Stephen Donnelly (Wicklow, Social Democrats) | Oireachtas source

I support this amendment because we need to know what effect this scheme will have on house prices. I would like included in any such report, the impact not just on first-time buyers, which the Minister hopes will be positive, but on the negative equity generation. On Committee Stage, the Minister said he would look at help for the negative equity generation. His office sent me on the current rules. It is true the 10% and 20% rule does not apply if one is in negative equity from the Central Bank's perspective. That is a minimum guideline put down by the Central Bank. The banks, however, still apply it. Nearly ten years on from the collapse, people who bought apartments between 2004 and 2008 are still trapped. On Committee Stage, the Minister identified that this help-to-buy scheme was a targeted intervention to help first-time buyers deal with the fact they could not save 10% to 20% deposits. While I do not agree with the Minister, it is a coherent rationale for helping that group of people. At the same time he said we have to help those who are trapped and cannot buy homes in which to raise their kids, he has completely excluded the negative equity generation. Accordingly, we are forced to table amendments on Report Stage because Parliament is not allowed suggest tax changes to the tax Bill.

Take the case of someone stuck in negative equity trying to buy a new house. The argument the Minister is using for not including them in his help-to-buy scheme is that they do not have to meet the Central Bank's deposit rule. The banks say one has to hit a deposit rule for their own potential lending, however. One cannot sell and buy or keep the negative equity apartment and buy because the rules applied to stress testing mean that one does not get a mortgage whatsoever. They are trapped. One way I am looking to alleviate this, which seems reasonable, is to end the double taxation of accidental landlords.

It was supported by Fianna Fáil and, I believe, Sinn Féin. I do not know whether Deputy Burton was in the Chamber at the time but there was broad agreement that parents who bought apartments during the bubble are stuck and trapped by double taxation. We had a debate on this and the Minister raised the concern that if we stopped the double taxation, it might help the people it is intended to help but that there are others who might be able to game the system. Therefore, I tabled an amendment that was very restrictive. It proposed that if one has but one property, in which one lives and which is in negative equity having been bought during the bubble, and one is seeking to sell it and buy another that is a bit bigger and has an extra bedroom, one should not be double taxed. In other words, if one is trying to move from a one-bedroom or a two-bedroom apartment to a two-bedroom or a three-bedroom semi-detached house, one should not be double taxed.

I was very disappointed the Minister did not accept the amendment. He has not helped people in negative equity, who are completely trapped by the taxation system. We hear from him time and again that high taxation is a disincentive to work. Couples in their 30s and 40s with children and stuck in tiny apartments are being hit with a €5,000 tax bill because they say they cannot raise their children in them. They wish to move out of the two-bedroom apartment and rent a three-bedroom semi-detached house in which to raise their children but the tax system is such that if they do so, they will be hit with a tax bill of an extra €5,000. Therefore, one will either stay where one is, which is not suitable for the children, or try to proceed without paying tax, which should not be done under any circumstances. Alternatively, one will do so and resign oneself to never having the money to save for a deposit or pay down the negative equity.

In the Minister's response to Deputy Burton's amendment on a report, why has he chosen to abandon these people in negative equity? He has not tabled any amendment. There was broad support across the House for something to be done, particularly on the double taxation of accidental landlords. Will the Minister please tell us why he has chosen not to do anything? He has not chosen to table his own version of my amendment. Why is he choosing to allow a taxation system to bury these people in an unanticipated tax and leave them trapped in negative equity?

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