Timmy Dooley (Clare, Fianna Fail) | Oireachtas source

I welcome the opportunity to contribute to this very important debate. I hoped we would have had an opportunity over the two nights to deal with what is a very serious crisis but, unfortunately, the only engagement we got, in particular from the Government backbenchers, was an effort to try to undermine people on this side, in particular in my party, and to try to draw out how we got to the situation in which we find ourselves. We all recognise problems existed in the past. We have a good understanding as to how that happened. I could get into the blame game and suggest policies we pursued were supported and, in fact, there was demand that we would do more in terms of tax reductions and increases in spending and less by way of regulation of the banks. That would have been cheer-led by many on the other side of the House but I do not want to go down that road. We all have a mandate in this House and it is incumbent on us to try to find a solution to the crisis we face. The Minister of State is a man who is prepared to listen to views expressed, regardless of where they come from, and if there is a good idea, I would hope he would give due regard to it.

There are a couple of serious issues and my colleagues have covered most of the main points. I have great belief in the mortgage to rent scheme but, unfortunately, it is relatively limited in terms of to the extent to which it applies. The first difficulty is that a house, which is subject to the potential for mortgage to rent, must be adequate for the needs of the family concerned – in other words, there is no point putting a mother and one child into five, six or seven bedroom house. However, many families find themselves meeting the accommodation criteria but fall down on the negative equity component. Many of these families are prepared to say to the voluntary housing association that they have a bit of equity in the house and that they are prepared to hand it to the voluntary housing association and the State if they continue to maintain them in the house. They are prepared to sign legal waivers to allow that to happen but the criteria state that if the house is in negative equity, it does not comply. For example, in a house where there is a debt, together with failure to meet various payments, of about €120,000 and the house is worth €150,000 or €160,000 or maybe €170,000 on a good day, the husband has gone and the wife and three children are still in the house, she would be more than happy to allow the voluntary housing association to purchase that house at the value on the bank's balance sheet and then to rent it back. The voluntary association would receive an asset much greater than what it had to pay for it. The people are prepared to give a gift to the State because otherwise they will be out on the street and will be coming to the Minister of State or myself looking to be put into a council house. The bank will sell the asset. I appeal to the Minister of State to look at the issue as it relates to mortgage to rent to see if something can be done in that particular instance where the family is prepared to sign over the asset.

I would like to deal briefly with the new mortgage rules from the Central Bank. I listened to Professor Honohan, for whom I have a fair amount of regard, but at times I am concerned that he is, to some extent, out of touch. He is looking at the capital adequacy of the banks and protecting the banks and he is right to do so. We want him to regulate in a careful way and I really respect him in that regard. However, I have a problem with how these rules might impact on the housing market in general. The decision to differentiate between first-time buyers and other buyers will change the nature of the way people seek to purchase a home. I think he has effectively done away with the notion of a starter home. Many people started off in an apartment. Some of them married and settled down and some of them had children in the full knowledge that they would be able to purchase another home. If a couple move into an apartment and have a child or two children, it may not meet their needs and they may want a family home.

A couple each earning a wage of €50,000 who under the loan-to-income limit would be able to borrow €350,000 somehow have to come up with €70,000 while paying the mortgage on the apartment in which they currently reside. The Minister and I know full well that that is not possible on that income. They are expected to pay their mortgage - or even pay rent, for those who are renting - and somehow come up with €70,000. That is ludicrous.

The first-time buyer will now be deciding before they even enter the market that under the new rules, if they give away their first-time status they will not be able to buy a second home. There will be a much greater focus on what might be a secondary home. Nobody will be looking at the apartment market other than investors for the rental market because the rental system is strong, and that will force the price of houses up further. We will now have first-time buyers and some people who have access to a considerable amount of cash chasing properties in that market.

The Minister knows there is a limit to the supply here in the city of Dublin. That will result in an upward pressure on house prices and will change the characteristic in terms of the way people stepped their way through life going for what met their basic needs. We may have a slump in apartment prices, which will impact on the banks also, because many of them have just seen a recovery in that market because of the way in which the rental sector is working. That is why I question Professor Honohan's analysis of the entire market. He has looked at the banks and the loan-to-value ratio and ensured that that is right, but there is failure to examine the transition, so to speak, by citizens of this State through the housing market. I hope that when the legislation comes forward some rethinking can be done on this particular issue and that we will see a better joined-up approach whereby people will still be able to have starter homes and work through, as their needs change, to a more permanent residence.

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