Mr. Patrick Davitt:

I will address some of the questions, after which Mr. O'Flaherty will respond on renewal and regeneration. To make a jovial point, perhaps the reason auctioneers want to enter the Seanad is a desire to supplement their income because they are doing so badly. Apart from that, it is very good to have representation in the Seanad as it shows that auctioneers are interested in representing the auctioneering profession, as my colleagues and I are trying to do at this meeting. While we do not claim to have all the answers, we have thought long and hard about the points we are raising. We are seeking to build a sustainable property market and get it moving again.

The proposal to increase the loan to income ratio, LTI, for borrowers from 3.5 to 4.5 is part of a whole package. We are not calling willy-nilly on the Government or Central Bank to change the LTI from 3.5 times income to 4.5 times income. The proposal is part of a complete package which includes providing finance for builders.

There are two sides to the housing issue, namely, homelessness arising in the area of social housing and the private housing market. Housing is required in both areas. In this instance, we are discussing finance for private housing. Such finance would only be provided to builders on condition that the house is sold at a capped price. Builders should not be givencarte blancheto obtain various reductions for building homes and subsequently add these to the costs for consumers. Money can be borrowed from the European Central Bank at a rate of 0.005%, whereas home owners must pay high mortgage rates and the interest rates sought from builders to build properties are in the region of 10% and 20% through mezzanine financing arrangements. Some builders who cannot afford to finish houses are being asked to pay these types of interest rates. Ultimately, however, it is the consumer rather than the builder who pays these rates because their costs are added to the price of the house.

We are trying to reduce the price of new housing to a level that people can afford to pay. The only way to achieve this is to consider all the proposed measures together. We are calling for a reduction in the VAT rate from 13.5% to 9%. Such a measure would not generate a loss to the Exchequer as it would result in a significant increase in the number of houses completed and the Government would receive much more in VAT returns as a result. While I am aware that there is a see-saw type of effect at play here, if a lower VAT rate is reduced, more houses will be built and the Exchequer will receive more income. It would also reduce the cost of a new house, thus enabling people to pay the price of a home.

On the proposal to increase the loan to income ratio for borrowers from 3.5 to 4.5, there is no reason banks cannot introduce secured mortgages of ten, 20 or 30 years' duration and apply interest rates that people can afford to pay. Last week, we attended a conference of our European partners in Germany where ten year mortgage money costs 1.8%. The equivalent rate in Ireland is 4.2%.

We believe that if long-term mortgages were given to people, the Central Bank would not be worried about LTI because it would know that somebody got a mortgage for 20 years and at a rate of 2%. The LTI would not enter into it after so many years because the money is guaranteed. Even if people paid a little bit more for a house and if they got a little bit more than the 4.5% they were supposed to get, at the end of the day we hope that with inflation and if wages rise a little bit, that 4.5% will be easily maintained.

The Deputy mentioned renters and auctioneers. Recently, the Irish Human Rights and Equality Commission, through the Minister, stated that auctioneers and landlords could not advertise on their websites or whatever that they would not show properties to, or accept, certain people. There is absolutely no problem there but at the end of the day, the person who makes the decision on who to rent his or her house to is the house owner and not the auctioneer or the Minister. People go through the process of viewing a property and all that goes with it but if an auctioneer has two people who want to rent the property, one in receipt of rent allowance and one who has his or her own money, the landlord makes the decision and tells the auctioneer who to take and who not to take. The point I am making is that the auctioneer is acting on instructions. The auctioneer has to do what he or she is told because we have a contract with that person - a PRSA contract, which is a legally binding document from the PRSA - so we have to get the best price possible when selling a house or when renting a house. If we do not, we can be hauled up and fined. From our point of view, we do not engage in discrimination in terms of who we rent a property to. We are quite happy to rent it to either party. If the landlord says he or she wants to rent it to a particular person, that is what we have to do. It is a great idea but at the end of the day-----