Malcolm Noonan (Carlow-Kilkenny, Green Party) | Oireachtas source

Let me begin by thanking Deputy Ó Laoghaire for tabling this Bill for Second Stage debate, which the Government will not be opposing. As I understand it, the principle underpinning the Bill is to provide affordable, stable rents and rent certainty for tenants. I, and my Government colleagues, have worked since taking office to improve rent controls for tenants living in areas with high rental demand and facing the highest rents and sustained rent inflation.

In that spirit, the Government will not be opposing the Bill. However, it should be noted that, as currently drafted, the Bill has a number of technical and practical shortcomings which, if enacted, would have serious ramifications. Considerable action has been taken by successive Governments since 2016 to provide rent predictability in the private residential rental sector.

The rent predictability measure was introduced in December 2016 due to rapidly accelerating rental inflation in the sector and the need to control rents in certain areas with high rental demand. High rent inflation occurred on foot of a confluence of factors that resulted in an under-supply of both rental and owner occupier housing and growing demand for housing due to increased demographic household formation in a recovering economy after the financial crash.

The measure was implemented with immediate effect on 24 December 2016 in the administrative areas of the four Dublin local authorities and Cork city because they already met the criteria to be designated as RPZs. A further 50 local electoral areas, LEAs, and Kildare local authority area have since been designated as RPZs as their rent data met the criteria required under the Residential Tenancies Act 2004. This does not mean, and should not be taken to mean, that the Government is ignoring rent pressures in other areas. In fact, the law statutorily mandates both the Housing Agency and the RTB to monitor prevailing rents and report to the Minister, Deputy Darragh O'Brien, if an area should be designated as an RPZ.

I will go into some detail on this statutory process now. Section 24A of the Residential Tenancies Act 2004, as amended, provides that the Housing Agency, in consultation with housing authorities, may make a proposal to the Minister that an area should be considered for designation as an RPZ. Following receipt of such a proposal, the Minister requests the director of the RTB to conduct an assessment of the area to establish whether or not it meets the criteria under the Act for designation and to report to the Minister on whether the area should be designated as an RPZ. For the purpose of the Act, "area" is defined as either the administrative area of a housing authority or the LEA, 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 an RPZ.

The criteria to be satisfied by an area under section 24A(4) of the Residential Tenancies Act 2004 for designation as an RPZ are as follows. The information relating to the area, as determined by reference to the information used to compile each RTB rent index quarterly report, shows that an annual rate of increase in the average amount of rent for an area is more than 7% in each of at least four of the six quarters preceding the period immediately prior to the date of the Housing Agency's proposal, and the average rent for the area in the last quarter, again as determined by reference to the information used to compile each RTB rent index quarterly report, is, in the case of counties Kildare, Meath and Wicklow or an LEA in any one of those counties, above the average rent in the State, excluding rents in the four Dublin local authority areas. In the case of any LEA outside of the greater Dublin area, for example, Dublin, Kildare, Meath or Wicklow, above the average rent in the State, excluding rents in the greater Dublin area.

Each RTB quarterly rent index report includes a summary table of the data of the most recent six quarters used to establish whether each LEA fulfils the criteria for designation as an RPZ. This ensures transparency in relation to the position of an individual area in terms of its average rent levels and increases over the last six quarters and provides clear and objective information to underpin the legal justification for the Minister to designate an LEA as an RPZ, having met the criteria under the Act. Approximately 74% of tenancies in the private rental sector are covered by RPZ designations. It is important to note that the RPZ designation process is deliberately transparent to prevent political interference in the designation of new RPZs. The Minister can only designate RPZs in the manner outlined just now.

Due to lower rents in rural parts of some local authority areas having a drag effect on the average rent, rents in a given local authority area as a whole may not have reached levels in excess of the national average. This is why we have put in place a mechanism to enable smaller geographical areas, the LEAs, to be examined against the designation criteria. Consideration was given to using data from smaller areas, such as electoral divisions, but the rent data is not statistically robust at a lower level.

With regard to Carrigaline specifically, and by way of background for the House, the former Ballincollig-Carrigaline LEA was designated a RPZ on 27 January 2017 in accordance with section 24A of the Act.

Subsequently, new local electoral areas and municipal districts were signed into law on 31 January 2019 for Cork city and county, which took into account the expanded Cork City boundary for the May 2019 local elections. The new LEAs and municipal districts effectively split the former Ballincollig-Carrigaline LEA. Ballincollig became part of Cork City Council, while Carrigaline and its hinterland are now contained within its own LEA and municipal district. The new Carrigaline LEA is wholly within the administrative area of Cork County Council.

The areas within the new Carrigaline LEA, which were designated as an RPZ under the old Ballincollig-Carrigaline LEA, remain designated as an RPZ under section 24A(6) of the Act, which 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." Under section 24A(6), therefore, areas already designated as RPZs will remain designated and areas that are not designated nor were due to become part of Cork City Council will retain their current undesignated status. Areas within the new Carrigaline LEA that were not previously designated as an RPZ remain undesignated.

The Residential Tenancies (Amendment) Act 2019 provides that any area falling within the new Cork City Council boundary, which was not already within an RPZ, became an RPZ from 31 May 2019. The data from the rent index report for the third quarter 2022 relating to the local electoral area of Carrigaline shows that while average rents in the Carrigaline area are above the non-GDA standardised average rent of €1,047.15, rent inflation in the LEA has been above 7% in just three, and not four, of the past six quarters. Accordingly, Carrigaline LEA does not fully satisfy the criteria for designation as an RPZ at this time. The Housing Agency will continue to monitor the rental market and may recommend further areas for designation. Where, following the procedures set out in the Act, it is found at a future date that additional areas meet the criteria, they will be designated as RPZs.

On an initial assessment of the Bill, section 2 presents the biggest challenge to the application of the existing rent controls, which are designed to avoid any political pressure for electoral boundary change. I accept that the Bill is put forward in good faith and I know the Deputy has been working on it for a considerable time. The section seeks to amend section 2 of the Local Government Act 2019 to include the new Carrigaline LEA within the boundary of Cork City Council, with the intent of being covered by rent controls. As I have said, the design of the rent predictability measure provides that any order designating an LEA as an RPZ should not be impacted by subsequent LEA boundary changes. Rent controls were designed to operate objectively, without political influence.

Section 2 would have far-reaching impacts for both Cork City Council and Cork County Council. Work on the Cork boundary alteration began in January 2015 and concluded in December 2020, which was a period of six years. It was a considerable logistical exercise that required careful evaluation and planning. The Bill, if enacted, would have serious ramifications for the two local authorities involved. I think the Deputy will agree is disproportionate to the intent of his Bill.

Section 3 proposes to amend section 24B of the Residential Tenancies Acts to require the Minister to designate the entirety of an LEA, post-boundary change, as an RPZ where a substantial area of that LEA has already been designated if the Minister is satisfied that to so designate would be fair and in keeping with the intent of Part 3 of the Acts.

Part 3 provides for rents and rent reviews including the RPZ rent controls, which are designed to operate objectively and without political influence. Accordingly, there is legal and political complexity involved and difficulties are likely to arise with the current wording of the Bill.

In conclusion, the Government is acutely aware of the difficulties faced by people in Ireland’s private rental sector. The Government will not oppose the Bill and will work with the Deputy, as he has asked us to do. The issue that he has raised merits careful consideration as part of the review of the sector, which is under way. The principle underpinning the Bill is not opposed by Government and it is in order for the Bill to proceed to pre-legislative scrutiny.

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