Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

I thank the Senator for raising this issue. As a representative of the north inner city, she has first-hand experience. She probably does not have to walk too far from her own front door to see areas that might benefit from what she proposes. I appreciate and understand that she has first-hand knowledge because she was a representative at local level. She mentioned Dublin City Council. She has a lot of knowledge and experience of this area and that is why she is saying that the existing scheme, while good, is very narrow and restrictive and needs to be broadened.

I will first refer to the existing scheme and then revert to the Senator on the idea of an alternative. It might not fall within the remit of the Department of Finance because we deal only with tax. A grant system would be a different issue. The Senator's point has been made in many areas.

The Living City Initiative is a very specific tax incentive that has been cleared by the Department of Finance. It is so specific that it is not a suitable vehicle for broader application beyond its original goal. When it was being established, the local authorities were asked to exclude areas where there was no dereliction. The idea was really to develop older buildings in city centre areas with quite a bit of dereliction and where occupancy rates were very low, both commercially and residentially. Both homeowners and renters are eligible. The scheme covers specific areas in Dublin, Cork, Limerick, Galway, Waterford and Kilkenny. It was introduced in 2015 and reviewed in 2016. There were amendments to the Finance Act to account for some of the issues that arose.

The special regeneration areas for the Living City initiative were designated following consultation with the relevant city councils and an independent review by a third-party adviser before being submitted to the Department. Specific criteria were required to be taken into account by the relevant city councils when putting forward the proposed special regeneration areas for each city. It is important to state the initiative mainly covered dwellings built before 1915, or over 100 years old. These are the types of properties we are talking about.

The scheme offers relief from income or corporation tax for qualifying expenditure incurred on the refurbishment or conversion of qualifying buildings located within the special regeneration areas designated by the local authorities in the cities I have mentioned. There are three types of reliefs: owner-occupier relief; rented residential relief; and commercial relief. The rented residential and commercial elements provide for tax relief over a seven-year period. A person living in a property can get tax relief over a ten-year period. The maximum relief that a taxpayer can obtain through the scheme is €200,000, which is quite substantial. The scheme is still open for applications. It is one way of addressing the issue. The use of grants probably comprises a broader approach.A grant scheme through the Department of Housing, Local Government and Heritage might be a better proposal because most owners of a derelict building need cash flow to do the renovation. They cannot be asked to wait for seven years to get the cost back in tax relief, and they might not have a big taxable income to start with. The idea is that when they have the work done they can be sure of getting a grant. They can go to the bank with their letter of grant approval before the works begin and the banks know that when the works are completed there is a grant on its way. That does help the cash flow. Anybody who has spoken to me about this issue highlighted the need for a grant to get the job done rather than being told they have to finance the work themselves and claim tax back over the following seven years. There is a big issue in that regard. This is the kernel of the scheme. The Senator had mentioned that a grant scheme might be more effective than a tax incentive scheme or could complement the existing scheme, which remains open. In my second reply I will give some financial information as to the cost of the scheme to date.