Darragh O'Brien (Dublin Fingal, Fianna Fail) | Oireachtas source

I thank Deputy Bacik for introducing the Private Members' Bill. It is her first Bill since she was elected in the by-election and I congratulate her on it. I thank her for bringing it forward. It gives me an opportunity to reflect on a number of the issues that have been touched on during this morning's debate.

Everyone can agree there is a need to ensure the residential sector is an attractive option for tenants and landlords. We need a sustainable and adequate supply of homes to rent to meet current and future demand. We need those rents to be at an affordable level. Tenants who are renting need to have certainty that as long as they pay their rent and meet their obligations, they will be able to stay comfortably in the property they are renting. Equally, landlords must have confidence in the long-term viability of their investment and that the rental income will be sufficient to cover their expenses over time. I remind colleagues, and I know Deputy Bacik is aware of this, that approximately 86% of landlords are individual mom and pop landlords who own one or two properties. They are the group on which I will particularly focus in my remarks.

As the Minister of State, Deputy Noonan, outlined earlier, any legal change to be introduced cannot risk weakening stability and confidence in the rental sector. No new law should intentionally or inadvertently undermine the economic viability of providing rental accommodation or negatively impact on the existing and future supply of rental units. There are knock-on effects to the wider economy to consider also. We absolutely need rents to be affordable. We also need them to be viable. Any new measure should be fair. Any new measure must be capable of withstanding legal challenge, including constitutional challenge.

With regard to supply we can all accept there are acute pressures in the rental market at present. These are driven by a number of factors but predominantly by the rise in demand for rental accommodation as we come out the other side of the pandemic and a constrained supply exacerbated further by two construction shutdowns over the past couple of years caused by the pandemic.

We all know that these factors have led to significant rental price inflation over recent years. However, the long-term solution for the high levels of rent lies in increasing supply, as well as providing transparency and consistency around rent levels.

In this regard, Members know that in July I introduced, and saw enacted, the Residential Tenancies (No. 2) Bill 2021, the purpose of which is to better protect tenants with affordability challenges by extending the rent pressure zones until the end of 2024, prohibiting any rent increase in those zones from exceeding general inflation as recorded by the harmonised index of consumer prices. This measure significantly reduces the level of permissible rent increases for approximately three quarters of all tenancies that are in rent pressure zones. In addition, until 2025, rent reviews outside the zones can occur no more frequently than biannually. They may occur on an annual basis within the rent pressure zones.

The harmonised index of consumer prices averaged approximately 0.73% over the past three years, although I am acutely aware that as our economy recovers and people return to work after the pandemic, inflation has begun to rise. When I introduced the legislation in an expeditious manner last July in order to deal with the 8% issue, I acknowledged that inflation was rising and stated that I would keep the need for an overall cap under review. That is what I have done and I have already asked my officials to re-examine the rent control provisions with a view to introducing an overall cap so rents in rent pressure zones can only go up, if necessary, in line with general inflation to a maximum cap. That is something we are working on but I wanted to move quickly in July to deal with the matter. I said at the time that we would be bringing forward a more comprehensive residential tenancies Bill, which I will allude to further in my response.

One of the cornerstones of Housing for All is the introduction of the new form of tenure, cost-rental. Between now and 2030, we intend to deliver at least 18,000 - and not 2,000 - cost-rental homes. That means the tenants would pay the cost of delivering, maintaining and managing the homes only. We did not wait for the plan to be launched. The first 25 cost-rental homes have been delivered and tenanted at Taylor Hill in Balbriggan, in a scheme managed by Clúid. Some of these homes have been delivered at a 50% reduction on the open market rates. At Enniskerry Road in Stepaside, there are another 50 apartments with average monthly rents of €1,200. It is a start on a new tenure of housing. It is a model that stands very well in comparison with Vienna and in many instances it is a better model than the much talked about Vienna model. We must build this at scale to make a real difference across the rental market. The more cost-rental units out there that people can fill, the more effect there will be in reducing rents in the private sector. Cost-rental is a game changer. It is the start of a new rental system, with fair rent and certainty for tenants.

I will address a couple of specific items in the Bill brought forward by Deputy Bacik and her colleagues in Labour. On the model tenancy agreement, section 152 of the Residential Tenancies Act already provides that in the development and publication of guidelines for good practice for those involved in the rental sector, the Residential Tenancies Board can include a precedent for a model lease of a dwelling. The Residential Tenancies Board is examining the feasibility of developing a standard lease for the sector and the requisite legal provision is already in place for it to do so. I would like to see that done. We will work through this Bill with scrutiny and that could provide a further impetus for it to happen. It should happen.

On the question of expanding the definition of a landlord, I recognise that the appointment of a receiver to a dwelling may cause and has caused real difficulty and distress for tenants. It is critical the rights of tenants are protected. Going back to our time in the Seanad, I remember a former Minister with responsibility for justice telling us that measures would be brought forward in this regard. That was not today or yesterday. This must be done. Under section 5 of the strategy for the rental sector, my Department established a working group with the Departments of Justice and Enterprise, Trade and Employment to examine the scope for amending legal provision. I want to see that done and I intend to address this matter in the upcoming housing and residential tenancies Bill, which we will see later this year. It is useful that this aspect of the Bill brought forward by Deputy Bacik can feed into the pre-legislative process for the housing and residential tenancies Bill. It is something I have stated before should be done.

On the question of deposits, the Deputy is aware that in one of the five items of tenancies legislation I have brought forward, section 7 of the Residential Tenancies (No. 2) Act 2021 inserted a new section applying to tenancies created on or after 9 August this year. A new restriction is in place for the total amount that a tenant is required to pay a landlord by way of a deposit or advance rent payment to secure a tenancy. It should be equivalent to no more than two months' rent. It comprises one month up front and one month of a deposit. That applies to students and all renters. There was a Bill from the Opposition that dealt with this matter and we made improvements to ensure the provisions would apply not just to student renters but to all renters. That legislation is now in place.

There is a section on the obligations of the landlord and this is something we must work through a little more. There is the question of a definition regarding the deposit. The legal definition of a deposit could serve as a term to be circumvented by certain parties that might wish to charge key money, for example. I know this is not what the Deputies intend. More work is required in that space. There is now an understanding of what a deposit means right now. If we define it in legislation, there may be an issue with people trying to do something by using other terms, such as charging key money.

The Residential Tenancies Board considers a security deposit to be a sum of money paid by the tenant to a landlord, usually before a tenancy commences. It is still the property of the tenant and the security deposit is considered the lawful property of that tenant until the landlord establishes a right to it, whether that is unpaid rent or damage to property.

There is the question of grounds of termination by a landlord in a Part 4 tenancy. Deputies know Part 4 rights were extended from four to six years in 2016, which was welcome. In Housing for All, the strategy I published as part of this Government's policy, security of tenure will be strengthened for tenants subject to legal advice. We must do this by legislating for tenancies of indefinite duration. There is a commitment in the programme for Government, and it is reiterated in Housing for All. An upcoming Government rental Bill - either the tenancy Bill I will deal with next or the one after that - will contain work that is ongoing in the space to look to address tenancies of indefinite duration.

I take the point completely regarding the extension of rent pressure zones nationwide. That is something the Housing Agency monitors continuously. Particularly after the Covid-19 pandemic, we may see people moving to regions, leading to further increases outside the rent pressure zones. Some rates of increase are running into double digits, which we do not want to see.

We know that the rental market is dynamic and constantly changing in response to fluctuations in supply and demand. We must be careful that abrupt legal or regulatory changes do not undermine confidence in the sector or add to uncertainty for both tenants and landlords. Unintended consequences may arise in such cases. We must be careful and all be earnest in our efforts to help secure homes for our people.

I take this Bill in the spirit in which it has been tabled. It is useful legislation and we intend to progress our own rental reforms. I will bring forward a residential tenancies Bill this autumn. It would be very useful for a committee to proceed with further scrutiny of this Bill, which is why I will not oppose it. There are useful measures in it. There are others I question, although I have not had the time to go into them here. The committee might do that. I heard Deputy Howlin speaking earlier about unfurnished properties and we should look at that.

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