Thursday, 18 May 2017
Residential Tenancies (Housing Emergency Measures in the Public Interest) (Amendment) Bill 2016: Second Stage [Private Members]
I will be glad when he is. I have become increasingly frustrated in recent months because the critical issues facing huge numbers of citizens will be drowned out. They are already being drowned out in the hubbub of the personality contest that is occurring within Fine Gael. Certainly, my frustration has escalated in the past few days. The media is awash and I fear will be for weeks with the beauty contest between the two candidates for Fine Gael leadership, thereby drowning out critical issues of importance to our citizens. While the identity of the next Taoiseach is not an unimportant issue, it certainly should not be allowed to drown out critical issues facing ordinary people. No issue is more critical than the housing, homelessness, eviction and rental crisis now facing tens of thousands of our citizens and inflicting really appalling hardship on them. I argue very strongly that the evidence is now piling up daily to show the Government's approach to dealing with this crisis is failing disastrously. In particular, the Rebuilding Ireland plan and the residential tendencies legislation brought in by the Minister, Deputy Simon Coveney, in December have absolutely failed and will fail further to address a crisis or emergency that is absolutely spiralling out of control.
In the past couple of weeks, I have used the time available to me during Leaders' Questions to try to highlight just how bad the circumstances are in a number of areas and how existing policies and legislation have failed to deal with the real crisis faced by families, individuals and, tragically, children right across the city and urban areas throughout the country. That failure comes in a number of forms. We do not believe this Bill alone is the panacea to all the problems that need to be addressed if we are to deal with this emergency but it is part of a suite of measures that need to be implemented urgently on an emergency basis to stem this crisis.
What is in the wider suite of measures? We have said multiple times – I will not spend a great deal of time going through this – that the ultimate solution to the current crisis is the provision of a massive amount of council housing, directly provided by the State and local authorities. I do not refer to the outsourcing of social housing to the private sector. What I propose is the critical step. We also need to stop immediately selling off, via NAMA, residential property, land banks and so on to vulture funds that are gaining oligopolistic control, or a virtual monopoly, over residential property and land, thereby ratcheting up rents, evicting people and escalating the housing crisis. One critical aspect of what needs to be done is contained in this Bill, the purpose of which is to deal with spiralling rents and the eviction crisis. Prior to December, the Bill of the Minister claimed to be an effort to address this. I put it to him that recent weeks have shown clearly that it failed to do so because it is riddled with loopholes. Those loopholes were particularly demonstrated in the Robin Hill case. Mistake number one in wider policy terms is NAMA selling off huge portfolios of residential properties to the vulture funds to give them the opportunity to ratchet up rents and evict people. In terms of what they can do to tenants, the flaws in the Minister's legislation become clear. The rent pressure zones, which are not dissimilar from the four rent zones we propose in this Bill, which are supposed to limit rent increases to 4% per year, have a number of key get-out clauses for vulture funds, as we have seen with Robin Hill. Tragically, I believe we will see a lot more of this. Think about the size of Project Gem, with its assets worth €3 billion. We are going to see more of this.
What are the loopholes? The first is that if the landlords claim they are refurbishing the apartments substantially, they can go beyond 4%. The second is that they can introduce backdoor charges. In the case of Robin Hill, heating and hot water charges may be introduced effectively to increase the rent dramatically at a rate way beyond 4%. The third is that the legislation of the Minister allows the landlords to go beyond 4% if they can make a case that the rent they are charging, to which they are restricted in the rent pressure zones, is leading to a significant loss vis-à-vis what they would make if they got the full market value.
These are major get-out clauses, all of which are being exploited by the new owner, Cerberus, the vulture fund, in Robin Hill. The other big loophole is the Tyrrelstown amendment about which we warned the Minister. Allowing for up to nine people to be evicted in multi-unit complexes means that is what landlords will do. They evict up to nine people in phases over time. All of this is happening in Robin Hill, highlighting the major flaws in the Minister's legislation.
The Bill also seeks to address another flawed central element of his housing policy in respect of the housing assistance payment, HAP. HAP was described by him as a secure form of social housing and we have discovered over the past few weeks tenants who had been homeless, sometimes for a year or two years, and who then secured HAP accommodation thinking they had secure social housing being told by their landlords, "Sorry, I am selling up and I am evicting you". They are faced with homelessness again. Amanda, a young woman, attended our press conference about the Bill earlier. She wrote to me, stating:
I was homeless last year. I was told HAP was my only option to get myself out of homelessness. Now a year later I am now facing homelessness again. I can't find a property to rent within the HAP limits for my family size. The stress of the situation has really taken its toll on my health. I am suffering with postnatal depression and now I am feeling a lot worse than I was before. I cannot even sleep anymore. It's just a constant worry not only for me but for my three kids. I lost everything when I was homeless before but I built my life back up and got things together for the kids. Now we are back to square one. It's devastating. All I want is a secure home.
When she was told to find another HAP tenancy, which cannot be found, she pointed out to the council that she did not have the money for a deposit even if she found one. The officials said she had a deposit with her existing landlord and they would not give her another one. It is impossible. This is against a background where the Simon Community reported earlier this week that average rent in Dublin for a two-bedroom property is €2,629 a month compared with a HAP limit of €1,275. This is incredible. The HAP support is, therefore, less than half the average rent in Dublin for a property of this size. The scheme cannot work and it is not working with people like Amanda suffering the consequences.
Against that background, our Bill does something simple. It first recognises that there is an emergency and establishes an emergency regime to deal with areas in which homelessness and the rental crisis are out of control, giving the Minister power to designate them as "fair rent areas". He can do this because the authors of this Bill worked with Deputies Bríd Smith, Gino Kenny and with me. They dealt extensively with the Parliament's legal advisers and it has been crafted to essentially employ the same logic as the financial emergency measures in the public interest, FEMPI, legislation, which was used to cut public service pay and pensions. The Government can introduce emergency legislation and get around so-called constitutional barriers on the basis of declaring of an emergency in the housing sector. The legislation gives the Minister the power to declare an emergency in particular areas and to take emergency measures that follow from that. Among the measures, he can pin rents back to 2011 levels. Since 2011, rents have increased by 60% to the unaffordable levels I have outlined. If the Minister did what the Bill proposes and used 2011 as the baseline for rents while taking account of increases in the consumer price index, CPI, and wages, average rents in Dublin would fall to around the HAP limits. In other words, HAP might be viable. I do not agree with it as a solution but it might at some level be viable if the Minister did this, otherwise, it is a complete fantasy, which will lead to an ever worsening crisis. The emergency measures allow for consultation and submissions to be made to the PRTB, which will set fair rents, but the baseline is 2011 rents before the 60% increase in subsequent years. This also takes into account CPI and wage increases. The CPI has increased by 1.6% since 2011 while wages have increased by 2.6%. Rent increases have outstripped increases in the CPI and wages by a multiple of 15, which is unsustainable. The legislation seeks to address this on the same basis that the FEMPI legislation unjustly cut the pay and pensions of public sector workers.
The other key issue the legislation addresses in fair rent areas is security of tenure. This would prevent what is happening in Robin Hill and what is happening to people like Amanda who is being evicted by a HAP landlord because in those areas it would remove almost all the existing grounds for eviction, including sale, except for emergency circumstances for the family of the owner of the property. The owners could make a case to the PRTB that they need the place for themselves. However, this would prevent vulture funds from evicting people with spurious justifications to secure vacant possession to ratchet up rents and drive people into homelessness. This is a fair and reasonable provision. It would provide for it on an ongoing basis but at least the power should be introduced to do it in areas where there is an emergency. Whatever the Minister may say about the wider philosophical issue of rent controls, this should be done in the here and now to prevent the profiteering on rents that is leading directly to evictions, homelessness and a social catastrophe, which is inflicting incredible hardship on people. This can be done through this robust legislation. We do not say it is the complete solution by any means. We need a major social housing programme and a right to housing established in the Constitution with rebalanced property rights for the common good. These measures could prevent the economic evictions that are taking place, and the rent racketeering that is driving people into homelessness. I appeal to the Government, the Minister and the House to support the legislation.
I thank Deputies Bríd Smith, Boyd Barrett and Gino Kenny for bringing forward the Bill and providing us with another opportunity to discuss the development of the rental sector, which is an absolute priority for me and for the Government. As Deputies will be aware, I have tabled an amendment to the motion. Unfortunately, I will be unable to support the legislation as is.
While I acknowledge the Bill’s relevance in the context of the current market conditions in the residential rental sector, the Deputies will appreciate that the proposal once again raises issues that have been addressed in the passage of recent legislation and in the Government's strategy for the rental sector, which was launched on 13 December 2016. The strategy contains 29 actions, aimed at achieving improvements in security, standards, services and supply in the residential rental sector. The Planning and Development (Housing) and Residential Tenancies Act 2016, which was signed by the President on 23 December put many of these actions into effect, including the rent predictability measure, which established the system of RPZs. Families remain under pressure in the rental sector but anyone who thinks there are overnight solutions is wrong. The positive impacts of our strategy are being felt and rental inflation is moderating. Supply indicators are all moving in the right direction as well but I acknowledge not fast enough. It would be premature to revisit the decisions of the House on the new rental legislation after much consideration in a few short months.
In addition, the measures in the Bill risk undermining stability and confidence in the rental sector and negatively impacting on existing and future supply of rental accommodation.
We all know that strong economic performance and demographic trends mean that demand in the rental sector is high and is likely to remain strong into the future. The sector has doubled in size over the course of the last 20 years. Population growth, economic recovery and challenges in the home ownership market are all driving increased demand for rented housing at present. The changing nature of work also contributes to the growth in demand in the rental sector. Firms increasingly need more mobile workforces, and changing location and employer has become a more common feature in most people's careers. There is an increasing need and a growing demand for the more flexible housing solutions that only the rental sector can offer.
To date, the rental market in Ireland has not responded well to this increased demand. The levels of new investment and the numbers of new rental units coming onto the market are low and in many parts of the country, particularly urban areas of high population density, demand for rental accommodation far outstrips supply. In these areas, rents have been spiralling upwards and people, including many ordinary working families, are finding it more and more difficult to find accommodation they can afford. This situation is unsustainable, causing uncertainty and hardship for many, contributing to homelessness and threatening our economic recovery by undermining competitiveness, driving up wage demands and making Ireland a less attractive investment destination.
The last Government made some important improvements. Significant amendments to the Residential Tenancies Act introduced in December 2015 mean that the minimum period between rent reviews for tenancies has increased from 12 to 24 months. This will apply for a four-year period, until 2019. In addition, the minimum period of notice of new rent is increased from 28 days to 90 days and longer notice periods for the termination of long-term tenancies have been introduced.
I have gone further, with a comprehensive package of reforms of the entire rented sector, addressing issues of security of tenure, supply, services and standards. While the acute pressures on the rental market mean that we need to manage the inflation of rent prices in the short term, ultimately, the most effective way to reduce and stabilise rents in the medium to long-term, and benefit the entire sector, is to increase supply and accelerate delivery of housing for the private and social rental sectors. That is why, in Rebuilding Ireland, the Government has set out a practical and readily implementable set of actions to increase and accelerate housing delivery across all tenures to help individuals and families meet their housing needs. As of today the most recent figures of the number of social houses now in the pipeline is over 10,000 across 607 different sites across the country at various different stages. That figure was 8,400 last January. We are accelerating delivery. We are opening up more sites through local authorities and approved housing bodies, which I think is what the Deputies are calling for.
Together with the strategy for the rental sector, the housing policy sets out over 100 actions that the Government is taking through new policy, new legislation and innovative measures to achieve increased supply. Supply measures include the use of public land. My Department has requested local authorities in rent pressure zones to use publicly owned sites to kickstart supply. Dublin City Council has brought forward a land initiative project covering the three sites at O’Devaney Gardens, Oscar Traynor road and St. Michael's, Inchicore, and is seeking partners to deliver a mix of social, affordable and private housing.
We are also supporting more build to rent development through pathfinder sites to help ensure a more supportive regulatory approach. In February, I launched major infrastructure works on the Cherrywood site in Dublin costing €35 million, a first step towards the delivery of over 1,300 new build-to-rent homes, which will start later this year. The repair and lease scheme, under which local authorities will refurbish vacant properties and lease them from their owners, was rolled out nationwide in February to bring vacant properties back into use. This will deliver 3,500 properties by 2021 and cost just over €150 million. Funding this year will cover getting 800 dwellings back into use for families on the social housing list.
On foot of a commitment contained in the strategy for the rental sector, the Department of Finance has set up a working group on tax and fiscal treatment of landlords. This group will examine and report on the tax treatment of landlords, and, having due regard to the critical role of landlords in a properly functioning rental sector, will put forward options where appropriate for amendments to the tax treatment. The working group is chaired by the Department of Finance and includes officials from the Department of Housing, Planning, Community and Local Government, the Revenue Commissioners and the Residential Tenancies Board. This group will report to Government on potential tax measures in the middle of the year.
Although supply is the central problem, we cannot ignore the high and rising levels of rent in certain areas of the country. The strategy for the rental sector recognises that rapidly increasing rental inflation is the most significant challenge to security of tenure in the rental sector at present and that there is a need for a targeted, time-bound and transparent policy response to the issue of rising rents. That is why the Government has introduced the rent predictability measure and established a system of rent pressure zones.
The rent predictability measure is one of the most significant actions provided for in the strategy. The measure was enacted by the Planning and Development (Housing) and Residential Tenancies Act 2016 and introduced the concept of rent pressure zones to moderate the rate of rent increases in those areas of the country where rents are highest and rising quickly. Rent pressure zones are defined as areas where rent increases have been 7% or more in four of the last six quarters - that is annual rental inflation - and where the rent levels are already above the national average. Once an area is designated a rent pressure zone, rent increases are capped at 4% per annum for up to three years.
Rent pressure zones were introduced with immediate effect last December across the four Dublin local authority areas and in Cork city. On 26 January, I made an order designating a further 12 local electoral areas as rent pressure zones in parts of counties Cork, Galway, Kildare, Meath and Wicklow. On 29 March, I made another two orders designating Maynooth and Cobh as rent pressure zones. Altogether, some 57% of tenancies nationally are now located in rent pressure zones.
Following on from the introduction of rent pressure zones at the end of last year. The methodology for producing the Residential Tenancies Board, RTB, rent index has been revised and developed so that we can now use the RTB data to calculate and monitor changes in average rents at the level of local electoral areas, which allows us to be much more targeted. Up until now, this has only been possible to do from a local authority perspective - Dublin versus the rest of the country, in fact. The new approach recognises that the same pressures do not apply equally in all parts of the country and gives us the objective evidence base we need to appropriately target the rent predictability measure we introduced last year and designate the correct areas as rent pressure zones.
The practical effect of these measures is that over 186,000 households that currently rent their homes in these areas now know exactly what maximum rent they will have to pay over the next three years. It also means that the rents they will have to pay will be lower than they would otherwise have to pay if the market was allowed to continue as was previously the case. We have also taken account of legitimate concerns that rent regulation can discourage investment in supply. The measure allows exemptions for new rental properties and for those which have been substantially refurbished, thus ensuring a predictable and fair return on investment for landlords. The measure is also time-bound, providing that rents can be capped in an area for a period of three years only to allow for additional supply to come on-stream.
It is essential that any measures taken to address rental prices do not jeopardise supply. So while I appreciate the motivation behind the Residential Tenancies (Housing Emergency Measures in the Public Interest) (Amendment) Bill 2016, its provisions would have a negative effect on both existing and future supply of rental accommodation and risk perpetuating the very imbalance between demand and supply that is driving rental price inflation. Without counterbalancing measures, there is a very real risk that the measures proposed in this Bill would force existing supply to exit the market and discourage future supply for the sector, making the problem much worse. That is why, although I agree with the intention of the proposers to achieve more affordable rents and increased security of tenure, I believe the rent predictability measures that I have already introduced, in addition to the other measures contained in the rental strategy, will bring increased security and provide significant certainty to both landlords and tenants by allowing for reasonable growth in rents while preventing the instability and uncertainty caused by volatility such as we have seen in the last number of years.
The pressures in the rental market are borne out by the data published by daft.ierecently. This shows that rent asking prices rose nationwide by an average of 13.4% in the year to March. In Dublin rents increased by 13.9%, while rents outside of Dublin increased by 12.7%. However, the report also shows that rent inflation has slowed over the last quarter. The rate of increase in Dublin for rent prices between the fourth quarter of 2016 and the first quarter of 2017 was significantly slower than the rate of increase over the year. The annual inflation figure of 13.9% implies an average quarterly inflation of 3.5%. The quarterly inflation registered in the first quarter of 2017 was less than half of this with south County Dublin at 0.7%, west County Dublin at 1.4%, north County Dublin at 1.6%, north city at 1.5%, city centre at 2.1% and south city at 1.4%. Dublin was designated as a rent pressure zone in December 2016. The daft.iereport data for Dublin shows that the rate of rent price increases has dropped since then. Therefore, I believe it is having an effect. It is not perfect, but it is certainly having an effect.
Through implementing the rent predictability measure and establishing the rent pressure zones, the Government has already substantively addressed the objective of this Bill. In passing the relevant legislation the House has already extensively discussed and reached decisions on the issues and options involved. The rent predictability measure currently being implemented does cover the majority of private tenancies that are under real pressure today.
A significant change, of course, such as that involved in undertaking the rent control provisions contained in this Bill, is not appropriate until we have had the opportunity to review the effectiveness and impact of rent pressure zones. We are due to do that in the summer, by the middle of the year. I have already committed to carrying out that review in June this year. At that point, the provisions will have been in place for six months, we will have data from the Residential Tenancies Board and it will be possible to ascertain the effectiveness of the rent predictability measures that we introduced before Christmas and whether any changes, amendments or improvements need to be made. The review will provide the opportunity for Deputies to propose and discuss any new ideas in this regard.
I will issue a word of caution. We are committed to that review - of course we are. That was the basis on which some Deputies supported the legislation before Christmas. We will honour the commitments that we made. However, I believe we need to be careful. The property sector, and in particular the rental market, cannot bear dramatic changes on a regular basis. We need to give certainty, on the back of which we will get investment. We need to give certainty to tenants too. We cannot give the impression that we are going to change this dramatically every six months. Let us look at this with an open mind. If there are things that need to change and improve, I will certainly be open to that. However, we do need to try to bed down an approach that can allow us to give certainty to the market so that we can facilitate market forces to help us solve some of this problem of a lack of supply.
I move amendment No. 1:
To delete all words after “That” and substitute the following:“Dáil Éireann, while acknowledging the relevance of the Residential Tenancies (Housing Emergency Measures in the Public Interest) (Amendment) Bill 2016 in the context of the current market conditions in the residential rental sector, declines to give the Bill a second reading for the following reasons:(a) it seeks to once again raise issues that have been addressed in the passage of recent legislation and in the Government’s Strategy for the Rental Sector, and it is premature to revisit them at such an early stage of implementation of the strategy, and of the Planning and Development (Housing) and Residential Tenancies Act 2016;
(b) it pre-empts the review, due to be undertaken in mid-2017, of the implementation of the Rent Predictability Measure in those areas already designated as Rent Pressure Zones, the potential positive impacts in additional areas to which the measure may be extended in the future, and the potential refinements to the rent pressure zone approach that might arise from the review;
(c) the measures in the Bill risk undermining stability and confidence in the rental sector and negatively impacting on existing and future supply of rented accommodation; and
(d) the Bill has potential legal and constitutional implications which require careful consideration.”.
The first thing all of us are agreed on is that rents are continuing to rise. All of the data from both the RTB and daft.ieconfirm that. It is important to remind ourselves just how much they have risen to. In my constituency in Dublin Mid-West, and this is reflected in many areas, an average two-bedroom or three-bedroom family home is currently going for an asking price of €1,800. That is not even the top of the market. That is an annual cost to the household of €21,000. The idea that it is only in rent pressure zones that families are feeling that kind of pressure clearly is not the case, even where rents might be lower than that.
The Minister is right that when one reads the daft.iefigures, the rate of rental inflation in the last quarter appears to slow. However, if that level of rental inflation was to carry on over the course of 12 months, in a number of those areas it would breach the 4% limit that the legislation is meant to prescribe. I would be worried even by that slowing rate of rental inflation from the limited figures that we have.
The other concern, which many of us are beginning to hear in our constituency offices, is that because the policing of the 4% is in the main left with the tenants, particularly tenants at risk of losing their homes who may have a notice to quit, we are beginning to see in the private rental market what we saw for decades under rent supplement, which is under the counter additional payments above the cap. One of the things I urge the Minister to look at in the review is some way other than requiring, for example, a struggling family with only a month or two left on a notice to quit from being the only mechanism for policing whether or not the 4% limit is being adequately adhered to where it applies.
I am also concerned about the exemptions. This needs to be looked at very carefully in terms of what the differentials are going to be between, for example, the rents of refurbished and new properties on the market and those that are covered by the rent pressure zones, if there is data to that effect in the review period. I will make the same point I have made a number of times. The fact the rent pressure zones are based on local electoral areas, LEAs, is causing problems in some areas. I have used the Waterford case repeatedly because in that area, if the Minister went below the LEA to the district electoral division, DED, he would at least start to give some comfort to people in those areas that are facing rents as high as they are in my constituency. In the LEA as a whole, they currently cannot avail of the rent pressure zone. It is something that we are told the RTB is looking at.
Outside the rent pressure zones, the markets still reign supreme. These are families under huge pressure. We warned that this was going to happen. The Minister's own explanation of the slowing of the rate of increase in the rent pressure zones proves the point. We are essentially incentivising landlords outside the rent pressure zones to push their rents up as fast as they can within the existing legislation to the already unsustainable levels in Dublin city, Cork city and elsewhere. That needs to be urgently reviewed.
One of the worrying things about the daft.ierental report that came out last month is that it is now seriously warning about the opening up of a two-tiered rental market. I know this because I experience it myself directly. People like me who have been in a rental property for a long period of time with a stable landlord actually have rents significantly below the new asking prices. However, new entrants into properties on my street are at the very top end. Some action is going to need to be taken to find a way of preventing a two-tier rental market opening up, widening and becoming the norm.
Vacant possession notices to quit are currently the single largest cause of family presentations of homelessness in the Dublin region and I presume it is similar in Cork city. The Minister knows this. Those families are presenting as homeless not only because they receive a vacant possession notice to quit, but because, as Deputy Boyd Barrett said, they simply cannot access private rental accommodation. These are not just families on HAP. These are working families, single people on low part-time incomes etc. The Bill is timely because many of us feared that struggling renters, whether they are accessing HAP or working full or part time, would not get the level of relief that was promised to them when the Minister introduced the legislation in December. The evidence is pointing in our direction and we will see where it will go over the next number of quarters.
I believe the Bill has real merit. The reason I say that is because to date, all of the conversations we have had in Government and Opposition benches on rent issues is how to constrain rents and stop the accelerating rise of rental inflation. This is the first time we have a specific Bill that tries to move the conversation on to situations in which rents are already at unsustainable levels and whether there is some mechanism, legislative and legally sound, that can start to draw those rents back to affordable levels. While this Bill may or may not be the most technically correct way of doing that, the very fact that it is being put on the table means that I believe it is deserving of at least committee scrutiny and further discussion and debate rather than being rejected in the House. The reason Sinn Féin is supporting the Bill is because the principle of it is right and worthy of moving forward.
In the few minutes I have left, I will respond to the Minister's contribution. First, his rental strategy is not comprehensive. I said this when we had a very limited time to debate it in December. It is to date the weakest part of his housing strategy. It is the shortest in terms of length, detail and specific commitments. Most of the things the Minister listed in terms of supply, services and standards have not yet been actioned.
Some of them do not even have concrete deadlines.
The Minister is right that the demand is too high. It is also because too many different types of households that should not be pushed towards the private rental sector are being pushed because of Government failures elsewhere. Social housing is the most obvious one. It is misleading to talk about there being 10,000 social housing units in the pipeline. Here is the reason. A significant number of those have neither planning permission nor agreement from their local authorities to proceed. In my constituency, a third of the properties the Minister is claiming are in the pipeline will never go ahead. Two significant developments in Dublin Mid-West, which the Minister visited today, are not only not at planning stage but will never get off the ground. If that is translated across other areas, the 10,000 figure simply is not credible.
I make the point all the time that supply in and of itself will not guarantee affordability. In the run-up to the height of the boom, both in terms of private rental accommodation and first-time buyer accommodation, supply increased to historic highs but affordability was not guaranteed. Supply on its own, without adequate measures such as the ones outlined in the Bill to ensure affordability, will not address the concerns many have.
Once again, the Minister has said measures such as these will have a negative impact on current supply and future investment and, once again, he has provided no evidence to support the claim. We had exactly the same conversation when we debated the Minister's previous legislation. If there is some evidence - something concrete and tangible - to say these measures, the consumer price index or other measures that have been proposed will negatively impact supply, the Minister should present the evidence to us. In committee we are all very sensible, reasonable and rational people. We will look at it and study it. Simply stating over and over again that giving struggling renters a break will damage existing and future supply and investment is not evidence that is the case. I have no doubt we will be back here in three or four months when the next round of data is out and continues to show people in private rental accommodation are under huge pressure. Struggling renters need a break. What the Minister introduced in December is too modest and piecemeal and does not apply universally to all renters who are having difficulties coping with astronomical rents. This issue should be allowed to go to committee because it does not deal with the crucial issue that even with a reduced rental increase of 4%, those rents are already unsustainable. They are already putting huge pressure not just on families out of work who depend on social welfare but on students, young working families and older people who, because of changes in their lifestyles, have ended up close to retirement and back in the private rental sector. They are fearful of what happens when they go onto State or low occupational pensions and will not be able to meet market rents as they stand.
While I have no doubt the Minister has no intention of considering this Bill and allowing it to proceed, I have no difficulty supporting it. I urge others to support it in order that we can have a more detailed conversation at committee. If we are back here in three or four months when the review is being conducted with the evidence on the table and the data from the Residential Tenancies Board, RTB, and daft.ieconfirming that yet again that struggling renters are not being assisted by this Government, I would urge the Minister then to consider much more substantive changes to the existing regime than suggested by his warning at the end of his remarks.
The Bill was introduced to the Dáil prior to the passing of the rental pressure zone legislation in December so it is somewhat out of date. That is not to imply the situation in the rental market has in any way improved for the great majority of renters, especially tenants who have had to move to a new property or those looking to rent. It is not clear that this Bill offers any new solutions not already included in the Government rental pressure zone measures. Fundamentally, the 4% cap on upwards rent increases implemented in the rental pressure zones measures has probably helped ease the pressure on some sitting tenants from significant rent increases. It has created greater certainty for sitting tenants. According to Ronan Lyons, there is evidence landlords have passed on rent increases to movers. According to the latest daft.iereport, for many sitting tenants there have been no dramatic increases in rent. This may mean the rental pressure zone system is making things worse rather than better by amplifying the insider-outsider nature of the rental sector. Again we are back to the issue of supply. Rent caps and other rent regulations will not fundamentally alleviate the crisis renters face. The message has to be that much greater supply is needed. The Bill proposes to empower the Minister to designate fair rent zones in which the rent shall not exceed the market rent on the fair rent valuation date of 1 October 2011 by more than 5% above the CPI. By my calculation it would mean many areas in Dublin would probably experience an average rent reduction but not by much. Whether we like it or not, forcing a reduction in rents, as this Bill attempts to do, would infringe on property rights which would be unconstitutional. It would also probably make the situation a lot worse for people who are looking for accommodation.
On the other main point of the Bill which seeks to improve tenants' occupancy rights, we have a lot of sympathy. If we want to tackle the rental crisis and in particular the lack of tenant security in the sector, it has to be done in a meaningful way and in a manner that is legal and constitutionally sound. Fianna Fáil supports in principle the removal of sale as a reason for ending tenancies and we are working on measures that would provide greater security of occupancy for tenants in this regard. We will also support the reduction, in the Tyrrelstown amendment, to five units or even fewer. Mike Allen of Focus Ireland argues that eviction for reasons of sale is now the number one source of homelessness. He estimates that one third of households becoming newly homeless is as a result of evictions for this reason. We saw such evictions recently in Balally, Sandyford and Tallaght.
I will address some of the specific issues with the rental pressure zone legislation that will need to be addressed in the review in June. I will discuss where we are going wrong on the supply side and what measures are needed truly to accelerate supply. From rent inflation data in quarter one of 2017, it is clear the 4% rent caps are only having a very limited effect on stabilising rents for those in situ. They should be considered a short-term stabilising measure. Rent regulations will not be the solution to the rental inflation of housing prices generally. It is clear there are flaws and inconsistency in the methodology used in the designation of rent pressure zones. Many towns with both the highest rents and highest rent inflation, such as Maynooth in Kildare and Greystones in my county, are not covered under the rent cap legislation due to the flaws in the approach used to decide on the designations. Meanwhile many areas within these counties and others that have been designated do not have particularly high rent pressures, such as many rural locations.
Other issues with the rental pressure zone model include its effect on investor uncertainty. This is because designations are decided upon in such a piecemeal manner. If there were a wider or even national roll-out, of rent caps it would be better for investor certainty in the short term. The threat that rent caps can be implemented in any quarter has a bigger impact on investor capacity than the rent caps themselves. We will be ensuring the review in June goes ahead and the flaws in the methodology are rectified to ensure towns and other rental pressure zones can be included.
The publication of the three recent reports on the acceleration of house price inflation, continual rent inflation in 2017 and the lack of progress being made on new social housing construction demonstrate the plan is failing the key test of expanding new housing supply. The Minister, Deputy Coveney, continuously ignores areas where we could deliver significant new housing while introducing procyclical measures that are causing very extreme house price and rent inflation which are clearly creating conditions for the next housing bubble. It is acknowledged that building houses is a time-consuming and difficult undertaking. The constant assertions that targets of new housing supply are being met when apparently the opposite is the case is doing nothing to change policy that will impact the dysfunctional housing market.
Census 2016 results show that Ireland has 2 million homes, a net increase of just 9,000 homes since 2011. Given that there were 170,000 extra people in the country in 2016 compared with 2011, it is quite easy to see why we have a housing crisis. The Government continues to overlook areas which could deliver significant construction cost savings. It could, for example, reform our defective self-certification system of building control introduced by the last Government. Instead, it has introduced pro-cyclical measures aimed at private developers that are causing price inflation and has clearly created the conditions for the next housing bubble.
As has been well documented, the most recent census revealed almost 260,000 vacant homes across the country, representing 15% of the total housing stock. This is both shameful and wasteful but this figure may well be a significant underestimation of vacant properties throughout the country. There are thousands of square feet of liveable space above shop units, for example, as anyone who walks around our cities and towns will see clearly. A vacant building study completed by UCC revealed that the typical city centre conversion of vacant sites' upper floors could increase the residential population in urban centres by over 260%. In Dublin this could translate into over 2,000 additional residential units in a very short space of time. The policy priority should be to focus on returning vacant spaces into use as accommodation. Most vacant spaces have the potential for conversion to residential use in older buildings but it is next to impossible to get sign-off because of the building standards for new builds. Building control and planning regulations make the spaces in older or commercial buildings virtually impossible to convert for residential use and must be changed if we are to make a dent in reducing the levels of vacancy and dereliction.
I see no acceleration in the supply of social housing. In the past six years, the State has built just over 4,000 social housing units, which is fewer than were built in almost every year between 1994 and 2009. This not only affects the families who are eligible for social housing but also impacts on housing supply across the board. Traditionally the State has acted as the largest single house builder in the country, adding significant levels of new supply annually. However, under Fine Gael Governments, this situation has been reversed and the absence of new supply coming from the State affects all who are in search of affordable housing. There have been no new approvals for large scale housing projects since January 2016. The most optimistic reading of the latest data suggests that fewer than 1,000 new social homes will be constructed in 2017. It is indicative of the Department's strategy that of the 276 social housing projects that have passed the pre-planning stage, just 15 include 50 or more individual houses or apartments. The largest scale housing project proposed is for 100 homes, of which there is only one in the country. Approximately 80% of the projects involve just 30 units or less. There can be no doubt that the preference for small scale housing developments of between ten and 30 units is holding back the delivery of social housing. While no-one is suggesting that we build social housing developments on the scale of Ballymun or other post-war social housing projects, it must be acknowledged by the Minister that the preference for small social housing developments is costly and time consuming and is not appropriate in the context of the current drastic housing situation. Further, it does not address the needs of families throughout the country.
I will cut to the chase in this debate. This crisis is manufactured. It has been in the mists for the last seven or eight years. It is a crisis that has been caused by politicians like the Minister of State - I do not mean that personally - and his party colleagues, as well as members of Fianna Fáil looking the other way. It is a crisis that has brought untold misery to thousands of people. It is ideologically driven by the worst forms of neoliberalism, which commodifies housing. Nowadays, most people refer to housing as property but housing is a home, in my eyes.
There are so many examples of families and working people who are in absolute crisis and who have nowhere to go. At the same time, some have made serious profits from this crisis. I want to draw attention to two companies in particular. I had not heard of them until a few weeks ago when I started doing some research for this debate. The companies in question have lovely names but they are actually ruthless. The first is a company called I-RES REIT. This company generated a pre-tax profit of €30 million last year, up from €7.9 million in 2014, on the back of strong rental growth and high occupancy levels. The group said that it had net assets worth €435 million at the end of December. The other company is called Green REIT, which recorded a 10% increase in contracted annual rent this year, to €61.3 million from 21 properties. Its net asset value rose by €148 million. These companies were set up to avail of very generous tax laws introduced by the current Minister for Finance which enable international investors to capitalise by buying properties which were sold very cheaply by the State and then renting them out for astronomical amounts. That is very unjust.
I am from Dublin Mid-West, the same constituency as Deputy Ó Broin. When I was a councillor, the issue that always dominated was housing, but nothing shocks me anymore. I hear stories all the time from people who phone or call into my office but nothing shocks me anymore, such is the extent of the housing crisis in this country. I have spoken to people who have been on the housing waiting list for ten to 12 years and who have run out of options, both physically as well as mentally. Their situation is doing terrible things to their minds and to the lives of their children and it is ruining their social lives. There is a litany of horrible things going on Ireland at the moment. People are being forced to live in hotels or in totally overcrowded conditions. They are living in appalling circumstances that are not of their making but are of the Government's making. This is ideologically driven.
The housing assistance payment, HAP, scheme is simply not working, according to the vast majority of people who have contacted my office. I heard of a case recently where a family has been given homeless HAP up to the tune of €1,900 for a two-bedroom unit. This is leading to a situation where vulture funds and unscrupulous landlords are increasing rents further, in the face of the unnatural level of demand. There is a huge crisis out there and this Bill, which is not perfect by any means, is an attempt to address the horrendous situation for those in need of social housing, as well as those who simply want to rent and get on with their lives. At the moment, some people are spending up to 70% of their income on rent and that is not acceptable.
I was born and grew up in a housing estate in Neilstown and am very proud of where I am from. That housing estate was not without its problems at the beginning but it has grown into a very mature and good place to live.
It is predominantly an area of social housing. I suggest 95% of houses in the area are social housing. I take exception to anybody inside or outside this House suggesting we cannot have 100% social housing anymore because it would lead to social problems. It is absolute rubbish to use such language. When people are given good housing, infrastructure and transport links, they will grow with their communities and become good citizens.
The ideology or policy of the Government and its predecessor has been that there must be mixed-tenure dwellings and projects, which is fair enough. I understand there must be mixed tenure. However, the vast majority of projects are now so diluted that they have less than 20% social housing. If this continues, we are going to keep coming back to the same problem, which is that people cannot be housed in the State. I have many problems with Fianna Fáil, but at least it housed people in the 1950s and the 1960s at a time when the country had nothing. People were housed in great areas of Dublin like Drimnagh and Ballyfermot at a time when the country had very little. It is now extremely wealthy, but it cannot house its citizens, which is an absolute shame. While the Bill is not perfect, at least it tries to deal with some aspects of the ongoing crisis.
I admire the fact that the Minister, Deputy Simon Coveney, who is not present in the Chamber shows a little humility in his approach to this matter. He consistently says the measures he has introduced are not perfect and need to be added to. However, I take issue with what he considers to be better and what he would like to add to the current regime. For the moment, I advise him to study a document, Locked out of the Market VII, which has been produced in recent days by Simon Communities. It is worth reading because it illustrates clearly the gap between what is being paid to recipients of housing assistance payment and the rents the market is demanding, particularly in bigger cities like Dublin and Cork. As other Deputies said, on a daily basis we are dealing with families that are extremely stressed out because they are about to be evicted by landlords who are selling their properties and do not want housing assistance payments. There is a real problem with the strategy of controlling rents and driving everybody into the private rental market.
I would like to mention an example of the behaviour of IRES REIT, which was mentioned by Deputy Gino Kenny. In a recent briefing note to his clients Goodbody analyst Colm Lauder noted that the high asking rent at an IRES REIT development in south Dublin "reflects the quality of product and service [but] is also an effort to overcome the 4%-per-annum rent review cap by starting at a rent that is very much at the top end of the market". According to the company's website, apartments at the development in question will be available from early July, with prices starting from €1,925 per month for one-bedroom properties and increasing to €2,750 for three-bedroom units. This is the world in which we are living. If we continue to say the problem is supply, while doing nothing about soaring rents in the State, those who are in a position to provide the supply needed will do what IRES REIT is doing in south Dublin by starting at the very top end of the market. In fact, this behaviour is pushing rents up further and there are no mechanisms or measures in situto control it.
Although the Bill is modest, as has been said, it is one of a suite of measures aimed at alleviating the farce of rising rents. It deliberately plays on the precedent set in the Financial Emergency Measures in the Public Interest Acts - the FEMPI legislation - which we will be discussing next week. The FEMPI legislation was designed to overcome the criticism that it would be unconstitutional to go after the private property of public servants, specifically their pensions. According to the Government, the financial emergency is long since over. This measure has been designed to address the housing emergency which has not yet peaked by bringing rents back to 2011 levels.
I would like to deal with the argument that this proposal interferes with the free market. I recently participated in a radio discussion with the Minister and Mr. Tom Parlon of the Construction Industry Federation. I asked Mr. Parlon how much profit builders needed to make in order that they would get out of bed each morning and build. At first he would not answer that question - the Minister was very quick to attempt to defend the Construction Industry Federation - but he eventually conceded that it would not be worthwhile for builders to start building unless they were making 7.5% profit. They would have to wait until they could obtain such a yield. If public sector workers were to lodge a pay claim in the morning for a pay rise of 7.5% and they went on strike in the way builders have gone on strike, the Government would be screaming blue murder at them. The idea that we cannot interfere with the market is an utter farce. We are incentivising landlords by offering REITs tax breaks on their profits and incentivising developers by giving them land for nothing, offering them loans at special rates, giving them tax breaks and throwing funds at them. We are interfering with the market to favour landlords and developers at the expense of tenants and those who are desperate to attain housing.
I ask Deputies to excuse my voice. I have had a bad chest infection.
The housing crisis has worsened in the past few years. Over 100,000 families have joined the housing waiting list and thousands more are homeless. If the market is all that great a God, why has it put people in worse circumstances than they have ever been in before? Although Fianna Fáil was clearly involved in winding down the delivery of social housing, its representatives have, rightly, made the point that the Fine Gael-Labour Party coalition Government was the first to cut it out altogether by failing to build any social or public housing. That is at the heart of the problem. I absolutely believe in interfering with the market. The Bill will interfere with it, not in favour of those who make vast profits but in favour of those who need a nest, a roof over their heads and a safe place for their children in which to put their heads down at night. It is not as if housing is a luxury or an extra gift in life. It is absolutely essential for every family in the country. It would be truly ignorant of the Government to write off the Bill on the basis that it would be unconstitutional to interfere with the market. Such an idea is truly offensive to the thousands of families that are in dire need of housing. We will get no return on our investment by favouring and pampering the Construction Industry Federation and private landlords. We will pay out millions of euro in housing assistance payments in the coming years, but at no stage will the State own any of the properties involved or get a return on the rent payments made. Instead, we will be giving public money to the private sector. In other words, it will be socialism for the very wealthy and capitalism for the homeless and the poor.
My argument is that in a housing emergency such as this, it is the duty of the Dáil to interfere with the market. The true blues of Fine Gael cannot afford to stand back and say they would never interfere with the private market. I suggest they have a duty to interfere with it. If they do not, rents will rocket upwards and upwards as supply comes on stream. The IRES REIT development in south Dublin is an example. If the Minister of State and his colleagues read the documents, they will be unable to deny that all the evidence points in that direction. It should not and cannot be left to the market to meet the basic right to shelter. Landlords, developers and builders cannot be allowed to undermine the lives of real people and tenants as they make their profits. At least the Bill is trying to bring some balance into the relationship, although it will not deal fully with the crisis.
The Minister has acknowledged humbly that he does not have all of the solutions.
Just as he said his solutions are not perfect, neither are we saying that this Bill is perfect. It is one of a suite of measures that must be taken, and it will bring some balance to the relationship until we deal fully with the crisis and allow tenants more security and landlords to be restricted in how they can raise rents.
The vast majority of workers in this country have not had a pay rise since 2011. The average industrial wage has gone up by 3% but rents have gone up by 66%. I ask the Minister of State to square that circle and tell people that it is okay not to interfere with the rental market. At least we are attempting to do something to bring a sense of equality and justice into their lives.
I am delighted to have this opportunity to speak briefly on this very important Bill and I thank the members of People Before Profit for the great work they have done on the Bill and for bringing it before us today. The timing of a discussion on this Bill could not be more appropriate or fortuitous. It seems that our housing and homelessness crisis has reached emergency heights. The idea of coming forward with a housing emergency measures in the public interest, HEMPI, Bill in the rental and to utilise the same type of dramatic action that we saw taken on behalf of the banks and the bankers six, seven or eight years ago is totally appropriate. It is what the Government should have done and what the next Government will definitely have to do after the next general election.
I tabled a Topical Issue matter earlier today, to which the Minister of State, Deputy English, kindly responded, on the lack of communication with families currently in homeless accommodation and their upcoming move-out dates of 1 July. In just six weeks, the Minister, Deputy Coveney, has promised to move 1,256 families with 2,563 children into alternative, more suitable accommodation.
The Bill before us seeks to amend the Residential Tenancies Act 2004 and utilises the same principles as financial emergency measures in the public interest, FEMPI, legislation. The general thrust of the Bill is that emergency measures are now absolutely necessary for the common good in the housing area, and that is why I fully support and welcome this Bill. It echoes what I have been saying for at least the past two years, that the crisis is so severe and deepening that drastic action is required by Government to address it in a meaningful way. It is no use coming into the House with a mantra, as the Minister, Deputy Coveney, did earlier, about rent certainty and predictability when he is not prepared to regulate the market, which is the most market of having a roof over one's head.
Section 2 of the Bill would insert a Chapter 5A into the Residential Tenancies Act 2004. This chapter deals with "fair rent areas", as they are rightly called, and would link rent increases to the consumer price index. Before Christmas Dublin and Cork city were named rent pressure zones in the Government's so-called rent certainty legislation introduced by the Minister, Deputy Coveney, and by the end of January this year, he had designated 23 more towns and Galway city as rent pressure zones. They are those areas where rent is above the national rent and have had more than 7% rental inflation in four of the preceding six quarters. Rent increases in these areas cannot be more than 4% for three years. New properties and those which have been substantially refurbished are exempt from this limit. Rent pressure zones will only exist for three years and apparently cannot be extended beyond that. That is the value of the Bill and proposal before us and the measures included in it are far stronger and will go much further in providing real stability, affordability and security of tenure for tenants.
Census 2016 showed us that the cost of renting in Dublin city has increased by almost 30% since 2011, in Dún Laoghaire-Rathdown, it increased by 26.2%, in Fingal, it increased by almost 23%, in south Dublin, it increased by almost 23% and in Kildare, it increased by 20%. The average weekly rent paid to private landlords in April 2016 was up 17% on the figure for 2011.
The Minister referred to the rate of the rental increase slowing. That reminded me of a former leader of Fine Gael, a former Taoiseach, Garret FitzGerald, who talked about the rate of the increase in unemployment slowing but it was still increasing. That was the problem we had to deal with when Garret FitzGerald was Taoiseach in the 1980s.
On Tuesday of this week, the Simon Communities in Ireland launched its study, Locked Out of the Market VII: The Gap between Rent Supplement/HAP Limits and Market Rents, which showed that almost 90% of properties for rent are unaffordable to people on housing supports. That is a shocking indictment of the Department under the Minister of State's senior Minister. An example of a gap of around €800 for a two-bed unit in Dublin was cited. In a study over three days, it found that just 12% of the available 600 properties were affordable within the rent supplement-housing assistance payments limits, yet the Minister of State reiterated in the earlier debate on my Topical Issue matter that HAP was working for people facing homelessness or in homeless accommodation. Of that 12%, only two properties were affordable to a single person and just seven properties for a couple who receive those payments. The study also showed that there are now 48% fewer homes available to let than there were in May 2015.
At a briefing on this Bill, organised by Deputy Boyd Barrett earlier this week, representatives from Focus Ireland and Threshold demonstrated how broken the current housing sector is. Focus Ireland has been working directly with families entering homelessness and has previously said that rent increases were the number one reason for homelessness in families, and that is certainly my experience as well. When people become homeless it is always due to them facing increasing rents or attempts by landlords to use various devices to evict people and then get increased rents when they are gone from the properties. Now, however, the main reason for people entering homelessness is evictions due to landlords selling up. Where is this being monitored? Even though a landlord signs a statutory declaration to say that the property will be sold, where is the follow up?
On Tuesday last, Mr. Mike Allen drew a very apt analogy that people allowing properties to become vacant in such a crisis is comparable with hoarding food in the middle of a famine. He is right. There is more than enough vacant property and land across the country, but again the Government seems to be too scared to act to achieve real rent certainty or even to begin local authority housing programmes rather than the feeble efforts we have had so far from the Minister, Deputy Coveney, and the Minister of State, Deputy English.
Census 2016 gave us the up-to-date figures and showed that there has been a 15% decrease in the number of vacant dwellings between 2011 and 2016. Some 62% of those were holiday homes, but that still leaves 183,000 other vacant dwellings. For the first time in census 2016, the type of dwelling was captured in terms of identifying vacant dwellings. It found that in counties like Cavan and Leitrim there was massive developments proportionately in the Celtic tiger era, which represented a high proportion of those.
Rebuilding Ireland has a target of 47,000 units of social housing up to 2,021, yet the vast majority of this is to provided within the private rented sector through the housing assistance payment, HAP, scheme. There are currently around 20,700 HAP tenancies across Ireland, including 7,000 which have moved from rent supplement payments to HAP. I have consistently been questioning, as I did earlier with the Minister of State, the appropriateness and effectiveness of this programme as, while housing need is considered to be "met" in a HAP tenancy, the local authority has no part in the tenancy and, therefore, gives none of the security of the previous rental accommodation scheme. The Minister, Deputy Coveney, continues to repeat the mantra but even since I last spoke to the Minister of State, I have talked with a constituent in Fingal county who is facing homelessness in two weeks' time. She has been trying endlessly to access HAP type accommodation because the last thing a family like hers needs, with all the issues a young family faces, is to become homeless in two weeks. She does not want to go into that system, but nobody wants to know when the HAP is mentioned. I urge the Minister of State, and the Minister, Deputy Coveney, in whatever will be the formulation of the next Government, to give the local authorities a direct role in the provision of HAP - in other words, to make them ultimately responsible for securing HAP tenancies because certainly in the Dublin region, their current policy is not working.
There are now almost 7,500 homeless people in Ireland. There has been a huge increase in family homelessness, especially in the 18 to 24 years cohort. According to census 2016, 10% of the population are living in overcrowded conditions, and tens of thousands are languishing on the housing waiting lists.
We are talking about what history will write about various people, including the outgoing Taoiseach and the outgoing Minister for Finance, as if history was some stern person in the future. History will be the work of scholars in years to come and what their judgment will be.
Despite the palaver in the newspapers today, their judgment may very well be harsh on the outgoing Taoiseach and perhaps the Minister for Housing, Planning, Community and Local Government as we have seen this scandal of desperate suffering of families and children who are in homeless accommodation. The Government has allowed that to go on. We have seen many redress schemes arising because of scandals in the past. In the 2020s and 2030s, history might record the making of redress to the children who suffer tonight because they must live in that kind of accommodation.
This modest, simple and straightforward Bill is the way to go and we need emergency housing legislation. I commend People Before Profit for bringing it forward.
I thank Deputies Bríd Smith, Richard Boyd Barrett and Gino Kenny for giving us the opportunity to debate this Bill. My party's position is that the Bill should go to Committee Stage for further exploration. There may well be some concerns as outlined by the Government but the fact the Government's review will happen during the summer is not a reason to prevent the Bill from going to debate on Committee Stage. Why should this not go in tandem with the Government's review? There is a question of whether there are legal and constitutional implications, and although there may be such problems, there may not be as well. That can certainly be explored at a later stage.
I have stated before that I was a member of an Oireachtas committee on the Constitution more than ten years ago. We examined a number of measures, with one being the implementation of the Kenny report relating to the value of land, specifically having only reasonable profit rather than windfall profits. At the time our legal adviser was a very eminent person, Mr. Gerard Hogan, who suggested it was not unconstitutional. We agreed the report as a result and the elements were put into a Bill I presented on behalf of the Labour Party late last year. These matters must be tested. There is a balance in the Constitution between the common good and property rights and we seem to say cautiously that property rights trump the common good; there is no reason the common good might not trump property rights in some cases. It is not a reason to prevent further examination of the proposals.
I have some questions but I am not sure if the Deputy gets the chance to reply.
Why are only certain areas highlighted and why did the Deputies designate some areas as fair rent locations? The Bill in some cases seems to be doing what the Government did with rent pressure zones. I do not really understand why this should not apply to all areas. This brings me to some concerns about what was inserted in that legislation, which we dealt with just before Christmas. There are loopholes, as noted by Deputies Boyd Barrett and Ó Broin. The obligation on tenants, effectively, to report breaches is a real problem. There are people who see their rent increased above the 4% level or those outside the rent pressure zones who have seen landlords trying to increase rent before the two-year limit expires. There are other obligations for areas outside rent pressure zones. These people are in such a vulnerable position and they know they cannot get other accommodation at the same price. They are the very last people who should have to police the matter, so I hope the Government will consider that in the review. People are under real pressure in that respect.
Several Deputies have referred to the Simon Communities of Ireland report, Locked Out of the Market, and I attended its launch. In my city centre of Limerick, the report considered renting by single persons and couples, including sharing adults and one-parent families, as well as one-parent families with two children. Only one property under all those headings in Limerick city centre is within the rent supplement or housing assistance payment, HAP, limits. It is for a couple or one parent with one child; there is nothing for a single person or a couple with two children within the area. The daft.iereport up to the third quarter of 2016 indicates an average increase of 13.2% in rents in Limerick, yet it is entirely outside the rent pressure zones. The Minister, Deputy Coveney, visited recently, and he gave some indication that he thought Limerick would be included the next time. That is a kind of invitation to landlords to put up rent now, which is a worry, and I have publicly said that this absolutely should not happen.
There will always be places just outside the rent pressure zones with people hoping they will just about get in. That causes very big problems, as does the point raised by Deputy Ó Broin when he spoke about the use of local authority areas rather than district electoral divisions. I know Limerick city best and because there is a big rural section in that local electoral area, it may not be included in a pressure zone, despite rents being near their highest in the city in part of that local electoral area. It is an imperfect model and I hope it will be examined in the review. I have just drafted a letter in response to a woman who contacted me and who lives in the suburbs of Limerick. She is renting and works in a professional job full-time. Her husband is a carer because they have two disabled children. The two years of controlled rent, if we call it that, under the regime introduced by the former Minister, Deputy Alan Kelly, are due to expire in the next couple of months. She is really frightened about what will happen at that stage as she knows there is nothing else that the family can afford in the area where they live and their children go to school. There is a real squeeze on people and they need solutions and some hope for the future. Supply is clearly a problem. Deputy Boyd Barrett states that wages have only increased by 2.6% since 2011 but rental costs have increased by a huge amount more. Even from a Government policy perspective, there will be more demands for wage increases if there is no control of housing.
As I do not have much time left I want to make a more general point. The supply issue is really difficult. Other people have referred to social housing and if the Minister, Deputy Coveney, had been here I would have asked him if he had looked at the One Cork idea, which is a very good social housing proposal. The trade unions in Cork have come together to present a very interesting document and I hope the Minister will consider it as a model of how local authorities can provide housing.
In my last few minutes I will speak to a concern raised by others about how publicly owned land is now being used to bring in private developers to build houses. I know the Minister of State, Deputy English, spoke about it last night when we discussed the planning legislation. The difficulty is we do not have an affordable housing scheme. There will be 10% social housing but we must see that this will not lead to very expensive houses on the one hand, with the builders asking why they should not charge such an amount; a small number of social houses, as provided for under current legislation; and no affordable housing. When somebody on an average income is not able to afford to buy an average house, the market is not working, and that is where we are now.
Deputy Gino Kenny was the last person to refer to mixed tenure but if we are to have that, we need affordable housing in the middle. We need the kinds of houses that people can buy because they do not qualify for social housing and at the same are not so beyond people in terms of cost that the person earning an average salary can afford them. We need to focus on intervening in the market in that regard. We urgently need affordable housing to be in that mix.
I urge the Government to deal with that issue quickly because it needs to be dealt with.
I agree with Deputy Casey with some of the points he and others made on vacant properties and the need for more effective ways to bring the properties back into use. I favour sticks as well as carrots in terms of not allowing people to leave empty properties to sit there idle. Deputy Broughan referred to that a moment ago. We need measures to ensure that they are not allowed to just sit there until a bigger profit is to be made.
We will support bringing this legislation to the next Stage.
It is unfortunate that this Bill is being debated on the day that the Leo and Simon show is dominating the attention of the media, where a press event to discuss and highlight the Bill was not attended because the media were busy elsewhere. The reason I mention it is that the new leaders of Fine Gael will have a huge responsibility in housing, which is the biggest social crisis in this country, bar none. I also wonder if the Minister of State has any advice, or if either Deputy Coveney as Minister for Housing, Planning, Community and Local Government, or Deputy Varadkar as it is in his constituency, have any advice for the 30 families who last week in Blanchardstown had their lives torn apart when a fire engulfed 30 apartments that they were living in.
Those 30 families have now joined the general homeless blackspot that Blanchardstown is and has been for a number of years. Furthermore, the private rental market in particular which the Minister of State keeps on lauding, as he did in his speech today, means that as private renters they are thrown to the wolves. Owner-occupiers are covered by the management company insurance and will be facilitated with having accommodation subsidised, as are anyone on housing support, but the biggest group of people, who are privately renting, are not covered by that insurance. Landlords are covered by the insurance if they happened to lose out on rental income as a result of the fire. That is a loophole which I would ask the Minister of State to seriously address. I raise it here because these people are facing rents of up to €2,250 per month which are being sought in the Castleknock area, where most of them will end up looking. There are 21 two-bed properties in the whole of Dublin 15 listed on daft.ietoday, so along with hundreds of other families, those families have now been thrown into the mix. If they were living on a street in certain parts of the constituency, Deputies would have swarmed like locusts around it, but because they are privately renting and many of them are not Irish, there does not seem to be much interest. No task force has been set up. They were each given cheques for €100 from the Department of Social Protection. That would not get them a night in a bed and breakfast accommodation if they could even find one, never mind the fact that they could not get in to get their clothes, medication and so on.
I wanted to talk about the rent predictability measures that the Minister of State tells us covers everything and so we do not need this Bill. They are simply not working. The rent pressure zones that are covered in the Bill are in respect of a limited number of areas. In Dublin, by the Minister of State's admission, rents have gone up by 13.9% following the imposition of the rent limits. It is pathetic to hear the Minister of State say that the rate of rent price increases has dropped when they have gone up by almost 14%. The rent limits are not, and cannot be, enforced because the Government has put the onus on the desperate tenant, who is in a queue with 40 other people to secure a place to live, to question the landlord. At the time of that Bill, we put forward something that I would have thought was very sensible if one was serious about this. Our proposal was that a certificate ought to be issued by the RTB to the landlord saying that the rent was legal and that any increases were also legal. Instead, the Government put the onus on the tenant to find that out. In a tweet today, the CEO of the RTB said that 85% of rent reviews which were challenged by people to the RTB are invalid. What does that show? That landlords are chancing their arms, they are introducing rent increases that are not legal. When people have the wherewithal to challenge them, they are successful but if they do not have the wherewithal they do not have much hope.
Having put in a lot of work in the special Committee on Housing and Homelessness, I issued a minority in which I put forward the idea of real rent controls where what we need is not merely limits on increases but intervention to bring rents down. How could €2,000 per month be an affordable rent for anybody? We need to bring rents down to a level that people's incomes have been brought down to since the crash in 2011. We should go back to 2011 prices.
I also want to raise something as I am not sure if it has been referred to in the Dáil. I do not know if the Minister of State if aware of the sex for rent advertisements that have recently appeared online. Ten advertisements have appeared on two Irish websites in the last week. I have not heard the Minister of State say much about it but I wonder how he can tell me that things are working when one can see this form of sexual exploitation. Landlords are offering rent-free accommodation, mostly to women, in exchange for sex. Ten advertisements have appeared on Craiglistand Locanto.iewebsites. To give a flavour, in one advertisement, a man in a Dublin suburb says he is looking for a woman for "a two-week trial period", that longer availability is possible, they can do housework and massage in exchange for rent. How desperate does the Minister of State think that people would have to be to avail of that? The man in this advertisement is a single 30 year old and he asks in those contacting him by email to tell him more about themselves, and says that women should preferably be Latin American. In another advertisement, a free bed was offered to a woman who could "look after me".
What is most worrying is that one of these gurriers received 30 replies. What does that tell the Minister of State? That under his Government, people have become so degraded that they would avail of something like this. That is how desperate they are. Organisations have called this effective prostitution because something is being given to people in return for sex, and foreign women, arriving in this country and seeing the rents that are being charged, are most likely to take this up.
The housing crisis is not better, it is worse. The Government's key policy plank now is gifting public land to private developers to get trickle-down housing or paying for essential infrastructure to get building started. The Government announced €200 million recently but it has not even sought guarantees that there will be affordable housing in these projects. The Dublin Inquirerthis week gives the example of Cherrywood, where 8,000 new homes are planned and the Government set aside €15 million for the upgrade of roads and bridges. Normally a developer would have to pay a key chunk to upgrade a road to get a development built, that would be in the planning permission, but Hines developers have not been able to say how much affordable housing will be in that project. In an email on 10 May it said it would be 10% in line with the legal rate that everyone is obliged to provide but on 3 April, the Minister, Deputy Coveney, claimed that local authorities had received commitments from housing developers with regard to affordability. The Government has not received any commitments at all. I strongly suspect that we will be looking at tribunals about this largess in the not-too-distant future, where the Government is doling out taxpayers' money to these developers in order to get this trickle-down housing, if we even manage that.
Fine Gael is looking increasingly like callous Tories where they seem oblivious to the real suffering that is taking place in the real world outside of the Leo and Simon show. Two funds that we have in this country have money. Both the Minister for Finance, Deputy Michael Noonan, and the Taoiseach have said that money is not the issue. There are two funds, the Irish Strategic Investment Fund and NAMA, that both have up to €7 billion in cash. We could use those funds to build social and affordable housing schemes. Deputy Gino Kenny is correct, the Government has an allergy to social housing and it is demonising people in social housing and has been for months. Why not raise the eligibility for local authority housing and allow middle income workers, lower paid workers, live alongside people who qualify for social housing?
Why not bring in an affordable mortgage scheme, for which the Government has been asked countless times? It does not exist in any local authorities. There is no reason that is the case, because they existed in the past. Why not let people who do not qualify for social housing live in the same areas as other people and get affordable mortgages?
We could have good estates with proper infrastructure, green spaces and well-planned schools, as I have seen elsewhere, built by the State. Unfortunately, ideology is the problem. The Government has already set its face against public housing and challenging the restrictions on it, and will again give largesse to the private sector.
The rental sector needs to be an attractive option for tenants and a safe and viable investment choice for investors. Tenants need to have certainty that as long as they pay rent to meet their obligations they will be able to stay in the properties they are renting. Equally, landlords and investors, from the individual wishing to secure an income into the future to an institutional investor looking to build a balanced investment portfolio, must have confidence in the long-term value of their investments and the incomes they derive from them.
As the Minister, Deputy Coveney, outlined earlier, the changes proposed in the Bill risk weakening stability and confidence in the rental sector. The type and severity of the rent control proposed in the Bill and the significant reductions in rents that could be enforced as a result of its passage would undermine the economic viability of providing rental accommodation and negatively affect the existing and future supply of residential rental units.
The Bill would set maximum rents today at the consumer price index, CPI, plus 5% above their levels in October 2011. This would mean that over nearly six years, from a point in time where rents were hitting an historic low, the permitted increase would be only 7.3%. To achieve this, the cuts in rent prices would be dramatic and drastic. For example, we would expect the rent for a two-bedroom apartment in Dublin 2 to be cut by over €500 per month.
The Deputy might be happy with that but we think that would greatly affect supply. During the debate on the rental strategy at Christmas, we tried to get a balance between supply and demand. It is all very fine to say that we should cut rents and keep them low. We want to keep rents as low as we possibly can but we also want to attract more investment into the sector. We had this discussion yesterday. I know the Deputy wants all housing to be social housing and thinks the State should build every house, but even with the best will in the world-----
I am okay with Deputies who believe that but it is not possible to do that overnight. We are trying to ramp up building and we will get back to where we should be. As I said, local authorities should never have stopped building houses. We need to build houses but it takes a little time. We also need investment from the private sector because we need 25,000 or 30,000 houses to come on stream over the next couple of years and the State simply cannot do all of that. Some of those in opposition want the State to do everything in every sector, which is not possible. We genuinely believe we need a balance of social and private housing.
Many landlords would be forced out of the market and the confidence of new investors in long-term returns on investment would be fatally undermined. It would also be naive to think that landlords would accept such a radical interference with their ability to derive an income from their property. If these measures were adopted, it is inevitable that they would become the subject of legal challenge.When we developed the rental strategy before Christmas, we were very careful to present a balanced document and range of measures that would pass a legal test and ensure we would not be tied up in the courts but would instead achieve some results. I acknowledge some Deputies want to go further but we must try to balance things in terms of what we believe is achievable and would pass through the court system.
There are acute pressures in the rental market. These pressures are driven by a number of factors, including rising demand as a result of the economic recovery, a lack of supply and the high costs highly indebted landlords face in servicing their loans. I accept quite a lot of, rather than all, landlords are affected. This has led to significant rental price inflation over recent years. However, the long-term solution for the high levels of rent lie in increasing supply.
The rental strategy contains a number of specific measures to encourage and accelerate new supply, to keep existing rental units in the market and to bring vacant units back into use. The rent control proposed in the Bill would undermine all of our efforts to get supply going.
The Government's rent predictability measure is carefully designed to control rent increases without having negative effects on the supply of rental accommodation. It is effective in controlling rent inflation. It limits rent increases to a maximum of 4% per annum, which is less than one third of the rate of rent inflation reported by www.daft.ie. Tenants can expect to see significantly smaller rent rises than those they have seen recently or would have faced if the measure had not been introduced. The measure will have a substantial impact. The practical effect of the measure is that rents for more than 186,000 households who currently rent their homes in the areas concerned will be lower than they would have been if the market rents had continued to apply. Recent estimates from my Department indicate that households are likely to see savings of between €1,000 and €2,000 per annum, depending on the property type and location.For example, a family in a two-bedroom apartment in Dublin 3 would pay €1,056 less over one year compared with what they would have paid without the measure. We estimate that for a two-bedroom apartment in Ballincollig, the saving in a year would be over €1,600 while for a three-bedroom semi-detached house in Beaumont, Dublin, the saving would be almost €2,000. The figure of 4% is a carefully measured response to the current extreme pressures in the rental market. It will provide certainty for tenants that they will not face a rental hike of the order that may have been recently seen and provides certainty for landlords that they will continue see a return on their investments in rent pressure zones.
I thank everybody who contributed to the debate, in particular Deputies Broughan and Jan O'Sullivan and Sinn Féin for supporting the Bill. I am not sure whether Fianna Fáil said it would support it.
I want to appeal, even at this late stage, to the Minister of State to get on his mobile phone and ask Fine Gael to reconsider not letting the Bill go to the next stage, which, as we know, would involve a committee scrutinising the Bill. It would not go directly to Committee Stage, because that is not happening with Private Members' Bills. It would be absolutely shameful if the Government did not at least allow this to go to a committee for scrutiny.
The Government seems to imply that it wants to address the same issues that we do. However, the reason given in its amendment to the motion for not letting the Bill go to the next stage is that it pre-empts the June review. The Bill would not be scrutinised before the June review. The Minister said on national radio, in response to the issues raised in Robin Hill, which I brought to public attention, that if there are loopholes we need to seriously review the legislation - I think they were his words. There are loopholes. We have clearly identified them in Robin Hill. They are not suggestions of loopholes; rather, they are loopholes that have been exposed in a case concerning one small part of Project Gem, which has just been sold to Cerberus. It is a €3 billion project and we know what is happening in one apartment block. Do we believe Cerberus is behaving differently in the rest of the project? Of course it is not. A policy is being pursued.
It is going beyond the 4% by loading on charges, such as a sign-on charge of €250 a month for new charges that were previously paid for through rent, plus bills that are double what one would pay on the open market for other energy providers. A makey-uppy company, Kaizen Energy, is apparently the heating and hot water provider, but the bills will run to €100 or €200 a month. A loophole has been identified and that is what is happening.
Properties are being hoarded. NAMA was doing it, incredibly, and now Cerberus is doing it. It is doing so because it knows rents are increasing and it can start at the top of the market, as Deputy Bríd Smith said. That is happening. It is carrying out refurbishments in order to get around the 4% increase for which legislation allows. That is happening. These loopholes exist. Cerberus has evicted up to ten tenants, which the Government allows, and will be able to do the same again in about six months' time. As others have said, there is no enforcement regime to stop it flagrantly breaking the law. The loopholes exist and it can get around the legislation but there is no enforcement even if it was playing by the rules. In any event, the rules are not robust enough to stop it bypassing them.
The Government has not addressed what it is going to do about these loopholes.
If this goes to scrutiny, the Government will have an opportunity. If it does not, there will be a delay in dealing with it. I appeal to the Government to allow us to address these loopholes, as this legislation does. If it wants to debate or amend it, that is fine and we are open to that discussion. To prevent it happening, however, is a disgraceful abdication of responsibility in the face of things that are happening now. This is not speculative. It is happening now.
If the Government will not allow this to progress, it should tell me what I am to tell the tenants who are being evicted by Cerberus. I want to know. I have written to the Minister, as have they. What is the Government going to do for them? What is it going to do about the fact that Cerberus is bypassing its legislation? Is it going to do anything? It has not given me an answer in anything the Minister of State has said. This Bill would prevent that from happening. It is that simple. All the areas in Dublin, Cork, Limerick and Waterford, etc. would be declared fair rent zones and this would not be possible. Cerberus would not be allowed to evict people on the basis of sale except in totally exceptional circumstances where it would have to prove to the Residential Tenancies Board, RTB, that the accommodation was needed for its own family. Cerberus does not have a family in Ireland. It is Mr. Steve Feinberg who is busy advising President Donald Trump on his mad policies. As such, we know those people will not be evicted under this legislation. If the Government is not going to accept it, what is it going to do to stop them being evicted and to stop the racketeering? If it does not let the Bill go through while offering no concrete alternative, the answer is "nothing". That is what is happening. I appeal to the Government not to do it.
This business of the slowing down of rent increases is ridiculous. Average rents have gone up by 60% since 2011. As the Minister of State pointed out, average rents were high even in 2011 at €1,100 and €1,200. That, by the way, is approximately the level of the rent support the Government is offering under the housing assistance payment, HAP, scheme. Even with our measures, which would reduce rents in these areas by approximately €500, it would only bring them to the Government's HAP limits and make those in some way viable. Even at that, it is €15,000 a year in rent. The Minister of State is saying we cannot do that. That figure of €15,000 is a hell of a lot but the current situation is that it is €31,000 per year for a two-bedroom apartment in Dublin city centre. Who can afford that? It is crazy stuff. The Minister of State has not addressed how he is going to bridge the gap between a €1,275 HAP limit and €2,660. How is he going to do it? If he does not, every person who approaches the local authority in emergency circumstances, as is happening, will be told to pack his or her bags for emergency hostel accommodation. That is what is happening. They are told to go out and look for HAP but it is just not there. As Deputy Coppinger said, the situation is now so bad that landlords think they can ask for sex in place of rent.
One of the young women at our press conference today, Celine, is facing eviction. She is overholding on a property rather than going homeless and knocking on the door of every empty building she sees to ask if there is any chance she could rent the property. She told me that at one she approached this week, the landlord said he might consider it if she gave him €3,000 up front. This is what is going on. What is the Government going to do about it? "Nothing" is the answer. Its legislation simply does not deal with this. Unless we deal with it, this thing will spiral out of control.
A statement was made about supply and worry about investors. I want to counter that. If we did this, it would actually drive these racketeers out of the market or force them to rent stuff they are currently hoarding in the expectation of increases. If they knew they could not increase rents because it would be pinned back to affordable levels and they could not evict tenants, it might force more supply into the market or drive the racketeers out of the market to allow the State to purchase properties, as Edward Honohan, the Master of the High Court, has been saying for the past year. He believes we can use compulsory purchase powers to get hold of the empty properties. There are 55,000 in Dublin. We have learned that these were hoarded by NAMA and are now being hoarded by the vulture funds. Let us drive these people out of the market and get hold of that property to rent it to those who need it. Let us stop the hoarding and landbanking that is going on. That is precisely what we need to do as opposed to what is currently happening, which is the exploitation of the market.
The Minister of State thinks that if we get down on our knees and give subventions to these people, the supply will eventually come onto the market to deal with this. Is he honestly telling me that even if that supply comes on board, they will reduce rents to affordable levels? Does he think that rents will come down at any point to affordable levels? That is fantasy. It has never happened before. It took a major economic crisis for rents to go down. The idea that if supply rises, rents will come down to affordable levels is the worst type of fantasy. The Government should cop on.
It happened with a major economic crash. I have to go back to these individuals who are homeless or who face eviction and give them an answer but there is no answer coming from the Minister of State today. There is nothing but vague assertions about supply in the market. This Bill at least attempts to deal in a concrete way with the dilemma these people face today.