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.

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.