Ann Phelan (Carlow-Kilkenny, Labour) | Oireachtas source

I thank the Deputies for raising this very serious and important issue. The private rental sector is regulated by the Residential Tenancies Act which sets out the rights and obligations of landlords and tenants, including relating to rent, security of tenure and the termination of tenancies. The Act was passed in 2004 and represented the most significant legislative reform in the private rented sector in over a century. Prior to this, there was little or no security of tenure for tenants and in most tenancies, the landlord had a virtually absolute right to raise the rent at any time.

Security of tenure under the 2004 Act is based on rolling four-year tenancy cycles. Where a tenant has been in occupation of a dwelling for a continuous period of six months and no notice of termination has been served in respect of that tenancy before the expiry of the period of six months, the tenancy is established for the remainder of the four-year period. Landlords and tenants may not contract out of this provision of the Act.

A report by DKM Economic Consultants commissioned by the Private Residential Tenancies Board, PRTB, which was published last autumn, considered a number of options relating to rent control, including a rent cap. A review of the literature for the report found that where rent caps are introduced, the fall in rents leads to a reduction in the supply of rental units. Supply is further impacted by a consequent reduction in housing mobility. As the main reason behind increasing rents is a shortfall in housing supply, we need to exercise caution in respect of measures which, prima facie, would seem to offer a solution. This is especially the case where the sector is volatile. In a recent RED C poll carried out for the PRTB, 29% of landlords stated that they intended to sell their property as soon as possible. In addition, according to Central Bank data, 38,000 buy-to-let mortgages are in arrears, accounting for 27% of all buy-to-let properties.

Almost one in five households is now housed in the private rented sector compared with one in ten in 2006. The rental sector cannot be divorced from the wider housing market and the virtual collapse of the construction sector after the economic crisis has led to a serious supply problem, particularly in Dublin and other cities. With the growth of household formation and the recovery in the economy, the lack of supply has seen market rents stabilising and rising since 2012. In the third quarter of 2014, rents were 5.6% higher nationally than in the same quarter of 2013, according to the most recent rent index from the PRTB. Rents for houses were 4.3% higher while apartment rents were 7.3% higher than in the same quarter of 2013. In Dublin, which is seeing the highest rates of increase nationally, overall rents were higher by 9.5%, although the rate of annual increase was down slightly. This moderating of rental inflation is reflected in the latest Daft.ierent report. Fundamentally though, the issue remains one of supply and the key to stabilising rents is to restore equilibrium in the housing market by addressing supply.

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