Thursday, 8 July 2021
Residential Tenancies (No. 2) Bill 2021: From the Seanad
If I may, I will deal with all of the Seanad amendments together, as they all relate to changing rent pressure zone, RPZ, restrictions. I am grateful for the opportunity to return to the House with the Bill, as amended by the Seanad. There have been 13 amendments to the Bill since it was passed in the Dáil. Some are substantial and others are technical. I will run through them very quickly.
Amendment No. 1 is technical. It amends section 1, dealing with definitions in the Bill, to remove the definition of "Minister". The full title, the Minister for Housing, Local Government and Heritage, is used in section 5, which is the only reference in the Bill to the Minister. This is just a technical amendment.
Amendment No. 2 inserts a new section 4 to provide for a technical amendment to section 12 of the Residential Tenancies Act 2004 relating to the obligations of landlords. The provision obliges a tenant to furnish a tenant with a statement in writing of how the rent was calculated and set under the tenancy of the dwelling, having regard to section 19 of the 2004 Act, rather than having regard only to section 19(4). The effect of the amendment is that a landlord's statement will also cover the calculation of rent in accordance with the new section 19(4A), which provides that any rent increase in an RPZ area cannot exceed any inflation recorded in the harmonised index of consumer prices, HICP, values.
Amendment No. 3 inserts section 5 to amend section 19 of the 2004 Act and provides for rent-setting. From the coming into operation of section 5, the formula provided in section 19(4) shall no longer apply in capping the maximum rent increase in RPZs, that is, the current 4% limit. The formula will be replaced by a requirement that any rent increase in an RPZ shall not exceed any rent increase determined by the Residential Tenancies Board's, RTB, rent pressure zone calculator reference to the HICP values, in accordance with the new section 19A of the 2004 Act. The RPZ calculator will calculate any permissible rent increase that may apply. The user shall input into the calculator the date the rent was last set and the amount of the rent last set, and the calculator will produce the amount of the maximum permissible rent increase, if there is to be an increase. Rent increases are not compulsory and are a matter for the tenant and the landlord, but the maximum will be set at the HICP value.
That is a significant change from the current situation. There is no legal obstacle to a rent reduction and no legal requirement that a rent increase must apply.
The calculator shall compare the HICP value contained in the table published by the RTB on, or most recently before, the date the rent was last set with the HICP value contained in that table published by the RTB on, or most recently before, the date that any rent increase is being determined by that calculator. Any difference between the two aforementioned values shall be calculated as a percentage by the calculator. If that percentage is a positive value, that is where there is an increase in the HICP values over the period in question, it is applied by the RPZ calculator to the amount of the rent last set to produce the amount of any permissible rent increase. If that percentage is zero or negative, then the calculator will advise that no rent increase can be applied. As I said, this does not prevent a landlord or tenant from agreeing a rent lower than that currently being paid.
Any table of HIPC values published by the RTB shall be based on the all-items harmonised index of consumer price values in respect of Ireland, which is published by the Central Statistics Office, CSO, with reference to Eurostat data. As Minister, I am empowered under the Bill to prescribe an alternative index published by the CSO and containing data that correspond with the HICP values for the purpose of calculating any permissible rent increase. I do not expect to have to prescribe an alternative index, but I will have the power to do so if the all-items HICP index becomes unsuitable for our purposes during the period between now and 2024. From the coming into operation of section 5 of the Bill, the RTB will establish and maintain the said calculator and publish a table of HICP values to assist with the lawful setting of rents in RPZs. My Department is working closely with the RTB to ensure that every assistance will be available to the sector from the passing of this Bill. The calculator will be up and running and the HICP table will be published without undue delay.
Amendment No. 5 inserts a new section 7 into the Bill to amend section 22 of the Act of 2004, which provides for notices of rent. Section 7 of the Bill inserts a new paragraph (g) into subsection (2A) of section 22 to require that where section 19(4A) applies to a dwelling which is in the RPZ, that is a new rent increase restriction linked to the HICP, a notice of new rent served on a tenant shall "state how [an] increase in the rent last set...[for] the dwelling was calculated or, where section 19(4A) does not apply, [to] state [exactly] why it does not". An exemption from the RPZ rent controls applies where a rented dwelling is new to the rental market or a substantial change to a rented dwelling has occurred to warrant an incentive. There are no changes in this respect in this Bill, this is just a reference to the previous Act.
There is an Opposition amendment in this grouping, which I will address now if Members wish and if it is permissible. These amendments were all in one grouping. The Opposition amendment to Government amendment No. 5 proposes to grant me, as Minister, discretion regarding the designation of particular RPZs. Section 24A of the Residential Tenancies Act 2004, as amended and enacted by the Oireachtas, provides that "The Housing Agency, following consultation with the relevant housing authority, may make a proposal...to [me as] the Minister that an area [should] be prescribed" as an RPZ. Following receipt of such a proposal, the law provides that, as Minister, I shall request the director of the Residential Tenancies Board to conduct an assessment of the area and to establish whether it meets the criteria for designation as an RPZ and then to report back on whether the area should be designated as an RPZ. For the purposes of the Act, "area" is defined as either "the administrative area of a housing authority" or a "local electoral area within the meaning of section 2 of the Local Government Act 2001". There is no provision for any other type of area to be designated as a rent pressure zone, including a part of a local electoral area, LEA.
For an area to be designated as a rent pressure zone, it must satisfy the criteria set out in section 24A(4) of the Residential Tenancies Act 2004, as inserted by section 36 of the Planning and Development (Housing) and Residential Tenancies Act 2016. Those criteria specify that the annual rate of rent inflation in the area must have been 7%, or more, in four of the last six quarters and the average for rent registered in the area with the RTB in the last quarter must be, "in the case of the county of Kildare, the county of Meath, the county of Wicklow or a local electoral area in any one of those counties, above the average rent in the State (other than the Dublin Area)" or "in the case of any other county or local electoral area, or any city, city and county or local electoral area situated in such city or city and county, above the average rent in the State (other than the Greater Dublin Area)". Section 24A(6) provides that "Where a local electoral area is prescribed by order as a rent pressure zone and, subsequently, any local electoral areas are duly amended in a manner that affects the area of the local electoral area so prescribed, then the order shall continue to have effect as if the local electoral area concerned had not been so amended".
I cannot provide legal advice, but I understand that the effect of section 24A(6) of the Residential Tenancies Act 2004, as amended, in respect of the designation of an RPZ applies to the area within the LEA boundary which stands on the date of designation. Subsequent LEA boundary changes do not affect the RPZ designation. Accordingly, it would not be possible or appropriate to redraw an LEA boundary for the purposes of becoming an RPZ. The RTB rent index measures rent increases in LEAs using the 2019 boundaries then in effect for those LEAs. There is no specific measure to calculate rental increases broken down into any lower levels. The Housing Agency and the RTB will continue to monitor national rents and if any LEA, in its entirety, meets the designation criteria, then it will be designated as an RPZ. I cannot accept this Opposition amendment to amendment No. 5. This Bill is urgent in nature and must be passed by the Dáil today with a view to early enactment. This is the reason we did not want to flag some of these changes publicly in advance. I thank, in particular, the two Opposition Deputies to whom I had intimated on a previous stage that changes were coming down the line. In fairness, I knew that was understood. We did not want there to be any unintended consequences from the legislation coming forward. If we get this Bill passed today, we want to get it enacted as soon as possible. We have an early signature motion for the President to sign the Bill as well.
Amendment No. 7 inserts a new section 11 into the Bill to amend technically section 115 of the Act of 2004, which provides for the redress which may be granted by an RTB determination order. Section 11 of the Bill technically amends section 115 to ensure that an RTB dispute adjudicator or tribunal may make a declaration under section 115(2)(b) as to whether an amount of rent set under the tenancy of a dwelling complies with section 19. If the declaration is that amount does not comply, then the declaration shall be accompanied by an indication from the adjudicator or tribunal as to what amount, in his or her opinion, would comply with section 19.
The technical change in section 11 of the Bill is to provide a general reference to section 19 in section 115(2)(b) of the 2004 Act, and by doing so, to cover the new section 19(4A) regarding the RPZ rent increase restriction of no more than the HICP inflation rate. Amendment No. 8 inserts a new section 12 into the Bill to amend technically Schedule 2 of the 2004 Act by extending the list of improper conduct by a landlord subject to Part 7A concerning complaints, investigations and sanctions. The RTB will be given the power to investigate, with or without complaint, and sanction any landlord in contravention of the new section 19(4A), which refers to the HICP-linked rent increase restriction. The Bill already contains an amendment to Schedule 2 to provide that improper conduct shall include the seeking of unlawful payments in respect of any deposit or advance rent payment. We discussed this aspect on Second Stage as well. An RTB sanction can cost a landlord up to €30,000 and there is a serious deterrent in place to combat improper conduct.
Amendment No. 10 empowers the Minister to commence the new section 5 of the Bill, which requires that any rent increase in an RPZ shall not exceed any rent increase determined by the RTB’s rent pressure zone calculator with reference to HICP values in accordance with the new section 19(4A). I intend to commence section 5 as soon as possible and urgently following the passing of this Bill. All other provisions will commence automatically upon the passing of the Bill.
Amendment No. 11 is a technical amendment identifying the provisions of the Bill that take account of recitals. Amendment No. 12 proposes consequentially to amend the Long Title of the Bill to reflect that a new section 5 is to be introduced into the Bill, requiring that any rent increase in an RPZ shall not exceed any HICP inflation.