Tony Killeen (Clare, Fianna Fail)

I reply on behalf of the Minister of State at the Department of the Environment, Heritage and Local Government, Deputy Noel Ahern, and I thank Senator Kitt for raising this matter. The Minister of State, Deputy Noel Ahern, is grateful to be afforded this opportunity to outline the ongoing development of the voluntary and co-operative housing sector and discuss the need to introduce a tenant purchase option under the capital loan and subsidy scheme.

The voluntary and co-operative housing sector provides social rental accommodation for general family-type needs and special needs housing for categories such as the disabled, elderly and homeless. The provision of social housing by the sector is funded under two separate voluntary housing schemes — the capital assistance scheme providing special needs housing and the capital loan and subsidy scheme which provides family-type accommodation. Approved bodies work in partnership with the relevant local authority in providing social rental accommodation.

Significant progress has been made in recent years in developing the voluntary and co-operative sector. The sector has much to offer in terms of volunteerism, innovation and management skills and the not-for-profit ethos. Support for the development of the voluntary and co-operative sector is being continued with the funding limits recently increased and new funding arrangements for the sector under consideration.

The capital loan and subsidy scheme is, for the most part, used to fund family-type housing. Funding under this scheme is provided by way of approval by the Department to local authorities to raise a loan from the Housing Finance Agency which is passed on to the relevant voluntary housing body by the local authority in the form of a 30 year mortgage. Loan charges are met by a subsidy payable to the local authority by the Department provided the accommodation is allocated to persons on the local authority waiting list. Rental income is used to defray the cost of management and maintenance and for the provision of a sinking fund to cater for more extensive refurbishment later in the lifetime of a project.

Under the terms of the capital loan and subsidy scheme, the rent payable to an approved housing body by a tenant is based on household and subsidiary income in the previous tax year. There is no maximum on the rent payable on the principal household income. However, the contribution to the rent by each subsidiary earner is subject to a maximum of €25.39 per week.

Where a tenant of a capital loan and subsidy scheme project produces satisfactory evidence of a fall in income to an approved body and of the likelihood of such a fall being sustained for at least four weeks, the weekly rent may be adjusted to the level appropriate to the reduced rate of income for the full duration of the reduction in income. However, approved bodies will, at their discretion, have flexibility to modify the application of the rent scheme in particular respects where they consider it appropriate, subject to an overall rent yield being not less than what would be payable under the existing rents scheme. The rental income will no longer be a factor in devising the net subsidy payable. Under the CLSS, in addition to rental income, a voluntary housing body also qualifies for additional subsidy for management and maintenance of the housing stock. Voluntary housing bodies are, therefore, well resourced to put in place a management system to ensure a high standard of upkeep of estates under their control.

In practice, voluntary bodies manage their estates to very high standards. This is achieved by requiring all tenants to take part in a pre-tenancy training course and involves hands-on involvement by tenants in the management of their accommodation. Ongoing maintenance is provided by the relevant voluntary body.

The CLSS scheme was introduced in 1991. It was considered that the sale of individual housing units could undermine the capacity and resources of voluntary housing bodies to manage and maintain their estates and continue to provide further housing projects to meet pressing needs. Therefore, to date there has been no provision under the Department's voluntary housing schemes for the purchase of individual houses by tenants. However, residents of more than one year's duration of houses provided under the scheme who wish to become owner-occupiers may, on surrendering their house to the approved voluntary housing body, qualify for various benefits, including a special mortgage allowance of €11,450 over five years for mortgages created on or after 1 January 2002 to assist with mortgage repayments; the shared ownership scheme; improvement works in lieu scheme in respect of the dwelling they are acquiring; low cost housing sites scheme; and exemption from the income limits for local authority loans.

To have maximum impact and reflect a 21st century approach for our fast changing society, the Department published a policy framework document late last year, Housing Policy Framework — Building Sustainable Communities. In that document, it is proposed that consideration would be given, in consultation with the voluntary and co-operative sector, to a pilot tenant purchase scheme for some new voluntary homes under the scheme.

As well as expanding the investment programme, the Government will implement a programme of reforms aimed at improving service and ensuring that social housing is delivered in a way that is fair and efficient. The reforms, including the bringing forward of the necessary legislation, will involve implementation of a fair rents policy across all social housing tenures.