Jan O'Sullivan (Limerick City, Labour)

This led to the point at which the super-heated market went into meltdown so spectacularly. The differential between borrowing and rental costs was too narrow and led to the "dead money" syndrome that nurtured the desire to acquire.

In order to recalibrate this ownership culture, it is essential to ensure that a fully functional, properly regulated and vibrant rental sector is introduced. The establishment of the Private Residential Tenancies Board, PRTB, was the first step in ensuring that security of tenure was safeguarded and appropriate accommodation standards were maintained. It is essential to strengthen further the remit of the PRTB by bringing the voluntary and co-operative sector under its influence and by protecting the rights of both tenant and landlord alike. A cultural shift away from ownership to a greater reliance on the private rental sector will only take place if a market is created that is transparent, equitable and affordable.

The programme for Government commits the Government to addressing the issue of deposit retention and the Bill will introduce a system of fines for unjustified retention by landlords. While the introduction of automatic penalties will seriously reduce the incidence of deposit retention difficulties, a more substantial deposit retention scheme might also be necessary. The programme for Government has made a commitment in this regard and I already have indicated to the Government that I intend to return to it with my recommendations on this topic in 2012, pending research by the PRTB.

The economic crisis has resulted in increasing strains being applied to the social housing area. The Government finds itself with escalating housing lists as more people find themselves in financial distress. The challenges facing the Government are immense and when coupled with the need to curb State spending, have confronted it with a major task. Local authorities traditionally have provided social housing by means of build or acquisition. Such capital-intensive programmes will not be possible in the future, certainly to the extent they have been in the past, and the shift to more flexible and immediate solutions will play an increasingly important role. In the past number of years the leasing and rental accommodation schemes have contributed considerably to servicing an ever demanding sector. The widened deployment of these tools in the coming years will allow for housing provision in a more direct, cost-efficient and speedy manner, while simultaneously absorbing the current overhang in the housing sector.

Transferring responsibility for long-term rent supplement recipients to local government will, together with the move towards greater tenure neutrality, be seen as the most significant and radical of the reforms contained in our policy statement. The programme for Government commits the Administration to reviewing the operation of the rent supplement scheme and to better aligning rent supplement and social housing support via an interagency working group. Originally intended as short-term income support for households, rent supplement became a long-term housing mechanism. This resulted in employment traps, weak regulation of the supported private rented market and a fragmentation of social housing services. The new policy direction will see the transfer of responsibility for rent supplement households with a long-term housing need to local authorities. Rent supplement will continue to be paid as a short-term income support, as originally intended. My colleague, the Minister for Social Protection, Deputy Burton, and I brought a joint memorandum on this issue to the Cabinet yesterday. We intend to begin to introduce the scheme from the beginning of January 2013. In the meantime, we have quite a lot of work to do regarding the mechanism of transferring rent supplement to the local authorities. For those households in need, the proposed arrangements would provide a new form of social housing support while renting in the private market. The details of the new scheme are being worked out at present and the objectives will be to encourage recipients to take up full-time work, to facilitate better regulation of the private rented sector and to provide a more integrated service for households seeking State support to meet housing costs.

Future social housing provision will see a greater reliance on the voluntary and co-operative sector. Already these bodies have built up considerable expertise and credibility and demonstrated an ability to manage housing in a cost-efficient and effective manner. The move from a capital-funded model to revenue-based tools will enhance their ability to service this sector. A robust regulatory framework will be necessary for the expanded role of these bodies, using a collaborative approach between the sector and my Department to deliver a clearly defined set of standards which will ensure the orderly evolution of this sector. The interim voluntary code of conduct will provide transparency in assessing the credibility of individual bodies from many aspects, including funding. I have met representatives of a number of the housing associations to discuss such issues.

Allowing the voluntary and co-operative sector access to finance, both from commercial institutions and from the Housing Finance Agency, will allow them to become more pivotal providers in the social housing sphere. This will allow them to capitalise on the current overhang in the construction sector, acquiring units at a premium while contributing to absorption of the surplus. Last year we saw the initial acquisition of property by Cluid from NAMA, and I anticipate more, allowing it to mine the social dividend of the housing surplus while allowing NAMA to fulfil its commercial objectives. These new ventures also induce the development of mixed tenure communities, with a blend of social allocations and private disposals. The eventual sales to social tenants under various purchase schemes, in time, might allow for further pathways to ownership.

The Government is acutely conscious of mortgage arrears problems. Where any borrower is experiencing distress, they should engage with the lender to seek to achieve an agreed solution. The services of the money advice and budgeting service is available to such borrowers and support is available through the supplementary welfare allowance scheme. Provisions regarding lending by local authorities for the purposes of house purchase are set out in section 11 of the Housing (Miscellaneous Provisions) Act 1992. Where a loan stands in default, section 11(10) provides that a local authority may make such monetary arrangements with a borrower as it considers equitable to take account of the particular circumstances of the borrower.

In addition, my Department issued comprehensive guidance in 2010 to local authorities on the treatment of mortgage arrears, including loans for shared ownership transactions, closely based on the Central Bank's first statutory code of conduct on mortgage arrears, which ensures local authority mortgage arrears are handled sympathetically while also protecting the position of the local authority concerned. To reflect the content of the Central Bank's revised code of conduct, effective from 1 January 2011, my Department is currently preparing updated guidance to local authorities in consultation with the County and City Managers Association, and publication of this manual is imminent.

The well-documented and grave problems in the commercial sector prompted the setting up of the interdepartmental group on mortgage arrears. One of the key recommendations was the establishment of two mortgage-to-rent schemes, wherein distressed borrowers undertook to surrender their homes to the lending institution and thereafter lease them back from either the bank or a voluntary housing body who would purchase the property. Officials from my Department and the other stakeholders have devised and recently initiated pilot projects in this regard. Once we have assessed the efficacy and scope of these schemes we hope they will be rolled out more extensively. This relates to the specific measure our Department is delivering arising from the Keane report, but there is more cross-government action in this regard, particularly with action from the Departments of Justice and Equality and Finance on distressed mortgages in general.

When this Administration came to power, we were acutely aware of the problems presented by the plethora of unfinished estates nationally. We resolved to tackle the issues head on and to put the residents of these developments at the heart of all of our actions. On the recommendation of the advisory group on unfinished housing developments, we immediately set up the national co-ordination committee on unfinished estates to drive the proposed resolution agenda. By including representatives from the local authorities, Irish Banking Federation, construction industry, NAMA, the Housing and Sustainable Communities Agency and the residents, we harnessed the goodwill, expertise and commitment of these entities to the job in hand.

The national co-ordination committee produced a code of practice for stakeholders, which defined the rights, responsibilities and interrelationships of the key parties involved. It also devised a guide for residents living in unfinished housing developments which outlined the possible steps to empower themselves and take a central role in pushing the resolution agenda. Perhaps the most pressing concern for us as an Administration was the public safety aspects of unfinished developments where the responsible party could not be held accountable in the short term. We made €5 million available to local authorities to assess and make safe those elements which posed a safety hazard to members of the public. To date, we have identified 166 such estates and have expended €1.48 million on this programme. We expect to pay out an additional €2 million for works which are currently being completed in this regard.

As evidence of my ongoing commitment, I have also set up a legislative review group to explore existing legislation and identify areas where it may need to be amended or strengthened. Additionally, we are developing and deploying a standardised site resolution plan to identify the necessary remedial works in problem estates. I am sure Senators are well aware of the problems of unfinished estates in the country and we must ensure we continue to respond to those problems and have proper site resolution plans to address the problems.

In the midst of a period of extreme turbulence and working within the financial constraints placed upon us, my officials and I have applied our best efforts to ensure the maximum possible outcomes are achieved for the least possible expenditure. That is what we must do across the board in these times. We will continue to devise imaginative and effective policies as we face unparalleled challenges. The indomitable spirit of our people historically responds well under these pressures and, in the same spirit of resilience, I have had to review housing policies and react to the changing landscape which our straitened circumstances have imposed upon us. We are not the fount of all wisdom and I welcome any suggestions Senators have on how to address the problems we face as a nation, especially in the housing area.