Ciarán Lynch (Cork South Central, Labour)
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I thank the office of the Ceann Comhairle for allowing me to raise this matter this evening. I also thank the Minister of State, Deputy Jan O'Sullivan, for coming to the Chamber personally to respond. I could commend the Minister of State on the many actions she has taken on since she acquired this brief, but as I have only four minutes I will deal with the matter at hand, which is the consideration, if any, that has been given to instituting a rent-to-buy scheme for NAMA residential properties for first-time buyers and prospective owner-occupiers.

The Government has two clearly identifiable tasks related to home ownership and both relate to normalising the residential property market. First, we need to deal with people who have bought homes and find themselves in financial distress. We have seen actions arising from the Keane report, the most significant of which is the Personal Insolvency Bill, at present before the House. However, we also need to look to the present and the future and create a normalised residential property market, which does not favour investment over the purchase of a home, as we witnessed in the bubble years. Despite the difficulties in the residential property market in recent years, we will continue to be a home-buying nation. In future people will continue to have the ambition to live in a home they own.

At present, NAMA has 14,000 residential properties in the State, 9,000 of which are being rented. I propose the introduction of a rent-to-buy programme to deal with these NAMA properties. A structured plan and scheme should be examined in conjunction with NAMA to make that happen. People interested in purchasing a home have two concerns. First, they are concerned over whether house prices will continue to drop and, second, they are concerned about the security of their jobs and incomes. The Government has taken action on the house prices, with the implementation of the Residential Property Price Register database a number of weeks ago, which gives clarity and a degree of certainty to that issue. Obviously that needs adjustment to give more clarity as to the property type - whether it is a flat, a house or an apartment, the number of bedrooms and the floor area - because at the moment it just gives an address.

There is also the issue of salary security, and the option of a rent-to-buy programme would allow people, who are paying rent which is the equivalent of a mortgage, to do so over a period of two to three years and the rent, accruing over a period of time, would act as a deposit, which would also deal with the issue of loan to value. Since 2009 the Central Bank has correctly tightened up on the lending practices of the past. It also needs to tighten up on loan-to-value requirements, along with the required income levels for those who are purchasing. Over a two to three year period, people in a position to pay market rents in a rent-to-buy programme should be able to achieve loan-to-value percentages of 90% to 95%.

NAMA would be also beneficiaries of such a proposal. NAMA has estates throughout the country, some of which are category 3 ghost estates which means they require a minimum amount of adjustment to take them out of the ghost estate ranking. However, they require maintenance and security. By putting into those estates residents, who had the intention of purchasing those homes over a number of years, we would establish communities, the dereliction of these sites would be halted and the existing cost of security on these sites could be used to get them corrected. We would succeed in normalising the housing market by putting in place a robust rent-to-by programme with proper lending practices. It would deal with a housing crisis that will arise in a few years with a young population and an ongoing demand for property purchase into the future that will need to be met. Why not meet that demand now with the 14,000 NAMA properties, 9,000 of which are being rented. Surely we should try to get those rented properties purchased.

Jan O'Sullivan (Limerick City, Labour)
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I thank the Deputy for making this suggestion. I need to give my reply in the context of the Government's 2011 housing policy statement, which is quite explicit in taking a tenure-neutral approach to housing. That is, we will work towards enabling households to access the type of housing that best suits their needs at a point in time. Part of the function of the National Asset Management Agency, as a major holder of residential property stock, is to make a contribution to the social and economic development of the State. In this regard, the delivery of a social dividend from its stock of residential properties is a key challenge that Government has set the agency. While progress in this regard has not been as fast as hoped for, it has identified 2,000 units that may match well with my Department's social housing leasing initiative that is being rolled out in conjunction with the approved housing body sector.

The residential mortgage initiative product launched by NAMA this year may have a role in facilitating people who want and can afford to buy to realise their home ownership aspirations. However, there is a fine line between facilitating and enticing. I have no issue with facilitating, but we need to be careful with enticing because we cannot afford to repeat the mistakes of the recent past.

While I have no function in respect of the commercial activities of the agency, a responsibility which rests with my colleague, the Minister for Finance, I believe a rent-to-buy scheme could have merit. I again thank the Deputy for raising the issue in the context of the provision of housing that meets individual needs at a point in time. Such a scheme could provide a housing solution to households, with the possibility, but not the legal obligation, of progressing to purchase at a point in the future.

The Deputy may be aware that in 2010 my Department launched a rent-to-buy scheme in the Dublin City Council area specifically to facilitate Dublin City Council to deploy unsold affordable housing units in its stock. Under this scheme, the applicant will rent the property for up to three years, with an option to purchase at any time during this term at an agreed affordable purchase price. A percentage of the rent paid can be used as a deposit towards the purchase of the property. At the end of this three-year period, the applicant has the choice of proceeding or not with the purchase. While the fact that this scheme provides an opportunity for eligible households to test drive home-ownership for a few years without the fear of getting caught out by fluctuations in the housing market is not its main aim, there are still some very real advantages in it for individual households.

Taking this into account, I will raise the topic under discussion with my colleague, the Minister for Finance, as another potential housing market intervention by NAMA. I compliment Deputy Lynch, who always thinks outside the box, on coming up with this practical proposal. As I stated, I will take it to the Minister for Finance, who is the relevant Minister dealing with NAMA in this regard.

Ciarán Lynch (Cork South Central, Labour)
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I thank the Minister of State for her explicit response. Often, what we get are scripted responses to Topical Issues. It is obvious this evening that the Minister of State has given her attention to the issue I have raised.

The Minister of State referred to the 80:20 scheme introduced by NAMA, which is a welcome development that allows people to purchase a home at 80% of its value and which provides that where a property loses 20% of its value, the purchaser will realise it over a period of his or her mortgage. The Minister of State also set out the Department's policy in terms of it remaining neutral on this issue and in regard to the concept of enticing people into making purchases when it might not be suitable for them. While I concur with the Minister of State's sentiments on this, the fact remains that Ireland will remain a home purchasing nation for those who can afford to do so and therein lies the nub of the issue, namely, what is determined as affordability. In my view, house prices have almost reached the point of normalisation, namely, that they now cost three to four times the rate of annual income. The average price of a house countrywide is currently three to four times the annual national industrial wage.

Another issue that arises is that of social dividend and NAMA's responsibility in this regard. I am aware that the Department has delivered housing options for homeless agencies and through the 80:20 scheme. However, in terms of dealing with enticement of concerns, we are now presented with a unique opportunity in terms of the lending model applied in the rent-to-buy scheme being robustly structured to reflect the lending criteria set out in 2009 by the Central Bank, which acknowledged the mistakes of the past when people were permitted to include overtime pay, secondary rental income and so on into the equation when applying for mortgages, resulting in purchasing prices in some parts of the country increasing from two to three times a person's income to ten to 12 times his or her income.

I note the Minister of State's undertaking to take up this matter with the Minister, Deputy Hogan. Members of this House are experiencing difficulty engaging with NAMA owing to how the NAMA legislation is drafted. On one occasion I had to obtain senior counsel advice because of the manner in which NAMA is structured. I believe some engagement should take place with NAMA at departmental level, be it the Department of the Environment, Community and Local Government or the Department of Finance, in regard to the stock which it has in hand, some of which may not be saleable or may be in remote locations. There are NAMA estates on the periphery of Cork city which, if normalisation of the market occurred, could become attractive to purchasers. The scheme I am promoting this evening is for first-time buyers and owner-occupiers rather than investors.

I ask that the Minister of State request NAMA to examine what stock it has in hand which, in terms of location and affordability, would be attractive to purchasers on a 20 to 25 year term rather than the 30 to 35 year term witnessed in the past and to ensure that the mortgage product put in place and structure of same would be such that it would be sustainable and would, in the context of prospective purchases, be reflective of the rent they are currently paying in these properties.

Jan O'Sullivan (Limerick City, Labour)
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As Minister of State with responsibility for housing, my main objective is to provide options for people in the context of fairness and choice using the various vehicles at our disposal. NAMA is a player in this regard. The Deputy referred to the 80:20 scheme. We also engage with people through the social housing scheme. A social dividend has been written into the NAMA legislation. NAMA also has a commercial mandate. However, I believe its commercial mandate and social dividend can tie in with each other, resulting in a win-win situation in terms of the role given to NAMA under the legislation.

The Deputy's suggestions should and will be brought to the attention of NAMA. In terms of policy, the relevant Minister is the Minister for Finance. I will also bring the Deputy's suggestion to his attention. The Minister, Deputy Hogan, and I also meet with NAMA in regard to the transfer of social houses. NAMA has decided to establish a special purpose vehicle in order to speed up that process. The Deputy's suggestion is worthy of consideration. What we all want to achieve is as many options as possible for people who need a home. There is much merit in the Deputy's proposal, for which I thank him.