Fergus O'Dowd (Louth, Fine Gael) | Oireachtas source

On Deputy Doherty's amendment, I would like to clarify any confusion which may exist in relation to the point he has raised in his amendment. I share his concern that the initiative should be targeted at the areas where it will do the most good and that it should not be available on a wide-scale basis. The landscape of this country is still scarred by the rampant tax-driven property developments of the past. Mercifully, these older tax schemes have been largely brought to an end and the Minister for Finance has no ambition to preside over a repeat of them in the future.

Deputy Doherty's amendment concerns the residential element of the initiative. Under the scheme, the building must have been originally constructed as a dwelling prior to 1915. The relief is intended to apply to expenditure on refurbishment or conversion of the building for residential purposes. The relief only applies to the person who owns the building and is residing in it as their sole or main residence. Furthermore, the relief is only given for any of the first ten years after conversion or refurbishment and while the person continues to be in residence.

The Minister for Finance envisages two types of situations in which this relief might apply. First, the building may currently be occupied as a dwelling, though in need of refurbishment. Subject to all the other conditions of the scheme being met, the owner-occupier of that dwelling can avail of the relief in relation to the cost of that refurbishment. The term "refurbishment" takes its meaning from elsewhere in the tax code but the use to which the building is put does not change. It was and remains a dwelling. The relief also applies to refurbishment of an empty dwelling so it is not vital that it is occupied at the time the work is done, although of course it must subsequently be occupied as the sole or primary residence to avail of the relief.

The second situation is where the building has been converted into something else since it was originally built. While it may have been constructed as a dwelling it may now be a shop or put to some other use entirely. Where eligible work is done on such a building it is classed as a "conversion". This is also allowed. The reference to "immediately prior to the conversion" in paragraph (a) allows for the situation in which the building is converted back into a house from having previously been something else. Similarly the same reference in paragraph (b) is to address situations in which the building is converted into a series of apartments from having been a single dwelling or not in use as a dwelling at all.

During the Committee Stage debate Deputy Doherty was concerned that the occupier could move out of the building for a short period so as to avail of the relief and it would appear that his amendment is designed to prevent this. He seeks to ensure that properties cannot be converted overnight from a business to a residential dwelling and that the premises must have been a business premises for at least five years before conversion works are carried out. The likelihood of a premises being changed from residential use to business use and then back again to residential use within a period of five years would appear to be remote. It is difficult to see what loophole could be availed of here to circumvent the intention behind the legislation. The key objective is to encourage people, especially families, to live in these run-down areas, and that is what the relief is designed to do.

The Minister for Finance hopes that this measure will work and if it needs improvement in the future he will consider changing it. Since this initiative is not available in the rental sector I am confident that it will cause no distortions in that sector. I am aware, for example, that some low income individuals and families currently live in substandard rented accommodation in inner cities. If the relief under this initiative were available to landlords, it could ultimately result in rents being increased and becoming unaffordable to this group. Obviously, theirs is an unhappy situation and I do not wish to introduce a tax incentive which would have the perverse effect of making their situation any worse. I hope that Deputy Doherty accepts that explanation.

Deputy Timmins indicated on Committee Stage that he would submit an amendment on Report Stage to include Bray in the scheme. The Minister for Finance explained to him then, and I repeat it, that he was not prepared to do this at the present time. This is a pilot scheme. When it was introduced originally it was intended to apply only to Waterford and Limerick. The Minister for Finance has since been persuaded by the results of the ex-ante cost benefit analysis to include Cork, Dublin, Galway and Kilkenny. Deputy Doherty thinks he has gone too far as it is but we will not be going beyond these six cities until we see how the initiative has worked out. The Minister will be consulting with all the relevant local authorities in the coming months with a view to identifying the streets and the areas within these cities where the relief will operate.

The legislation provides for the Minister for Finance to specify by order the "special regeneration areas" to which the relief will apply. The cities and-or towns themselves are not referenced in the primary law. For the reasons I have given, I am not accepting Deputy Timmins's amendment.

See this speech in context