Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I thank all Deputies who participated in the debate on the amendment. They will recall that the Minister, Deputy Alan Kelly, and I made a joint announcement on a series of measures to deal with the problem of rents, rental property and the lack of supply and housing market. There was a range of measures and I am sure Deputies can recall some of them. They included everything from NAMA's commitment to build 20,000 houses over the next five years to the commitment of the Minister, Deputy Kelly, to confine rent increases to limited periods.

This is a proposal I brought forward in response to a case made by some Deputies in the House, but more particularly by the voluntary organisations. They were very concerned about increasing homelessness, particularly in Dublin. The case made to me was that as the economy grew and as more people got jobs, people in work could pay more rent than people in receipt of rent supplement or assistance from the local authorities, and some landlords were replacing people on rent supplement or those getting assistance from local authorities with tenants who were economically viable and could pay more rent. This was the case made and presented to me by the voluntary organisations and many Deputies in the House as a key driver of homelessness, particularly in this city.

The amendment is not a big issue and is designed in the first instance to incentivise landlords to hold onto their tenants who are in receipt of rent supplement or financial assistance from the local authorities, and to incentivise them to look at a more even playing pitch when choosing a new tenant because they will get this extra benefit in terms of a tax break on their interest if they select a tenant on rent supplement rather than a tenant from the labour market in the private sector. This is its purpose. Of course it is not designed to solve the housing problem. It is not even designed to solve the rental problem. It is designed to make an impact on an issue related to homelessness, which was explained in great detail by the voluntary organisations involved, and their arguments were taken up by a number of Deputies in the House. This is the position and it is why we are introducing it.

Existing tenancies registered prior to 1 January can qualify, once the landlord registers an undertaking to continue to make the accommodation available for three years on or after 1 January 2016 but no later than 31 March 2016. This is the question Deputy McGrath asked and it was a very good question. If this was not allowed, it would not work as intended. There is also a sunset clause, which provides for a three year permanent tenancy, which must be given before the additional part of the interest rate, between 75% and 100%, is rebated to the landlord. It is an incentive built in for this reason. It allows the landlord to roll it over again and give security of tenure for a six year period, and to avail of a break on 100% of the interest rather than the 75% available at present.

It does not apply to all landlords because some landlords do not have any mortgages. This only works as a tax incentive if one has borrowed to the point where there can be a tax break on the interest. Of course many landlords are very indebted. There is a case to be made that it should be a deductible expense at 100% for all landlords. This case was made by representative groups, including IBEC. It would cost €180 million and would be mostly dead weight because it would not incentivise any additional supply or progression towards extra tenancies at least for two years. I decided not to go that way but to have a very narrow focus on this aspect.

Deputy Pearse Doherty asked how it would be apportioned if a property was divided into a number of living units. The legislation provides for the interest deduction to be apportioned on a just and reasonable basis between various properties or between parts of one property let under qualifying and non-qualifying tenancies. The increased interest deduction will be allowed on interest relating to qualifying tenancies only. If there are five units in a house and it costs €1 million in total, that is €200,000 apiece, and if two are rented to people on rent supplement only the interest which runs from those two apartments will be covered. It will be apportioned justly and fairly.

I do not think the Deputies want me to go through the range of measures already announced, but it is true to say the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, announced €3.7 billion in the capital programme for social housing up to 2021. We all know we went through times when the country was bankrupt, in effect. Any money we had to spend we had to borrow from abroad, from our colleagues in Europe or the IMF. We lived on the charity of our friends because the country went bust under the previous Administration.

It took a lot to repair it. I would be the first to say that many of the decisions made were tough, hard to make and implement and unpopular. Nevertheless, they had to be made. I see Deputy Paul Murphy shaking his head up there at me, as he always shakes his head, but on television I saw him on the streets of Athens, cheering on Syriza as the revolution was coming. He was trying to apply the same formula to Ireland.

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