John Curran (Dublin Mid West, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I wish to draw your attention to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this committee. However, if you are directed by the committee to cease giving evidence relating to a particular matter and you continue to so do, you are entitled thereafter only to a qualified privilege in respect of your evidence. You are directed that only evidence connected with the subject matter of these proceedings is to be given and you are asked to respect the parliamentary practice to the effect that, where possible, you should not criticise or make charges against a person or persons or an entity by name or in such a way as to make him, her or it identifiable. The opening statements will be published on the committee website after the meeting.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable.

I am pleased to welcome the representatives of the Residential Tenancies Board, Ms Rosalind Carroll, Ms Janette Fogarty and Ms Kathryn Ward. We have received your submission and it has been made available to the members of the committee. Ms Carroll, please begin your opening statement and we will take it from there. Members will then have a number of questions.

I thank the Chairman and committee members for the opportunity to address the committee today. I wish the committee well and I am very happy to assist it in any way I can. I am accompanied today by my colleagues, assistant directors Janette Fogarty and Kathryn Ward.

In my statement today, I will concentrate on the rental sector. However, the dynamics of the rental sector are part of a much broader housing system and any policy recommendations or development in the housing area needs to consider fully the implications of that policy for all parts of the housing market. What I will briefly set out, based on the experience of the Residential Tenancies Board, are the current trends and issues affecting the rental sector, the steps that have been taken to date to address some of these issues and some thoughts on approaches to these and potential future issues.

The Residential Tenancies Board, RTB, formerly the Private Residential Tenancies Board PRTB, was established in 2004. It has 324,000 tenancies registered, representing 172,000 landlords and 705,000 occupants. Its remit is to regulate and support the rental housing market by operating a national system of tenancy registration; providing a quasi–judicial dispute resolution service for tenants and landlords; and conducting research and providing advice to the Minister on matters impacting the sector. We produce a quarterly rent index based on one of the most extensive rental databases in the country.

Our remit has also just recently been extended to include approved housing bodies, otherwise known as housing associations, which provide housing for approximately 30,000 tenants. This change and hence our recent name change means that both tenants and landlords of these properties are now also protected by the residential tenancies Acts and have access to our dispute resolution services. This is an important development as it breaks down the traditional distinction in the rental sector between social and private rented housing and moves us closer to models elsewhere where those differences cannot necessarily be identified.

The rental sector has grown considerably over recent years. Census 2011 showed that one in five were renting in the private sector and if the social rented sector is included this figure increases to just under one in three. Therefore, the rental sector makes up a significant component of housing tenures in Ireland and this is likely to be a continued feature of our housing market into the future. The growth in the sector can partly be explained by the downturn in the economy, decreased mobility with fewer first-time buyers and the lack of new supply. It can also, however, be partly explained by long-term societal changes, and population growth. In particular, a rise in migration has given rise to an increasing demand for rental accommodation, 75% of non-Irish nationals were renting from a private landlord in our last census. Combined with this, there are more people living alone, and more people who need more flexible tenure options to facilitate more mobile work requirements. This means there is an increasing demand for rental accommodation. It is particularly important to take cognisance of these shifting demand patterns as they suggest that a significant part of our society will rent rather than own their homes. Therefore, we need to consider not just the much recognised need for more supply, but specifically the need for more supply of rental accommodation.

The need for more supply is evident from the increasing level of rents across the country, which are being driven up by a lack of supply. According to our 2015 quarter 4 rent index, rents were 9.8% higher nationally than in quarter 4 of 2014. This is still 9.1% lower nationally than the peak in quarter 4 of 2007. What is a matter of concern is not just the increase, but its pace. While in Dublin rents for the first time passed their peak levels in 2007, being 0.4% higher than ever before, the rate of increase has started to decline in the Dublin area. However, pressures on availability are still evident, with availability of rental accommodation nationally, the lowest on record.

The trends in our annual number of new tenancy registrations also evidences the pressures on the rental sector and the lack of supply. Annual tenancy registrations peaked in 2011, with nearly 112,000 tenancies registered in that year but that has dipped consecutively in 2014 and 2015, while our overall numbers of registered tenancies have increased. This suggests that tenants are staying longer in their properties.

The volume of disputes referred to the RTB has increased steadily in recent years. This is to be expected, given that ours is a large sector and the fact that we have undertaken education and awareness campaigns. What is significant is the changing nature of the disputes referred to us. Cases involving disputes over deposits used to be our most common dispute type, whereas now rent arrears and over-holding make up our greatest number of cases. Such disputes account for over 33% of cases, compared to 20% in respect of deposit disputes. Rising rent levels mean that tenants are finding it more difficult to meet rental payments, leading to a greater number of disputes regarding rent arrears and over-holding issues.

The overall vision of the RTB is to have a well-functioning rental housing sector that is fair, accessible and beneficial to all. This is a challenging vision in the current environment. The Minister has introduced a number of legislative changes to address some of the issues in the market. These include: new rent certainty measures whereby rent cannot be reviewed more than once in any 24-month period; an extension of the notice period of rent review from 28 to 90 days; a requirement on landlords when undertaking reviews to provide details of three similar properties in the area; and an extension of notice periods for both landlords and tenants in respect of termination of longer-term tenancies of up to 224 days for the former and 112 days for the latter. Stronger verification procedures are required in terminating a tenancy where the landlord intends to sell or refurbish a property. Measures have also been introduced to ensure that both tenants and landlords know more about their rights and responsibilities.

It may be premature to assess how far these measures will go in addressing the current issues. As some of the measures have been introduced on a temporary basis and will expire at the end of 2019, it is important to consider not just the very real and immediate issues, but also what the future of the rental sector should look like. In this, the committee is urged to consider the short-term and long-term implications of any policy proposal.

The vision of the RTB sets out that we should have a well-functioning sector that is fair, accessible and beneficial to all. We need to recognise the fact that renting will be a much more common choice for Irish households in the future. We need to accept and welcome a larger rental sector that is reflective of our modern economy and of a society with a more flexible and mobile workforce. We should no longer view the rental sector as a residual sector in which people serve their time on the way to something more long-term in nature. To accomplish this, we need the rental sector to be attractive to tenants and landlords alike.

There are a number of specific challenges to be addressed if we are to achieve this. How do we balance the needs of the tenants with the needs of the landlord? It is certain that we need a willing landlord and tenant to enter into a tenancy agreement. How do we ensure that we build to rent, as well as building for purchase by owner-occupiers, and that we build accommodation appropriate to our changing demographics? In the future, how do we ensure competition in the market to keep rents competitive?

At present, we estimate that approximately 80% of our landlords own only one or two properties. The profile of landlords is starting to evolve, however, with REITs and institutional investment now playing a bigger part in the sector. Looking at examples elsewhere, institutional investment in the rental sector, while common, is balanced between for-profit and not-for-profit providers. How do we deal with the immediate challenge of the 29,000 buy-to-let mortgages in arrears of over 90 days? How do we consider the needs of people as they grow older in rental sector and their disposable incomes reduce? How do we transition to whatever policy paths are chosen, taking account of the current profile of the sector?

Although a strategy specifically for the rental sector will not magically solve the much wider supply pressures experienced in all sectors of the market, it is critical to bring certainty to tenants and landlords on the long-term future of this sector. Investors need certainty - but so do tenants - on issues such as security of tenure and rent regulation. When looking at the overall housing landscape, it is also necessary to have an understanding of what tenure mix we are aspiring to, and to develop suitable policies to make that mix happen. In a modern society and economy, a vibrant rental sector is vital. It is important that the rental sector does not become the forgotten sector again.

The RTB's role is not to develop policy but to regulate the sector in accordance with the legislation within which we operate. However, the services we provide in the rental sector give us a unique insight. We will support in any way we can the development of solutions to the current housing crisis and will continue to raise awareness of the rights and obligations of tenants and landlords to support a well-regulated sector.