Mr. Eddie Punch:

The bridging loan idea is one of the potential answers but will only deal with the grant element of the cost of this project. The project is likely to cost €150,000 and upwards so it is not the solution on its own. The issue fundamentally is banks will not lend for the renovation of derelict properties, by and large. In the terms and conditions for this scheme there is a discussion about the charge on the property that will be put in place. That is to ensure that if he or she does not comply with the terms, the local authority in question can get the grant back off him or her at any time in the next ten years: 100% in the first five, 75% thereafter. This is probably also a barrier to lending. It accepts, and the wording is clear, that where the applicant has taken a mortgage to purchase the property, the bank’s charge will take priority. This is ambiguous because in many cases there is not the purchase of property in question. These are derelict buildings on a farm which are likely to be renovated by the existing farm family. Whether it is the older or young generation does not matter. We go back to the fact that there is a finance issue that will cause a huge problem.

Every source of funding needs to be looked at but many of the other options tend to be for shorter terms. We have solved these problems relating to agricultural and farm buildings but in these cases there is the profitability of the farm to pay for, for example, a new milking parlour, combined with a capital allowances provision in the tax code that make the whole piece work together in tandem. We have to think of the tax code combined with the repayment issue because there is a cash flow issue in question. In a rural area, he or she will not get Dublin rents but he or she might get €1,000 per month to rent out a property. That is €12,000 per year. Those who do that would most likely be in the taxable bracket where any additional income is taxed at 50 cent in the euro. It is completely different tax treatment to that given to large institutional investors in large property developments. This has to be looked at because the cash flow issue is hugely problematic for those trying to make repayments over too short of a timeframe and faced with an ever-increasing tax bill. In the first couple of years, there is a large component of interest in the repayments that may mitigate the tax bill, but quickly, at a 50% tax rate, people start running out of road and the tax bill is too severe. Of the €12,000 annual rental income, €6,000 goes to the taxman. The amount of interest that can be offset against that is likely to be small. There are no capital allowances allowed for in this so far, which needs to be looked at. We have the living city initiative, where there are capital allowances to write off the cost of capital investment over seven years, but that is for prescribed areas in the major cities. We should look at something similar here. As a general comment from the financial point of view, people need to be able to access money to be repaid over something realistic. That, in our view, would be 15 to 20 years plus because we are talking about huge investments.