Peter Burke (Longford-Westmeath, Fine Gael) | Oireachtas source

I thank Deputies for contributing to this debate and the discussion of the rental sector. I look forward to the real changes that Housing for All will make for landlords and tenants alike. However, the motion generally addresses the RTB-ESRI rent index as published last week and calls for a number of actions from Government which have been debated numerous times in both Houses.

The Government's counter-motion outlines achievements to date and the plans that are in train through Housing for All. The Government's housing plan to 2030, Housing for All, is a multi-annual, multi-billion euro plan which will improve Ireland's housing system and deliver more homes of all types for people with different housing needs. The Government believes that everybody should have access to good quality housing to purchase or rent at an affordable price, built to a high standard and located close to essential services, offering a high quality of life.

As we can see, real progress is being made. The latest figures for housing completions and building commencements indicate strong construction activity and increased housing supply, which is critical to alleviating pressure. In the year to March 2022, 22,004 units were commenced outside Dublin, up 78% on the number of units commenced in the year to March 2021. Some 1,842 units were commenced in Dublin, which is an increase of 139% on the same period to March 2021. The Land Development Agency is advancing plans for thousands of cost rental homes on its portfolio of lands. Cost rental delivery is being rapidly ramped up to provide 18,000 homes over the course of the Housing for All plan at an average of 2,000 per year.

Over the past two years, the Government has not been found wanting when it comes to protecting renters, nor will it be going forward. It introduced a ban on evictions in all but limited circumstances in order to mitigate, where practicable, the effect and spread of Covid-19, introduced enhanced protections for tenants economically impacted by the pandemic, extended rent pressure zones to the end of 2024, restricted upfront payments by tenants to one month's rent and one month's deposit, capped rent increases at 2% per annum where inflation is higher and will introduce, from June, tenancies of unlimited duration.

In the time I have remaining, I will address some of the other topics which were raised in today's motion. The RTB rent index for quarter 4 2021 was published on 27 April 2022 and showed that, year on year, new rents increased nationally by 9%. The growth rate was higher than that of the previous quarter, when it was 8.8%, and was the highest since quarter 4 of 2017, which recorded a growth of 9.3%. It should be noted that the effects of the Covid-19 pandemic were still strongly impacting the rental sector during the fourth quarter of 2020, the comparison period. The national standardised average rent remained static in quarter 4 of 2020 and overall there had been a significant trend of moderation in rental inflation relative to previous years. The annual increase of 2.7% in 2020 represented the lowest annual increase in rent levels since 2012.

I also note that the analysis carried out by the ESRI and the Department of Housing, Local Government and Heritage, published earlier this month, suggested that ongoing pressures in the general housing market and the robust macroeconomic recovery would mean that without rent pressure zones, rental inflation would be notably higher.

The Government is committed to supporting the continued participation of small-scale landlords in the rental market. The management of tax issues is a matter for the Department of Finance and under Housing for All, a specific action has been set for that Department to review the policy options proposed by the 2017 working group on the tax and fiscal treatment of landlords. The Department of Housing, Local Government and Heritage, working in collaboration with the RTB, will assist the Department of Finance in carrying out this review in quarter 3 of this year.

The review of taxation of rental income will take account of the trends in landlords exiting the private rental sector. The aim is to ensure that the residential rental sector represents a viable investment option within a stable regulatory environment, with a fair and effective balancing of tenant and landlord rights and responsibilities.

The exiting of small landlords from the private rental sector is a consequence of multiple factors. A changing regulatory environment which has been necessary to ensure a fair and effective residential rental sector that balances tenants' rights and landlords' responsibilities has resulted in a challenging compliance framework for some. The recent rise in house prices has also prompted some landlords to sell their rental properties in the absence of negative equity. Some of the key findings from the RTB rental sector survey published last year included that, of the landlords surveyed, only one in five acquired the rental property with a buy-to-let mortgage, while 54% acquired it with an owner-occupier mortgage and one in ten inherited the property. Most became landlords ten to 15 years ago, during the Celtic tiger era, and 60% previously lived in the property they rent out. All of this would appear to strongly support the anecdotal reports of accidental landlords as key players in the sector heretofore.

Any measures such as a rent freeze that impacts private property rights requires detailed consideration and scrutiny, having regard to the provisions of Article 43 of the Constitution and the associated legal complexities. The current rent pressure zone arrangements, under which the rent increases are capped at 2% pro ratawhere inflation is higher, were introduced as a balanced set of arrangements which recognised the need to intervene in situations of high and significantly increasing rents while at the same time taking account of constitutional property rights and the need to avoid disincentivising the provision of rental properties. The Government needs to strike a balance between restricting the level of rents tenants are paying and keeping ordinary landlords in the system. It is unclear how the motion as drafted would reconcile the desire to freeze rents for tenants while simultaneously seeking measures to stop the exit of landlords from the market. A blanket rent freeze will simply not grow or maintain the supply of much-needed accommodation in the rental market. It is highly likely that a blanket ban on rent increases for a significant duration would be the subject of legal challenge and would almost certainly deter continued investment in the rental accommodation market.

Regarding a tax credit for renters, the matters raised in the motion have arisen before now. The previous tax relief in respect of rent paid was abolished in the 2011 budget and it is no longer available to those who commenced renting for the first time from 8 December 2010. This followed a recommendation in a 2009 report by the Commission on Taxation that rent relief be discontinued. The view of this independent commission was that, in the same manner in which mortgage interest relief increases the cost of housing, rent relief increases the cost of private rental accommodation. Accordingly, the result of reintroducing this relief would be a transfer of Exchequer funds directly to landlords, which would not have the intended effect of reducing pressure on tenants. Pumping more money into the rental sector in a way that will just inflate prices will not help renters.

In order to ensure the RTB is fully resourced to deliver on its every-increasing mandate, €11 million current funding was secured for the RTB's operational costs in 2021, which is an additional €2 million on the previous year's funding of €9 million. Some €11 million current funding has also been secured for the RTB's operational costs in 2022. The RTB received sanction for an additional 41 staff since 2019 to ensure that its enhanced powers and the new legislative provisions are fully implemented and enforced. This includes the sanctions granted in 2021 by the Department of Public Expenditure and Reform for two new full-time permanent senior posts at principal officer level, and also for the remuneration of the director or CEO to be set at assistant secretary level. The authorised staff complement for the RTB is now 106.4 whole-time equivalents. The Department continues to engage with the RTB to guarantee that it has the funds and staffing it requires to effectively discharge its functions in the residential tenancies sector.

In accordance with both the programme for Government and Housing for All commitments, the Government has provided for tenancies of unlimited duration through the Residential Tenancies (Amendment) Act 2021. All new tenancies created on or after 11 June 2022 will become tenancies of unlimited duration once the tenancy has lasted more than six months and no notice of termination has been validly served on the tenant. This will enhance security of tenure for tenants and simplify the operation of the Residential Tenancies Acts 2004 to 2021 through a transition to tenancies of unlimited duration. This provision respects the landlord’s constitutionally protected rights to terminate a tenancy in accordance with section 34 of the Acts. The Government is fully committed to tackling high rents and ensuring an increase in the supply of affordable, high-quality rental accommodation through continued significant capital investment, including cost rental and other means, in a manner that respects security of tenure for renters by ensuring equity and fairness for landlords and tenants alike. Above all, we urgently need the supply of all tenures of housing to keep up with demand in the market. The supply is now ramping up and we have a plan to deliver that in Housing for All.

See this speech in context