Cian O'Callaghan (Dublin Bay North, Social Democrats) | Oireachtas source

I was worried, coming in here, about the Government's entire approach to this and how out of touch it is with the problems faced by renters and the problems in the private rented sector. Having heard the self-congratulatory comments from the Government, as if this Bill is the answer to all the problems in the private rented sector, overselling a technical change in respect of the provisions on indefinite tenancies, I am much more worried. We have to start with an honest analysis of the problems, an honest acceptance of the problems and an honest analysis of this Bill and its limitations. It is not something to be proud of that this is the sixth piece of legislation in less than two years on the private rented sector. That is a sign that the other legislation has not done the job that was needed. We see temporary measures, emergency measures and the measures that were implemented in the summer, tying rent increases to the harmonised index, which we all warned at the time would not work as inflation is going up. We see the Government behind and out of step on this. What we need is one Bill to correct the problems in the rental sector and to give certainty. Several different pieces of legislation is only a way to sow confusion. It leaves landlords, tenants and everybody else confused as to what the regulations are in the sector. It is the worst possible way to do regulation or legislation. No Government should be proud of coming back in here every few months with different Bills when it should be coming in once to sort out the problems. It is very clear to me that the Government does not understand the pressures faced by renters and the problems in the sector.

It was said earlier that Dublin is the third most expensive capital city in the European Union in which to rent. In fact, it is worse than that. Dublin is the third most expensive capital city in Europe in which to rent and the most expensive in the European Union. In Europe, it is behind only London and Monaco.

While I am assessing the Bill, I wish to bring in the voices and personal testimonies of renters because it is important we analyse the Bill and how it is affecting people in their real-life situations. When talking about renters we are talking often about people on low incomes paying very high, unaffordable rents. We are also talking, increasingly in recent years, about people on middle incomes and good incomes who would like to be able to buy their own home and who are squeezed out of doing so. The average household income of a first-time buyer is now €82,000. It is higher again in Dublin. Households below that level are simply being squeezed out of being able to buy and forced into a rental trap for years. What happens in the rental sector affects people on low incomes particularly in affordability terms. We need to look at this Bill in terms of how it affects renters in that regard. I wish to quote from one personal testimony. These personal testimonies are compiled by Dr. Rory Hearne. One states:

I just signed a lease to rent a two-bed house for me and my two children. I'm a single parent. It is almost €2,000 per month and, to be honest, I have no idea how I'm going to make ends meet. I'm a full-time permanent employee and have been renting privately since I was in my early 20s. I have modest savings but nowhere near enough to even think about a deposit for a mortgage. Let's face it: I have no hope of getting one. I'll be eating into those savings over the next while anyway to make ends meet, and then what? So I'm in a situation where the bank says that I can't afford mortgage repayments of about €1,300 so I pay nearly €2,000 a month in rent instead. It feels so hopeless, and trying to shield the kids from the stress is unbelievably hard.

That personal testimony is something that all of us as Deputies will be very familiar with, unfortunately.

The Bill allows for 2% rent increases when we already have some of the highest rents in Europe. These measures are completely insufficient. As others have said, they will allow for cumulative increases beyond 2%, which people will not be able to afford. In addition, they will apply only to those parts of the country covered by rent pressure zones.

I have amendments in to address all those points. There is only two hours for Committee Stage next week because that is all the Government has allowed, so whether we get to all our amendments is uncertain.

On rent caps, the Minister of State and others have referenced that the 4% cap did not work, has not been enforced and has been breached in every county. If that did not work, why does the Government think the 2% cap will work? We have been told nothing about why this new cap will not be breached when the 4% one was breached all over the country. Despite the comments from the Minister for Housing, Local Government and Heritage on this, insufficient resources have been put into the Residential Tenancies Board and there has been insufficient enforcement of the existing rules. Figures released to me by the Residential Tenancies Board show that in 2020, more than 90% of the investigations conducted by its investigations and sanctions unit related to rent increases above those allowed for by rules governing the rent pressure zones, RPZs. That worked out at about 225 approved investigations into breaches of rent pressure zones. In the year to July 2021, only 28 landlords received a written caution, monetary fine or both for breach of the RPZ rules. That is just over 10% of sanctioned investigations resulting in action against landlords, showing how weak the system of enforcement is.

The alternatives needed to high rents include cost rental. Unfortunately, the delivery on cost rental to date has been paltry. It is not accurate for Government Deputies to say they introduced cost rental because the work on that was done by the previous Government, which introduced it, and by the National Economic and Social Council, NESC, and others arguing for a cost rental model for years. The take-up and roll-out of it has been extremely slow. We heard in the previous general election, especially from the Green Party, that if it got into government we would get the Vienna model of cost rental. Cost rental rents in Vienna come in for a two-bed apartment at between €650 and €750 per month. The newer builds come in at about €750 per month. That is what we were promised. We need thousands of cost rental homes per year and, if we are to get affordable rents, we need to avail of and leverage low-cost financing rather than using private speculative models of development. We also need to do what they did in Vienna, namely, ensure lower land costs by having zonings that allow just for affordable housing to be built on land zoned for it.

I want to nail a few things on the head concerning rent regulation and the issues around it. First, we have some of the highest rent levels in Europe and the European Union. That has to be taken into account. Second, when an investor looks at investing in rental accommodation, rental income is not the only thing he or she looks at. If the investor is making a rational investor assessment, which he or she often is not, the capital appreciation is a key consideration. Capital appreciation at the moment is good with house prices rising quickly. If the investor is making a rational assessment, he or she also looks at rental yield and, in Ireland, the rate of return received on the money invested is amongst the highest in Europe. A German investor who was reported this week to have bought up 72 homes in Clonskeagh was asked why they chose Ireland over other European countries for one of their first investments outside of Germany and said it was because rental yields in Ireland are higher.

It is important to say that, especially when it comes to landlords who own one property and that type of investment, it is not purely driven by maximum rental return. There is a bias in people who invest in rental homes towards wanting to get a tangible asset - bricks and mortar, if you like. Often in different countries people invest in rental properties instead of stock shares because it is a tangible asset. If there is a complete economic crash, bank shares can collapse in value, while house prices will fall but not collapse to the same extent. That point was made decades ago when this rental sector was being assessed by economist Peter Bacon. He said it was not all about rational investment and that has to be taken into account when policies are being tailored. We saw that traditionally in Ireland when a good number of landlords followed the practice of not increasing rent if they felt they had a good tenant in situ. It was not always about maximising return.

Important research was done in the UK recently on economic return and landlords which shows that small landlords generally do not compare rates of return on investment in rental properties with stocks and shares. That research was from the London School of Economics. Some two thirds of landlords in Scotland with tenants in arrears said they did not intend to seek an eviction on pragmatic and moral grounds. Landlords often develop a relationship with their tenants not solely driven by economics. Some 55% of landlords in Scotland supported emergency legislation to protect tenants from evictions. There is no reason to believe landlords in Ireland are different. That should be borne in mind when we talk about rent regulation.

A disappointment I have in the Government concerning the rental sector, with this legislation and more generally, is that the issue of deposits being withheld from tenants has not been addressed. There has been legislation in place since 2015 for a deposit protection scheme but the Government has chosen not to get that up and running. Tenants lost out on about €200,000 from the rental company, Period Door Properties, when it went into liquidation and they failed to get their money back, despite determinations and judgments from the Residential Tenancies Board. We have had tenants losing deposits of €1,800 and in some cases being owed up to €2,700 and tenants left without heat in the middle of winter and failing to get their deposit back. The Government is doing nothing about that.

On insecurity, I will quote from a personal testimony compiled by Dr. Rory Hearne:

Was renting with two kids (one with autism and learning difficulties) in 2017 when landlord raised rent beyond means. Then said he was giving place to daughter. Before 3 months were up it was back on the rental market. Took it to the RTB who found in my favour and fined €9000. He took it to tribunal and basically talked the whole time not giving me much time to speak and they found in his favour. ... Anyway moved 9 times in 12 years and effect on child with autism devastating. Hates changing. Went to ask for HAP or some stability and told I earn too much. Over 70% of [my] salary on rent. So basically no help from [local authority] or RTB or this government.

That is the devastating impact, which we are all aware of as Deputies from our constituency work, that insecure tenancies can have on tenants. There is a suggestion that the closing of this loophole is somehow huge progress. I will support it because this loophole should never have been in place. It has been in place since a majority on the commission on the private rented residential sector recommended it more than 20 years ago. I was one of the minority of representatives on the commission to dissent from and oppose that. Its introduction had no logic except the landlord representatives, appalled at the idea of any additional measures to provide security, insisted on it. We need an end to no fault evictions, as in most other European countries. That is needed at this point.

In regard to the breaches of the rent pressure zones, which I spoke about earlier, I want to quote a final personal testimony in that regard:

I’m 45.

Was in a rented flat for over 10 years and then the landlord wanted to increase the rent from 1100 to 1600.

I was really struggling at 1100. I explained to him that the limit for rent increases was 4% per year.

His response was “I don’t give a – [I can’t say that word]. I’ll sell if you don’t pay it”.

I mentioned the RTB.

He said “sure they are useless, I wouldn’t register any of my places with them”.

I believe he has at least 8 properties. Maybe 12.

I contacted Threshold and RTB. They asked me to provide what he said in writing as evidence.

Obviously I couldn’t as it was done verbally so they couldn’t help me until I did the work for them and gathered the evidence.

My landlord told me he was advised by his son who happens to own one of the largest property management companies in Ireland.

Then in the same breath telling me his son recently bought a Tesla car for €180k. I’d given my landlord over €100k in the 10 years.

I didn’t have the strength anymore to fight this alone (as the RTB and Threshold couldn’t help) and left the apartment.

That is the reality for people with the bureaucracy around the rent pressure zones. In this case, if the person was finally able to provide evidence - it is hard for tenants to be able to do that - and it was taken up by the Residential Tenancies Board, there is a good chance it has not been brought to any conclusion and no sanctions have been applied because we know from the figures I quoted earlier that, at this point, 90% of cases have not resulted in sanctions for landlords.

On the Bill, I have tabled amendments to various sections which it is hoped we will be discussing next week. In regard to section 3, I have tabled an amendment to provide for 0% increases. Anything short of that will not work, as we have seen in recent years in terms of the failed measures to date that have been breached. We need a simple, clear measure and we need that strongly enforced and in place for a number of years to allow for supply to catch up.

Another amendment to this section deals with gender inclusive language. We should not be bringing to this House Bills that are in breach of the United Nations guidelines on gender inclusive language. I have raised this in regard to other legislation as well. I raised it earlier in the week with the Minister for Housing, Local Government and Heritage, Deputy O'Brien, on Committee Stage of a separate Bill and he responded to me on it. I appreciate that efforts are being made to change the legal definitions in our Bills such that they are gender inclusive. That is welcome. However, that goes only halfway to addressing the issue because we still should not be producing legislation that does not reflect the fact there are many people in Ireland who have a gender identity that is neither male nor female and they should be included in our legislation explicitly. It is welcome that the Government is addressing that in a technical and legal sense, but that needs to be done more comprehensively such that in all legislation everyone is included in the language therein. We are approaching the end of 2021 and we should be able to do that.

I am also bringing forward an amendment to extend the rent pressure zones throughout the country. We have seen some of the strongest rent increases in recent times in areas outside of the RPZs. Nobody can afford those kinds of rent increases. I urge the Government to accept some of the amendments from the Opposition, it is hoped next week. I will not be opposing the Bill because the very limited measures in it are better than them not happening, but we should not be under any doubt that this Bill does not go anywhere near far enough to address the very substantial pressures renters are under. We also need to be tackling heavily the exits from the rental sector. If we do not have more fair and balanced tax treatment between different types of landlords, whereby large corporate landlords pay very little or no tax and small landlords pay a huge amount, we will not be tackling those exits.

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