Thursday, 30 April 2009
Social Welfare Benefits.
Question 9: To ask the Minister for Social and Family Affairs her views on a full review of rent supplement rather than a cost saving review in view of the recent changes announced in the 7 April 2009 budget. [17033/09]
Rent supplement is intended as a short-term income support for eligible tenants whose means are insufficient to meet their accommodation costs. There are currently almost 85,000 people in receipt of rent supplement, an increase of 42% since the end of December 2007. Rent supplements are subject to a limit on the amount of rent an applicant for rent supplement may incur. The objective is to ensure rent supplement is not paid in respect of excessively expensive accommodation, having regard to the size of the household and market conditions.
Rent limits have recently been reviewed. In testing the level at which basic accommodation can be secured, the Department was informed by analysis of a number of data sources. Data published by the Central Statistics Office show rents fell by almost 7% between November 2008 and February 2009. A leading property website reports that rents have fallen by around 12% in the past year. A similar trend is apparent in tenancies registered with the Private Residential Tenancies Board.
The recent supplementary budget provided for reduced maximum rent limits to be prescribed in regulations to take effect from 1 June 2009. Rent limits will be kept under review in light of trends in the private rental market. Payments being made to existing rent supplement tenants are being reduced by 8%. Also, from 1 June 2009 the minimum contributions payable towards rent is being increased from €18 to €24 per week to reflect downward trends in the private rental market and align the minimum weekly contribution individuals make towards their rent under the rent supplement scheme more closely with the rents local authority tenants have to pay.
Rent supplement will also be restricted to individuals who have been an existing tenant for six months. Individuals forming new households must have been placed on a local authority housing list following a full housing needs assessment before they are eligible for rent supplement. Some exemptions will apply and rent supplement will continue to provide support where exceptional circumstances exist in any individual case, for example, where the person is at risk of experiencing homelessness and-or hardship.
One of the measures introduced in recent years to address the issue of long-term rent supplementation is the rental accommodation scheme, RAS, which gives local authorities specific responsibility for meeting the long-term housing needs of people receiving rent supplement for 18 months or more.
It is not correct that the rent limits have been reviewed. The Minister took a blanket decision to reduce them and require tenants to pay more rent. If she had reviewed the limits, she would have made a fair decision based on the rent payable in each area.
Take-up of the rental accommodation scheme is only half of what was envisaged when the scheme was announced. Despite the brouhaha surrounding the budget announcement of 1,000 additional places under the scheme, this will increase take-up to marginally above half the number originally envisaged. Clearly, RAS is not working and must be reviewed.
In response to a priority question I tabled on this issue, the Minister stated the Revenue Commissioners have a system in place to chase down landlords, the ultimate recipients of rent supplement. Has this system been established in recent weeks? Some six weeks ago Deputies had an opportunity to put questions about this issue to representatives of the Revenue Commissioners and officials of the Department of Finance appearing before the Joint Committee on Social and Family Affairs. They indicated that such a system was not in place. Has a system been established in the meantime?
If the Minister were to introduce a deposit payments scheme, as I have proposed on several occasions, it would provide a series of mechanisms to save money without immediately affecting tenants or reducing their purchasing power. Will she establish such a scheme under the Private Residential Tenancies Board as opposed to under a new agency, given the potential of such a scheme to secure significant savings? A deposit payments scheme would also increase the power of tenants because landlords would be unable to get their hands on deposits.
A number of aspects of the rental accommodation scheme need to be reviewed. The significant expansion of the scheme in recent years, even prior to recent developments in the area of unemployment, raises questions, particularly as regards the formation of new households, young people etc. Issues also arise regarding the nature of the accommodation on offer, for instance, whether it is substandard. Another issue is the ability of people on rent supplement to obtain accommodation they would not be able to afford if they were in employment. In this context, the Department seeks to ensure we do not build into the system disincentives to work, an issue we discussed earlier.
A further issue, one which I have discussed with a number of housing officers, is the number of times individuals may be permitted to refuse an offer of social housing or to participate in the rental accommodation scheme before rent supplement is discontinued.
This is an issue. Thus far, 19,500 people have transferred to the rental accommodation scheme. I appreciate the importance of encouraging further transfers to the scheme. The Department is working closely with the Department of the Environment, Heritage and Local Government to ensure more places are made available.
While taxation is a matter for the Revenue Commissioners, it is crucial that landlords meet all their tax obligations. I will consult community welfare officers and housing officers on the operation of the scheme. My officials are also in constant contact with officials in the Department of the Environment, Heritage and Local Government about the scheme.
State expenditure of approximately €500 million per annum on rent supplement highlights the complete failure of the Government's housing strategy. An additional 1,000 places in the rental accommodation scheme is a drop in the ocean because the vast majority of people at the lower end of the private rented sector should be in the scheme. The Minister has failed to move quickly to address this issue.
Will the Minister explain precisely how the arbitrary cut of 8% in rent payments will work? Rents at the lower end of the market have not reduced by 8%. I refer to the grotty bedsits located all over Dublin and in other cities. Demand for cheap accommodation is increasing and there is no evidence to show rents have declined at the lower end of the market. I ask the Minister to explain what will happen in the case of a person in receipt of rent supplement living in a bedsit who approaches his or her landlord - provided the landlord can be found - and asks for an 8% rent reduction on the basis that rent supplement is being reduced. Such persons are in a contractual arrangement with their landlord and have signed a lease which could have ten months or more to run. If the landlord responds by telling the tenant to get lost, what should the tenant do?
Will the Minister confirm that no one will be made homeless as a result of this measure? Will she guarantee that a person whose landlord refuses to reduce the rent will continue to have rent supplement paid until alternative adequate accommodation is found? Will she also confirm that the measure will not increase costs on the State? Given that persons who manage to exit a contract will not have their deposit returned, will these moneys not be lost to the State?
Has the Minister taken legal advice on this issue because there is a legal view that the State, through the Department, is contractually obliged to honour leases already entered into with landlords? While I am aware the leases are agreed between tenants and landlords, the Department is involved in the contract through the operation of the rent supplement scheme, for instance, landlords must fill out a form and meet tax compliance requirements. It appears the Department is proposing to break contract law.
Money is paid to tenants who forward it to the landlord with whom they have an agreement. As I indicated, letters will issue to all tenants indicating that rent supplement will be reduced by 8%. As a result, tenants will be required to negotiate with their landlords. People who are working and experiencing a drop in their income are seeking and securing a reduction in their rents. Tenants who are on the rent supplement scheme will be able to negotiate with their landlords in a similar manner. As I indicated, community welfare officers have discretion in cases where persons are made homeless or suffer severe hardship.
What will be the position if landlords refuse to reduce rent? How will the tenant be fixed in such circumstances? Will the Department continue to pay rent supplement until he or she finds alternative accommodation? These are important questions because they relate to real people who will find themselves in very difficult circumstances.
One of the reasons for the decision to reduce rent supplement was the substantial decline in rents throughout the country. Rented accommodation has also become much more widely available. Landlords are aware that existing tenants have a choice. Losing a tenant imposes costs on landlords because they must prepare accommodation for new tenants and then find them. They would prefer to hold on to current tenants rather than go through such a process.
The Minister should be trying to persuade landlords to enter the rental accommodation scheme. I thank her for clarifying the position on whether landlords are paying tax on income from the rent supplement scheme. I ask her to raise this matter with the Minister for Finance because it is not acceptable for her to inform Deputies repeatedly during Question Time that the issue of taxation is a matter for the Minister for Finance. The Ministers both have seats at the Cabinet table and the Exchequer is losing revenue.
I ask the Minister to withdraw her comment that people are refusing offers of council houses and remaining on rent supplement. Failing that, she should at least provide figures on the number of people who have refused offers because I have not met any of them. It is in very rare circumstances that somebody does that. There are tens of thousands of people on the housing list in this country who are very anxious to get a property.
Did the Minister say people have to be on the housing list before they qualify for rent supplement? Is the she aware the delay in getting approval to be on the housing list can be quite long? What happens in the interim to people who might be waiting for months and months to get such approval?
The indication of people turning down accommodation came from housing officers who said because one can buy time where perhaps three offers would be made to a person, pending on when such offers would be made, one could perhaps buy an extra year or whatever in rental accommodation.
Regarding the last question-----
One new measure being introduced is that one must have been an existing tenant for six months, but if one is forming a new household, one has to go through the full housing assessment to qualify for housing, unless one is homeless, which is one of the criteria. I will of course raise all aspects of tax, particularly in this scheme. It is costing the State half a billion euro.
I again ask the Minister to clarify today what the position is for people who are on rent supplement, go to their landlord to try and negotiate and the landlord refuses to reduce the rent? Many people on rent supplement are in very vulnerable circumstances and do not have the kind of choices people in the private sector have. They may have children at a local school and cannot move to another part of the city. There may be other reasons why they cannot move easily. There may not be other accommodation available in the area.
I ask the Minister to advise what is the situation because this is very important and affects many people who are, generally, in very poor circumstances. If the landlord says he will not reduce the rent, what happens then? Can the Minister give a guarantee such rent supplement will continue to be paid at the full rate until such time as appropriate accommodation can be sourced for the person concerned?
I am not willing to allow a situation where those on rent supplement are dictating the rents and guaranteeing landlords an income they would not get from a private tenant. If a tenant goes to their landlord and the rent is not reduce the tenant can do exactly what they would do in a private situation, namely, threaten to leave or leave. However, if they find themselves in a homeless situation, something we want to avoid, we would be very anxious to protect those in that most vulnerable situation and the community welfare officer has discretion to look after such people.
People will end up homeless unless the Minister allows some time for them to find alternative accommodation. She needs to clarify what the reasonable period is with community welfare officers because otherwise people will be turfed out and will end up on the street as a result of this cost-cutting measure.
What percentage of the rent supplements are paid to landlords who are registered with the PRTB? Will the Minister make any changes to ensure the payment of the supplement is linked to the standard of the accommodation? It would be one way of sorting out the situation, particularly the very poor standard of bedsits. I understand some 172 were found in the last report not to meet the minimum standards.