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

It does not really matter who the landlord is. The test is whether he is prepared to rent to somebody on rent allowance. If so, he or she gets the interest tax break of 100% rather than 75%, but only on the unit that is rented, not on the block. The scheme does not depend on the background or nature of the landlord. It does not distinguish between wealthy landlords and poor landlords, but it does distinguish between tenants, and it is because of the tenant that the landlord might qualify. It is an incentive to the landlord to rent to tenants such as I have described and to reduce in the first instance the potential for them to lose their lease and become homeless, but the intention is also to even the playing field somewhat, so that it would be as worthwhile for the landlord to rent to a tenant who is being assisted in the way I have described as to somebody who has not been assisted in the way I have described.

The registration of a three-year commitment is with the PRTB. The fact that landlords who are availing of the scheme have to register will allow us to do a running tot and see how many landlords are actually availing of the rent allowance. After the three-year period we will have very good data, but since it is demand-led, it is very hard to be absolutely accurate on it. I am not building it up as a solution to the rental problem; I am simply saying it is one measure among a range of measures announced by myself and the Minister for the Environment, Community and Local Government, Deputy Alan Kelly. This particular one is on the tax side, so it is appropriate for the Finance Bill, but it is based on the potential arguments about homelessness, rather than fixing the rents or anything like that.

Deputy Michael McGrath raised another interesting point about the present funding model for the building sector. As any of the Members who have been around for ten years or longer will be aware, the model was that a small builder built 60 or 70 three-bedroom houses, usually semi-detached, with the odd four-bedroom house studded into the scheme, and then he sold them and moved on to the next site to build another 60 or 70. The funding model was that between 60% and two thirds of the cost was funded by the bank, but the equity piece was the profit on scheme A rolled into scheme B. That is how it was done. When the small builders went bust, they had no equity. The banks are still prepared to give a good builder 60%, but where does he get the other 40%? This is the point Deputy Michael McGrath has addressed, and he is absolutely right.

We have tried a number of schemes. The Ireland Strategic Investment Fund put a fund of €500 million together. The equity is expensive. They were charging 15% on it, but there has been take-up. I understand there will be a second tranche of funding, the interest rate on which will be slightly lower, but that may not make a dramatic difference.

A model that some builders are using now to reduce the interest rate on the equity is to offer profit-sharing on the up side. For example - I am not sure whether these figures apply in real life - funding is made available at 7% provided the lender gets 40%, 30% or 20% of the profit on the scheme. There are different models being tried.

The cheapest funding is in publicly quoted companies. For instance, both Cairn Homes, which now has an interest in Dublin, and Hines from Texas, probably the biggest developer in the world, which has the Cherrywood land with sites for 4,500 houses, can get funding on the market at 3.5% or 4% because they are publicly quoted. The movement is in that direction because if a developer can fund through the banks to the tune of 60% or 66% - two thirds - and if he or she can fund on the markets at 3.5% or 4%, that is a working model.

What we trying to do in all directions is to repair a sector that was badly damaged. The builders were damaged and the funding model was damaged, and morale was shot to bits. Then, on top of that, as we came through the recession, the sectors that were most scapegoated, for good or bad reasons, were builders and developers and banks. We need a combination of the two to fix housing supply. If one talks to small builders, many of them will say they would get out if they could. Some of the courageous ones are going back in. No doubt it will take a while to rebuild it.

Deputy Michael McGrath will probably come back at me when I say it, but we are quickly moving towards the economic and social problems of success rather than of failure. No doubt housing will be an issue in the lifetime of the next Government, but traffic and transport are becoming increasingly pressing issues as well. It is getting more difficult to come in from west Dublin off the M50, and that is directly related to an economy growing at 6%. All sorts of decisions will have to be made.

All I would ask is that the Deputies stop the sloganeering. They do not have to do it. There is a lot to be done and there is a lot can be done constructively. If the debate is reduced to slogans, it is great fun but it gets nowhere.

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