Clare Daly (Dublin Fingal, Independent) | Oireachtas source

Deputy Wallace is a hard act to follow, and in deference to the hour I will try to curtail my remarks somewhat, but it gives me no pleasure to say that not only do I believe the legislation before us will not make things better for the families and individuals who are in dire straits tonight in terms of the crisis in the private rental market, and those who have made homeless, I genuinely believe that what we are looking at here will make the situation worse. That is because, in reality, this Bill is a depressing continuation of the types of housing policies successive governments have been pursuing for years. Other Deputies dealt very well with the aspect of rent predictability, which is wholly inadequate in terms of the provisions of the legislation, and while it is encouraging to see aspirations outlined in terms of the rental strategy, regulating standards, indefinite tenure and so on, with regard to much of this it is a case of let us wait and see what happens.

The root of this problem is that housing policy over the past 30 years has boiled down to giving the developers whatever they asked for in the hope that they would deign to build a few houses and therefore magically increase supply. It was a case of to hell with the unregulated development and to hell with the fact that, historically, there is only a small link between increasing supply and throwing carrots at developers and lower housing costs. The figures, which are available, dispute the Minister's whole premise that is before us. Between 1991 and 2006, for example, 762,541 housing units were built in Ireland. At the same time, house prices increased between 300% and 400% in different parts of the country. More supply does not mean more affordable housing stock, and more affordable housing stock is what is desperately required by Irish citizens, and everything that has been done proves that point. From at least the time of the Urban Renewal Act 1986, the State has thrown incentives amounting to billions to the private property market from hotels, nursing homes and student accommodation. The section 23 tax relief cost the State well over €1 billion and despite all of these reliefs and incentives, we still have a dysfunctional housing market and periodic crises because there is no link between incentivising developers into the rental market and lower rents. The proof of that is that the highest outlay on the section 23 rent relief was in 2006 and 2007, the two years in which there were peak levels of rents. The problem with the Bill is that it is continuing to further the vested interests who have not come forward with a solution to our housing problem.

I want to deal briefly with the three amendments we have tabled to this section. Amendment No. 56 is about repeal of section 19(2)(b) of the 2004 Act. That is inserted in the unlikely event that our amendment No. 58 on rent control is accepted. It probably will not be accepted and in that instance we will not be pressing amendment No. 56 but I do not understand why the Minister would not accept amendment No. 57, which simply deals with the issue of defining market rent. I raised this issue last year in the debate on the Residential Tenancies (Amendment)(No. 2) Bill 2012. We did not have a proper definition of "market rent" a year ago and we still do not have one now. The legislation as it stands, section 19 of the Residential Tenancies Act, references market rent but it defines it incredibly loosely and that is a huge part of the problem. It is akin to saying the price is whatever somebody wants to charge for it; it is incredibly vague. Whether a landlord is charging the market rent for a property is left to the Residential Tenancies Board to decide after the event. It is ludicrous.

The proof of the uselessness of the current definition, if one could even call it that, is that it has done nothing to stop rents from increasing over 40% in recent years. The 2004 definition refers to market rent being dwellings of a similar size, type and character and situated in a comparable area but none of the aspects of it is defined. Let us look at size first because size does matter. If we look at daft.ieand so on, we will not see any size defined in terms of square feet or square metres in any rental property. Nobody collects data on price per square metre of rental properties in Ireland. Nobody is under any obligation to state the size of the property. Instead, what we have is the number of bedrooms erroneously acting as a sort of proxy for size because in Ireland a two bedroom property can be anything from 40 sq. m. to 100 sq. m. A two bedroom property can be a one bedroom property with a bit of plywood thrown up masquerading it as a two bedroom property because there is no real regulation. There is no enforcement of standards in rental properties and sizes can vary massively.

We need data if we are to regulate the rented sector properly and set prices. That is critically important. I do not understand why we have not adopted models of other jurisdictions like the Mietspiegel arrangement, the rental mirror system which operates in Germany. It is an index of local rents per square metre prepared by local government that serves as a guideline for market rents. It is an official document. It must be referred to in the setting and increasing of rent and it contains information on the age of every property in every city and town, its size, the price range from high to low per square metre of properties of a similar size and so on. It is so granular it will give one the average price of 20 properties in the same street. Why can we not do something like that? It is not that difficult.

Collecting data is an important first step towards regulating renting in Ireland for a better system for landlords and tenants. I am glad the Government is talking about some of these issues but it is not enough and it is not done in a sufficiently defined way. For example, what is a comparable area? Is Sandymount comparable to Clontarf, Ranelagh or Fairview? Who knows who defines these things but what is clear is that the looser we leave it, the more open it is to exploitation and so on, which is regrettable. That is our amendment No. 57, and I do not understand why the Minister would not agree to the definition in our amendment.

Our other amendment to this section is amendment No. 58, which calls for rent control. I will repeat the points about the 4% which were well made by other Deputies. The measures being put forward by the Government will not help. They will make matters worse. The only way to control cost is to control rent and that means proper rent control, not only within tenancies but at the beginning of tenancies also. Let us face it. This might have been a radical proposal four years ago but it is not radical now. It is a basic A, B, C approach in that something has to be done now to stop rents going up further. Our proposal to link increases to the CPI is the only sane way of doing that. Anything else is merely window-dressing, which will make the situation worse.

The last point I want to touch on in regard to this section is what has been missing from much of the discussion about the private rental market in Ireland, namely, the buy-to-let mortgages and the significance of those mortgages for our troubled banks. If one looks at the figures, last month there were 173,956 tenancies registered with the RTB. Two months before that, the Central Bank reported that there were 132,571 buy-to-let mortgages on its books with a value of €24.6 billion. In our policy discussions and strategy about regulating rent, we have heard a great deal about accidental landlords and the Government's concern, in bringing forward measures, that we do not inadvertently penalise these poor people who bought houses during the boom, whose family size perhaps required them to move, who were not able to sell the property and who became reluctant landlords. I know many of these people. They undoubtedly exist. If one looks at the figures I quoted, one can work out that they are not the majority of tenancies. Some 76% of the tenancies in Ireland are overseen by landlords for whom the property was an optional investment and when we talk about being worried about the accidental landlords, we are using that argument to hide the fact the Government is really worried about protecting not only the investment properties but the impact of those on the banks' mortgage balance sheets. Rents are being let to sky-rocket so that tenants can pay off the buy-to-let mortgage arrears in which they had no involvement. Looking at this legislation, the Government is more concerned about the banks than it is about tenants. That is verified by the measure in the rental strategy that talks about a fast-track approach to enable landlords to regain possession quickly where non-payment of rent constitutes grounds for termination. That so many buy-to-let mortgages are in arrears of over 90 days to the tune of €6 billion and that a not insubstantial proportion - 11% - are in arrears of 720 days or almost two years shows the banks are slow to initiate repossession even without mortgage payments being made. Some of these measures are more about the banks' balance sheets than concern for tenants and tenant's rights. Mr. Aidan Regan of the school of politics in UCD summed it up accurately. He states:

If NAMA or the banks fire sell housing assets to solve the housing crisis, then all those under performing loans/mortgages will be exposed. The debt dynamics of the banks will be exposed. The government will be exposed. Then the ECB is exposed. It's a house of cards and the only thing holding everything together are rising rental and house prices. Those renting (and those who don't own mortgages) are ultimately picking up the bill for the last crisis, of which they had no part.

Hence, the structural constraint underpinning the housing crisis is a convergence in the incentive structureto maintain sky-high rents and rising house prices.

That, in effect, is what the legislation has to do today.

A solution and a different, more radical approach to deal with this was outlined incredibly effectively by Dr. Michael Byrne of NUIM in the Irish Examinerearlier this year where, instead of the type of measures being brought forward today, he put forward a proper NAMA-type system for buy-to-lets. Basically, it would be an asset management agency that could step in, take the loans away from the banks relieving the mortgages holders of the debt and rent the properties to the existing tenants at a deep discount. Dr. Byrne calculates that would cost €8.8 billion, which could be kept off balance sheet. A debt could be paid off over approximately 25 years of continuous affordable tenancy. It is an elegant, rational approach, manifestly in contrast to the measures before us today.

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