Tuesday, 9 April 2019
Ceisteanna - Questions (Resumed) - Ceisteanna ar Sonraíodh Uain Dóibh - Priority Questions
This is an opportune moment to ask the Minister to clarify what the position is with the funding status of the Rebuilding Ireland home loans scheme.
It is especially opportune in light of the additional information I received through the freedom of information procedure to the effect that the Department knew as of last September that there were issues with monitoring. Will the Minister tell me whether the scheme is still frozen? Several local authorities are telling applicants that they cannot process applications or issue loans. They maintain this is because they have been told the money has been expended and they have not been given a new allocation. Will the Minister clarify the position?
I thank the Deputy for the question. The Rebuilding Ireland home loan scheme was launched on 1 February of last year to replace the existing house purchase and home choice loan schemes. It provides a new line of mortgage finance that includes fixed rates over 25 to 30 years to creditworthy first-time buyers who cannot access sufficient mortgage finance from a commercial lender. The Housing Finance Agency borrowed €200 million to fund the scheme. It was estimated that the drawdown would be approximately €200 million over the three years. Some criticism at the time suggested that insufficient loans were being approved and drawn down. However, as Minister I had made a commitment to seek further funding at an early stage, if necessary, given my belief in the scheme's potential. The scheme has been more successful than anticipated. By the end of January €106 million had been drawn down. That accounted for 53% of the available funding at a point when €66 million would have been more consistent with the expectation of a three-year drawdown period. By the end of March of this year drawdowns had reached €127 million.
My officials have kept me informed regularly regarding progress on the loan scheme. They have been engaging with the Department of Public Expenditure and Reform since October of last year when higher lending and drawdown volumes were beginning to materialise. I informed the Dáil on 29 January of this year of the scheme's success and of the need for additional funding. Furthermore, I indicated that my Department was in discussions with the Department of Public Expenditure and Reform and the Department of Finance with regard to the allocation for 2019. Local authorities could continue to accept applications as the total funding had not been drawn down. A meeting with the Minister for Finance and Public Expenditure and Reform took place on 5 March of this year. Ongoing discussions between the three Departments have included consultation with the Central Bank as recently as last Friday, 5 April. When these discussions have concluded I will be in a position to confirm the level of allocation for 2019. In the meantime, the scheme remains open - it is not frozen - and all local authorities have been advised to continue to receive and process applications.
I do not know where to start. For local authorities to receive and process applications is one thing but to issue loan offers is another. How many local authorities are not allowing the drawdown of those funds? I imagine the Minister has heard in recent days of testimony from several individuals throughout the country from south Dublin to Waterford. People applying to several local authorities have been unable to get the funds. The Minister says the scheme is open and is accepting applications. The local authorities may be processing applications up to the point of the issuing of the loan offer, but they are not processing them any further and that is the issue. In many instances those who have made an offer on a house at the moment cannot draw down the loan. What is the actual position? The Minster can say that the scheme is open but the local authorities are not concluding the processing of applications.
Will the Minister inform the House when a new round of funding will be confirmed by the Department of Finance? When will we know that additional funds have been allocated? Last September, the Department was still noting the fact that the take-up was slow. Monitoring was a major problem between the Housing Finance Agency and the Department. We need to give clarity to those who are depending on a Rebuilding Ireland loan to be able to purchase a home.
I thank the Deputy for the follow-up question. First, as I confirmed to Deputy O'Brien at a recent meeting of the joint committee, all approvals given to date by credit committees and local authorities will be honoured. There should be no hesitation or pause in facilitating the drawdown of those loans where an approval has been made by the credit committee. Of the €200 million provision, only €127 million has been drawn down. In fact, if we drill into the detail, only €85 million has actually been drawn down by the local authorities from the Housing Finance Agency. There is more than enough funding in the scheme at present to honour the approvals for drawdown.
The Deputy asked about allocations for this year. The money is available for drawdown and more money will be made available. Local authorities need not wait for their allocations for 2019. We will honour any approval given by a credit committee of a local authority. They can continue to do that. If we find examples of where that is not happening - there was one on the radio today - we get in touch with the local authority to ask why it is not happening.
I am very sorry for the confusion that is in some local authority areas. The confusion is not because of anything the Department of Housing, Planning and Local Government or the Housing Finance Agency are doing. Where there are difficulties we will work to address them.
I genuinely welcome that clarification. It is really important. The message the Minister is giving in response to the questions I am asking on behalf of Fianna Fáil is that there should be no impediment to any of the loans or mortgages approved as of now being drawn down. Will the Minister indicate whether the Department will issue a written directive to the local authorities, including South Dublin County Council and Waterford City and County Council? South Dublin County Council has not permitted drawdown of mortgages since December last. Why is that?
I genuinely welcome the clarification from the Minister. It is important. There is confusion, although it has not been brought about by this side of the House. I put it to the Minister that we should get those loans that have been approved drawn down should the applicants need them. I call on the Minister to continue to update the House and give us some timeframe for when he envisages additional funds will be allocated and when the 2019 allocations will be made. People are making loan applications but are unsure whether they will ever be able to get to the stage of drawdown. We need to clear this up once and for all.
Like Deputy O'Brien or any other Deputy in the House, it makes me angry when I hear of a couple or individual who are trying to buy a home and who have been given approval for a mortgage but who are then unable to draw down the mortgage and thus potentially unable to complete the transaction they have entered into where they have gone sale agreed with someone who is selling a home. This is why it is important to clarify the matter and I thank Deputy O'Brien for affording me the opportunity to clarify that any loan from a credit committee that has been approved is to be honoured and the drawdown is to be facilitated by that local authority. We are not to be getting in the way of people buying homes. I issued a circular to local authorities recently clarifying that the scheme is still open and that they are still to continue to process applications.
The Deputy asked about funding allocations for 2019. Again, there is more than sufficient funding in place at present for local authorities to be able to draw down from the Housing Finance Agency. They can continue to access that money and lend it.