Joe Costello (Dublin Central, Labour)
Link to this: Individually | In context

Question 217: To ask the Minister for Finance if he will allow the private housing market to take its course without Government intervention; his plans for an initiative in the housing market; and if he will make a statement on the matter. [35413/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

The State plays a major role in the housing sector and as I stated in my Budget Speech last week, the Government has invested significantly in housing in recent years. This includes the direct investment by the Exchequer in a number of social and affordable housing schemes, augmented by funding raised by the Housing Finance Agency. Supports are also provided through rent supplement payments and tax reliefs are available for interest paid on mortgages.

There is a correction process under way in the housing market and the moderation in house prices is being driven by a range of factors, including wider economic uncertainty and higher interest rates. In view of the changing conditions in the private housing market, my colleague Mr. Gormley, the Minister for the Environment, Heritage and Local Government and I have agreed that there is merit in amending some existing housing policy. Consequently, I announced last week an extension of the existing local authority mortgage scheme by increasing the maximum loan available to borrowers. This extension will assist purchasers who wish to become homeowners but who are, at this time, unable to obtain loan finance. This will be a targeted and temporary initiative to reflect current market conditions. Funding will be provided by the Housing Finance Agency and it will be operated by a small number of local authorities acting on a regional basis. The objective of the Scheme is to provide credit to prospective first time buyers, but it is not intended to stop the market correction taking place.

Secondly, we have decided to introduce a single Government Equity Initiative to replace a range of existing schemes which have developed in recent years. Under this Initiative the Government will assist those seeking affordable housing by taking an equity share in the property. The purchaser will be able to buy out the Government equity share over a number of years or settle the equity share when the property is sold.

Details of the Local Authority Mortgage Scheme were announced last week by Mr Finneran, Minster for Housing, Urban Renewal and Development Areas. Details of the Government Equity Scheme will be announced in due course.