Oireachtas Joint and Select Committees
Wednesday, 13 July 2016
Select Committee on Social Protection
Rent Supplement Increases: Department of Social Protection
We are now in public session. I draw the attention of the witnesses to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, they are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. 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. The opening statement submitted to the committee will be published on the committee website after this meeting. I remind those present to switch off their mobile phones or place them in flight mode as they interfere with the recording of the proceedings.
Members are aware of the increasing hardship citizens are experiencing as a result of increasing rents. People in receipt of rent supplement have encountered particular difficulties because the limits were seen as being too low to meet the rents that were being sought. On 28 June 2016, the Minister for Social Protection and the Minister for Housing, Planning and Local Government jointly announced increases in rent limits under the rent supplement and housing assistance payment schemes. Today, the committee will consider the impact of the increase in rent supplement. To assist it in this regard, I am very pleased to welcome Ms Helen Faughnan, Ms Jackie Harrington and Ms Laura Pathe from the Department of Social Protection. I thank the witnesses for attending and I invite Ms Faughnan to make her opening statement, which will be followed by questions from members.
Ms Helen Faughnan:
The Chairman has introduced my two colleagues, both of whom are from the supplementary welfare allowance policy unit at our headquarters in Sligo. They have responsibility for rent supplement as well. I have made my presentation and some statistical information we sent yesterday available to the committee. I hope members will find it useful. I will take the committee through some of the key points I want to make.
The State is a key player in providing support to people in the rented market and is providing funding of almost €450 million this year in respect of one third of the rented sector. This is under the rent supplement, housing assistance payment and rental accommodation schemes. The State is supporting a total of almost 100,000 individuals and families under these three schemes. There are approximately 54,000 rent supplement recipients and over 7,000 claims have been awarded in the first six months of this year. A total of €267 million has been made available for the rent supplement scheme this year. The scheme plays a vital role in maintaining people in their homes during these difficult times of reduced supply and increasing rents. As the committee knows, the Department recently carried out a review of the rent limits in line with the commitments in the programme for a partnership Government. The limits were introduced in all areas of the country - both urban and rural - from 1 July.
The new rent limits are generally benchmarked at the 35th percentile of agreed rents, as collated by the Residential Tenancies Board. This represents a realignment of the maximum rent limits with agreed rents. This will provide increased stability and transparency for tenants and landlords and will cost up to €12 million this year under the rent supplement scheme. In Dublin, the rent limits are increasing by some 30%, while in Cork, Limerick and Galway, increases of over 20% are being provided. Increased rent limits will now apply to the commuter belt surrounding County Dublin where supply pressures are particularly acute. One of the primary findings of this review that is in line with well-documented research is that individual counties are experiencing different levels of price inflation.
The revised limits immediately apply to all new rent supplement tenancies. Existing recipients are currently signed up to tenancy agreements and the revised limits will apply on a review of their claim. A review can be undertaken for a number of reasons, including at the request of a customer, where an existing lease is expiring or where ongoing entitlement is being examined. The Department is concerned that there are people who have entered into informal top-up payment arrangements with their landlords and may have difficulty in ensuring that there is sufficient money remaining to provide for basic living expenses.
We are, therefore, advising people in these circumstances to contact the Department for a review of their rent supplement claim so that their position can be regularised. In recognition of the continued pressure that exists in the rental market, discretion and flexibility will continue to be available under the rent supplement scheme. Prior to the introduction of the increased limits, the Department operated an individual case management approach where each tenant's circumstances were considered on a case-by-case basis. Under this approach, rent payments were made in excess of the maximum limits as appropriate.
Staff in the community welfare service have a statutory discretionary power to award or to increase a supplement for rental purposes, for example, when dealing with applicants who are at risk of losing their tenancy or in danger of homelessness. This flexible and responsive approach is a key instrument in assisting families to keep their homes. To date, it has supported over 8,800 households on rent supplement through increased rental payments. The revised rent limits will regularise this policy approach, and the numbers seeking payments in excess of the new limits should reduce substantially. Also, and importantly, rent reviews can now only be sought by landlords after a two-year period, which provides increased certainty.
In addition, the Department, in conjunction with Threshold, continues to operate a special protocol as part of the tenancy protection service in Dublin, Cork city and recently extended to Galway city and the commuter counties of Kildare, Meath and Wicklow where the level of housing supply is particularly acute. The primary objective of this service is to provide advice and support to householders experiencing housing problems and at risk of homelessness, including advocating on their behalf with landlords and the Residential Tenancies Board. For example, over 4,000 of the 8,000 calls to Threshold were resolved without referral to the Department for financial support. The programme for a partnership Government has identified expanding this protocol nationwide. The Department of Social Protection will work with the department of housing and Threshold to carry out this extension.
The strategic policy direction of the Department is to return rent supplement to its original purpose of being a short-term financial income support scheme mainly for people who are unemployed. To achieve this, the Government has two initiatives to deal with long reliance on rent supplement. They are the rental accommodation scheme, RAS, and the new housing assistance payment, HAP. Under HAP, responsibility for the provision of rental assistance to those with a long-term housing need will transfer back to local authorities. Furthermore, HAP will contribute to the provision of a more integrated and streamlined system of social housing supports, as it has been designed to allow any households that find full-time employment to remain in the scheme. HAP is currently operational in 19 of the 31 local authority areas. A HAP homeless project is operating in the four Dublin local authority areas. It is expected that HAP will be available in nine more local authorities by the end of this year and in the remaining three Dublin local authorities early in 2017. That will the complete implementation of HAP. To date, there are almost 11,000 households in receipt of HAP.
I want to mention another important element of supports provided by the Department towards rent deposits under the exceptional needs payments scheme. We also consider payment of deposits under the HAP scheme on a case by case basis. To the end of June, in excess of 1,170 rent deposits were made at a cost of over €732,000.
I assure members that the Department's community welfare service staff responsible for administering rent supplement, have considerable experience in engaging with people facing challenging and financially difficult times. These staff work closely with local authorities and local homeless action teams, including non-governmental organisations, to provide the necessary financial supports to facilitate people to access and maintain their existing accommodation.
The ongoing reduction of supply in the rental market, and increasing rents, continue to present serious challenges and stress to many families. The measures I have outlined in my presentation will provide increased stability for rent supplement households. That concludes my presentation and I will be happy to discuss any issues raised.
I thank Ms Faughnan very much indeed for her presentation. The accompanying statistical information was also very interesting.
I welcome the Government's decision, under the bilateral arrangement entered into with my party, to increase the limits for HAP and rent supplement. We have had this problem for a while. The limits were capped four or five years ago, yet rents kept gradually increasing. We were told on numerous occasions that there was no point in doing something like this because it would only increase rents and would not provide any extra houses. However, rent control, which everybody seems to be in favour of, does not provide any extra houses either. I have seen no economic advice as to how exactly this increase will drive up rents. The whole point of promoting this exercise is that while it does not increase the number of houses, it does help to stop people slipping into homelessness.
I would like to ask Ms Faughnan a few questions on her presentation. The new limits apply to people who are entering the system from here on in. I am a bit confused about the position of existing people. I think Ms Faughnan said that their situation would be taken care of when there is a review. She seemed to suggest that they can request a review on their own initiative. I have had a number of queries since these changes were announced and that seems to be contrary to what people are being told. Existing HAP and rent supplement clients are being told that the new system will only come into place for them when an actual review is taking place. Nobody is being informed about their right to seek a review, so I require some clarity on that.
Ms Faughnan's Department is inviting people who are in informal top-up arrangements. I take it she is talking about people who could not rent a property under the cap limit, so they had to pay more but pretend that they were only paying up to the cap level. We have numerous examples of those. They are being asked to come forward now, so will there be some sort of amnesty for them? Will there be any repercussions, since it could be said that they misled the Department in the past? I want to ensure they are quite safe in coming forward.
A couple of years ago, the previous Minister informed me about the introduction of flexibility, but there is always a problem with it. In theory, I suppose it is better to be flexible in these matters when the local social welfare officer looks at each individual case. Unfortunately, however, the downside of flexibility is that it can give rise to very different results depending on whom one is dealing with and in what area of the country. For example, I notice in the statistical information Ms Faughnan circulated that discretion has been exercised 185 times in Longford last year, 348 times in County Meath, and only seven times in Limerick. There seems to be an undue amount of inflexibility in Limerick for some reason that I cannot quite fathom.
Can Ms Faughnan clarify if it is the intention that HAP will fully replace the RAS scheme? There is a transfer from RAS to HAP, so everybody will ultimately be under the HAP scheme. Ms Faughnan says the situation will be fully resolved when the other local authorities take it on, but my area is in the HAP scheme. Only a percentage - I forget what percentage - of people on RAS have been moved into the HAP scheme. When will we reach our ultimate objective to have everybody moved to the HAP scheme? When the HAP scheme is fully implemented throughout the country will rent supplement still be a feature for what are called short-term arrangements? Who defines exactly what a short-term arrangement is?
Ms Helen Faughnan:
Yes, please, that would be good. I thank the Deputy for his questions.
Let me clarify the limits. The limits apply to new people, but we have existing tenants in different circumstances. Some are in a tenancy arrangement and the rate of payment they are making is what they are declaring to us, so there is no change in their position. Depending on their lease, for example if their lease is up in the next six months and the landlord decides at that stage to put up the rent and he or she can do so, because the period since the rent was last raised is more than two years ago, the tenant will come in with the details of the new lease and the new limits will apply.
If somebody is paying an informal top up, because he or she wanted to retain his or her accommodation, I am stating clearly that we want those people to come forward. There will be no repercussions. We have a homelessness crisis at present, we do not want those people to lose their tenancy. We have been saying this to them. People were possibly afraid to come in. If somebody was paying an increase of €100 a month, he or she should come in and declare the actual payment and we will increase his or her rent supplement payment accordingly. We have spoken and briefed our divisional managers and instructions have gone out to our area managers and the community welfare service staff around the country in this regard.
That is the key message that I would like each and everyone of the members of the committee to take away today.
On the question of the flexibility of community welfare service staff, we have been grappling with this issue. A key tool the community welfare service has is discretion and flexibility. The staff are trained to engage and elicit information from customers. They come across so many diverse cases on a day by day basis where people are facing immediate issues of financial concern at any given time. This flexibility can really help in allowing people to make the payments. We have given guidance to staff. When the community welfare service was absorbed into the Department in 2011, community welfare officers had been used to operating under eight health board areas, with differences in each area. What the Department has tried to do in the intervening period is to ensure that if somebody is coming into claim in Limerick, Buncrana, New Ross or inner city Dublin, he or she will be afforded the same treatment.
The differences in terms of flexibility were raised. It is not appropriate to compare the position of rent supplement in Limerick with other counties, mainly because the HAP scheme is in place in Limerick since March 2014. Limerick was the first local authority area to pilot the scheme. In fairness the local authority deserves great credit. They have really piloted it well and have now become the hub that administers all the HAP payments for right around the country. There are currently 1,270 HAP tenancies in payment in Limerick and that exceeds the number of rent supplement claimants which is about 1,180. The balance has shifted from rent supplement to HAP, so that if somebody has a housing need in Limerick, HAP is the appropriate way for them to go, particularly if they have a long-term housing need. Over time HAP will replace the majority of the claimants of rent supplement. Rent supplement will return to what it was originally intended to be, a supplement for people who have a short-term housing need, namely people in rented accommodation who are paying their rent and are working but for some reason lose their job. We will be there to provide financial support on a short-term basis to let them retain that tenancy. Generally we refer to short term as a period under 18 months. The plan is that tenants in receipt of rent supplement for a period of more than 18 months will in time be transferred to the new housing assistance payment, HAP.
I was asked how many of the 1,270 HAP tenancies have come from rent supplement. It is approximately 41%, about 520 have moved from rent supplement to HAP to date. Our staff and the local authority staff are working together to continue that transfer. What will help is that HAP payment in Limerick can go above the rent supplement limits. They have the flexibility to go above 20% in the local authority area, so that will help the transfer.
RAS, the rental accommodation scheme is still supporting a large number of people, some 32,710 people are in receipt of the rental accommodation scheme payment. I suppose that scheme will wither over time and HAP will replace it. Many local authorities operating HAP are still operating the rental accommodation scheme in their areas, where they have direct engagement with the landlords and it seems to be working well. I would envisage that until we are out of the homelessness crisis those different tools will continue to be in operation.
On the question of the increased rent limits, increasing the rent limits will not tackle the supply issue and that is still of major concern. What has been happening is that the flexible approach we had adopted in the past 18 months or so, has helped about 8,800 people to remain in their homes and we have been paying increased limits on approximately 120 new tenancies on a weekly basis. In effect that is not sustainable. The major difference is that with the changes to the Residential Tenancies (Amendment) Act 2015, in particular where a landlord cannot increase the rental payment for a two year period, this has allowed us to regularise the position by increasing the rent limits.
Let me assure Deputies that we are probably still going to come across cases, depending on the nature of the household, particularly a household with a large number of children or with a person who has particular medical issues, we still have the flexibility to go above the limits that were set on 1 July 2016 on a case by case basis, if the need arises.
I welcome the officials from the Department of Social Protection to the committee. I thank them for their presentation.
As Ms Faughnan mentioned, rent supplement started as a short-term payment to assist people with a housing need. I think initially, it was a payment for a period of between three to six months before long-term housing needs would be met. Unfortunately successive Governments have used this as a tool to meet the housing needs of many people. In reality it is an admission of failure of the housing policy on the part of successive Governments that we rely on the private sector market as one of the major providers of housing to meet the housing needs of citizens. To my mind that is an admission of failure of successive Governments. It is also interesting to note that Ms Faughnan acknowledges that the increase in the rent supplement limits will not impact positively in terms of additional supply of housing. I think that everybody acknowledges that but it is interesting that some members do not see that as they think it will increase the supply. The Department of Social Protection acknowledges that is not the case. Sinn Féin and many organisations have argued the case for rent caps to be put in place. Once there is a reliance on the private market, the market will demand increased rents. The Government is pandering to the private market. We have proposed that rent caps be index linked to the rate of inflation. Unfortunately the Government has taken the alternative view of increasing allowances but restricting it to apply on a two year basis.I do not think that will be sufficient. Until we put rent caps in place, I think we will see this continue.
I wish to raise a number of specifics. Ms Faughnan mentioned top-up payments that many had been making to landlords.
In 2014, Threshold produced estimated figures that 44% of all families in receipt of rent supplement had to make top-up payments to landlords. Ms Faughnan mentioned the process whereby these payments will be regularised. I would be interested to learn how that process will be rolled out and the criteria to be used. I would imagine landlords will dispute that under-the-table payments had been made to them because of the tax implications of the non-declaration of payments. Will the CWO take the word of the people who had been making these payments? As I said up to 44% of all recipients had been engaged in what was an unlawful but very necessary practice to keep a roof over their heads. Will their word be sufficient for the CWOs and what evidence will they need to produce for these payments to be regularised?
Difficulties will arise from the discretion of the CWOs to increase payments. In Wicklow we have a fantastic organisation called Sa Bhaile, which does fantastic work for homeless people. This organisation was born out of the identified need to have a deposit of one month's rent in addition to the rent itself. Last year Wicklow County Council gave an allocation of €40,000 to that organisation, Sa Bhaile. I am sure there are many more excellent organisations like that across the State, doing the exact same work. That indicates they are either replicating or doing the work that community welfare officers are not doing. If a local authority has to make a provision of €40,000 for finance that a community welfare officer has the discretion to be able to put in place, surely that indicates there are difficulties there. The people who come to me tell me it is pot luck as to which community welfare officer one gets as to whether he or she will use the discretionary powers to make these payments. I would be interested to learn the criteria the community welfare officers have to apply and the discretionary powers they have, because the evidence I have is that it is purely dependent on the CWO. For a local authority to fund a group to the tune of €40,000, which is a substantial sum from their budget, when community welfare officers have the means to be able to meet that need, shows there is a problem.
Was it last year or the year previously to that, the then Minister stepped in to deal with the issue of letting agents, advertising properties on online websites where it was stated that nobody on rent supplement need apply. In fairness, the then Minister stepped in and outlawed that practice. Unfortunately, letting agents have devised a new method to circumvent that ruling. While it is illegal to advertise that rent supplement is not accepted, those on rent supplement who view the properties are now being put on waiting lists, and they never hear again from the letting agents. These agents are effectively gatekeepers for the landlords, to keep people in receipt of rent supplement away from the property. In the past number of weeks, I have been snowed under by people coming to me and telling me that they have viewed properties, have given their details but have not heard again from the agent.
While it is illegal to advertise publicly on websites or in the letting agents, the legislation has not dealt with the issue.
I have seen properties that were substandard being offered by people who cannot be called anything other slum landlords. The condition of these properties is such that they would not be fit to house an animal. In some cases, these landlords are getting substantial sums in rent supplement and other payments. I know it falls on the local authorities to carry out checks on properties. Some local authorities are very proactive and carry out inspections. I have been speaking to people from different local authorities and they say the housing section of the local authority turns a blind eye to some of these properties. They have adopted an approach that it is better to have a roof rather than no roof over one's head, regardless of the condition of the property. Has the Department been in touch with any local authority, voicing concern about the level of inspections? Have local authorities ruled against any properties? There are serious concerns. I was in a property the other day where the family is in receipt of rent supplement. The bathroom floor is completely rotted and it is a safety issue.. Anytime they raise the issue with the landlord, he says it is time for a rent review, and that is hanging over their heads.
I know that HAP has to be rolled out in nine local authorities. My fear is that resources are needed to conduct investigations to ensure the property meets the critical requirements. What additional resources are being put into the local authorities to deal with these inspections and with the number of cases that are putting demands on them? I know HAP is to be rolled out in County Wicklow before Christmas, but without additional staff in the housing section and other resources, the local authority is facing serious difficulties.
Ms Helen Faughnan:
I thank the Deputy. I will address the supply issue. The increase in the rent supplement and the HAP limits will give us a small increase in supply. We estimate approximately 300 tenancies around the county, but the most important objective of increasing the rent limits was to secure the position of the existing 54,000 tenants in receipt of rent supplement and the nearly 11,000 households in receipt of HAP in their private rented accommodation. That will achieve that objective.
We believe the rule that landlords cannot increase the rent for a two year period will make a difference. The Departments of Social Protection and housing, planning and local government will be keeping this position under review to see how the rent limits affect our tenants. We will be definitely carrying out a review in the next 12 months.
As I said to Deputy O'Dea, it is difficult to deal with tenants paying a top up payment to landlords mainly because it can be paid under the counter and it is difficult to be aware of it. In terms of the evidence the Department would need, we would need confirmation from the landlord that this is the exact rent that the tenant is paying. We would need confirmation from the landlord and the tenant to that effect because the Department has a responsibility under audit for taxpayers' money. In many instances, this is a substantial sum of money.
It could be up to €1,400 per month that we are paying to a household and then to a landlord, so we have to ensure that this is the correct amount that is payable to the landlord. We cannot, in effect, turn a blind eye.
The relationship the landlord has with the Revenue Commissioners is a matter for them. We return data on all of our rent supplement tenancies to the Revenue Commissioners to assist them with their end-of-year audits. We also supply data to the Private Residential Tenancies Board to ensure that there is compliance by landlords with the rules and regulations of that board.
As regards Wicklow and the discretionary payments by community welfare service staff, up to June this year 56 exceptional needs payments have been made in that area for rent deposits at a cost of more than €48,000. When people come to the officers and have a need, they are being met.
In terms of ensuring consistency, I have responsibility for six of the Department's divisions. I and my colleague, who has responsibility for the other seven divisions, meet our divisional managers every month. This is one of the topics that is discussed. In addition, my colleagues in the social welfare policy unit have a network of staff throughout the country whom they engage with to ensure that as various issues arise, we are trying to be consistent in the approach. The evidence of the volume and numbers of rent deposits, for example, on the uplift payments of 8,800 households is that the discretion is being used.
When community welfare staff moved into the Department back in 2011, they were concerned that we were going to restrict or hamper that discretion in some way. However, the Department absolutely values that discretion because it gives us a flexible approach to meeting any kind of needs that arise in the public domain. If members of the committee are aware of cases where they are unhappy with the outcome, they should please flag them to the Department and we will definitely examine those.
As regards letting agents, our Department raised this issue a couple of years ago with the Department of Justice and Equality, and we pushed for the legislation in this area. I was delighted it came into being. We also engaged with key letting agents to stop them displaying the no rent supplement signs they had on their advertisements. Naturally, there are going to be ways around that but the fact is we have more than 66,000 landlords between rent supplement and the housing assistance payment, HAP. If one looks at the rental accommodation scheme, RAS, also, about 100,000 properties in the private market are in State-funded schemes. Landlords are engaging therefore and we have had in excess of 7,000 new claimants this year, about 40% of which are new tenants coming into the scheme. Therefore, much of the private rented market is supporting the schemes.
Some of the financial incentives put in place during the previous budget will help in this regard, including the 100% mortgage relief if somebody is supporting a rent supplement or HAP tenant for three years. The new housing action plan that the Minister will publish in the next couple of weeks will address the main issue of supply.
Substandard accommodation is of concern. We have heard people say, "Isn't it better that they've a roof over their head, as opposed to having the correct standards?" Landlords have a legal obligation to comply with minimum standards and if anybody notifies our Department about substandard accommodation, we will engage with the tenant in the first instance to ensure they are not made homeless and also to try to work with them if they need to seek alternative accommodation.
We supply quarterly updates of all rent supplement tenancies to the Department with responsibility for housing, planning and local government, which in turn are provided to local authority areas. It is up to each individual local authority to decide its own enforcement strategy for inspection arrangements. Under HAP legislation, all HAP accommodation units must either have been inspected 12 months prior to the date of commencement of HAP or to be arranged for inspection eight months post the date of coming into HAP.
I understand the Department with responsibility for housing and planning is working with local authorities, particularly new ones, as they are starting to come into HAP to look at the area of resources. Finance has been provided to local authorities to support them in the roll-out of HAP, and that is part of the engagement with local authorities. However, the enforcement strategy is a matter for the Department with responsibility for housing and planning and local authorities in the first instance.
I think I have covered all the various questions.
As this is the first formal meeting of the select committee, I congratulate the Chairman on his appointment. I look forward to working with him and other members of the committee in the time ahead.
I thank Ms Faughnan for her presentation which was informative. Housing has become a huge issue in our country. I am from County Clare and my experience with the housing section in Clare County Council has been positive. We have a good director of services in that council as well as the community welfare officers. The discretion Ms Faughnan spoke of does happen and I have many clients who have availed of it.
There is uniformity among community welfare officers in County Clare as to how they approach particular cases. That point must be made. Has the Department done any analysis on top-up payments for housing? If so, is a contingency budget set aside to meet that challenge? The Department is obviously encouraging applicants to come in and put their hands up to regularise their situation. Is there a contingency budget in place to meet that challenge?
In County Clare we have 639 active HAP tenancies since the transition from rent allowance started there. If a landlord is resisting the move from rent allowance to HAP, does any penalty apply? For example, if a tenant is availing of rent allowance and the landlord is happy with that arrangement but is resisting the move to HAP, can any type of penalty be imposed on a landlord to take HAP? Would such a landlord be within his or her rights to refuse a tenant who is moving from rent allowance to HAP?
The other questions I wanted to put have already been asked.
Ms Helen Faughnan:
I thank Deputy Carey for his comments. I am familiar with the position because Clare is one of my divisional areas. I know that the community welfare staff in Clare are proactive. There are some tight accommodation issues in Clare, especially for single people. They have been working with the local authority to ensure households receive the necessary accommodation.
The analysis of rent supplement and top-ups is difficult for us, mainly because people do not declare them. We are becoming more aware of them, however, when they move onto HAP.
The rent supplement increases will cost €15 million this year, that is, €12 million under the rent supplement budget and €3 million under HAP. We have a budget of €267 million which is demand led and we will be managing it. If the cost increases, we will be looking within our own resources in the Department initially, but we are happy we have sufficient resources to meet this contingency for this year. We are applying to the Department of Public Expenditure and Reform for the knock-on increases for next year.
The Deputy asked about the situation if a landlord is resisting HAP. At the moment, local authorities are working with landlords to encourage them to go into HAP. There are a lot of benefits for landlords in doing so. They will receive prompt full payments. Currently under rent supplement, there is a payment that the Department makes but the tenant has to make a personal contribution.
Under the HAP scheme, the full payment is made by the local authority which will recoup it from the client. This makes it easier for the landlord. All payments to landlords are made electronically and we are working with them and trying to encourage them. There are no penalties, but we will keep the position under review. If we find that landlords are resisting, we will try to figure out why and address the issue.
Ms Faughnan is not here to defend Government policy as the Department of Social Protection simply deals with the issues we have raised. The Government instructs the Department to change things. I welcome the increase in rent supplement payments as it has been a huge issue which we have been raising for a long time. It grates on me, however, that more money is going into landlords' pockets at taxpayers' expense, which places a question mark against policy in the State rather than the Department.
Top-up payments are a serious issue that does not seem to have been addressed. If somebody tells us a landlord wants to increase the rent, we advise him or her to get a letter from the landlord stating this and to take it to Threshold or the community welfare officer, but that does not happen as landlords do not want to declare rent increases to Revenue. We have to treat this issue seriously, but I do not know what to advise. Perhaps there might be an amnesty, a period in which we could clear these matters from the decks. If we do nothing, we could be waiting for another year until the next review of the two-year rent limits is carried out, at which point more money will be needed for exceptional payments. Every landlord will increase the rent at the end of the two year period, possibly significantly; therefore, what can the Department do to address the issue? It will remain as no tenants and landlords will come forward to do something that will have implications for Revenue.
Ms Faughnan said rent supplement recipients will move to the HAP scheme and that the RAS will peter out. That will not make any difference to the amount the Department will pay out in rent payments and the amount may even be more. Therefore, the statement that rent supplement is only a short-term measure misses the point. The housing action programme will I hope increase the number of private landlords with property to rent, but this means that the Department of Social Protection will have to spend more money in the future. We are not seeing a significant increase in local authority housing. I put a question to the Minister, Deputy Simon Coveney, a couple of weeks ago and he said the programme for Government allowed for a 70:30 ratio between rent supplement and housing assistance payments, on the one hand, and the building of local authority housing, on the other. That is absolutely mad and the Department will have to deal with the issue. It will put huge pressure on the Department and the taxpayers' money it spends.
In the past month we have heard of people who are entitled to rent supplement viewing rented property where the rent was €1,200 but the landlord wanted a deposit of €3,600. There is no way anybody on social welfare payments or a working class family would be able to pay that amount. but it is a practice that seems to be creeping in that landlords cannot refuse those in receipt of social welfare or rent supplement payments. Is the Department aware of this? It should watch out for it as it is going to feature more and more and will force more people back into homelessness.
A number of issues have been raised, although a number may not relate directly to the topic. As Ms Faughnan will be aware, we prepared an all-party report on housing in which we advocated certain recommendations at which I hope the Minister will look, particularly those relating to the need for additional construction. However, that is not an issue for today. Perhaps Ms Faughnan might deal with the issues raised today, particularly the demand for higher deposits.
Ms Helen Faughnan:
There were concerns about the two-year limit on rent increases and we have heard that a lot of landlords put up the rent before it took effect. The tenancy agreements are spread across the year and the landlord will declare a rent figure whenever a lease ends. There has been a small increase in the number of queries to the Department about this, but few people have presented. We will wait and see what happens. I advise people to contact Threshold because it is an advocacy service for tenants and may be able to help those who are negotiating with landlords in declaring top-ups. Dealing with Revenue is a matter for landlords, but the Department can improve communication and encourage clients who are in difficulty. We will also talk to NGOs operating in this space and have asked them to encourage clients to come to us, particularly around the time of review of their rent supplement claim which generally takes place once a year.
Under the HAP scheme, there will be €450 million available to support 100,000 households. The housing action plan will include a commitment to increase supply, but there is a dependency on the rental market. The advantage of the housing assistance payment over rent supplement is that payments will not be stopped to people who take up part-time or full-time work. Rent supplement is a short-term income support, but it will cease for a person in full-time employment. The housing assistance payment will allow people to increase their hours at work or take up full-time work and have their differential rent payment recalculated. We are already seeing some of the benefits of this. Some 160 households have moved from being fully unemployed to part-time work, while 130 have moved from unemployment into full-time work and 20 from part-time to full-time employment. The big difficulty with the rent supplement scheme was that local authorities were happy for us to look after these tenants and were not aware of the housing needs of so many.
It is time that this new housing assistance payment, HAP, came into play and that housing authorities considered the social housing needs of this full complement of people.
We will have to keep the deposits issue under review. We are coming more and more into this space under our exceptional needs payments and will be meeting the needs of people but not with outlandish payments. They will have to be within the normal market rules for rent deposits or rent in advance if that is required. Dublin City Council, which is operating the HAP homeless pilot for the four Dublin local authorities, is providing rent deposits and rent in advance to help secure people tenancies and particularly to move them out of hotel accommodation. It is doing this in addition to being able to go up to 50% above the limits in play to try to secure accommodation. That is working. We are working with our colleagues in the local authorities and will keep this matter under review.
I thank Ms Faughnan. Her presentation was good and answered many questions. What is the relationship between the 11,000 HAP tenants and the local authority housing list? People on the HAP scheme will ask if there is a chance they will ever have social housing in the future. There is a grey area. When I talk to officials on South Dublin County Council, they say those people are technically still on the housing list but technically they are not. We have been told that once people go on HAP they can forget about social housing. I have ideological reasons to be against the rental accommodation scheme, RAS, and HAP because ultimately it pays money to landlordism and so forth.
I do not know if Ms Faughnan can respond to this retrospectively but I have seen many people on rent allowance which was paid to the landlord but the landlord did not pay the bank and the mortgage went into serious arrears. The relieving officer or whoever did not flag this. I do not know if this is widespread but I thought it was unbelievable that it went on for two or three years at one stage. The mortgage was in arrears for €20,000 or €30,000 while the person took the rent allowance, which was taxpayers’ money and the tenant was vulnerable and would eventually be thrown out of the house.
Ms Helen Faughnan:
This came up when the HAP was being legislated for, and there was a lot of discussion on this issue in both Houses of the Oireachtas. Our understanding is that people can go on a transfer list within the social housing sphere. HAP is seen as meeting a person’s housing need but there is a facility for people to go onto a transfer list. We have come across cases of people who prefer to be in private rented accommodation, mainly because of the area they live in. There are two sides to the coin. That is our understanding of the housing transfer list.
If people are in receipt of rent supplement, the payments are made to the landlords who provide the accommodation for the State-supported tenants. What the landlords do then with the money is up to them. Ideally, we would like to see them using the money to assist with their mortgages on the properties. There is no compunction on the landlord. Rent supplement is not paid with a tag saying the landlord must use the money to pay the mortgage, although I am sure that if the banks are pursuing the landlord for non-payment of the mortgage, they could be aware that the person is in receipt of rent supplement, if it is a rented property. The landlord is paid to provide the accommodation and that is the deal.
Ms Helen Faughnan:
There are several areas in that. We are responsible for taxpayers' money and this is why we provide data to the Revenue Commissioners on an individual basis in respect of landlords. We also ensure that we collect the tax reference number of landlords as part of our process to ensure that they are registered with the Revenue Commissioners. It would be outside the sphere of the Department’s operation to try to get into the mortgage difficulties a person may have with his or her bank. We would not be aware if there was a mortgage on the property. We would just have a tenancy lease.
I wish the Chairman well in his new role. He comes highly qualified by his track record in his previous role. I thank the officials from the Department of Social Protection for coming in and for their presentation. Like Deputy Boyd Barrett, I come from the housing department of Dún Laoghaire-Rathdown County Council. It is very proactive and drives the supply of housing in Dún Laoghaire, although it has been slow and that is probably because of the procurement process it has to go through. I hope that will be addressed in the action plan for jobs. A total of 681 units are under way and will be delivered in the next 12 or 14 months in Dún Laoghaire. That will not solve the problem but it is a fantastic start.
What distinguishes HAP from rent supplement is that it allows people the opportunity to get back into employment, with their allowance diminished or increased on a gradual basis where required. Rent supplement did not do that. It is important to state that. I come from an area where rents are exorbitant, at between €1,600 and €1,800 a month for the average three-bed house. We have not started this scheme in Dún Laoghaire yet but this does give us breathing room or a safety net for people to have a roof over their head while we get supply up and going. We all know what happened in the past but we did rely in the early 2000s on private developers under Part V and ceased direct builds which diminished our housing stock as well as selling off housing stock. The procurement process is 134 weeks for any part aid scheme. We are now getting to the point where funding is back to develop direct build in local authorities. In Dún Laoghaire the 681 units are a start. I hope this gives us space to continue that programme throughout the country.
People give out about the housing stock we have and say that we have not been spending money on council housing. Deputy Boyd Barrett will confirm that in Dún Laoghaire over the past ten years, a serious maintenance project has been under way such that every council-owned house has had a massive overhaul, whether new windows, guttering, painting, new hall doors or attic insulation so that the turnover is much faster. There is only one void in Dún Laoghaire, which is unusual compared with the rest of the country. That is because the housing department is driven and has really killed itself, so to speak, in recent years. Only now do we see the fruits of the hard work that has been done because a house cannot be built in less than nine months. It is impossible, unless it is rapid build. This will be a multifaceted approach. HAP is very welcome. I know there may be teething troubles in certain areas, but we have to accept that. We have to give it time. We need time for supply to get to the level we need as well. I welcome this, and I am delighted with the Department’s presentation, but we need to say this allows people to go back into employment without losing the safety net of support.
Ms Helen Faughnan:
I welcome Dún Laoghaire’s proactive approach, particularly the fact that it has only one void, because that has been a problem and many local authorities have been tackling it and trying to turn them around much more quickly. There is nothing worse than seeing an empty house or apartment when families need a home. I welcome the Deputy’s comments.
-----the glass-half-full view of what is happening in Dún Laoghaire. I came here to make the opposite point. I will not, like some other members, go straight into issues that are properly the territory of a different committee. Suffice it to say that we are in a bad situation in Dún Laoghaire. I say to the committee "Watch this space" as regards Dún Laoghaire. We in Dún Laoghaire were ahead of the curve in identifying the looming crisis back in 2011. There is a very simple reason for that: property and rental prices in Dún Laoghaire have always been higher. That might be beneficial to property owners, property developers or asset speculators, but it is very bad news for people on low incomes who do not get higher social welfare, higher rent allowance or higher wages because they happen to live in an area where rents are higher. I genuinely mean it that this and all committees dealing with housing should watch Dún Laoghaire because it is - as it was in 2011 - a beacon for what is coming down the line for everywhere else. When I raised in the Dáil in 2011 and 2012 the fact there was going to be a housing crisis, I was laughed at because at that point rents and housing prices were falling nationally. It seemed to and was considered preposterous by the Government that there could be a problem. In Dún Laoghaire, however, there was a problem even then.
If we want to understand the problems we face on this, consider at Dún Laoghaire. Last week, I was informed that the average rent for a one-bedroom property in Dún Laoghaire is €1,800. Look at the new limits: the new, increased limit for a single person is €660. For a couple, it is €900. For a one-parent family with one qualified child it is €1,200; with two qualified children it is €1,275; with three such children it is €1,300. I went on daft.ie, as I do on a regular basis to help constituents coming in, and allow me to inform the committee on what is the situation in the entire area comprising south Dublin and Dún Laoghaire-Rathdown. The number of available one-bedroom properties for less than €700 in Dún Laoghaire-Rathdown is zero and there is one available for less than €900. The number of available two bedroom properties for less than €1,150 is zero. The number of available three-bedroom properties for under €1,300 is zero. If someone on social welfare or working on a low income, which is another question for the committee, finds himself or herself looking for rented accommodation, he or she has zero chance - even with the new limits - of being successful. I do not know whether the committee has heard the expression "ethnic cleansing" but I can inform colleagues that we are having social cleansing in Dún Laoghaire. Working-class and poor people are being cleansed from Dún Laoghaire by an insane, out-of-control property market and, quite frankly, by the greed of private landlords or the banks standing behind them.
Given that this is the objective reality - these are the facts of the situation - I want to know what the community welfare officers and the Department of Social Protection will do when people walk in and say they are sorry but the only available one-bedroom property they can find, if the average is €800, is somewhere for €1,200 or €1,300 - and that is if they are lucky. That is for one bedroom. If people are to have even a prayer of finding two or three-bedroom accommodation, they will be obliged to pay between €1,500 to €1,700 at an absolute minimum.
Even if they find it, the chances of the landlord taking rent allowance is limited. These limits just will not cut it for us. I want to know what flexibility exists and whether there is any acknowledgement within the Department - and in discussions with the Minister - of the position that obtains in places such as south Dublin. Other people should make pleas for other areas. I suspect that people who live in parts of Bray, Wicklow or places such as Howth in north Dublin, who happen to be working class and who have low incomes or who are on social welfare are in deep trouble. What is the policy for these people? I know the Department does not decide this but I want to know the position. When people such as this come in, are they just informed as to what is the limit and that, perhaps, they can be given flexibility by €100 or €200? The policy has to be that the Department will work with them to find accommodation. That should be the policy. An official from the Department of Social Protection should sit down with the person, go on daft.iewith him or her and see what is available so it is objectively assessed. Will the money made available by the community welfare officer go anywhere near helping to get that person housed? In my opinion, our responsibility, the Department's responsibility and that of the various Departments dealing with this is to get people housed. These are the issues about which I want to know.
Ms Helen Faughnan:
On rent supplement, it will not be possible to provide housing in all areas but we are looking, on a case-by-case basis, at the needs of clients coming in. It depends where they are coming from. If they were already resident in Dún Laoghaire, had been in private rented accommodation and had lost their job, so they are established in the area - maybe their children are going to school there - we will look at that with the flexibility to see what kind of supports we can put in place. On the other hand, if somebody is looking to move into the area and a one-bedroom property costs €1,800, yet accommodation is available in adjoining areas or whatever, we may not provide that accommodation. It literally is done on a case-by-case basis, depending on need and circumstances.
I can kind of understand, although I do not fully accept, why if people wanted to move in, the Department would say that it is just too expensive and it cannot go to the limits. However, is Ms Faughnan stating that for people who have connections, are from the area, have family there, have kids going to school there and so on, the Department will work with them to not make life difficult in getting stuff that is, as described, way in excess of the cap?
Is that even with the new limits that have been revised upwards? So it will not be the case that community welfare officers will say "The limits have gone up now and that is it".
Ms Helen Faughnan:
The instructions we have sent to our staff indicate that there is still flexibility. For example, in other areas throughout the country we would have a limit in a particular town or whatever. Each county normally has its prices benchmarked on the main urban centre in a town. For example, in Kerry it is Tralee. We have various kinds of limits. In other parts of Kerry, rents are not as costly, so the community welfare service would be cognisant of what is the local market rent. In a different part of the area that is maybe not as under pressure, those are the maximum limits, so we could be paying a rent supplement that is below the limits. Conversely, in areas of tight supply and in places where property is expensive, we may have to go above the limits. It will be done on a case-by-case basis.
I welcome that news. I will monitor the situation closely. I have no choice but to do so as people are contacting me about this matter. I appeal to the Department to recognise the scale of the problem in south Dublin. There may be other areas; I do not want to say it is exclusive to south Dublin, but it is worse there. To get the scale of it, that rent level is double the average in Dublin city. In addition, house prices in Dún Laoghaire are also double the average. The two things are obviously linked.
I just have one other question to follow up.
Very briefly. I know the plan is to transfer people who are working, the working poor who cannot afford stuff, to HAP. Huge numbers of landlords will never go to HAP, so Ms Faughnan will still be dealing with this for a long time, no matter what the Minister might say or Ms Faughnan might hope. HAP is supposed to help people who are working and put them on a differential rent. It is a recognition that people who are working cannot afford accommodation. That recognition has to work back into the rent supplement. Has there been any discussion about that? In other words, people who are on low incomes but cannot afford these rents who are working and are currently homeless - I am dealing with homeless working people at the moment - should also be given rent supplements.
Ms Helen Faughnan:
Coming back to the first issue, the community welfare service staff are practical. As I said, they will look at matters case by case. They have had to really inform themselves of housing matters over and above what we would have expected. They are very familiar within their own areas of different streets and prices etc., particularly with families resident in the area who now have an income need. Please do flag these cases to the Department.
On people working who cannot afford rent, the main crisis is supply. If somebody is in full-time work, the rent supplement is not payable. If they have an issue on a once-off basis or an exceptional need, we would consider that as part of the community welfare service. Under A Programme for a Partnership Government, the Department of Housing, Planning and Local Government, as it will be known, is committed to delivering an affordable rental pilot scheme, with the tenants paying the majority of the rent from their own resources and the State helping to meet the shortfall. It is viewed that this scheme would be put in place for employed households on low to moderate incomes. It would be in addition to the rent supplement and the HAP scheme.
I ask Ms Faughnan to report back to the Minister that there are emergency cases of people working? I know a baker who works every day, 40 hours a week and he lives in homeless hostels because he cannot get the rent supplement. As a stopgap, I ask Ms Faughnan to discuss with the Minister the possibility of some rent supplement payments going to people who are working and who are homeless.
I thank Ms Faughnan for her report. A lot of stuff has been covered, so she will be happy to know I will not repeat anything. I just want to touch on the exceptional needs payment. Ms Faughnan said that the Department considers payment towards deposits. In my constituency of Dublin Bay North we have a serious issue where people have presented themselves to the welfare officer and have been refused. Are the criteria different for certain areas? We have had cases in other parts of the constituency where people got it. It would be helpful if Ms Faughnan could let us know the criteria or whether it is at the discretion of the welfare officer. It seems be happening quite frequently. For people to present themselves to the welfare officer, they are really in need. To be turned way is quite distressing for them.
I want to raise again what Deputy Collins said regarding top-up payments. No disrespect, but we are in cloud-cuckoo-land if we think landlords will present documentation to say that they were doing things that were illegal or were operating under the table, so to speak. We have to go back to the drawing board and look at that again because we will face the situation where tenants can avail themselves of the new top-up, but because of the criteria presented by the Department it will be next to or near impossible for them to get it.
That is something we will really have to look at, because we will find that we have more people out there who cannot afford to pay their rent, who will be struggling and will face homelessness because they do not reach the criteria to apply for the top-up.
I am trying to give a balanced view that we are proactive. One family that is homeless is one family too many. One family in distress is one family too many. It is about coming up with solutions all the time, rather than criticising. We have to recognise that we came from a base where there was no ---
I am looking at my home. While the rents are exorbitant, and I accept they are scandalous, there are properties to rent under €1,350 and €1,600. I am saying that there has to be a balance. We came from a level where there was no funding for direct build. From that level, this is where we are now. We have a long way to go, but it is a start. It is not utopia, but it is a constructive start. We will not get the roof on the house unless we get a proper foundation in. I welcome the HAP scheme and that is what we are here to debate.
Thank you. I have one or two quick comments to make. First, I acknowledge the Minister has increased these payments. They were set about three years ago and they were no longer effective. People here rightly said that it will not increase supply, but it gives people dependent on these payments an equal opportunity in the marketplace they were being squeezed out of. That was the reality.
On these payments and the increases, I specifically ask that they are kept under constant review and acted on when they are not in line with market needs. I am conscious of this because before I came here I was on the housing committee. Our recommendation was a little more subtle: that they be not just increased, but increased in line with market rents. We did not envisage that Dublin would be just two zones - either Fingal or not Fingal. That works both ways, at the higher and lower levels. When you publish these figures, they have a tendency to push rents up in some areas and in others, as you have heard from some of the Deputies, they do not meet them. As the payments are under constant review, our study areas should also be reviewed into smaller regions so they are more accurately reflected. That is the first issue you might comment on.
Second is the exceptional needs payment. I want to highlight an issue. We constantly think of people in HAP, on rent allowance or whatever, but there is a transition. There are people in private rented accommodation. In most cases, but not exclusively, through either job loss or marriage break-up - those are the two main reasons - a person ends up in a house that they had been paying the rent for from their resources, but they are now dependent on State support. There is a lead time. During that time inevitably debt builds up because they have to go to the local authority or the community welfare officer. They were paying from their own resources, but they might have lost their job, or whatever, and there is a debt. Are exceptional needs payments available to those people to clear that debt? In other words, they eventually get on to the HAP scheme, a rent allowance, whatever the scheme might be, but in the interim, from the time they lost their job, their partner left the house or whatever the issue was, a debt has accrued. Can exceptional needs be considered in those cases to clear that debt? Those are my two questions and there were comments from previous speakers.
Ms Helen Faughnan:
Deputy Mitchell, on the exceptional needs payments, again cases vary. Some people would have a rent deposit available to them: they were renting, they got their deposit back from the landlord and they would be expected to use that deposit for their next tenancy. We would keep details of the rent deposits made, so it does not matter what part of the country they were in if they received a deposit. Generally, we would not be in favour of households receiving a second deposit.
No, that is not the case. This is people presenting themselves for the first time. It seems that we have different criteria between different offices. Maybe you can supply us with the information so we can let our constituents presenting for it know what they are entitled to.
Ms Helen Faughnan:
We can provide an information note for the committee just to clarify, because the committee is absolutely a great source of communication with the public. We are currently working on preparing extra guidance for our community welfare service staff on rent deposits. At the same time, we will send a note to the committee on this.
Exceptional needs payments are means-tested. As I said, circumstances change, but somebody coming in who absolutely must have the money available to him or her should be able to receive support. Again, if committee members are aware of cases, they should highlight them with the Department.
On landlords and under-the-table payments, I want to clarify that we are not looking to clear up a retrospective situation. If someone has been paying an under-the-counter top-up for the last 12 months and they want to regularise the situation, we are not asking the landlord to come forward and say so. If they come in and verify that this is the current rent payable under the lease, we can look at the circumstances. Issues relating to revenue are matters for the landlord and the Revenue Commissioners. We will wait and see how this issue resolves itself. As Deputy Curran said, we will and we do keep this under constant review. Our staff on the ground highlight issues to us if they are of particular concern. At different times there are different pinch points in the market.
On market rents for Dublin, with the difference between the Fingal and non-Fingal areas, as I said, community welfare service staff working in the various areas have a lot of information. Whether they are operating in Dublin 15, Dublin 7, Dublin 3, the south side or whatever it is, they have a good idea of what the market rents in the area are, but also what the agreed rents come up as. In the Department we have access to the Residential Tenancies Board database, which records the actual agreed rents, which oftentimes do not quite reflect the asking rents put up on some property registers.
On the exceptional needs payment, if a debt has been accrued, anybody who is in debt should come in and talk to us. We are not saying that we will fully clear the debt, but we could work with the person, particularly if bills are mounting up, such as electricity or gas bills, because they have had difficulties with their rent. We would recommend that the person talk to the Money Advice and Budgeting Service and work with it to try to regularise the situation, but we would see whether we could help them in some way. I also note that a new micro-credit scheme is available through the credit unions. That is another source of support. Again, we recommend that people come in and talk to us and we can see how we can work best with them.
It is just on the top-up payments and the need for landlords to come in. Ms Faughnan mentioned the rent payable in accordance with the lease. To echo the sentiments of Deputy Mitchell, I have huge concerns about that. I cannot see too many landlords coming in and saying they have been receiving under-the-table payments for the previous 12 months, five years, ten years or whatever. I live in the real world: landlords will not do that. That will have repercussions and there will be serious implications for people in getting that payment from the community welfare officer. I hope there will be discretion there. If the recipient of rent supplement cannot provide the necessary information or confirmation required by the CWO - in other words, the landlord is just not willing to play ball and come forward with that information - will that impede that recipient in attaining the higher bands? What impact will that have?
I do not know the full answer, but in 2015 more than 8,000 people managed to secure the increased payment, so there must be some degree of flexibility in the system. It may not be the full level of flexibility that the Deputy would want to see, but there must be some considerable level because we know that in 2015 more than 8,000 top-ups were approved and paid based on applications before the new increased rates came in.
Ms Helen Faughnan:
It is a balancing act within the Department. We are responsible for minding taxpayers' money and ensuring that it is used for legitimate purposes, but we could work with the tenant. This is where Threshold, which is an advocate on behalf of the tenant, comes in. It can work with the tenant and the landlord. In some cases it might mean that the tenant needs to move. There is quite an amount of churn in rent supplement payments. Of the new tenants that came in this year, approximately 60% were moving address as a result of churn within the system. We will keep that under review and provide the committee with information they can use to inform their constituents.
I thank the officials from the Department, Ms Faughnan, Ms Pathe and Ms Harrington, for their attendance and for their direct and informative answers to the committee. A date has not been set for our next meeting. As we discussed in private session, I will inform the committee of the date for our next meeting over the coming weeks.