Eoin Ó Broin (Dublin Mid West, Sinn Fein)

I thank the Chair. I am sorry for the intrusion into her committee but I am obviously keenly interested in cost rental and the LDA. I have been following the debate upstairs.

Let me refer to one of the things that strikes me as strange about the corporation tax exemption. My view is that the LDA should never have been paying corporation tax. It made no sense. AHBs and local authorities do not pay it, and it adds considerably to the rental charge on the cost-rental tenant. The LDA has been campaigning on this for a while. When the new measure was introduced, my view was that it was positive, but then I started wondering whether the real intention behind it is actually to incentivise increased private-sector investment into the sector, in the following way. In the Minister’s Department’s report on the future funding of the LDA, completed in February and published in the summer, one of the recommendations suggested by his officials was that, to resolve the problem of the absence of a medium- to long-term funding option for the LDA, the LDA should sell properties off. Given the fact that it is buying most of its properties from private developers, through Project Tosaigh, it is an odd proposal, but that is one of the proposals that exist. The difficulty is that the LDA currently makes a commercial return, as required, of under 3%, in line with the capitalisation from ISIF. Private sector investors are not going to be interested in a commercial return of 3%. We know from our market analysis that they typically look for 5%. Therefore, is the intention not actually to address the viability issues, because the STAR scheme does that to some extent, but rather to create a scenario where a current, reluctant private sector investor might now be more attracted because the return they will get is higher? The reason I ask is because there is already a crisis in cost rental. The rents are too high and huge numbers of people applying for cost-rental cannot gain access to it because of the affordability tests. The very people for whom cost rental is designed are being turned away because the rents are too high. If we then move to a situation where private sector investors become major players, rents will continue to increase even further. Has there been any discussion of that as part of the rationale? Is this in any way connected to the recommendation from the report on the future funding of the LDA of the Minister’s own officials?