Mr. Patrick Davitt:

I thank the Chairman and members for the invitation to contribute to the pre-legislative scrutiny of the residential tenancies (right to purchase) Bill. I am the chief executive of the Institute of Professional Auctioneers & Valuers, and I am joined by Mr. John Kennedy who is the IPAV president.

IPAV has more than 1,500 members nationally. We operate a comprehensive system of professional education and development for members and for those wishing to enter the profession. Our profession is often misperceived as having a vested interest in ever-increasing property prices. While IPAV members are legally obliged to seek the best prices for those on whose behalf they act, we strongly believe in, and strive for, policy interventions that would bring about a sustainable property market where people are enabled to buy, sell or rent according to their needs.

On the tenants' side, existing tenants are generally the first to know that the property they are renting is coming for sale. They have the benefit of having lived in the property and, therefore, tend to know the quality of the property, whether the property would amount to a desirable property and location in which they would want to live over the medium or long term, whether they could qualify for a mortgage, the amount of repayments, etc. The key question that arises is if the tenant could satisfy the necessary criteria. The bottom line is that tenants are making decisions every day of the week to buy properties. Some decide to buy the home they are now renting and others decide to buy other homes because maybe their plans are more fluid.

On the landlord side, we believe that up to 90% of the residential tenancy accommodation in this country is provided by private landlords. Although the framework of this Bill is likely to have minimal impact on the right of a landlord to sell his or her rented dwelling, nevertheless the Bill will set a precedent for legislative intervention in a landlord's right to sell a rented dwelling. This is the first time legislation would impact on a landlord's right to sell a dwelling in this way. I would be concerned that a future Government could extend the impact of this legislation further and restrict the rights of landlords to sell their property in a manner which would have a more considerable impact on landlords' constitutional property rights.

There have been calls for landlords' rights to sell rented property to be abolished altogether or severely restricted. This legislation could be seen as the thin end of the wedge in terms of restricting landlords' rights in the future. Motivation for the private individual is different from that of the State, which has a social responsibility to its citizens. The private landlord involves himself or herself in the market for various reasons, but most typically they are, generally speaking, people who do not have a guaranteed income in later life or who are parents planning ahead for their children’s future and the property will become a home for that child or children during the college years.

Last year IPAV and the Irish Property Owners’ Association, IPOA, whom we have just heard from, undertook research involving more than 880 such landlords. They found the major cohort by far, 43%, became a landlord for pension purposes, and the next biggest cohort, about a quarter, did so to gain an income. There are two further very important findings from the report. Over 70% were self-employed and almost six in every ten had a debt to service. Many require a quick sale because they may be under pressure from a lender.

I assure the committee that our members are seeing the legacy of the last financial crash live on. Increased interest rates, sadly, set fire to the dying embers of unsustainable debt for many. Indeed, many landlords are happy to sell to existing tenants. Some owners might want to sell to a relative, typically, a daughter or a son. The Bill that we are discussing today, if implemented, would place the relevant family member in competition with an existing tenant.

Head 5 makes provision when property is being transferred for no or partial consideration but we believe it is not comprehensive enough. The tenant’s right to bid for the property should not arise where a landlord intends to transfer the property to a spouse or certain defined family members, as well as inheritance rights. IPAV believes the Government should give a public commitment that transfers of property to spouses and family members as well as inheritance rights are not to be affected by this or any future legislation.

I know we will have a more detailed discussion shortly but in summary IPAV respectfully suggests the following. Part 4 of the Bill states that a tenant must be in a position to provide to the landlord, vendor or his or her solicitors, in a manner that the Minister may prescribe through regulation under section 8 of the principal Act, their financial capacity to pay to the landlord the amount specified in any bid made by the tenant pursuant to the invitation to bid under the subsection. This section continues on and I will not read it out here. Where does the licensed property service provider in selling this property on behalf of the landlord fit in? Where are they when someone wants to get the documentation that a tenant can buy the property as they are probably the person who is selling the property? Where does this all fit in for somebody who wants to auction their property? How does that work? We ask the committee to investigate this.

We believe that this Bill is unnecessary since what it seeks to provide is already happening in the market in any event - tenants are buying where it suits them and where they can finance it. This Bill would prolong the sales process. With 90 days to bid on a property and a further 90 days to match a bid it will be six months before we get to the legal process to transfer that property. It will frustrate many potential and genuine buyers where a tenant could not match those offers but for whatever reason decides to exercise all available options. The legislation could raise tenant expectations in an unrealistic manner. A tenant’s right to purchase should be removed if they are in breach of any of their statutory obligations. It could be used by some tenants to stay in properties longer than existing legislation prescribes. The tenant’s right to bid to purchase does not apply to the sale of multiple-unit developments, further exacerbating the unequal treatment of private and institutional landlords.

IPAV would respectfully encourage the Legislature to prioritise measures that will increase supply as that is the secret to what we are discussing today. If supply is improved, virtually all the other difficulties in the market will be eased and fall away. The market will work.

While I am very thankful to get the opportunity to attend today, IPAV has had two to three working days to put a statement together for this meeting which is not long enough. This is very serious legislation and we need time to look at it with our legal representatives. The date on the scheme of the Bill was 20 October. We got the invitation on the 28th. We had a conference that day and had our president's lunch the following day which was a Friday which took it completely out. Saturday and Sunday came next which left us with Monday to work on this. That is why my statement is slightly changed from the one that was submitted. I apologise to the committee members for that. We would ask that we would be allowed seven working days together with the IPOA to bring our legal representatives together and come up with a response to this Bill. That is what we would really like to do. We have only touched the tip of the iceberg here. I have more details on the individual heads of the Bill that we need to go through but I do not have time to do it here. I ask that we be given time to do that. I thank members for listening to me.