Simon Coveney (Cork South Central, Fine Gael) | Oireachtas source

There were some very relevant questions. To respond to Deputy O'Dowd's questions first, we introduced some incentives for landlords to rent to HAP tenants in the last budget. If they take on a tenant for more than three years, they get preferential tax treatment. This is to incentivise an end to what Deputy O'Dowd rightly referred to as a bias that some landlords certainly have against tenants whom they see as being local authority tenants or whatever. We need to try to get away from that, and one of the big themes of our housing strategy will be trying to create diverse communities where social housing, private housing, affordable housing and rental accommodation are intermingled in order that there is no stigma attached to people who need assistance either with their rent or finding or paying for a house. That is something we need to try to do in the context of building a lot more social housing in the next five to ten years.

Deputy O'Dowd is also right that much of the talk that we have had about housing has understandably concerned the need to build an awful lot more social housing, but that will never meet the current demand on its own. If we do not have a private housing sector that builds a lot of houses every year to meet the demand, we will have more and more people relying on social housing because there will simply not be options in the private sector. We will then get into a dangerous cycle of more and more people who would normally aspire to buying, financing and owning their own homes being forced to rely on the State to provide that housing or supported housing. We will create more and more demand, which will then create more and more need for supply, and we will get into a very difficult area. We therefore need a balanced housing strategy that drives the private sector, which is totally undersupplied at the moment, particularly in Cork and Dublin, but also to a certain extent in Limerick, Galway, Waterford and other urban centres.

There is an unusual phenomenon in the housing market in that although there is serious demand to buy new houses, there are no huge queues to do so because people cannot get finance. Many first-time buyers have been essentially locked out of the market for a number of years. They are unable to get the finance to buy a house because there are no houses at prices they can afford. Although we have significant demand, we do not have the capacity to match that demand. This means houses are not being produced for that demand.

In the past, house prices were driven by extraordinary demand because everyone was getting ridiculous mortgages with low financing costs or interest rates. This fuelled the property market. Developers were building far too many houses and many people were buying for the purposes of speculation. The opposite is now the case. There is considerable demand but an inability to finance mortgages. Therefore, we have a strange broken structure in the property market, with considerable demand for houses but an inability to finance and buy them - even if they were available to buy. Developers maintain that there is no functioning first-time-buyers' market for them to supply by building houses, even though there are first-time buyers throughout the country who are seeking to purchase houses. It is a difficult issue to resolve. To be honest, the only way to resolve it is either to reduce the cost of building a house and reduce prices somehow or increase the capacity of people to raise the finance needed to buy a house at current prices. Without one or both of these issues being addressed, we are going to continue to have real problems in the private sector.

Deputy Ó Broin made some points on the capital spend. When there is an underspend in a Department and a carryover into the following year, the Department of Public Expenditure and Reform often nets off the underspend in some Departments with the overspend in others. The Department of Public Expenditure and Reform will also agree to allow a certain amount of carryover from one year to the next, under certain conditions, especially in the area of capital spending, and that is what has happened here. This happened in the Department of Agriculture, Food and the Marine as well. There were numerous payments in December and January under various schemes and the payments carried over two years. Some of the projects we are financing for social housing will have a carryover spend from one year into the next, depending on delays in getting those projects up-and-running or whatever. It is true to say, I suppose, that if we could have spent the €28 million allocation last year on social housing, it would have yielded a better outcome and we would have had another spend again this year. In any event, the money is being carried over and we will continue to try to finance projects as quickly as possible.

A question was asked about top-ups and the housing assistance payment, HAP. Tenants sometimes choose to pay a top-up if they have been in a house for a while and are keen to stay there. There are legally allowed to do that, although now that there are increased support payments for HAP we are keen to encourage less of that. HAP is rather different to rent supplement. If someone gets a HAP tenancy and then goes back to work and increases his income, then the support under HAP begins to reduce as his incomes starts to increase. That person may then decide to make an extra payment to a landlord or whatever and we try to factor that in. The flexibility around HAP makes it a more sustainable model than rent supplement in dealing with people's changing incomes - hopefully, these incomes are changing for the better.

There was a question on how we calculate the numbers switching from rent supplement to HAP. We do not see rent supplement as solving a social housing need as such. It is like a temporary solution, whereas we see HAP in that category. A total of 63% of people who are coming into HAP are new to a rent support system that provides a social housing solution, if we can call it that. They are new to the system. Other people are switching over from rent supplement, which is a less sustainable way of maintaining supports for someone as a social housing solution. These people are moving from rent supplement, which is seen as a temporary solution, to HAP, which is seen as a more permanent social housing solution given the flexibility that it facilitates and so on.

Anyway, I take the point made. When we are discussing HAP we should probably differentiate given the numbers. However, I have no wish to suggest that switching people from rent supplement to HAP is switching someone from one equal solution to another. One is far better than the other and provides a more permanent and sustainable solution, and should be seen in that light. For example, last year when we calculated the provision of 13,000 solutions in terms of people getting keys for social housing, that factored in HAP but did not factor in rent supplement. This year the corresponding figure will be over 17,000 and that will include approximately 10,000 under HAP.