Noel Ahern (Dublin North West, Fianna Fail)
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I am pleased to have the opportunity to address the Seanad to outline recent developments in housing policy and to update Senators on the positive effect of our policies. We all would agree that housing is a vital element in our national infrastructure and access to good housing is essential to our continued economic success. This is why housing has been high on the Government's agenda since we took office nine years ago. It was clear then that demand was outstripping supply, with just 38,000 housing units completed in 1997. Action obviously needed to be taken and nobody can argue that we have not delivered results.

In the intervening period 500,000 homes have been built. Indeed, it is staggering to think that three out of every ten homes in the country have been built in the period since the Government came into office nine years ago. It reflects the priority the Government has accorded to ensuring the necessary procedures, systems, planning and resources are all in place to meet the needs of our people.

At this stage, it is likely that the number of new house completions this year will exceed all previous records. I mentioned that in 1997 total housing output was 38,000. Earlier, in 1991-92, output was approximately 22,000 houses. Output, therefore, has increased from 22,000 houses in the early 1990s, to 38,000 houses in 1997, and has increased every year since. It was 81,000 last year and it looks clear at this stage that there will be a new record this year. In fact, we have the figures today for the first eight months of this year and I will be formally releasing these to the media later in the day.

Maurice Cummins (Fine Gael)
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The Minister of State might as well do it now in this House and not mind the media.

Rory Kiely (Fianna Fail)
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The Minister of State, without interruption.

Noel Ahern (Dublin North West, Fianna Fail)
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That is what I am doing. I will be formally doing it later in the day. What it shows is that in the first eight months of this year 58,600 housing units — houses and apartments — were completed, an increase of 23% on the corresponding period for last year. If we hit 80,000 units last year, we are confident of being ahead of that figure this year. We should hit 90,000 units anyway. The detailed figures I can provide later give a breakdown by each local authority area or county. The ten-year target of 500,000 new houses, which was set by the current national development plan and was to be achieved by 2010, will effectively have been delivered by the end of 2006, four years ahead of schedule.

Increased supply has improved affordability, although perhaps not to the extent that we would like. In 1997-98, annual house price inflation was at 40%. Since then it has steadied somewhat from those dizzy heights, but I appreciate that we have seen impacts of increased demand in the past year due to growth in population, growth in employment and overly aggressive marketing by some financial institutions, particularly in the case of 100% mortgages and interest-only mortgages. Having steadily, over five or six years, brought the annual rate of increase down to single figures, there is no doubt that products such as 100% mortgages have been at least partly responsible for the new burst of the increase over the past 15 or 16 months.

The figures last month showed that the rate of increase was slowing down a little but it is still 1% a month, which is 12% a year. Currently, it is running at 12% to 14% a year, well above the rate of inflation, which is 4.5%. While we have made some progress on price increases, I am not happy that we have reached a proper level yet.

Increased supply has also improved access to housing by first-time buyers. The number of first-time buyers in recent years has probably been higher than ever before. It is estimated that 45% of mortgages for new house purchases last year were taken out by first-time buyers. The percentage might be slightly lower if one were to look at second-hand houses because more first-time buyers have traditionally gone for new houses than for second-hand houses. As supply measures increasingly have effect and the market hopefully calms somewhat with interest rate increases and, I would add, responsible lending and more sanity in the mortgage lending area, we will resume the path towards house price moderation and stability in the market.

We have not relied exclusively on the market. We have taken a wide range of steps to address issues of affordability, particularly in the Dublin area where price pressures are most acute. In particular, the affordable homes partnership, which we established last year, will bring an important additional focus to bear on co-ordinating and adding impetus to the delivery of affordable housing in and around the capital. There are four local authorities in the Dublin area. A little co-ordination and co-operation between them was necessary and that is the main area of responsibility of the affordable homes partnership. We are awaiting the outcome of the partnership's call for extra land, applications for which they are currently processing.

In addition, we have made available a wide range of State and local authority lands for affordable housing and we have adopted innovative ways of bringing these into use — none more so than the land exchange mechanism. To date, we have exchanged three pieces of State property totalling less than two acres, in return for which we have received more than 500 discounted affordable homes. The speed of delivery has been also impressive. The deal for phase 2 at Harcourt Terrace was wrapped up only a few weeks ago but many of the houses are available. An advertisement for 200 houses in Clondalkin, Tallaght and Lucan was placed in newspapers last weekend while the advertisement regarding the 90 houses we received in exchanged for Broc House in Donnybrook will be placed in newspapers over the next few days.

The Part V mechanism is also crucially important in contributing to increased social and affordable housing output and I am determined to ensure that it reaches its full potential in this regard. Let us be clear on what is that potential. Part V only applies to larger housing developments on zoned residential land, which is important, and sight must not be lost of other important societal gains resulting from improved social integration. Opposition Members and media commentators, in particular, deliberately misinterpret Part V, which provides for up to 20% of a development to be set aside for social and affordable housing, depending on what is outlined in the local authority's housing strategy. However, Part V does not apply to one-off housing, developments of fewer than five units or developments on land that has not been zoned. It is primarily concerned with housing estates in large urban areas on zoned land. As more land is zoned near large cities and towns, the dividend from Part V will improve.

Part V output is gathering momentum, with almost 1,400 homes delivered last year. Up to the end of June, almost 2,800 homes had been delivered, which is significant for the families that have moved into them. Annual output is expected to increase over the coming years, particularly as the old planning permissions expire. When planning permission is granted for an estate or a house extension, the applicant has five years to avail of it. Many of the houses on sale, therefore, were built courtesy of planning permissions granted prior to the introduction of Part V. As these expire, the output under Part V will be greater. More than 3,800 homes were under construction under Part V at the end of June and deals were being negotiated for a further 4,100 homes.

The dividend from Part V will increase considerably over the next few years. Local authorities also received land under Part V because developers have the option of handing over land rather than completing units in accordance with the legislation. A further 1,000 homes will be provided on this land.

We cannot content ourselves with simply focusing on increasing supply because there is more to housing than the building of units. People want to live in quality homes, feel they are part of a wider community and have access to facilities relevant to their needs. These are among the principles underlying our housing policy framework, Building Sustainable Communities, which was published last December. The framework document outlines the key principles to underpin housing policy and investment over the coming years and it firmly places housing policy in the context of building sustainable communities. The focus is on integrated policies to ensure an effective private housing market, increased social housing provision and improved quality and management in the social housing sector and improved pathways to home ownership.

Our housing and planning policies must work in support of these objectives. The new social partnership agreement, Towards 2016, endorses the principles set out in the housing policy framework. The agreement commits the parties to working together on delivering important aspects of this agenda. A further policy statement is being developed, which will set out more detailed approaches to the issues outlined in the framework document.

The policy framework reflects our continued commitment to meeting the housing needs of the less well off. This commitment is amply demonstrated by the resources being invested in social and affordable housing measures. The total capital provision on social and affordable housing output in 2006, inclusive of non-Exchequer financing, amounts to €2 billion, which is more than double the expenditure in 2000. We have met the housing needs of 100,000 households through the full range of social and affordable housing schemes since 1997.

The Government has committed in the social partnership agreement to further additional investment in social housing with 27,000 new units to be started or acquired over the period 2007-09. It is envisaged these new units will be delivered through a combination of local authority social housing, voluntary and co-operative sector social housing and long-term contracts for new supply under the rental accommodation scheme, RAS. Further households will benefit from the full implementation of the RAS involving contractual arrangements with landlords for existing properties transferring from rent supplement. In addition, we are committed to delivering some 17,000 affordable units over the period 2000 to 2009. The needs of 60,000 new households will be met through social and affordable housing measures over the next three years.

Alongside the substantial increase in the provision of social housing, there is the equally important issue of ensuring this investment brings about an improvement in the quality of life of tenants and local communities. To this end, we will bring forward a programme of reforms to improve the effectiveness of local authorities in delivering housing services. Elements of the proposed reforms will require new legislation and, therefore, a housing (miscellaneous provisions) Bill is being prepared in my Department. Hopefully it will be introduced in the coming months.

A further important component of the new housing policy framework is the emphasis on quality. It is not acceptable that social housing should be compared unfavourably with private housing development. There should be a high ambition for social housing, and, therefore, we are committed to delivering high quality social housing in mixed community settings. The design and quality of social housing is much better than that which pertained between the 1960s and the 1980s. At the time, mass production was the norm and large local authority housing estates were built. Significant anti-social problems are being experienced on them nowadays because they are too large and they are not well designed.

Of the €2 billion being invested in local authority social and affordable housing this year, approximately €250 million is being spent on regeneration schemes and remedial works to correct many of the mistakes made in the past when we went for quantity rather than quality. We will not repeat that mistake. Modern housing is of a good quality and more attention is paid to design and potential anti-social behaviour problems. It is not a perfect world and planners cannot eradicate such behaviour but the design of housing estates is important and more attention is paid to that than previously.

Our concern is with the planning and design of new housing, the prioritisation of management and maintenance of estates and an intensification of efforts to rejuvenate much existing social housing. This will build on the almost €1 billion invested in regeneration and remedial works since 1997 and will include completing the installation of central heating in all our existing local authority housing under the highly successful capital investment programme introduced by the Government two years ago. It was estimated at the time that more than 40,000 local authority houses did not have central heating.

The take-up of the scheme, which is 80% funded by the Department, has been very successful. Local authorities have taken to the scheme strongly and over the past two years, a great deal of good work has been done under it. Hopefully, within a few years, all local authority houses will have central heating. The achievements I have outlined, the level of future investment in social and affordable housing measures and the policy reforms now under way all serve to underline our commitment to meeting a broad range of housing needs. We are not simply addressing the specific needs of one group or sector. Housing is for all of the people and the Government is delivering across the broad spectrum of housing need. This is the bottom line. We have the capacity, commitment, vision and resources to continue to meet housing needs.

That is a broad summary of the measures we are taking with regard to delivery and policy. I look forward to the comments of Members.

Maurice Cummins (Fine Gael)
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I welcome the Minister of State to the House and welcome this debate on housing. There is a strong definable connection between housing policy and other areas of social policy. Studies have shown the connection between poor housing and ill-health and the link between housing and employment can be seen in both the difficulties of holding down employment while homeless and sustaining accommodation while unemployed. Strong links can be traced between housing and the availability of and access to social services. Inadequate housing can affect educational prospects and lead older people to an early entry to institutional care. In other words, suitable and sustainable housing provision is one of the most important issues entrusted to any Government and the current Fianna Fáil-Progressive Democrats Government has failed abysmally in its duty to provide affordable and sustainable housing across the sectors, leaving a legacy of poor planning and totally inadequate provision.

The Minister of State told the House that housing was high on the Government's agenda. I suggest he tells this to the thousands left on local authority housing lists for as long as this Government has been in office, which is more than nine years. They do not consider that the Government places them high on its agenda. No matter what the Minister tells us here today, the facts speak for themselves. A foot on the housing ladder for first-time buyers is a step too far for most. In a report published last month by Halifax, the plight of key public workers, including gardaí, teachers and nurses, is highlighted, showing that they are being priced out of the market in four of the five major cities in the country — Waterford, Cork, Galway and Dublin.

The Government is cashing in at the expense of young home seekers, rubbing salt into the already open wound by taking up to 50% of the excessive cost of a first home in stamp duty, VAT, development charges and other charges. What concessions the Minister has made in terms of stamp duty is the part adoption of a Fine Gael idea which we included in our party policy. However, the €317,500 threshold it adopted is €90,000 lower than the average price of a house for a first-time buyer in Dublin. Will the Minister of State commit to easing the burden for first-time buyers by abolishing stamp duty entirely, particularly in light of the Tánaiste's strongly held conviction that the Government no longer wants the €2 billion it raises annually from stamp duty?

The Minister of State, Deputy Noel Ahern, stated recently in the Dáil and again in this debate that first-time buyers are the key buyers in the market and that 45% of mortgages taken out last year were taken by this sector, which, according to him, is a vindication of Government policy. What he did not mention is that, while first-time buyers may be forced to buy at inflated prices, this is done at a huge cost in terms of adverse effects on their quality of life for many years to come, as most of their resources must go towards putting a roof over their heads.

The Minister of State is aware that according to the recent census, despite the rising numbers of non-nationals, the population of Dublin increased by only 2% between 2002 and 2006. However, that of neighbouring areas increased dramatically, with Fingal showing a 22% increase, County Meath a 21% increase and County Kildare a 14% increase. This highlights the distances first-time buyers are forced to travel to their city of origin and work if they wish to purchase a house at a reasonable price, which puts a heavy strain on transport links and infrastructure.

The global house price boom of the past decade has been fired by a number of factors, one of which is the artificial restriction on the supply of land. New houses being built in Ireland are among the smallest in the developed world despite there being no shortage of land. While design and space issues have improved, these aspects contrast adversely with countries such as France, where the majority of new houses are of larger dimensions. With the economic boom leading to an increase in those trading up from smaller units, there consequently has been a surge in the price of large second-hand houses.

First-time buyers who are unable to get on the property ladder with a conventional mortgage must take out a 100% loan and then cling on at the very bottom of the ladder. In the event of a fall-off in house prices, they could well find themselves facing substantial negative equity, perhaps up to 20% of the value of the property. Given five interest rate increases since last December, the majority of first-time buyers are already in trouble. The average working couple is being forced to spend an extra €257 a month on mortgage repayments, with the increases eating into the income of these buyers. The Economist highlights the existence of a large bubble in the Irish market. For now, the property bubble shows no sign of bursting but the existing fundamentals suggest this cannot continue much longer, and any change will have a disastrous impact on the Irish economy.

The biggest problem facing young people today is the complete and utter failure of the Government to get to grips with the housing crisis. Its laissez-faire approach to rocketing house prices has sickened those held to ransom by the knock-on effects of its right-wing policies. Only 903 social housing units — 719 local authority units and 184 voluntary and co-operative units — were built in the first quarter of 2006 according to the housing statistics bulletin. Despite this, the Government's response to the housing crisis has been the abolition of the first-time buyer's grant, a failure to meet commitments on social housing in the national development plan, increased VAT rates on houses and development levies that will increase the cost of houses by an average of €10,000.

As a result of the increasing price of housing for first-time buyers, more and more young people are forced to live with their parents until they are in their mid-30s. According to the 2002 census, there are now on average 43,000 people over the age of 30 who live at home. No matter what way the Government spins, there are indisputably in excess of 43,000 families on local authority waiting lists. This figure is considered by many housing agencies as a gross under-estimation according to the Department of the Environment, Heritage and Local Government housing needs assessment.

A mere 707 units were provided under the various affordable housing schemes in the last three months of 2006. Only 3,723 social housing units were built in the 12 months to September 2005, despite the estimate by the National Economic and Social Council, NESC, that 10,000 units are needed annually. These are the facts and figures which no spin will hide. A mere 1,512 voluntary housing units were completed in the 12 months to September 2005, negating the promise in the 2002 programme for Government which states, "We will assist the voluntary housing sector so that the target of 4,000 accommodation units per annum envisaged under the National Development Plan can be reached." This is another false Government promise which is shattering the dreams of many young couples trying to get their first step on the housing ladder.

As we near the end of the reign of incompetence of the current Government, affordable housing is virtually non-existent. Some 100,000 individuals are still waiting for local authority houses and the voluntary sector is underdeveloped. There are still enough homeless people to fill the Point Depot — up to 5,000 people are without a home. Manifesto promises of more houses and a reduction of waiting lists are now a distant memory.

In the area of social housing the most neglected are men in their 40s or 50s who, owing to separation or other circumstances, find themselves out of the family home and in urgent need of accommodation. These men are in a catch-22 situation. They want to keep in touch with their children but without suitable housing cannot have them for weekend or holiday stays. The Government should give priority to the provision of small units to house these and other single people for whom the prospect of receiving a local authority house is bleak, despite their circumstances.

Shockingly there are 492 homeless children in Ireland. The majority of them are in their mid-to-late teens but, shamefully, some 22 homeless children are under the age of 12 according to figures compiled by the Health Service Executive and the Department of Health and Children. The highest number of homeless children was recorded in urban areas such as Dublin with 210, followed by the south with 132, the west with 46 and the mid-west with 43. The lowest level was in the north west where five children were homeless.

The Government's social and affordable housing strategy is nothing more than an indictment of its years in office. The lack of clear guidelines has led to difficulties in implementing legislation. Planning permissions are being granted without the number of social and affordable houses to be constructed being definitively outlined. When local authorities seek to enforce the provision of these units, they are often told that including them would be in breach of planning laws.

Some developers are using bullying tactics to avoid handing over 20% of houses in new estates for the accommodation of people on low-incomes. Some local authorities are not building social and affordable housing units, despite having the money to do so. The lack of clear guidelines on how Part V of the Planning and Development Act is implemented means that some developers are operating on a piecemeal basis and are avoiding their obligations. That is a fact and the Minister of State knows it as well as anybody else.

With houses at the top end of the market fetching figures beyond imagination, while in contrast mere infants being forced to live on the streets, it is easy to see where the current Government's priorities lie. The wealthy continue to prosper while the vulnerable and less well-off struggle to access housing, which is one of the most basic human needs. The provision of adequate housing involves a number of complex issues, including access, appropriateness, quality, environment, supply, affordability, choice of tenure and sustainability. For some, however, it is merely a dream which founders on broken Government promises and inaction.

Cyprian Brady (Fianna Fail)
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I welcome the Minister of State to the House. I also welcome the opportunity to debate the housing issue again. We had such a debate some time ago during which I pointed out that our accommodation culture in Ireland over many generations has been one of home ownership. That is changing, however. The days of a young couple starting off and saving for a few years with the ultimate aim of leaving their parents and buying their own home are changing. We are increasingly moving towards what is seen as a European model of accommodation. For many years, long-term leasing, lettings and rentals have been the norm in countries such as France, Germany and Holland. We are slow to change here, however, and while that culture is changing it will not happen overnight. It will take a long time for such a change to take place.

As the Minister of State has pointed out, we are trying to keep pace with dramatic changes in demand for housing, which have taken place in a relatively short space of time. According to all the forecasts, this phenomenal growth will continue. This year alone, we could reach 90,000 new housing units. There has been a year-on-year increase in housing of up to 10% for the past few years and that trend is set to continue. The value of 90,000 new housing units to the economy will be €31.5 billion or approximately 23% of our gross national product. That is a huge figure.

Some 264,300 people are employed in the construction industry, which is a massive chunk of employment. Anything we can do to sustain that can only help. While all the forecasts are that this growth is set to continue, it does bring problems. Nobody is saying we do not have such issues to face. This Government and its predecessor accepted at an early stage that the key to the issue is supply. The Government has taken a number of successful measures in recent years to tackle the issue of supply.

The previous speaker referred to the recent census. From April 2005 to April 2006, our population increased by 104,100. To counter that we have produced up to 90,000 jobs to cater for these people. As has been pointed out, the population growth is accounted for by a mixture of inward migration and other factors. We have taken measures to cope with that situation but it still represents a phenomenal number of people in a relatively short space of time. Any measures we take will need time to come into effect. A number of programmes and schemes to which the Minister of State referred, such as Part V of the Planning and Development Act, will take time to come into effect but we are seeing those effects now. The figures speak for themselves.

People's incomes are rising and young people currently earn much more than they used to. Their expectations are also rising and, therefore, the days are gone when a couple might put a deposit on a house and save up to buy furniture. In the past, they may have had very little when moving into a house but today their expectations are different. Young people expect to move into a fully furnished house or apartment. If they have young children they expect to have crèche facilities and access to education. We have to cater for those requirements but it will take time to implement that process.

A number of measures have been suggested to deal with the stamp duty issue, particularly for first-time buyers. Changes in stamp duty have helped to slow the market but supply is the key issue. Any measures the Government can take should be targeted at that area. A number of changes have taken place, including the affordable housing schemes which have been mentioned.

In my constituency of Dublin Central, affordable housing schemes and particularly Part V of the Planning and Development Act, which includes social housing, have proven to be extremely effective in dealing with what had been a neglected area for years. Dublin's inner city has been transformed beyond all recognition in the past ten years. One only has to drive down the north or south quays to see the changes that have occurred. Coupled with those changes, there has been an increase in employment, investment and an improvement in educational facilities, which is leading towards a very sustainable community in that part of the city. There are still social issues that must be dealt with but dramatic changes have taken place in that area in past ten years. These changes are the result of policies which enabled and encouraged people to invest in the area coupled with the State agencies developing the infrastructure, encouraging more people to move into the area and investing in this community.

I recall in the late 1980s when I bought my first house, in which I still reside, the affordability of a mortgage relatively speaking was probably more or less the same as it is now for first-time buyers. At that time interest rates ranged from 15% to 17% and incomes were much lower than they are today. Therefore, in terms of percentages, the relative affordability of taking out a mortgage in the late 1980s early 1990s could not be far from what it is today.

Expectations rise in tandem with incomes. People are no longer happy with a basic house with four rooms and no other facilities. They want more. That is understandable and something for which we must cater. From that point of view, we are victims of our own success which has been achieved on foot of the policies adopted by the Government over the past ten years. This economy did not improve by accident or as a result of external factors. Decisions were taken in the early 1990s to tackle the major deficit in proper housing facilities, especially local authority housing, the quality of which suffered a major decline under successive Governments.

As the Minister of State mentioned, we made mistakes in the past. I recall going to Cherry Orchard in the early 1990s when there was no public telephone box, shop or other facilities but there were thousands of houses. When I went there in 1991 or 1992, the first public telephone box had been provided. The policy decisions taken by local authorities and central government at that time would now be viewed as mistakes. We have gone a long way towards rectifying those mistakes by investing in local authority areas. I have seen the improvements in the quality of local authority housing in the past ten years. Gone are the days of the flat complexes with boxes built upon boxes. We now have state-of-art quality housing. Some of the best quality housing in Dublin city is in the Dublin City Council area. There are a number of duplex developments throughout the city which are highly prized.

Another aspect of our being victims of our own success is that tenants can no longer afford to offer to buy the houses they rent from the city council because the price of them is too high. This is another issue that must be tackled, possibly at local authority level. Dublin City Council is examining this issue and has set up a review group on it. When investment and resources are put into an area, they can make a major difference.

Planning issues are a factor in the supply of housing. Land banks and serviced land were referred to. We have taken huge steps towards increasing the supply of serviced land. The Minister of State mentioned the recent announcement regarding a 0.2 acre site at Harcourt Terrace. While that site would have accommodated only 30 units, with the exchange of that site some 195 homes were built in Tallaght, Lucan and Clondalkin and 195 families have been housed. Other sites are coming on stream. The Department is considering the development of serviced sites throughout the country in various local authority areas which are under-utilised. These could be used to address housing needs.

The main issue raised with me in my advice centres is housing, particularly social and affordable housing. Major strides have been made in such provision. We can continue to streamline the system and make it easier for people to apply for such housing. The majority of these developments will come on stream over the next 18 months and this will have a major impact in Dublin, especially on the north side. I congratulate the Minister of State on the policies being pursued and hope they continue to be pursued.

Joe O'Toole (Independent)
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I welcome the Minister of State to the House. This does not reflect on the current Minister of State or the Government but when one hears Government speeches about the number of houses it has been responsible for building, one has an image of members of Cabinet opening up foundations, pouring in concrete and laying a few blocks. Given that Government is blamed when houses are not built under its watch, it is entitled to take whatever credit is going for having had them built during its watch. I will pass on any criticism on that aspect.

I bounded up to House for this debate because I was curious about the Minister of State's follow-up to his comments in mid-August and whether he would talk to the Minister for Finance to sort out these greedy builders who were charging too much and shoving up the price of houses. I carefully noted at the time that the Minister of State did not tell us the measures to be taken to do that and the matter was left hanging. We all wondered during our holidays if we would return to find that house prices were lower. I mentioned in the House afterwards that the Minister who would succeed in lowering the price of houses would be out of a job in ten days. The Minister of State seems to have dropped his commitment to put manners on the Department of Finance to reduce the price of houses. He might pick up on this point when he comes back to talk to us again.

There was an old saying in Dingle that it is grabbers who make land dear. The same principle applies today. As the Minister of State will recall, the Taoiseach has said on a number of occasions over the past four or five years, although not recently, that he believes, and I agree with him on this, that not more than a dozen people have tied up huge areas of potential development land around the greater Dublin area in particular but not only there. That is also my intuitive feeling and my anecdotal evidence concurs with that. However, the problem is we do not know how this is happening. I know that in north County Dublin where I live, often a developer has an option on a piece of land. Nobody knows that because the option is not registered.

A developer may approach a farmer who owns a few hundred acres. The developer has examined the county development plans and calculates there is a good chance the land may be rezoned next time around and he buys it on that basis. Large developers buy land that does not appear to be in line for rezoning for four or five times the price of agricultural land prices. They buy the land for €80,000 or €90,000 or even €100,000 an acre and bank it because they have nothing better to do with their money. Such land purchases are recorded somewhere. The developers will hold on to the land for a few years and if the land is not rezoned they can sell it or use it for some other development.

Another development that occurs regularly is developers approach landowners whose land may be rezoned at a future day and negotiate a first option to purchase it. They pay for that option. There is a handover of cash for the option to buy the land in the event of it becoming rezoned, and once rezoned the land would be valued at the top price. Both parties win, the person selling land and the developer who then has access to it.

All this is going on and it is building up throughout the country. What happens next is that they decide how much of that land to release at a certain time in the same way as auctioneers, until very recently, released houses as if they were letting them out of prison. They would announce the release of phase 2 in a month, then phase 3, while phase 4 was still at the negotiation stage.

That tells us everything. It is Freudian because the whole thing is kept away from the ordinary consumer or punter; there is not a fair, free market. I keep telling the so-called free marketeers in politics to look at the housing market. It is a perverted and corrupted market. Whatever reservations I have about the free market, and I have many, what is happening in housing is not a free market. Developers have corrupted the basic rule of economics to do with supply and demand. They have held back supply to keep it always running just below demand or barely at demand. There is a charge for houses, competition among buyers and, therefore, the prices go up.

An issue the Minister of State has not touched on, and perhaps he might do so when he gets around to having a chat with the Minister for Finance, is the question of stamp duty. The current Minister for Finance and the previous one always said they tried to protect the first-time buyer and I believe they made attempts to do so. There are many ways in which this could be done. In a long presentation to the previous Minister for Finance I suggested giving a tax break based on the type of house, for example, properties that would be of interest to first-time buyers rather than to developers. It would be possible to build on that. Tax breaks could also be given on the basis of geographical location.

It may be a bit unfair to mention this but the Minister of State may recall his partners in Government saying recently that the Government did not need the €3 billion collected in stamp duty and obviously that would be followed up by his giving it back to us in the budget. We would look forward to that in a strange way, but getting rid of stamp duty on property is a non-runner. Given that in the Minister of State's constituency there is much more second-hand housing for sale than speculative first-time buyer housing, would he agree that it would be a good idea to abolish stamp duty for first-time buyers of second-hand houses? It would not cost the Government a huge amount of money. It would be nothing like €3 billion.

All the time we see people struggling to buy a house and if the price is a penny above the limit for stamp duty they might have to find another €30,000. There is not even a sliding scale. I am sure the Minister of State would agree that something could be done, without the Government taking a huge hit on it, to give an advantage to the first-time buyer who is having to bid against speculators or investors. Let the investors carry the cost. They can simply add it into their costs and discount it against their profit at the end. It is the one issue I thought the Minister of State might have come back to us on after his speech during the summer. I thought he would tell people like me that he had put that proposal to the Minister for Finance.

The Minister of State will recall that during the debate in the House on the abolition of the first-time buyer's grant, while I opposed the measure, I did not like what was happening and agreed with the Minister of State that builders were trousering that money in one way or another. If we abolished stamp duty for first-time buyers of second-hand houses it would be altogether different. We would be giving the first-time buyer an advantage over the investor. That is something that has never been done before. It would be a consumer-friendly, family-friendly measure and would be seen as very supportive.

On the issue of house prices, I take little notice of statements to the effect that only 10% of houses are selling at auction. Perhaps a little sense is coming into the top end of the market. However, I have been looking carefully at the population figures. Our population is growing. It grew last year by more than 2%. Our birth rate is still quite high. We have the fastest population growth in Europe. As long as the economy is growing and there are people in the country they will be buying houses and will need houses for the foreseeable future in the medium term. Demand may not quite run at 80,000 plus houses per year but it will not be that far off it.

I nearly crashed my car when I heard the latest forecasts from one of the known economists in the last three or four days. The forecast was that there would be a 6.6% growth in the economy next year. If that is the case, there is no possibility of a collapse in house prices. If the population is growing and if the wealth of the nation is growing, there will be no collapse in house prices and people should know that. House prices may slow down and I hope they will. They may even settle and that would not be a bad thing. The Minister of State's job is to try to talk softly to the building industry and say that the greedy times are over, that there will be a settling down of the market and that people will be taking a good look at value and doing what many of us on both sides of the House have been telling them to do for many years and buying for value. If it is not what they are looking for, if it does not have the space they need, they will walk away. Given our economic growth and population growth, there cannot be a collapse in the housing market unless people are going to live in tents.

In the context of speculators, investors and buyers, in a market like ours approximately 20% of it will always be in the rental sector. It will not drop below that. If anything it might go slightly above if we follow European trends in the future. I am not suggesting that we should keep investors out of the market. Much work has been done over recent years to try to put manners on landlords. That is welcome where it works, but it does not work in all situations. House prices will not drop because population and economic growth are still on the up. There will still be a demand for a significant number of houses per year.

There is an issue regarding management companies for groups of houses, blocks of apartments and so on. The Minister of State spoke in the House previously on that subject. Management companies need to be legislated for in a much more basic way. They are only marginally covered by legislation. I have looked at what happens in other countries. In France there are local committees similar to the management companies here. However, small or large they are — they might represent five or ten houses or apartments, or 200 houses or apartments depending on the building arrangements in the locality — they have an input into the planning process.

If, for example, a person wants to build an extension to a house, he or she must get the permission of the local syndicate which is established by law and has an entitlement to give approval to certain kinds of things for which one does not need planning permission in Ireland but which nevertheless might deface a house or change the style of it. In Ireland people can add a conservatory at the back and if it does not exceed a certain size and it is to the back, they may not need planning permission. The local committees in France are a bit more than management companies in this country. They are established on a statutory basis. We should examine that idea.

There is one other matter I would like the Minister of State to raise with the Minister for Finance. This is something the building industry has pointed out many times. Of the whole cost, value and output of the housing industry, 40% of it returns to the Government in taxes. That is a huge amount. Some taxation measures should be taken to bring some relief to house buyers. I do not want to see measures that will put money back in builders' pockets, but I want to see measures — I have given one example — that will give an advantage to first-time or family buyers when trying to provide the ideal situation for their families.

The last time we spoke on this issue I raised the matter of the quality of speculative housing built in Dublin. Some builders still build with cavity blocks. That is disgraceful and should not be allowed. I told the Minister for the Environment, Heritage and Local Government, Deputy Roche, that such houses will never comply properly with the demands of insulation now required by Europe. The Government has welched on the new European directive on insulation that should have come into effect on 5 January this year. It has decided to postpone it for 18 months for no apparent reason. This is anti-consumer but nobody takes any great notice of it. I raised the matter in the House this time last year. It is appalling that since 1998, approximately 250,000 houses built in the Dublin area will not properly comply with the European regulations. It is also appalling that Dublin householders are being sold poorer quality houses than people outside the Dublin area. Nobody builds with cavity blocks outside of Dublin, but they are still used in Dublin.

Michael McCarthy (Labour)
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I welcome the Minister of State to the House. This is one of many debates we have had on housing in the past four years and each time we have debated the issue it has been more relevant and significant, with house prices becoming more expensive than on the previous occasion.

Before the summer the Minister of State gave a commitment with regard to staged payments. This issue is largely confined to the Cork region where developers negotiate staged payments with purchasers. Payments are made at wall plate level, at the roofing stage, when windows and doors are sealed, etc., and the mortgage is eventually drawn down over the period of construction. A Bill sponsored by one of the Independent Senators and Senators Coghlan and Ryan was introduced in the Seanad and the Minister of State gave a commitment then to examine the issue and prevent this practice, which only affects that pocket of the country. The practice is inherently wrong. People are cash-strapped and the arguments in favour of stopping the practice go without saying. The Minister of State was aware of the issue and I want to know what he has done about it since it was brought to his attention.

We have consistently been told by the Government that housing output has never been as high. Nobody disputes the figures, which are historically high over the past nine years, but we are faced with an affordability gap and the number of people who can afford to buy these houses is continually decreasing. When I hear the line about the historically high output I feel sick because the number of people being pushed further away from these houses increases on a weekly basis, all on account of affordability. Contrary to what the Minister of State said, supply has not improved the affordability issue. The situation has disimproved and become far more serious for the thousands of couples in the country who cannot afford to buy their own home.

I raised a matter on the Order of Business to do with home ownership and the cohabitation rule of the Department of Social and Family Affairs. In April this year, the Minister, Deputy Brennan, announced that he intended to abolish the rule in his overall approach to lone parents. A couple I know wanted to purchase their own house and avail of the rule. They provided their income details to the mortgage company, but it has refused to view the lone parent allowance as income because it fears the mother will lose the payment if the couple move into the house. This affects one aspect of affordability. Senator O'Rourke also raised this issue. It is one that may have slipped the radar but it should be taken on board by the Minister for Social and Family Affairs. It has prevented the couple I know from owning their own home. They must now try to obtain social or affordable housing, but there is a scarcity of these units in west Cork.

Noel Ahern (Dublin North West, Fianna Fail)
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What does the Senator recommend?

Michael McCarthy (Labour)
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I recommend that the Government build affordable houses for the thousands of people on our housing lists.

Noel Ahern (Dublin North West, Fianna Fail)
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Does he recommend lone parents should keep their lone parent allowance, even if they are not lone parents?

Michael McCarthy (Labour)
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We have a housing list in west Cork that increases weekly but nothing has been done about it.

Mary Henry (Independent)
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Senator McCarthy, without interruption please.

Michael McCarthy (Labour)
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Before the summer, the Daft.ie survey priced a three-bed semi in the Clonakilty region at €350,000, the most expensive town in Ireland in which to buy a home. I could show the Minister of State hundreds of couples and families in the area who cannot afford to buy their home at these prices and they face a shortage of social and affordable housing.

It seems nothing has changed since the Minister of State was here last. In December 2005 only 1,294 units had been completed under Part V out of a total output of 300,000 houses over a period of four years. That is not a record to be proud of. I would hang my head in shame if I was following Ministers into the Dáil lobby to support that kind of inactivity, inertia and neglect of the thousands of people in need.

Every time we debate this issue, housing has got more expensive. House prices are now 13.8% more expensive than they were this time last year. In the House in December 2002 we fought vehemently against the then Minister for the Environment, Heritage and Local Government, Deputy Cullen, but he decided to gift 70,000 planning permissions to developers. No Christmas stocking was ever before filled to the tune of 70,000 planning permissions. That was the stage at which the then Minister began to dismantle Part V of the Act.

Does the Minister of State think it was a good idea to abolish the first-time buyers' grant? Does the Government have any intention of reintroducing such a grant? The grant was abolished so soon after the election that it seems the Government hopes people will forget about it before its term of office expires. I have consistently reminded people coming to me with questions about the grant not to forget about it. It might not have been much money to some people, as the then Minister for Finance, Charlie McCreevy, said at the time. He was in Cheltenham the same week we debated the issue in the House. It might not be much to those in Cheltenham, but four years ago €3,000 was a significant sum to those who needed to put together a deposit to enable them get a mortgage for their home.

As if the abolition of the grant was not bad enough, the same Minister decided to increase development charges. These are attached to planning permissions when granted and they exist for good reason. However, there has been a significant increase in development charges. One-off rural houses in my area attract development charges of €4,000, €5,000 or €6,000. The larger the square footage, the higher the charge. I have repeatedly asked planning officials where the money collected in development charges has been spent. Has it been spent on footpaths, public lighting, a playground or a crèche?

I have seen no evidence of the money being spent, but I have seen people put to the pin of their collar to put together a mortgage to build a house. Before they ever bring in a machine to clear the site, the Government has cost them the first-time buyers' grant of €3,000 and they have had to pay out upwards of €3,000 or €4,000 in development charges, not far from a total of €10,000. Many of these are floating voters who voted for this Government, but they are now worse off to the tune of €10,000. That is not good enough.

It is the case that in the Clonakilty region stricter planning restrictions apply closer to the water and this information is contained in the development plans. I refer to a case of a couple who had agreed a price for a site and went through the planning process. The planners were not in favour of granting a permission for the particular part of the landholding. This occurred in the south-western area which is near the sea with panoramic and scenic views, so the price of land is expensive. The couple were refused permission for that part of the landholding. They could have used another part but the price would be prohibitive. Planning permission has been refused and they are now on a list for affordable and social housing in their region.

There seems to be a lack of joined-up thinking. Local government is the agent of the Department of the Environment, Heritage and Local Government in the area and they do not allow somebody to build a house on a site for a price they can afford to pay. This creates an increased demand on local affordable and social housing where there is already a shortage.

The State has gifted land outside Clonakilty. It is quite a good scheme and has been through the consultation period. Affordable housing units will be built there even though there was some resistance from people who should and do know better. I refer to an Adjournment matter on this subject raised in the other House recently. This scheme should be replicated all over the country. If it can be done here, it can be done in other areas. I just wish the timescale was not so long but this may be due to circumstances outside the control of those present.

Will the Minister of State allow tenants of small local authority units such as two-bedroomed and one-bedroomed units to avail of the tenant purchase scheme? I refer to a case in Dublin last spring where long-term tenants of local authority flats were allowed purchase them. I am not aware of a roll-out of this scheme to any other part of the country. Tenants of three-bedroomed and four-bedroomed houses are allowed purchase their units and I do not understand the difficulty posed by extending that right to avail of the tenant purchase scheme to a tenant in a smaller unit. I acknowledge there is an argument to be made for retaining some of those units for future applicants for social housing. However, I ask the Minister of State to consider treating like with like and giving those tenants the same right to purchase their unit as the person with the two or three-bedroomed unit.

The roll-out of affordable housing is progressing far too slowly. The Minister of State is aware of the geography of the area to which I refer. Areas such as Kinsale, Ballydehob, Schull and Clonakilty are areas where financial circumstances are more exceptionally difficult than in other parts of the region. People who cannot afford to buy houses in those areas regard the affordable housing initiative and the services site as the one bright hope. I have seen the difference this has made to couples and there is no reason it should not be happening at a quicker rate to allow people who have housing rights and need to buy their home at an affordable price.

I ask the Minister of State to address the question of tenants in smaller local authority units not being allowed buy their homes. The shared ownership scheme does not seem to be well publicised because I do not see enough end product from this scheme. The principle is novel and excellent but there is a very small take-up. I do not know if this is due to the price being paid.

I wish to bring to the attention of the Minister of State the county council scheme for improvement works in lieu of housing and the county council rural housing scheme. In one case, the county council intends to build a rural house for a family. The report on their current accommodation by a council engineer was carried out the day aeroplanes hit the twin towers. I need not remind the Minister of State of that date, which is more than five years ago. The same family have been moved out of the house and are in temporary accommodation and the local authority has still not expedited this project beyond sending plans and maps to the county architect's department. This is a disgrace. I do not blame the Minister of State but it is an issue of which he needs to be aware in the context of how local authorities operate. It is frustrating to write and receive a response stating the case is being investigated but it is not right in this day and age to allow somebody's housing needs to deteriorate to such an extent and not advance the case.

It should be a case of giving somebody living in a rural area the house they want to live in. There has not been any clear relaxation in the manner in which planners approach the county development plans. If these guidelines are adhered to I will be the first to say it and the first to praise the Minister if deserved. However, there has not been any relaxation of the guidelines.

I refer to the case of a house which is half a mile down a country lane, out in the middle of nowhere. It is screened by trees on the north, west, east and south of the site and it cannot be seen from the road but the planner wants to cut back the front porch of the house. This is beyond belief. I doubt if the planner ever went out to visit the site or else wires have been crossed. All these issues are related to housing. If the planners at local authority level are persistent in a very strict interpretation of the development plan, more people will be in chaos with regard to housing.

Ann Ormonde (Fianna Fail)
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I welcome the Minister of State to the House. I wish to read into the record of the House the Government's achievements to date before I express my own views.

One third of Ireland's houses have been built in the past decade. House completions are at the highest level in Europe, with 20 units per 1,000 of population. This is well over five times the rate of our nearest neighbour, the United Kingdom. Huge investment in servicing land has made land available to underpin the future supply of housing.

All water services schemes provide services for housing. By the end of 2005, the serviced land initiative had provided services for more than 81,000 housing units for 164 completed schemes. An additional 95,300 housing units will be serviced for a further 59 schemes at construction. The housing land available surveys undertaken in June 2005 indicated more than 14,800 hectares of zoned serviced land available, with an estimated yield of 460,000 housing units. This equates to sufficient national capacity for five years of residential development, based on recent average housing output.

At the end of June 2005, Dublin city and county had approximately 2,800 hectares of zoned serviced land with an estimated yield of more than 145,000 housing units. There were 1,374 hectares of zoned serviced land in the mid-east region, with an estimated yield of approximately 38,000 units. There was sufficient zoned serviced land in the other major urban areas to yield about 38,000 in Cork, 15,300 units in Galway, 12,000 units in Limerick and 6,200 units in Waterford.

It is important that these figures and statistics are put on the record of the House as a means of reflecting the determination of the Government and its commitment to make the supply equal to the demand. This is the aim of the Government and the Minister of State.

I welcome the new affordable housing partnership that was set up last year to negotiate exchange or swap of State land to facilitate affordable houses. The latest example in my area of south Dublin involved the exchange of land in Harcourt Street resulting in the building of 215 homes in Lucan, Tallaght, City West, Clondalkin and Rathcoole, which is a great success story. We have had other examples resulting in the building of more than 500 units following a swap of State land, which has given us real value for money. Those success stories need to be highlighted.

We do not have a problem with policy; the Government is doing all it can. However, we need to get all the stakeholders to work together to accelerate the rate of delivery, where we may have a problem. The validation of a planning application takes too long. Organising pre-planning meetings can give rise to significant delays followed by the processing of the application. If the site planning notice that must be displayed is incorrect, the whole operation must start again. We need to consider these issues. We also have the appeals system. Problems regarding Part V of the Planning and Development Act can delay the whole planning process and could contribute to increased costs for the new householders. While officials in South Dublin County Council are very professional, I have known other local authorities that are not as professional in their processing of applications, which can be a factor in delaying delivery. We must aim to speed up delivery to allow supply equal demand.

Another area of difficulty is with ESB Networks. People can be ready to move and are delayed because they must wait for ESB Networks to come on site and connect electricity supply. It is not the fault of the Minister of State; it is a problem with all the stakeholders.

Some county managers are very good and some are not so good. I do not know how they work when a developer makes an application or in a pre-planning discussion about Part V and the requirement for 20% of the development to be given to social and affordable housing. The process at that stage can take six to 12 months to resolve because there may be disputes over the precise location of the social and affordable housing. I favour mixed communities and the village concept. I was brought up in a village where it was great to deal with everybody as opposed to having beautiful people in one cul-de-sac and the not so beautiful people elsewhere. I never wanted that in our society. Ireland is not made like that and we should not have it. We should have integrated communities. I know that is where the Minister of State's heart is. He should pursue it and ensure it works because it is key to the solution.

We are doing a great job in housing in that we are catching up to get the supply equal to the demand. Our population is increasing with many people coming to the country. Our economic growth and the availability of mortgages facilitate buying houses. While the Minister of State is making it easy, the stakeholders are pulling him back. We need to get everybody singing the same tune, which would give rapid delivery of affordable houses. It is on its way. The Minister of State is doing a great job and I wish him every success in the future.

John Paul Phelan (Fine Gael)
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I welcome the Minister of State, Deputy Noel Ahern. I am glad to have the opportunity to speak on housing. I do not disagree with much of what Senator Ormonde said. While progress has been made, to borrow a phrase, there is a lot done and a lot more to do on the housing market. I recently attended a presentation which outlined some astonishing figures on housing production in this country. It blew my mind when I heard some of the figures for the rate of building taking place at the moment. We are all familiar with the vast new developments that are taking place. Apparently last year and into this year the rate of house building is 21 units per 1,000 people as opposed to the European average of four per 1,000, which is a significant difference. People have asked whether this is sustainable into the future. In the long term it would not be sustainable at that rate.

However, we have a problem with our housing stock which is considerably lower than that in our European neighbours. Senator Ormonde is correct in saying that we are playing catch-up on them. Last year we produced approximately 83,000 or 84,000 housing units and the figure is likely to be much the same this year. It is clear that the demand for housing is still very strong even though this year's census found that many houses are unoccupied. I am particularly familiar with new developments in my area that have not been occupied having been bought by investors. There is no demand for rental accommodation in certain parts of the country. While this may not apply in some of the larger urban areas, in some smaller towns the rental market is under severe pressure.

A particular bugbear of mine is the continued lack of planning for the necessary services and infrastructure in some massive housing developments. I am referring to developments of a few hundred homes, with no consequent provision for the increased demand for schools. In many parts of the country schools are already under pressure. When planning permission is given for a development with a few hundred housing units, the Department of Education and Science is slow in granting necessary funds to ensure that schools, which are often already overcrowded, are provided with suitable extensions. In a school in my area the multi-purpose room is used as three classrooms and it has no playground because it is occupied with prefabs. It is on the outskirts of New Ross which has had significant development in recent years. Other services have not received commensurate funding to ensure they can keep pace with the development. The Government has failed miserably in this regard over the past five to ten years.

I agree with Senator McCarthy's point about planning guidelines, especially for one-off rural housing. As a former member of a local authority, it was always my understanding that the councillors were responsible for drawing up policy. I still have serious questions about the implementation of that policy by some local authority planners. Councillors put great effort into drawing up local authority development plans and quite often the spirit of what the councillors intend when drawing up the plan is not implemented by the planners, which is unacceptable. The councillors are responsible for setting policy in the county development plan and it is the duty, responsibility and job of the local authority planners to ensure that policy is implemented and not the policy they might want to implement themselves. That is not happening everywhere and it needs to be reviewed.

Another bugbear of mine is with the concept of vernacular design. It is right and proper that new developments are in tune with what already existed. However, in my part of the world, south County Kilkenny, planners demand smaller windows in one-off rural houses because they believe this is part of the vernacular design tradition in the area. Small windows were traditionally installed in rural houses because people did not want to be fleeced by the window tax introduced by the British authorities when they were in control of this country. Now, 100 years later, local authority planners demand small windows because all the older houses had small windows. That is not acceptable because a case could be made for the energy saving potential of large windows in southerly facing houses. Perhaps planners should study history as well as urban design.

Senator McCarthy referred to development charges. In County Kilkenny, one would be lucky to pay €6,000 in development charges and it is more usual that €8,000 to €11,000 is levied on relatively modest homes. In parts of the county, people cannot get potholes filled on the roads because the local authority is not in a position to do so, yet they are forced to pay development charges before they can lay the first block in their own homes. In many rural areas, no noticeable service is provided in return for a development charge. If somebody receives a service, such as a water or sewerage connection, a development charge should be levied but it is not acceptable to make people pay money for nothing.

The development charge, on top of the abolition of the first-time buyer's grant, means in effect that people in counties Carlow and Kilkenny are paying €10,000 more than before, not to mention the ever increasing cost of housing construction. In 2002, total revenue from housing related taxes was approximately €3 billion. Last year, that figure increased to more than €7 billion, which represents a substantial proportion of the total tax revenue. Reform is needed on that issue.

I have become very annoyed by the way in which local authorities calculate differential rents. I was recently contacted by an elderly widow in County Kilkenny who earns €190 per week, out of which she pays an excessive €30 per week in rent. Differential rents are based on guidelines introduced by the Government in 2002 and 2004 but, because it is not incumbent on local authorities to enforce the guidelines, some are doing as they please. Many local authorities request copies of P60s or base retrospective assessments for rent arrears on overtime payments, which has a detrimental effect on those who wish to avail of tenant purchase, affordable housing or shared ownership schemes and creates difficulties in terms of having essential maintenance work done on houses.

The 2002 guidelines strongly suggested that banded income categories and applicable rent fractions tend to create the potential for poverty traps and high marginal rates of rent, and recommended that local authorities should move away from differential rent to a set percentage or simple fraction calculation. Such reforms have not yet been introduced in my area, although they may be in place elsewhere. Many people in local authority housing, particularly those in receipt of social welfare payments, are losing chunks of their increased benefits to local authorities once differential rents are recalculated.

Rent calculations seem to vary according to the time of year in which the rent review is conducted. For example, fuel allowance is assessed in some parts of the country, even though it is only paid over a part of the year. That is not fair to applicants. I am aware of a man who was paid on a monthly basis but whose income was divided by four and assessed at €309 per week. However, when the correct calculation was done by multiplying his monthly rate by 12 and dividing that figure by 52, his weekly income was €280. When we appealed his case, a couple of euro was taken off his rent. Clearly, significant problems arise with regard to how local authorities calculate differential rents.

Labhrás Ó Murchú (Fianna Fail)
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Owing to the importance for people of having a home, housing has always been a central issue for debate. I sat on a local authority for 18 years during what could be called the bad old days. New housing schemes were one of the biggest news stories for communities and there were always long waiting lists for houses. The situation has since improved and housing stock has undoubtedly been elevated to new heights. It is now within everyone's ambition and range to have a place in which to live with dignity and to feel a sense of ownership.

However, while huge progress has been made in terms of providing public and private housing, the rate of progress has given rise to fresh challenges. We have to keep up with these challenges while being fair to those who possess their houses. Rent is an important issue in that respect because people need to be able to pay the required fee. However, in most cases, issues are considered as they arise. In my experience, genuine concerns are addressed and people are no longer put to the pin of their collars or made destitute because of their commitments.

Other issues arise with regard to managing new private and public housing developments. I am aware of several cases, in my area of County Tipperary and elsewhere, where unrest has built up within communities because of anti-social behaviour or for other reasons. Such issues are just as important as the provision of housing at the correct level of rent and it is important we recognise them. In some of the cases of which I heard, people were almost on the point of leaving the area for a number of reasons, including the discontent and unrest among law-abiding people and those who respected the community and wanted to make a contribution to it. An address should not take on some type of stigma, as has happened in parts of the country. There is nothing worse than to have an address which, in some way, automatically dilutes one's curriculum vitae, whether one is going for a job or otherwise or even from a social point of view. It is an issue we will have to look at seriously. Local authorities can step in because they have by-laws and guidelines and they can take action but, unfortunately, it is not happening and this issue is becoming widespread.

Those of us who watch television will have seen the harrowing stories coming from a particular place in County Limerick. It is mind-boggling to think that 99% of the community, who are law-abiding citizens and are trying to give the very best to their children, find their area in the headlines on television, radio and in the newspapers because of a tiny minority. There must be a way to ensure sanctions are quickly taken against people who cause that type of havoc.

I refer to the appearance of housing areas. I saw a programme on television about a pilot scheme being operated not far from Dublin where a little community group was put together. Perhaps there is some way to encourage this type of activity through the provision of some resources. A small community group could come together, buy a lawn-mower and ensure an area is kept tidy. I see no reason that could not apply to the local authority housing scheme as it does to the private one because most people do not always have their hands out and do not always want the public sector to do things for them. Perhaps there is a way to ensure people take a degree of ownership for the appearance of their areas.

The upkeep of the inside of a house and its repair are important but so too is the environment in which it is located. One might even go as far as saying that if the environment is pleasant, no rubbish is lying around, the grass is cut and so on, it often motivates and inspires young people. Once a housing scheme becomes in any way dilapidated, it has an impact on morale and ambition. It is not enough for me to state that in the House. There should be some way for local authorities, at the prompting of the Minister of State, to make some resources available where such groups come together. I am not talking about groups coming together to legislate for their community but rather about the case I mentioned where a group came together to work for the community. It also results in interaction among people who do not remain locked in their houses when they return from work.

I wish to touch on another an issue which is perhaps outside the remit of the debate. During the days I spent on the local authority a number of schemes were brought forward whereby one could purchase one's house through the payment of rent. I always thought that was one of the best things to happen because people realised the money they were paying on rent was not dead money and that they were investing in the purchase of their house. It did not matter whether it took them 20 or 30 years. From the day they came into that scheme, their attitude automatically changed. It should be our aim to ensure new schemes are brought forward whereby people in local authority housing could purchase their houses through the rent system. I am not pointing the finger at anyone but if one believes one is buying back one's house, one will be twice as careful about the house in terms of maintenance and presentation.

We still have problems providing houses in rural areas. We had an exceptionally good debate and great consultation on this issue. Good documents were produced and very good guidelines were brought forward for the implementation and, to some extent, the relaxation of the restrictions being placed on people who want to build their houses in rural areas. There is not a county which still does not have a problem. I do not believe the problem lies within the guidelines or in any legislation. There is still a blockage which can be termed "elitist" and it must be confronted. There are people who could get a site from their family or their extended family on which to build a house in a rural area, yet the restrictions are very severe. There is a suggestion they could move to the nearest village or town but they cannot do so because they could not afford a house there. What will happen eventually is that they will go on the housing list.

We keep talking about the regeneration of rural Ireland. Surely the only way we can meaningfully do this is to listen to people who have confidence in rural Ireland and wish to return to it instead of emigrate or leave it. We should help them in every way we can. Will the Minister of State convey a message to his counterpart on this issue, that is, to get tough with the planners on these issues? The guidelines must be interpreted in favour of the applicant and not some people who lay down rules and who want to make a picnic area out of rural Ireland.

Eamon Scanlon (Fianna Fail)
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I welcome the Minister of State and I am glad to have the opportunity to speak on this issue. I recognise what the Government has done, especially in my county of Sligo which has received over €9.5 million for the building and purchase of new homes for people. That is a 100% increase over a few short years. However, there are problems and issues.

I wish to raise an issue which bothers me. Three years ago, Sligo County Council decided to get new housing application forms which were sent out to the 850 people on the housing list. Some 500 forms were returned which showed there were only 500 people on the housing list. I thought we might have got the figure right but that was not the case.

People who wish to qualify for rent allowance, opt for shared ownership or avail of the improvement works in lieu scheme must put their names on the housing list. I am sure the same applies in every other county. I do not believe the housing lists are accurate. We must find out how many people are on the lists because I believe they are out of sync with reality.

The improvement works in lieu scheme is very beneficial, particularly in rural areas in which people wish to remain. I know from experience that it has made a major difference to the lives of many people who could not afford to do up their homes but who were able to do so with the help of the scheme and who were able to continue to live in their homes. That is welcome.

The shared ownership is scheme is an excellent one, especially in rural areas, where one can still buy a new three bedroom house for €175,000 to €180,000. The one problem I see with the scheme is that it could be three to four months from the time people get provisional approval to buy a house to the time the county council pays for it. People selling houses are sitting ducks because there is no legal commitment on the part of the person buying the house or the county council who is purchasing it on his or her behalf. Some commitment should be given to the seller who may be concerned. Wearing my other hat as an auctioneer, I know people selling a house to someone buying on the shared ownership scheme may be concerned. As a politician, I am in a position to reassure them everything is okay and the sale will work out at the end of the day. However, some people become concerned and will not wait. As a result they lose the opportunity to purchase a home for themselves under the scheme. It is important that some measure would be introduced to ensure there is commitment on both sides.

I acknowledge the great work that has been done on housing estates in recent years, especially by people on FÁS schemes. They do not get the credit they deserve for their work. Local authority estates in Sligo have been transformed in recent years by this work and it is important that we would support it in every possible way.

Stamp duty for first-time buyers should be addressed as it is causing hardship. It is difficult enough to get a mortgage but stamp duty can make the difference between somebody getting a home or having to go on a housing list. We should try to address this matter in the forthcoming budget.

Another issue of concern is people on low income who apply for rent allowance. A lone parent with one child who came to my clinic recently was refused rent allowance because a three-bedroom house was considered to be too big for her accommodation needs. The maximum number of bedrooms required in her case was deemed to be two and, accordingly, her application was refused. I cannot understand this decision as two-bedroom houses are not available in the area. Nobody builds them.

Difficulties also arise for single men. The rent subsidy limit is €85 per week but one cannot get accommodation anywhere for €85 per week. In a case where the rent is €100 per week, no rent allowance is paid as the individual in question is considered to be over-accommodated. This is most unfair and the matter needs to be addressed. If a minimum rent allowance is available this should be paid to individuals and they can pay the difference themselves. People are prepared to do that in order to get accommodation where they wish to live.

The system is particularly discriminatory towards single men. Senator Cummins alluded to this point. I apologise for not hearing his entire contribution. The system does not properly cater for single men. They rate very low in regard to need in all local authority areas. This matter must be addressed.

It is important to recognise the work that has been done. The situation is difficult but certain changes can be made to make the system better. I am sure the Minister of State, Deputy Noel Ahern, understands the problems and he will endeavour to ensure the position is alleviated for people seeking their own homes and failing that, that they can rent at a reasonable cost with the aid of rent allowance without which they could not afford to do so.

Pat Moylan (Fianna Fail)
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I welcome the Minister of State, Deputy Noel Ahern. I compliment him on his performance in the Department in terms of housing. He came to the Department at a time when housing was a major problem. I also compliment the Department on providing funding for services to enable us to build houses in our towns and villages.

Speakers have referred to various points. Local authorities have a part to play in terms of future housing policy to ensure there is access to facilities, namely, shops, schools, etc., when housing developments are allowed to proceed. Too often our local authorities allow developments to take place without looking at the bigger picture. This lack of facilities has caused problems for some people in new estates.

I compliment the Minister of State on the money he has made available to local authorities. Many people have benefitted from improvements to housing stock. I welcome the upgrading of heating systems, especially in local authority housing. People appreciate these improvements.

The cost of sites is a problem. People are coming into areas and giving substantial amounts of money for land. In some cases this land should have been made available for small farmers to expand their holdings. I have heard Members complain frequently on the Order of Business about planning problems. In rural areas, the local authority dictates by virtue of its county development plan. Planners are told what can happen in particular areas. At one time we changed the county development plan in County Offaly to allow more development to take place because of a fall in population. This has paid off as people have gone there and built homes in rural areas in the county.

I welcome the mix of social and affordable housing in the new housing developments that are now coming on stream. Previously, developments did not have to comply with the provisions on social and affordable housing. I urge the Minister to ensure that local authorities would deal with these provisions speedily to ensure social and affordable houses are given out to successful applicants as quickly as possible so that estates would not remain unfinished for a long period of time. There is an onus on local authorities to make these allocations as quickly as possible.

Local authorities must be careful to ensure local people are allowed to build houses and live in their own areas. We must not give an opportunity to developers to buy sites and make a great deal of money. That is not the intention. Local authorities can overcome this problem by putting in a clause in planning permissions ensuring residency for at least five years. This would stop developers and ensure people could afford to live in their local area.

Problems have been experienced in regard to housing aid for the elderly and essential repairs grants. Those who are dealing with cases will not approve grant aid for elderly people in rented accommodation. In some cases the previous generation also lived there and the family will continue to live in the houses in question. As an absent landlord rather than the elderly person is the registered owner, neither the Health Service Executive, HSE, nor the local authorities will spend money. The Minister of State might ensure that the families present for the long haul are afforded the opportunity to make what are minor repairs in some cases on behalf of elderly people or people with disabilities. There are a number of cases in every county.

Will the Minister of State speak to county managers and housing officials in local authorities concerning the provision of private sites in towns and villages, which is a good scheme? Private sites allow young couples to build houses of their own design rather than the uniform houses on estates, thereby removing people from the housing list.

I compliment the Minister of State on his work in the Department, as there are significant improvements throughout the country. There are many water and sewerage services available in our towns and villages that allow us to build houses for the people in the area who require them. I wish the Minister of State well and I look forward to further funding for local authorities.

Noel Ahern (Dublin North West, Fianna Fail)
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I thank Members for their comments. I tried to be factual in my opening statement and I thank everyone who tried to be reasoned in their responses. Some comments were not valid.

I might go on about supply, but it is important. Only with a decent supply can one bring stability to house prices. In recent years, overall supply has increased considerably, but it must be put in context. The last census showed an increase of 8% in the population and the previous census showed another 8% increase. While we do not have a breakdown of the figures in the recent census, the previous census showed an increase of 18% in the number of people aged 25-34 years, which is the key household formation age group. Most of them work and make contributions to the economy, but trying to cope with an 18% increase is incredible.

Senator Cummins stated that some of these people live with their parents. One can visit a house and be told that three sons or daughters, aged 31 years, 29 years and 27 years, live there whereas one could have called at the same house or another house 20 years ago and be told that three sons were in Australia, America or elsewhere. Which is better? My party was not in power 20 years ago.

This is a worldwide trend. Even in my time, many people left school at 17 or 18 years of age and got married at 24 years of age. Thankfully, more people go to college now and remain dependent on their parents for longer. The average age at which people marry or set up homes is older than previously. While they might drive a few of us mad if they stay at home, so be it. It is better for them to be at home with parents than in Australia.

Ann Ormonde (Fianna Fail)
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A fair point.

Noel Ahern (Dublin North West, Fianna Fail)
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Prices have increased and I do not deny they are staggering. Many Senators, particularly Senator Brady, spoke about affordability, which is the key factor. It depends on prices, income before and after tax and interest rates. In the affordability index, which has been calculated over several years, the percentage of one's net pay that goes towards the mortgage repayment is the main figure. During the past 20 or 30 years, the worst years were 1991 or 1992 when interest rates were 16% or 17%. Affordability has diminished somewhat since then, but the current percentage of net pay used to repay a mortgage is not significantly worse than previously.

Often, we speak about first-time buyers. I am not very old, but I have seen many people whose worlds did not cave in when they did not have carpets or fancy wood panelling on their floors for a few months. While it is fair and reasonable that we say much concerning first-time buyers, they are getting by. Last year, 45% of mortgages for new houses were taken out by first-time buyers.

Maurice Cummins (Fine Gael)
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Is the Minister of State happy that they are just getting by?

Noel Ahern (Dublin North West, Fianna Fail)
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It is a phase. They are getting by. While I have heard some of their comments, they do not seem to be deprived of continental holidays or whatever.

Maurice Cummins (Fine Gael)
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They are not all in that category.

Rory Kiely (Fianna Fail)
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The Minister of State does not have time to address the Senator's statements.

Noel Ahern (Dublin North West, Fianna Fail)
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We speak about the concerns of first-time buyers, but when people compile figures such as in the Halifax survey, I wish they would be fair and honest. First-time buyers purchase new or second-hand houses that are cheaper than average. Such studies use the example of a nurse, civil servant or garda on the first or second year or his or her salary and forget that the person will get a few promotions. They then take the average price of a second-hand house, including many €1 million or €2 million houses in the leafy suburbs that might have development potential, houses built around it and so on. However, the house's average price is meaningless when discussing first-time buyers, so we might as well be honest. These surveys are only PR attempts to attract attention to particular financial institutions rather than anything else.

We have affordable housing schemes because some people have a problem with affordability. I apologise to Senator Cummins, but it is difficult to accept comments made by Fine Gael Members in this regard. Fine Gael fought the Part V legislation line by line and section by section when it went through the Oireachtas.

Maurice Cummins (Fine Gael)
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It is not working.

Noel Ahern (Dublin North West, Fianna Fail)
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It is the law of the land, but it will take time for its dividends to show. Some Members' comments are a bit rich for people whose parties fought the law.

Senator McCarthy spoke about Clonakilty. When Deputy Joe Walsh was the Minister for Agriculture and Food, he provided a site in Clonakilty and believed that houses would be built on it in a year or two. The council is proceeding at a snail's pace primarily because members of Fine Gael who have been trying——

Maurice Cummins (Fine Gael)
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Rubbish.

Noel Ahern (Dublin North West, Fianna Fail)
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It is a fact. Unfortunately, Fianna Fáil does not have a majority on Cork County Council and its Fine Gael members have been doing everything in their power——

Maurice Cummins (Fine Gael)
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That is why people gave Fine Gael the majority. Fianna Fáil was doing nothing about the situation.

Noel Ahern (Dublin North West, Fianna Fail)
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Fine Gael got the majority to look after the snobs and not build houses for decent people.

Ann Ormonde (Fianna Fail)
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Fine Gael has not done anything there since it got into power.

Maurice Cummins (Fine Gael)
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Fianna Fáil was doing nothing.

Rory Kiely (Fianna Fail)
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Order.

Noel Ahern (Dublin North West, Fianna Fail)
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If the Fine Gael-Labour coalition ever gets into power, it will be a problem. Senator McCarthy spoke about the fact that there is no affordable housing in Clonakilty and that a site was provided a few years ago, but in respect of which the council is proceeding at a snail's pace. Every twist and turn is being slowed down by council members who want to preserve the image of Clonakilty as being for scenic, beautiful, €2 million houses. They do not seem to give a damn about ordinary people who would buy affordable private houses. We are not discussing social housing. There is some hypocrisy.

Maurice Cummins (Fine Gael)
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Did the Minister of State listen to what Senator Ó Murchú said about the Minister of State's guidelines?

Noel Ahern (Dublin North West, Fianna Fail)
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We talk about people who need houses and then do very little for them at ground level. People must examine that situation.

Every country in the world has a property tax. It can be like our stamp duty, a poll tax, rates or so on. One must be careful of people who want to do away with it. Unfortunately, tax must come from somewhere.

Maurice Cummins (Fine Gael)
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The Tánaiste——

Rory Kiely (Fianna Fail)
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Order.

Noel Ahern (Dublin North West, Fianna Fail)
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There is always a property tax, but we have tweaked it and may tweak it again. When the Government last tweaked it, the limit increased to €317,000. We all sympathise with the belief that first-time buyers should not pay stamp duty, but when the Government increased the threshold, we were accused of increasing house prices. Senator O'Toole mentioned a sliding scale. If a house costs €325,000, it seems illogical to pay 3% on all of it. I like to believe that the Minister for Finance will make adjustments.

We have received the commitment of the Construction Industry Federation in Cork that it will introduce changes in respect of staged payments. I announced in the House previously that I hoped the system in Cork would be abolished next year. The CIF is trying to stagger it out and talk about a phased system which would not really start until 2008. We are arguing about the dates rather than about the fact that the system will go, but the sooner it goes, the better.

I take all the points made on housing aid for the elderly. We have given a great deal of money to that scheme, which is doing good work. In fairness, I find it somewhat funny being approached by Senators and Deputies stating they want more money spent on housing aid for the elderly when the counties from which they come would not even have used their essential repair grants, ERG, scheme. There is a great deal of money available under the disabled person's grant, DPG, scheme and the ERG scheme and we want to continue rolling those out.

Senator O'Toole spoke about my remarks during the summer. I spoke then and since to the Department of Finance and we must wait and see whether the Minister for Finance does anything about it. Some of the heat has come out of the market since. I would not be big-headed enough to suggest that my few words helped in that regard, but I was very much getting at speculators rather than investors. People who come into the housing market as investors providing rented accommodation are welcome provided they are in it for the long term and providing good accommodation for the rental market. The persons about whom I was concerned at that time are those who are buying land or houses and merely moving into and out of the market like those buying Aer Lingus shares. Such persons are speculators. They are not in it for the long term. While any person who is in it for the long term may be trying to make money, that is fine if he or she is providing accommodation. I would like to see the laws tweaked and perhaps capital gains tax increased on persons who are short-term players because they are not bringing any added value to the overall issue.

I am not suggesting that everything is perfect. The Government is delivering. On the social and affordable side, the provision this year is €2 billion. Those are significant resources. Often the problem is to get it all spent and get quality and delivery for it, but the resources are being provided.

I accept that there are 43,000 so-called families on the waiting lists, 40% of whom are single persons and some of whom have turned down more than one offer.

On Senator Scanlon's point, when local authorities are building they are supposed to look at the breakdown of those on the waiting list. If 90% of those on the waiting list are single persons——

Maurice Cummins (Fine Gael)
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They are a low priority.

Noel Ahern (Dublin North West, Fianna Fail)
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——there is no point in the local authorities building three bedroom semi-detached houses like they did 20 years ago. They are supposed to build in accordance with the breakdown of what is on their list. We have been trying to get that through to them. Many of the local authorities are coming on board but there is still a bit of a culture and ethos among them of building three bedroom and four bedroom houses.

The rent allowance aspect of which Senator Scanlon spoke is really a matter to discuss with the Minister for Social and Family Affairs, Deputy Brennan, but I understand from where the Senator is coming. Local authorities ought to build a proper mix of housing rather than the standard approach of taking down the old plan and building the type of house built 40 years ago in the same way. We have tried to get away from such an approach and have made clear to local authorities the need to look at their waiting lists, see the profile and submit an application. We have sent back a few applications on the basis that what they were trying to build was not in accordance with their list.

We are delivering. We are spending significant resources. We are not solving all the problems of the world but we are doing a reasonable job.