Matt Shanahan (Waterford, Independent) | Oireachtas source

Rental tenancies have become a very emotive subject over the past 20 years in Ireland with the fallout of the Celtic tiger followed by an economic upswing, which failed to deliver a commensurate rise in new house building and residential property supply. Even before Covid, rents were on an upward trajectory requiring rent pressure zones in an effort to contain further price increases. The Irish residential letting sector has, largely, two broad categories of rental investor. The first is the REIT property hedge fund or vulture fund that has access to pools of investment capital and is based on large economies of scale. The second category is the private investor who is often the accidental landlord who has inherited a property, or the future retiree who diversified his or her pension into a buy-to-let property. A snapshot of buy-to-let properties from a 2020 fourth quarter Cental Bank report demonstrates there are significant issues facing small private landlords in Ireland today.

Of a total of 96,400 residential mortgage buy-to-let accounts, arrears for 16% of the overall account were shown as follows: 19% were overdue by two to five years, 30% were in arrears five to ten years, and 13% were in arrears of more than ten years. That scale and longevity of arrears demonstrates a failure to provide private landlords with the legal supports to terminate property letting quickly and successfully. That is particularly true where a tenant is using all of the protections under the Residential Tenancies Board, RTB, protocols, as well as other legal means to drag out the process. That reality is removing small private landlords from the property market and, in so doing, is further constricting rental opportunity and supply.

Previous Covid-19 legislation has seen Government rightly provide additional protections to tenants who find themselves in arrears as a result of Covid, including providing emergency access to welfare supports. This Bill proposes to extend to June the provision that a tenant cannot be evicted during level 5 restrictions except where mortgage arrears have extended beyond five months. It also continues to allow support for landlords when they register with the RTB as being unable to pay their mortgages because of the non-payment performance of tenants due to Covid-19.

There has been much public discourse in Ireland around private home ownership and the rights of tenants to long-term letting agreements and fixed rent periods. While I welcome the proposed introduction of this legislation, I remind the House that our national housing issues are largely centred on our construction capacity, the available land supply, amenable planning, and future controls on predatory pricing. I make specific reference to governmental fees in terms of council levies, Irish Water connection charges, VAT and development fees, all of which are contributing to the spiralling cost of home ownership, whether council or privately funded, and currently amount to more than 30% of a new house build.

The cost base now prevailing in the Irish house building sector is creating indebtedness for future generations as a result of having consumers invest in home buyer mortgages sold principally on exceptionally low interest rates without any understanding of what a 30-year time horizon can do to family repayment commitments. That is a reflected image that is proving to be an economic millstone in the private rented sector also where rising rents are serving no one except professional landlords and financial institutions that continue to feast wildly on the financial arbitrage opportunities that exist in the Irish home building sector.

Like many Deputies I await legislation that will seek to disrupt the financial dysfunction that permeates house building costs in Ireland today and remove the State's requirement to levy fees that will require 30- to 40-year mortgage paybacks and shared equity agreements from private sector payers. Although this proposed Bill deals with tenancy rights in terms of Covid, the legislative conversation that will have to follow soon is the future direction of house build policy in this country. Such analysis will have to be much wider, deeper and more radical than what we have seen previously with the mission, first, to protect our citizens by protecting our economy. That will require the sustainability of our house build sector.

I point out to the Minister also that the Regional Group issued a press statement yesterday asking for the construction sector to be reopened on the basis of using antigen testing on a two-day format protocol. Currently, the UK Government is subsidising antigen testing and construction is open. We believe that at this stage we must get some economic activity going in the construction sector. It can be done safely with adequate screens and protective testing. I ask the Minister to consider that also.

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