Seán Kyne (Galway West, Fine Gael) | Oireachtas source

Rebuilding Ireland: Action Plan for Housing and Homelessness was launched in July 2016. Its vision is that, to the greatest extent possible, every household in Ireland will be able to access secure, good quality and affordable housing suited to its needs and located in sustainable communities. The residential rental sector has a vital role to play in achieving this vision.

As the Minister, Deputy Simon Coveney, outlined, pillar 4 of the Government's action plan committed to the publication of a comprehensive strategy for the rental sector by the end of 2016 and the Government has now met this commitment. In particular, the strategy includes measures to increase security of tenure and new mechanisms for setting and reviewing rents. It has a focus on maintaining existing levels of rental stock and encouraging investment in additional supply.

To reply to Deputy Catherine Connolly's point on the 14 social housing units discussed today on Galway Bay FM, a face to face meeting will take place in Ballina on Friday between officials of Galway City Council and the Department. There will also be a conference call to the offices in the Custom House. This is something in which I have been engaged in recent weeks. The purpose will be to find a solution to get over the problems experienced with the 14 houses. I understand the project will also involve constructing road infrastructure to allow for provision of 55 houses on the site. There are some issues regarding costs which must be ironed out between the Department and the city council.

The residential rental sector is an essential component of the housing sector and its vital role needs to be recognised and planned for. The sector has gone through considerable change in the past ten to 15 years, doubling in size and providing long-term homes for more people. Growth in the sector has been driven by a range of factors, including a reducing reliance on home ownership as a tenure of choice, as well as demographic factors, including immigrant migration from elsewhere in the European Union, decreasing household size and increasing rates of new household formation. The rental sector still needs to develop and mature to provide a viable, sustainable and attractive alternative to home ownership, rather than serving as a temporary refuge or starting post on the route to home ownership.

Severe supply pressures, rising rents, security of tenure issues, limited but nonetheless unacceptable examples of poor accommodation standards, a shortage of professional institutional landlords and a relatively underdeveloped voluntary sector are impediments to delivering a strong, stable and modern rental sector that offers real choice for individuals and households, while contributing to economic growth. That is why Rebuilding Ireland committed to developing a real and meaningful strategy for the rental sector. The strategy which was published on 13 December sets out a range of measures under the headings of security, supply, standards and services which will address immediate issues affecting the supply, cost and accessibility of rental accommodation, with more long-term measures to support the development of a viable and sustainable rental sector that can provide choice, quality, value and security for households and secure attractive investment opportunities for rental providers.

The strategy and the Planning and Development (Housing) and Residential Tenancies Act 2016, the provisions of which we debated prior to Christmas, follow earlier measures. In November 2015 the Government introduced a package of rent stability and additional housing supply measures. The Residential Tenancies (Amendment) Act 2015 included a number of measures to address rising rents and provide greater security for tenants. It provided that the minimum period between rent reviews for tenancies be increased from 12 to 24 months, with this provision to apply for a period of four years. In addition, the minimum period of notice of new rent was increased from 28 to 90 days, while longer notice periods for the termination of long-term tenancies were introduced. However, there is no question but that pressures in the rental market remain, driven by rising demand as a result of economic recovery, a lack of supply and the high costs highly indebted landlords face when servicing their loans. These pressures are borne out by the data published by the Residential Tenancies Board.

The Residential Tenancies Board's rent index data show private rents rose throughout the country by 10% in the second quarter and by 8.6% in the third quarter of 2016, compared with the same periods in 2015. In Dublin rents are now 5% higher than their previous peak in 2007, while outside Dublin they are increasing but remain at 7.3% off their peak levels. All of these trends are broadly in line with the trend reported in the recent daft.ieand Savills report late last year.

There is no question the increases place huge pressures on tenants, particularly those seeking new accommodation. The core issue behind almost all of the pressures throughout the housing market, including upward pressure on rent prices, is the lack of supply. For the rental sector, the best way to reduce and stabilise rents to protect tenancies in the long term and benefit the entire sector is to increase supply and accelerate the delivery of housing for the private and social rented sectors. However, the supply responses take time and rapidly rising rents have become in some areas of the country the greatest threat to tenant security. Because of this, the rental sector strategy, alongside measures to boost supply, includes the introduction of rent predictability measures to moderate rent increases in those parts of the country where the imbalance between demand and supply of rental accommodation is driving rent levels upwards. The rent pressure zones which have been given a statutory basis in the Planning and Development (Housing) and Residential Tenancies Act 2016 will provide rent predictability in areas where there is unsustainable rental inflation. In the rent pressure zones rent increases will be capped at 4% per annum for the next three years, by which time a new supply will have come onstream and pressures will have eased somewhat in these areas.

The Housing Agency is consulting local authorities to determine whether the Minister should request the Residential Tenancies Board to assess other areas, including other cities and commuter belt areas, to establish whether they meet the criteria for designation as rent pressure zones. As a result, we expect in the near future to see the designation of a number of local electoral areas. I know that for some Deputies these measures do not go far enough and that for others they go too far, but the Government believes the proposals included in the rental strategy will give significant certainty to landlords and tenants by allowing for reasonable growth in rents, while preventing the instability and uncertainty caused by the volatility seen in recent years. In addition, the Tyrrelstown amendment took effect today, with other tenure security-related measures provided for in the Act. The Tyrrelstown measure is a fundamental change to the obligations of institutional landlords and in response to recent high profile examples of multiple tenancy terminations in a single development in Tyrrelstown, County Dublin.

Increasing security for tenants and landlords is essential to the development of the rental sector as an attractive tenure choice for tenants and a safe and viable investment choice for a range of investors. The rental strategy includes a range of measures aimed at enabling a move towards secure long-term tenancies. One of the measures, action eight of the rental strategy, commits to amending Part 4 of the 2004 Act to provide that a Part 4 tenancy will last for six years rather than four. This is intended to be the first step in a transition to tenancies of infinite duration and was provided for in the Planning and Development (Housing) and Residential Tenancies Act 2016. Therefore, once a tenant has rented a dwelling for more than six months, he or she will be entitled to stay in the dwelling for six years.

The range of actions focused on security contained in the local sector strategy, as laid out by the Minister, together with the measures included in the 2015 and 2016 Acts, constitute a comprehensive and balanced approach to addressing the symptoms and causes of the problems affecting the rental sector, including those undermining the security of tenants. Development of the strategy was supported by a stakeholder consultation workshop and online consultation processes which received close to 500 submissions. Many of the Deputies present contributed to both processes, with the aim being the strategy would set a vision for a rental sector that would be better for tenants and landlords. It is my belief we achieved this goal and the key challenge now is to ensure the successful implementation of the strategy.

While work has begun immediately, implementation of the full range of 29 actions will take time. It would be premature at this early stage of implementation of the strategy and the measures included in the Planning and Development (Housing) and Residential Tenancies Act 2016 to revisit them. Prolonging the debate and introducing further changes on issues and actions already under way would risk undermining stability and confidence in the rental sector and impacting negatively on the existing and future supply of rental accommodation. What we need to do is concentrate on delivering what we have committed to deliver and achieve real and long lasting improvements in the rental sector for tenants and landlords.

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