Mr. Tom Parlon:

Good morning. We are happy to be present to assist the committee, which has a tight deadline and must devise recommendations in a short period. Two of my colleagues are members of the CIF and house builders, from which point of view they will bring quite a bit of experience to the question and answer session, while the other two are the executives who work with me. We represent the builders who have the skills and capacity to build houses. I hope we will be able to bring that perspective to the committee.

House building has become a lesser but still substantial part of the CIF. The industry's overall capacity is growing and recovering. It has a ways to go before it can be deemed to be at an optimal level, but the recent CSO figures show that we are increasing the construction workforce by approximately 1,000 workers per month. Unfortunately, that increase has not materialised on the residential side, which is the issue that we are present to address.

I have read the transcripts of the committee's meetings with other witnesses. The lack of supply is the real problem. Some have suggested that the problem was the management of existing supply, but there is no doubt that supply is a major part of the problem. The industry's large problem is the cost of construction compared with what the market is in a position to offer. My submission goes into the issue in some detail.

Substantial infrastructural investment, be it in roads, water, wastewater or schools for new communities, is necessary. We cannot build 10,000 or 25,000 houses without it. There has been a great deal of debate lately about the possibility of a Minister for infrastructure and construction or housing. It is imperative that someone have overall responsibility. The acting Minister referred to levers that need to be pulled. I appreciate that it would be difficult for one Minister to have access to all of them, but it is imperative that someone be given responsibility by the Government - for example, a senior civil servant who could lift the phone or pull the lever that is holding things up.

Housing supply has a knock-on effect on the issue of homelessness. The availability of adequate mortgages is a major issue for some borrowers. Assembling the required deposit is a major challenge for many who are attempting to get onto the housing ladder.

If a number of these issues are addressed, it will stimulate new house building. The level of direct social housing provision will certainly assist these persons also. There are many people on the margins of being able to draw down a mortgage and provide their own housing. We agree with the Central Bank applying restrictions, but some minor tweaking of these restrictions will allow people on the margins to qualify for mortgages without having a negative impact on their repayment capacity.

We have made a substantial and detailed submission which I will briefly run through. For a while we have been proposing a help-to-buy scheme. It would be a direct help to first-time buyers and has been happening in the United Kingdom for a long while, with very good effect in terms of the numbers of houses turned out. It means that the State or the Government would take an equity stake in loans up to a maximum of 25%. It means that somebody attempting to buy a house for €300,000 would see the State take a maximum stake of 20% or €60,000, with that amount being repayable over five years. It would make the challenge of getting a mortgage and putting a deposit together a little easier. It would certainly assist in encouraging supply. As I noted, getting a mortgage together has been a challenge and we, therefore, suggest a tax incentivised saving scheme for first-time purchasers of new houses which could be restricted to those saving for a deposit. It would certainly provide an incentive. We suggest a contribution of up to 25% by the Exchequer for every euro saved.

Development levies are a substantial cost on the industry and, as a result, first-time buyers. We can understand why they were introduced originally, as the investment in infrastructure had to be made. Now we have the local property tax and we had water charges until recently; therefore, it amounts to double taxation. The local property tax regime should be developed sufficiently to provide for infrastructure, with the levies being dropped. VAT has been mentioned. A number of people have accepted that 36% of the cost for a first-time buyer goes to the Exchequer and VAT is certainly one of these costs. A reduction in VAT, as proposed by us and a number of other players, from 13.5% to 9% would help to reduce the overall cost of a first-time buyer's €300,000 house, for example, by close to €12,000. There is a question as to how we could be sure it would be passed on to the first-time buyer and that is one we would like to address. One of our members has indicated that if there was a change in the VAT rate, it would be reflected in the price of the new houses he is selling. The industry does not want to be accused of lining its pockets in that regard.

It is about working out a viable proposal for lenders. Practically all builders have to acquire finance, not just from banks, to provide a maximum of 60% of the funding required, but it is a dysfunctional market. With regard to other financiers that may come on board, unless there is a viable plan and a margin can be demonstrated, there will be no funding. Dealing with the VAT issue, as opposed to levies, offers an opportunity to bridge the gap. The process should be targeted and time-specific in order to alleviate concerns any change could lead to difficulties. We propose changes to the seven-year capital gains tax exemption. It was put in place for a very good reason, but there was an unintended consequence, as happens in many cases. There is now no requirement to develop the land in question during the relevant period.

There is the review of Central Bank rules. Currently, to obtain a €300,000 mortgage, a person needs to have €38,000 and an annual income of €75,000. Unfortunately, that will accommodate a very small percentage of potential house buyers. It does not take into account the fact that first-time buyers are substantially older than they may have been previously. They may be five or six years older and have a family.

In most cases they are renting and could be paying up to €20,000 a year for rent, which is not taken into account. We are proposing some modifications that will lessen those requirements and with which the banking sector can be satisfied. It would have to be satisfied with the repayment capacity of the people.

On the social housing side we propose a number of different things and we know the committee has had a number of the players in already. We are proposing a review of the landbank retained by the Housing Agency and local authorities and its immediate suitability for general housing construction. We feel, as many commentators have said, that within the M50 there is a great deal of land, which certainly has to be reviewed. We have to work out what is available and shovel ready and make it available.

Part V contributions are an issue that have been raised time and again. We absolutely support a contribution to social housing but we feel that Part V makes a very minute contribution, particularly when there is little or no housing being built. If we are to ramp it up, that Part V contribution passes on to the first-time buyer just like all the other costs. We have proposed all along that instead of the Part V social housing contribution, there should be a 1% levy on all residential transactions. The figures we have presented here show that it would bring in substantially more than is currently the case.

In terms of urban regeneration, in particular in rural towns, there is a great deal of capacity, with many sites derelict and many rural towns falling into disrepair. We propose some incentives to encourage the people who own those sites to turn them into good quality living accommodation in towns where it suits people and families to live and so on. It would make the upgrading more financially viable.

The last point I will raise is the register of builders. The Construction Industry Register Ireland was accepted by the outgoing Government under action 55 to provide a register for contractors, builders and tradespeople on a statutory basis. The register would mean that when the customer, whether it is a housing agency, individual or local authority, engages a contractor from the register, they are assured they will get a competent contractor that is fully compliant in terms of tax, health and safety and insurance. It will get rid of some of the issues that unfortunately brought ill repute on the industry where non-professionals were involved and took advantage of loopholes and so on. This is something that the industry absolutely supports. There is a voluntary register in place at the moment with more than 850 people registered. We feel that through the attempts and efforts by the industry to solve this particular problem in terms of getting the output, the work will be done by competent professionals in future.

I will leave it that. My colleagues will be anxious to try to answer any questions that are put forward and we look forward to the questions.