Tuesday, 28 September 2021
Ceisteanna - Questions (Resumed) - Ceisteanna ar Sonraíodh Uain Dóibh - Priority Questions
When the Minister introduced legislation to link rent reviews to the harmonised index of consumer prices, HICP, he said that inflation was running at approximately 0.4% in the previous four months. Of course, in the month the legislation was enacted, rental inflation was 1.9%, thereafter went up to 2.2% and is now at 3%. What will he do to ensure that if inflation continues to rise, people do not end up with rent caps that are higher than those applying to the reformed rent pressure zones, RPZs?
The Planning and Development (Housing) and Residential Tenancies Act 2016 introduced a targeted rent increase restriction of 4% per annum. The Deputy will recall that we brought forward some of the subsequent changes in legislation more quickly than we would have liked in order to deal with the roll-over of outstanding increases into an 8% rise. The Residential Tenancies (No. 2) Act 2021 introduced measures in July 2021 to better protect tenants with affordability challenges by extending the operation of RPZs until the end of 2024 and prohibiting any necessary rent increase in an RPZ from exceeding general inflation, as recorded by the harmonised index of consumer prices. This was a measure all parties supported, including the Deputy's party. It significantly reduced the level of permissible rent increases for approximately 74% of all tenancies within the RPZs. The legislation also made a number of changes to tenancies outside the RPZs.
When introducing those measures, I was very clear on the need to monitor inflation carefully. I said in the debate that I was aware inflation was rising. At the time, the HICP averaged some 0.73% per annum over the previous three years, but had risen to 1.6% per annum in the year ending June 2021. I needed to revise the RPZ rent control relatively quickly in July, which was accepted by the House, on a basis that could be independently verified. The 2021 Act provides that an index other than the HICP may be prescribed for the purposes of restricting rent increases in RPZs. Given the continuing rise in HICP inflation, up to 3% per annum in August, I am considering all legal options available to me to ensure effective rent controls are legally in force in RPZs to cap the rate of any rent increase where the general inflation rate is too high. I intend to bring this change forward by way of the housing and residential tenancies Bill 2021 before the end of this Dáil term. I will give further details presently.
I thank the Minister for his response. The difficulty for many on this side of the House is that for a long time we advocated for rent certainty when that was the right policy but rents have now risen so high that a rental increase of 2%, 3%, 4% or possibly 5% is not sustainable, particularly for renters who have experienced a more than doubling in the cost of renting in the past decade. There have been 40% rental increases in Dublin since 2016 and 20% increases across the State. I accept the Minister's bona fides with regard to his intention to bring something forward but my concern, particularly given where inflation is going, is that if there is any delay or lag in that, we could have the intolerable situation of the cap that has been in place as a result of the Government legislation being higher than the rent pressure zones. If the Minister brings something forward that tackles that issue, he will have willing allies on this side of the House but it needs to be done as a matter of urgency and preferably before inflation hits or passes 4%, as a precautionary measure. I ask that he give an indication of what he is proposing. That might give Deputies on this side of the House and renters some reassurance.
I was very clear at the time as to why I was bringing these measures through more quickly than I intended originally, that is, to deal with the 4% issue. On 8 July, I stated clearly in the House that, effectively, I would monitor it and keep it under review. I do not intend to delay on this issue. This was the fifth rent measure we brought forward within the 12-month period. I want to bring legislation forward in this term. We are working on it at the moment. The legislation I brought through the Houses in July means that we can also use other indices to look at capping those rent increases. Rents are too high. It was previously the case that rent increases were too high. That is why I brought in this legislation. We hope inflation will come down and that it will come down in the short to medium term but in that instance we have to consider other ways of capping to ensure it does not go above 4% and I intend to do that in this session. The joint committee will be involved in that also.
I thank the Minister. The crucial point is that the clock is ticking and that this was entirely foreseeable. In fact, I was not the only Deputy on the Opposition benches to say when the legislation was brought forward in May that this was likely to happen. If the Minister brings forward such a measure, it will get the support of the Opposition and, therefore, I urge him to bring it forward at the earliest possible opportunity. Of course, the worry is that a renter can currently face a rent increase of 3% if the landlord abides by the rules. We have seen from the recent Daft.ie and Residential Tenancies Board, RTB, reports that the overall level of rental inflation in quarter 2 was significantly above the 4% rent pressure zone cap. It is possible that, notwithstanding the link to the harmonised index, there could be general rental inflation above that level. We will find out whether that has been the case when we get the data from those two organisations for quarters 3 and 4. I hope we do not experience rental inflation at that level but, again, I am urging the Minister to be attuned to that because what we are also seeing now, as he is aware, is that due to Covid and people relocating, there are greater levels of rental inflation in areas where that had not traditionally been the case. The sooner he can bring forward this measure, the better.
I flagged this issue on 8 July, as did others, including Deputy Cian O'Callaghan. I raised this at the time that we were bringing forward measures quickly to deal with a particular issue. I flagged that I would be bringing forward a more comprehensive tenancy Bill in the autumn and we are going to do that. Let us not lose sight of the fact that the change the Government made by linking rent to inflation was significant. This inflationary effect has been in the very short term but the change the Government made was a big break with what happened in the past. Now we are linking rates to general inflation. Under the Act we passed, supported by the Deputy's party and others, thankfully, there are other options available to us and we are considering them right now. We are not going to delay on it. I note the Chairman of the joint committee, Deputy Matthews, is present. We will be seeking co-operation from all Members of the House to make sure any measures we bring forward are done efficiently, effectively and quickly.