Simon Coveney (Cork South Central, Fine Gael) | Oireachtas source

The Government recognises the pressures tenants are under due to rent increases.

No one political party has a monopoly on compassion or concern in that regard. There is some merit in this Bill in the context of the broader debate on the rental market. However, having regard to the all-party report of the Committee on Housing and Homelessness to be published later this week and the Government's action plan for housing, which is due next month, supporting the Bill's passage through Second Stage now would be premature. For this reason, if Sinn Féin chose to adjourn the debate tonight, I would happily facilitate that and pick up the debate at a later stage when we would have an opportunity for a more informed discussion.

I was appointed as Minister with specific responsibility for housing, planning and local government to focus intensively on the challenge of tackling the housing crisis. I have been tasked with preparing an action plan for housing within the Government's first 100 days, working with Government colleagues, Oireachtas colleagues and key stakeholders. This plan must map out a vision for the evolution of the housing sector over the coming years, including the rental sector in which one fifth of the population now resides. The rental sector has faced considerable pressures in recent years and continues to suffer from an acute supply challenge, which is placing many families under severe pressure and, in extreme cases, at risk of homelessness.

A strong and viable private rental sector can play an important role in the housing market and the wider economy. It can provide a housing option for those who either cannot or choose not to enter the owner-occupied market but who still have sufficient means to meet their own accommodation needs. It can provide a housing option to meet rising demand and can promote flexibility and better alignment to a more mobile labour market, making it easier for individuals and families to pursue job opportunities or adapt their accommodation to changing family circumstances. It can also reduce the macroeconomic risks of an over-reliance on home ownership. In the past decade, we have seen examples of states with relatively large private rental sectors, such as Germany and Switzerland, being better insulated against housing booms that states with smaller rented sectors, such as Ireland and Spain, suffered as a result of.

The rental sector has traditionally been regarded as a transitional one in which households either wait while saving to buy their own homes or trying to access permanent social housing. It has been perceived as a stopover, not a destination of choice, but this traditional picture is changing. The rental sector has doubled in size in the past two decades. Almost one fifth of the population now lives therein. Growth in the sector has been driven by a range of factors, including a reducing reliance on home ownership as a tenure of choice and demographic influences, such as immigration from the EU and decreasing household sizes. It has also been influenced by a contribution made by the rental sector on delivering social housing supports for low-income households through the rental accommodation scheme, the social housing leasing initiative and, more recently, the housing assistance payment, HAP. While I favour a dramatic increase in social housing stock, the private rental sector will continue to play an important role in the immediate term while we try to increase stock levels.

Notwithstanding this, the rental sector is not yet on a truly viable or sustainable path. Severe supply pressures, rising rents, security of tenure issues, limited but nonetheless unacceptable examples of poor accommodation and a shortage of professional institutional landlords are impediments to delivering on a strong, stable and modern rental sector that offers real choice for individuals and households while contributing to economic growth.

Regarding rent levels, much has been done through last November's rent certainty and supply package, which introduced important amendments to the Residential Tenancies (Amendment) Act 2015. The new rules mean that the minimum period between rent reviews for tenancies has increased from 12 months to 24 months. This will apply for a four-year period until 2019. In addition, the minimum notice period for new rent has increased from 28 days to 90 days, and longer notice periods for the termination of long-term tenancies have been introduced. I accept that these measures are not enough and that we must do more, but we must undergo a process before the right decisions can be guaranteed.

While I appreciate the motivation behind Deputy Ó Broin's Bill, the proposal to tie rents strictly to the consumer price index, CPI, would break the link with the fundamental mechanism for determining rent under the Act, which is prevailing market rents. On the face of it, CPI-linked rent regulation looks attractive, particularly for tenants, but there are issues that need to be considered carefully. For example, a properly functioning rental market needs to offer something for landlords as well as tenants. Saying this might not be popular but without them, we do not get the supply that we need. With current inflation levels running at close to zero, a rent linked to the CPI would be a disincentive to future investment in the market. It could even force existing suppliers to exit the market, exacerbating an already acute supply shortage. Moreover, where rent regulation is too strong, it can lead to market segmentation by creating lock-in effects, black market distortions and supply fall-off. We all know the stories of rent top-ups being paid under the table so that people can stay in their premises. We must not facilitate the continuation of that practice.

In limiting rent reviews to every two years, the Government decided on an approach that would bring increased stability and predictability for tenants without changing the fundamental mechanism for the setting and reviewing of rent as laid down in the 2004 Act. Recent data from the Residential Tenancies Board, RTB, index appear to show that these changes are beginning to have some effect, with the rate of rent increases moderating in Dublin and nationally in the first quarter of this year. However, I fully support the view that more is to be done if we are to allow the sector to evolve into a mature and stable one in which there is a true balance between the rights and responsibilities of landlords and tenants. While the most recent data provide some encouragement, the sector remains fragile and unbalanced, with rents continuing to rise at unsustainable levels. However, we must avoid taking actions that could further destabilise it, contribute to a withdrawal of supply or discourage future investment.

The key to addressing rising rents in the medium to long term is through a dramatic increase in housing supply. Last year, we effectively built approximately one third of what we needed to build. The figure was far less over the past decade. Accelerating the supply of housing is a priority for the Government. Accordingly, a key priority for the programme for Government is the preparation and publication of an action plan for housing. That plan is being drafted with the input from a number of key Departments and will draw on the work of the special Oireachtas Committee on Housing and Homelessness, the report on which I look forward to considering and which I understand we will have by the weekend.

The programme for Government contains a specific commitment to reviewing the regulatory regime for the rental sector in order to ensure that an appropriate balance is struck between the rights, interests and responsibilities of tenants and landlords and between the need to ensure that we continue to get increased supply while helping people to stay in their homes regardless of whether they rent or own them. The forthcoming action plan on housing will set out a detailed timeline for the delivery of this commitment. We are committed to publishing a paper and a set of actions in the autumn on putting in place a more sustainable rental sector.

It is primarily for this reason that supporting the Bill would be premature from our perspective. I want the opportunity to be able to read and discuss in detail the work of the Oireachtas committee, to put our action plan for housing in place next month, to listen to all of the stakeholders involved and to work with many Deputies on putting as complete a response as we can manage in place so as to provide more certainty around rent, security of tenure and so on for tenants while hearing what landlords have to save on how not to undermine supply fundamentally. These are not unreasonable requests. We would have been willing to allow this legislation to continue to be discussed by adjourning the debate at the end of today's two hours as opposed to forcing a vote this week. If a vote is forced, however, it is too early to support the legislation that has been proposed by Sinn Féin.

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