Dáil debates

Tuesday, 9 December 2014

Topical Issue Debate

Local Authority Housing Rents

10:05 pm

Photo of Dessie EllisDessie Ellis (Dublin North West, Sinn Fein)
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Over the past three years, there has been much austerity coming from the Government. This has made life harder for struggling people on low and middle incomes. Some of the lowest paid and most vulnerable in society are tenants of local authorities. This is because of the very narrow parameters one has to fit between in order to be able to apply for social housing and the even more narrow parameters required for a person to actually be housed. People who fit into the first set of parameters almost always end up in private accommodation, receiving rent supplement that costs the State nearly €350 million annually. Recent rent increases in the private sector have pushed rent supplement to the limit and have done massive harm to many families. Far too many people have been made homeless due to these rent increases, so much so that there are record numbers in need of emergency accommodation. This kind of accommodation is bursting at the seams due to the failure of the Government to protect tenants from rent increases by implementing rent controls.

In the case of local authority homes, rent is controlled and it is much less likely that a tenant will lose his home. This is welcome, but the Government needs to strike a balance by having rent that is both fair and affordable. This balance has been struck in many ways, but we are dealing with people who live on extremely tight budgets and who have been the victims of many cuts over the past three years. The cut to the dole for young people was particularly hard. Increases in utility costs and the cuts to the household benefit, in addition to all the supplementary payments that must be made, took their toll on people living in council housing. The impending water charges loom large in the minds of these people. They will not pay, simply because they cannot pay.

Next summer a new rent scheme will come into place that will set base levels and thresholds for rent, in addition to bands. These may not change much, but there are some projections indicating that rents could increase for some people who really cannot afford to pay anything more. It may be an indictment of our economy and many other factors, but it is a reality that must be considered when setting the basic criteria for how local authority rent is charged.

I wish to ask the Minister about voluntary housing bodies and their rent levels. We recently saw the obscene set of circumstances in which a property that the State helped to develop was left idle because a Catholic housing association in Dublin was refusing to accept rents in line with the reality of what people could pay. Instead, it wanted market prices. Of course, most approved housing bodies charge a fair level of rent, give good service and are always eager to have their homes occupied, but a lesson must be learned from that. Common sense eventually did prevail.

Councils and approved bodies must continue to allow people to rent at a fair and affordable price. Will the Minister commit to not changing the rent scheme in any way that would result in higher rents? Senior citizens and such people who pay a certain rent could be affected if the proposals are implemented. I have examined some of the rent levels and am extremely worried that the new rent scheme will be much more disadvantageous. I ask the Minister to consider it very carefully. I realise we will be debating it thoroughly in 2015, but I just believe we need to examine it carefully now. I am worried about the bands that are being proposed.

Photo of Alan KellyAlan Kelly (Tipperary North, Labour)
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I thank the Deputy for raising this important issue. With regard to the issue he raised about the housing body, I know what he was referring to. As he is aware, discussions took place last night in order to solve the problem. I am happy that it is certainly moving in the right direction. Having said that, I share some of the Deputy's concerns and attitudes in respect of ensuring common sense prevails.

Consistency and fairness are at the heart of the new differential rent framework. Responsibility for setting local authority rents has been devolved as an executive function to individual local authorities since 1986. Under the new scheme, this will become a reserved function. While all housing authorities charge rents known as differential rents, related to the income of tenant households, the amount of rent varies from local authority to local authority across the country. This has led to a situation whereby similar households in comparable accommodation are charged varying amounts of differential rent depending on where they live and the local authority letting the accommodation. The rent regimes in individual local authority areas also differ on issues such as the types and amounts of income that are reckonable for differential rent purposes. There is no justification for this disparate and inconsistent approach to rent setting for accommodation that is funded wholly by the Exchequer. There are many cases that cause great concern, so this needs to be addressed.

Section 31 of the Housing (Miscellaneous Provisions) Act 2009 facilitates significant harmonisation of local authority rent levels while retaining the principle of having rents related to household income and leaving some discretion to individual authorities to determine rent policies in their areas. The new system, however, will be more equitable, transparent and consistent, with regulations providing for a base charge for each household member, amounting to €30 per week in the case of single-person households, which is identical to the rent contribution paid by single persons in receipt of rent supplement, and €45 per week for couples. Households with incomes in excess of thresholds to be set in regulation, which will be related to household composition, will also be required to pay a differential charge of a proportion of their income above the threshold.

Individual housing authorities are already empowered under the Housing Acts to include charges in the rent relating to the costs of works and services provided to dwellings.

The Government's Social Housing Strategy 2020, published a few weeks ago, indicated that the necessary statutory instruments will be made in the first quarter of next year to commence the process of introducing the new rents framework. The elected members of each local authority will then have a number of months to make their first rent scheme under the 2009 Act within the parameters laid down in the regulations.

A further commencement order will be made later in 2015 introducing rent charging under section 31. On the introduction of section 31 rents, housing authorities will have a two-year transitional period during which they will continue to set rents at their own discretion thus affording them the opportunity to move in incremental steps towards the rent levels that will apply on expiry of the transitional period.

Under an amendment of section 31 of the Housing (Miscellaneous Provisions) Act 2014, the new rent framework will apply also to rent contributions payable by beneficiaries under the new scheme of housing assistance currently being piloted by seven housing authorities. In the new year, I will prescribe the rent contributions payable in respect of housing assistance during the two-year transitional period for the introduction of the new rent framework.

10:15 pm

Photo of Dessie EllisDessie Ellis (Dublin North West, Sinn Fein)
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I agree that the practice in local authorities varies. That needs to be sorted out because it has been a hindrance and certainly has not been fair. I am totally in agreement with the Minister on that.

I am worried that in some ways this may cost a bit more. I mentioned the senior citizens and those who made financial contributions. Many of them made considerable contributions and ended up paying rent on top of that. In some cases in the past, I found tenants passed away within a short period and were still paying rent. Often they also pay, on top of their rent, for a boiler service and other matters.

There has also been a situation where differential rents, which has been used by Dublin City Council, have put the rents up so high. If a tenant's income increases, his or her rent goes as high, in some cases, as €200 or €300 per week. That does not make sense. Some voluntary housing bodies place caps on the maximum rent payable. We should be looking at providing for such a maximum and what that should be. It is ridiculous. I hold a local authority tenancy and I was paying €80 per week. Since I became a TD, I am paying nearly €300 per week. It is wrong. We should be encouraging social housing, not discouraging it.

I note the Minister plans to re-introduce the tenant-purchase scheme. We should also include in it that the proceeds of the scheme should be ringfenced for social housing. In the past, it ended up in a pile and did not go where it should have gone.

I have reservations about this scheme. We need to look much more carefully at some of the band levels the Minister has set and discussed. He is setting them a little lower and that will cause serious problems.

Photo of Alan KellyAlan Kelly (Tipperary North, Labour)
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This is something on which Deputy Ellis has considered views. In fairness, we are not a million miles apart on it. We agree. The two-year interim period is the period that we will use to sort out any issues that may arise. That is why I wanted it to be a two-year period. We need something consistent and fair and that shows tenants in the same bands are treated in the same way. Over the local authorities, if one analyses some of the rents that are being paid in various different local authorities, they do not stack up side by side as regards being fair and equitable.

We outlined the process by which we will do this. The two-year interim period will iron out any issues. I do not expect there to be many issues but that period can be used in that regard. I also point out that this is something that local authorities and many local authority members have requested. Of course, there will be a change in rents as a result of this. These changes will not be significant. I might also add that in some cases the rents will reduce. There will be an equilibrium.

In my time, which predates my time in this role, many local authority members across all political parties and none, and many local authority housing representatives, officials and CEOs, have requested that this be looked at. The framework, which leverages on previous legislation, including that introduced by previous Administrations, is welcome and is something that should be introduced.

I agree with Deputy Ellis on the tenant-purchase scheme. The tenant-purchase scheme is something I am initiating as part of the social housing strategy. I want to do so because it is critically important that we give tenants an opportunity to purchase their own homes. I also want to ensure the scheme is fair and equitable and that it will work. That is why a lot of energy will go in to ensure that happens. It is necessary because tenants should aspire to be able to purchase their own homes. I hope the scheme will operate in various different ways in order to facilitate tenants of different circumstances to be able to purchase their own home which is something we all desire.