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

I thank the Deputies for bringing forward this Bill. However, the Government will be opposing it. Aside from its technical and practical operational shortcomings, it would in all likelihood quickly face significant risk of legal challenge and is likely to have a severely detrimental effect on the supply of much-needed rental property. The Government is acutely aware that rents are very high in many areas as a result of pent-up pressures and supply constraints. The most effective way to assist renters is to increase supply and accelerate delivery of housing for private renters, including for cost rental and social housing. While supply builds, the Government has in place legally permissible and targeted measures to control rents.

It is not clear to me from this Private Members' Bill but I suspect the potential impacts of this Bill have not been adequately considered or proofed from a legal or economic perspective. The reduction of rents in an arbitrary fashion is not going to increase the supply of rental accommodation and is highly likely to fall foul of the Constitution. Supply is our constraint. Rents rise if demand outstrips supply. This Bill will not stop landlords leaving the sector or encourage new landlords to enter the market. We all want affordable rents for people but we must recognise the need to secure the provision of additional supply of rental accommodation. The Government has to strike a balance between restricting the level of rents tenants are paying and keeping ordinary landlords in the system. The Government seeks balance and fairness in residential rental accommodation. We will carefully examine and consider any impending proposals from the Housing Commission, including from a housing tenure perspective. The simple fact is we need residential rental accommodation. We need landlords. The Deputies proposing this Bill will be aware of the exodus of small landlords from the market and the effect this is having on tenants and tenancies. We are all aware of people seeking our assistance as their landlord has served them a notice to quit because they are selling their house. We need to support small landlords to remain in the market while we increase supply. Unfortunately, this Bill would do the opposite.

We need strong regulation and enforcement to deal with any unlawful activity in the sector, including the setting of unlawful and unaffordable rents. Only 2% of all tenancies become subject to dispute resolution in the Residential Tenancies Board, RTB. Redress is available to all tenants and all registered landlords through the RTB. The Government has a proven record in quickly addressing pressures on rents. The Residential Tenancies (No. 2) Act 2021 introduced measures last July to extend the operation of rent pressure zones, RPZs, until the end of 2024 and to prohibit any necessary rent increase in an RPZ from exceeding general inflation, as recorded by the harmonised index of consumer prices, HICP. From 11 December 2021, the Residential Tenancies (Amendment) Act 2021 caps rent increases in RPZs at 2% per annum pro rata, when the HICP inflation rate is higher. The 2% cap remains necessary and effective in the context of fast-rising inflation. Data from the Central Statistics Office, CSO, for May 2022 show HICP inflation of 8.3% while the flash estimate for June 2022 is 9.6%. Therefore, under the current law, a potential rent increase of 9.6% in line with inflation is capped at 2%. This cap has resulted in far lower rent increases, where they were sought, for the estimated 75% of all tenancies covered by rent controls. These Government measures are legally sound. I do not believe the same can be said for the measures in this Bill.

I will address the substantive issues with this Bill. The key aim of the Bill, via section 2, is to reduce rents by limiting them to not greater than 25% of local monthly nominal median household disposable income for households of the relevant size or 25% of local national nominal median household disposable income for households of the relevant size, whichever is the lower, as determined by a national rent authority. The Bill seeks to establish this new State body at additional cost to the Exchequer. I am not clear on how the body is to interact with the RTB or whether any interaction is proposed. The Bill provides for the State body to be comprised of tenant and employee representatives. I do not see the necessary balance, independence or fairness in the Bill generally but the proposed composition of the new State body is of particular concern.

The Bill also seeks within 12 months to reduce, if necessary, existing rents to no more than 25% of disposable income. An exemption to the blanket rent restriction is to be provided for luxury accommodation. The Bill proposes to empower the Minister for Housing, Local Government and Heritage to make regulations to establish a new State body whose functions will include determining the criteria for the designation of certain properties as luxury accommodation. No more than 5% of all accommodation can be so designated in any local area. Other Deputies across the House would agree it would be more appropriate to establish any new State body through primary law debated in the Houses of the Oireachtas. Costs to the Exchequer will arise in the operation of a new State body and its establishment would need to be on a sound legal footing. The proposed method of determining rent price ceilings by linking them to household size could incentivise landlords to favour larger households and would bring a risk of overcrowding.

I stand over the Government’s actions to date to enhance the operation of the rental market. Our interventions and the actions we are taking are comprehensive, targeted and legally sound. As Deputies will know, a key element of existing policy centres on the designation of RPZs in areas where rents are highest and increasing most. The Planning and Development (Housing) and Residential Tenancies Act 2016 introduced a rent predictability measure to moderate rent increases in those parts of the country where rents are highest and rising fastest. The Residential Tenancies (No. 2) Act 2021 introduced measures in July 2021 to extend the operation of RPZs until the end of 2024.

The current rent pressure zone rent increase cap of 2%, where the inflation rate is higher, is a considerable advancement since 2016. No rent set can exceed market rent. The RTB continues its work in resolving tenancy disputes. Lawful rent setting is being enforced. The Government will be addressing the rising costs in the upcoming budget and is fully aware of the affordability challenges being faced by people throughout the country, including by renters.

I do not believe that the Bill before us would ultimately help renters. Forced rent reductions would negatively impact on the supply of rental properties, ultimately building further pressure on rent levels. It would drive many small landlords out of the market and it would direct more tenants into homelessness. The measures introduced by the Government to date provide timely, effective and proportionate responses to help all tenants in rent pressure zones. Tenants outside of rent pressure zones can have their rent increased every second year, which provides rent certainty for at least two years. Aside from the legal issues, the Government believes that a blanket reduction of rents could be counterproductive. It puts a significant risk on the investment in the supply and upkeep of rental properties.

I genuinely thank all the Deputies for their contributions on the matters put forward in this Bill. The Minister, Deputy O'Brien, and the Government are working very hard to try to put forward a comprehensive response, through Housing For All, to this huge challenge being faced by the State.

With regard to comments made at the start by Deputy Boyd Barrett and Deputy Murphy, they will be happy to hear that I am not a landlord. I do not know what data the Deputies have on the Opposition Members and where the largest landlords in the State are among representatives in this House. It is absolutely incredible to state that a majority of this Dáil, which last night voted confidence in this Government, is anything to do with the composition of its Members and their backgrounds. All of us in this House are elected by the people. They have the ultimate control around who represents them in this democracy. I hear the Deputies, week in and week out, elegantly talking about the rental issue. I wonder how many more housing units the Opposition will object to for visual amenity reasons? It is more than 1,000 at this stage in their own communities. This really prevents people trying to get stable housing and stable tenancies. As a Government, we are trying to increase supply while the Deputies opposite are trying to stop it. It is the reverse of what we are trying to do. We are all meeting people in our clinics and our constituencies throughout the country who are very frustrated. The Opposition is focused on sound bites and coming in here to shout every single week-----

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