Ciarán Lynch (Cork South Central, Labour)
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Question 136: To ask the Minister for Finance his view of the situation in which income tax relief is allowed to tenants in the private rental sector but not to tenants in social housing; and if he will make a statement on the matter. [18452/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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As the Deputy will be aware, section 473 of the Taxes Consolidation Act 1997 provides tax relief at the standard rate of tax (20%), up to certain specified maximum amounts, to individuals who pay for private rented accommodation that is used as their sole or main residence.

However, tax relief is not available in respect of tenancies held from local authorities. The making of rent schemes is an integral part of the housing management functions of local authorities, subject to broad principles laid down by the Minister for Housing, Urban Renewal and Developing Areas. These broad principles are as follows:

• the rent payable should be related to income and a smaller proportion of income should be required from low income households

• allowances should be made for dependent children including those under 21 years of age in full-time education

• a contribution towards rent should be required from subsidiary earners in the household

• provision should be included for the acceptance of a lower rent than that required under the terms of the scheme in exceptional cases where payment of the normal rent would give rise to hardship, and

• appropriate local factors should be taken into account including the costs of the maintenance and management of the stock of rented dwelling and the adequacy of the rental income to meet such costs.

Within these broad principles, authorities have discretion as to the types of income to be taken into account in the assessment of rents and how to deal with hardship cases, poverty traps and any other issues that arise in individual cases. By definition, local authority rents should reflect ability to pay. They bear no relation to economic rents in the private sector.

Local authority rents are heavily subsidised at present. In my view, it would not be appropriate, on the one hand, to provide subsidised housing to a person, at a rent which takes full account of ability to pay, and also offer a further subsidy through the tax system. Furthermore, among the other advantages which local authority tenants enjoy are greater security of tenure vis-À-vis the wider rental sector and the right to buy the property at a market discount.