Wednesday, 4 March 2015
Ceisteanna - Questions - Priority Questions
Private Rented Accommodation Costs and Controls
5. To ask the Minister for Environment, Community and Local Government if he will report on his meeting with the Irish Property Owners Association; in view of rising rents and the homelessness crisis, his plans on addressing rising rents; his further plans to introduce rent controls; and the other reforms with regard to the rights of tenants, and the tax treatment of rental income, that are being considered. [9120/15]
I ask the Minister to report on his reported meeting with the Irish Property Owners Association and, in view of rising rents and the homeless crisis, the plans to address the rent crisis affecting people. I understand reference was made at the Labour Party conference to something approaching rent controls but referred to as rent certainty. The Minister might provide more detail on that. Does he have any plans to increase the rights of tenants because the absence of a legal framework providing security of tenure for tenants is a major factor? There has also been some discussion on the tax treatment of rental income.
The meeting which the Minister, Deputy Kelly, held with the Irish Property Owners Association was part of the consultations my Department is having with a range of stakeholders in regard to the development of legislative proposals. In that context, the association raised certain issues of interest to it, including the taxation treatment of landlords and the Housing (Standards for Rented Houses) Regulations.
Fundamentally, the main cause of rising rents is a lack of supply in the market. The implementation of the range of actions under the Government’s Construction 2020 strategy will support increased housing supply. In addition, the Social Housing Strategy 2020 published in November of last year sets out clear, measurable actions and targets to increase the supply of social housing, reform delivery arrangements and meet the housing needs of all households on the housing list.
The report Rent Stability in the Private Rented Sector, commissioned by the Private Residential Tenancies Board, PRTB, and published in autumn of last year, includes an examination of rent regulation regimes in other countries and puts forward a series of policy options on rent stability for consideration. These include options in regard to rent regulation as well as measures aimed at increasing awareness of tenant rights under the existing legislation.
The Government is monitoring the rental market closely and we are considering a number of policy options in regard to achieving greater rent certainty. The options put forward in the Rent Stability in the Private Rented Sector report I referred to form part of these considerations. The Government's overriding objective in regard to rents is to achieve stability and sustainability in the market for the benefit of tenants, landlords and society as a whole.
The Government underestimates the seriousness of this problem. We cannot just decide to wait and build houses at the slow rate referred to in the Government's housing strategy. According to the CSO, almost one third of people rent accommodation.
They are faced with rent increases of over 10% in Dublin in the past year. A recent report by the National Association of Building Co-operatives, NABCO, states that 23% of all tenants are afraid of losing their home. That is reflected in the calls that I get to my office, as I am sure other Members do, of tenants being bullied by landlords pushing them out in order to increase rents for others. The figures are worst for those on low incomes where 45% are afraid of losing their home. One third of tenants do not know whether they have a formal lease. Only 7% identify themselves as having a Part 4 tenancy.
Action is needed on this now. Action could be taken and central to that is rent controls. We do not need temporary rent controls in certain areas. We need rent controls, as exist in many other European and developed countries, to limit the profiteering that is going on at the expense of generally low-paid workers.
I assure the Deputy that the Government certainly does not underestimate the problem. We recognise that there is pent-up demand and we are doing what we can to address that. To do that, we need to adopt strategies. As I already outlined, the "Social Housing Strategy 2020" and the "Construction 2020" strategy address in a multifaceted way the delivery of more units for those who need them and to meet the demand. Unless we increase the supply of houses, rent will always be a problem in this country. The Government has already announced how it will invest heavily in the delivery of extra units. We are prioritising and front-loading the refurbishment of voids in the main urban centres to relieve some of the pressure and a number of housing projects and allocations will be announced shortly to further enhance that.
The PRTB refers to rent control, about which Deputy Paul Murphy speaks. Research shows that crude rent caps lead to a reduction in the supply of rental units. We need to be careful here that whatever interventions the Government makes do not reduce what we all know is needed, that is, an increased supply in this area.
In the real world, rent controls and rent caps do not lead to a decrease in supply. That exists in the world of neoliberal economists who simply look at supply and demand charts, but that is not how it happens. Landlords act as landlords as long as they can make an amount of money which can be made, including with rent controls.
Rising rents are a key factor in the homelessness crisis. According to Mr. Mike Allen, 52 persons were made homeless in January as a result of rising rents. Threshold has repeatedly identified rising rents as the key factor in driving homelessness.
On the question of an increase in supply, I agree that we need an increase in supply of housing in the housing market. What the Minister stated repeatedly earlier, that this is the biggest house building programme in the State, is not true when measured by houses, which is surely the only way one can measure it. In the strategy for 35,000 additional social units, 11,000 plus units are leased, that is, rented from private landlords, and almost 2,500 are refurbished voids, which leaves approximately 22,500 which will be built or bought, a rate of under 4,000 units per year. That is not the biggest house building programme in the State. It is a small housing building programme when compared to those in the 1970s and 1980s, when there were 6,000, 7,000 or 8,000 homes built in a year, or at earlier stages. That is not enough, neither is the failure to move on rent controls to deal with these crises.
As I stated at the outset, the strategy the Government is currently pursuing is showing an increase in the supply of units. We expect that to increase substantially over the coming year.
This is a multifaceted approach. Deputy Paul Murphy is correct in stating that we need to protect tenants when they are in their homes. That is why the PRTB and Threshold now have a protocol that will assist tenants where they are under threat of having to leave their home. That is working around the country.
Also, community welfare officers have discretion, through the Department of Social Protection, to assist tenants who are under pressure with regards to their rent on a case-by-case basis. Also, the PRTB is currently undertaking a national awareness campaign with regard to tenants' rights because often tenants are leaving homes unnecessarily due to pressure. It behoves all of us as public representatives to ensure that tenants are fully aware of their rights and to assure them that they are protected as far as possible under current legislation.
I repeat the Government is considering all options. We are looking at measures to introduce rent certainty but at the end of the day the housing market must be normalised so that we create stability and, more important, sustainability within the market so that tenants can remain in their homes at affordable rates.