Mary White (Fianna Fail) | Oireachtas source

I welcome the Minister of State and commend her for the great work she is doing. The aims of the Bill are to speed up the dispute resolution service provided by the PRTB by encouraging mediation and to bring the voluntary and co-operative housing sector under the governance of the Residential Tenancies Act 2004. The Minister of State has indicated that she also intends to deal with tenants who are in situ but refusing to pay their rent, as well as setting up a deposit protection scheme. Fianna Fáil has considerable reservations about the capacity of the Bill to achieve these objectives. The main streamlining efforts are simply a renaming of sections of the structure, which will achieve little efficiency. Furthermore, bringing the voluntary sector within the PRTB's remit without sufficient resources will place additional pressure on the board and the sector.

The programme for Government 2011 contains a commitment to establish a tenancy deposit protection scheme to put an end to disputes over the return of deposits in the residential rental sector.

The lack of detail about the proposed scheme and the issue of tenants in siturefusing to pay rent means it cannot be discussed in detail at this stage, but it must form a vital part of an effective regulatory regime in a modern rental market. The Minister of State with responsibility for housing, Deputy Jan O'Sullivan, has promised to publish the significant amendments to the Bill in the Seanad. Adequate time should be given to ensure Senators have an opportunity to discuss the issues, particularly on the proposals for the deposit retention scheme.

Fianna Fáil introduced the Residential Tenancies Act 2004 with the aim of modernising and professionalising the private rented sector. It set out the rights and obligations of landlords and tenants in a comprehensive way and established the Private Residential Tenancies Board, PRTB, to replace the courts in most disputes in the private rented sector. The Residential Tenancies Act 2004 introduced a measure of security of tenure for tenants and minimum obligations applying to landlords and tenants, and provided for the establishment of the PRTB. In 2009 we initiated a review of the Act to test its effectiveness in operation and identify problems to be addressed. The recommendations of the review, which had an overall emphasis on streamlining the Act and reducing delays in the services of the PRTB, fed into the present Bill.

The review made recommendations on deposit retention, compliance, governance and the voluntary and co-operative sector. The introduction of a system whereby the landlord will face a mandatory fine if found to have illegally withheld a deposit will act as a deterrent to landlords who automatically refuse to return deposits. An amendment to the Act will allow the landlord to terminate a tenancy during the dispute process in circumstances where the tenant discontinues the payment of rent but remains in occupation of the property. The new legislation will remove the board's direct role in the dispute resolution process and allow it to concentrate specifically on policy and governance. It is also proposed to extend the remit of the Residential Tenancies Act to the voluntary and co-operative sector.

The Bill now needs to be amended to adjust to the changed reality of the rental market in Ireland and the experience of the Bill in operation over the past eight years. The changes in this Bill come against a backdrop of a rapidly changing Irish rental market. The average Irish landlord has between 1.6 and 2.1 properties and less than 1.25% of landlords have ten or more properties, reflecting an undeveloped and amateur market in comparison to the European standard of large landlord companies operating multiple properties. The rental market is rapidly changing, particularly in the context of the collapse of the housing bubble, which is presenting a new set of challenges that the original Residential Tenancies Bill in 2004 did not accommodate. The number of households in rented accommodation increased by 47%, from 323,007 in 2006, to 474,788 in 2011. The overall percentage of households renting their accommodation rose to 29% over the same period, causing home ownership rates to fall sharply, from 74.7% in 2006 to 69.7% in 2011. Across Ireland, about 29% of people now rent, with 18.5% renting in the private sector. What is more interesting is the speed of change. Numbers renting in the private sector have increased 86%, up from 9.9%, since 2006.

The amateur nature of the rental market is highlighted in the 31.72% discrepancy in the number of tenancies registered with the PRTB in December 2010 and the number of tenancies recorded by the State census just four months later. This is symptomatic of a fear of regulation rather than recognition that regulation would strengthen the market, and indeed, rents. An effective regulatory regime will protect tenants and provide greater certainty to landlords investing in properties, generating a stronger overall market to the benefit of both.

Problems with the current legislation include the stunning complexity of the legislation, which means landlords and tenants struggle to identify and interpret relevant legal rules. The rules for termination of tenancies, for example, are a legal minefield. The PRTB dispute resolution procedures are multi-layered and, in many cases, do not facilitate fast outcomes. This is especially frustrating for landlords trying to enforce non-payment of rent or to repossess rented premises, and for tenants whose deposits have been unlawfully withheld by their landlords.

Landlords and tenants need a legislative scheme that is user friendly, together with an efficient mechanism for resolving disputes.

The disputes resolution service had a challenging year in 2010, with an unprecedented 2,230 dispute applications being received. This represents an increase of 20% on the 2009 figure. More recent figures from 6 February 2012 indicated that the number of complaints to the Private Residential Tenancies Board had risen by 25% overall. The most common complaints made by tenants concerned the refusal of landlords to refund deposits, which comprised 72% of all cases taken by tenants in 2010, while the most common complaints made by landlords concerned rent arrears and a breach of other tenancy obligations, which comprised 68% of all cases taken by landlords.

The addition of the voluntary and co-operative housing sector will further stretch the PRTB’s scarce resources and it remains to be seen whether the revised mediation rules, if enacted, will lead to a higher take-up of mediation. The voluntary sector will also be placed under pressure with additional logistical demands. Although viewed as tenancies for life, most approved housing bodies' tenancies are, in reality, weekly or monthly periodic tenancies that can be terminated with 28 days notice. There are 700 voluntary and co-operative bodies with approved housing body status. The inclusion of the voluntary and co-operative sector within the remit of the PRTB could result in approximately 185 additional dispute referrals, an additional 128 hearings and 73 determination orders per year. At current staffing ratios, this would require a minimum of 5.5 additional staff in the first year to provide the ongoing services of the PRTB. The main dispute areas are likely to centre on rent arrears, anti-social behaviour, neighbour disputes and maintenance, all of which have the potential to be time consuming for the PRTB to process.

The streamlining efforts of the Bill focus on changing names, the removal of a €25 mediation fee and tinkering around with the number of days given to the process. This does not constitute decisive action in reforming the work of the board and accelerating the process. There is nothing in the Bill to deal with tenants who are in rent arrears. However, it has been indicated that the issue will be addressed on Committee Stage. The Bill does not attempt to simplify the intricate rules governing the content of notices of termination, nor does it attempt to set any statutory timeframe within which a determination order should be issued following an application to the PRTB for dispute resolution. There is no provision in the Bill to clarify the long-standing ambiguity around the interaction between fixed-term tenancy agreements and the provisions governing tenancy terminations set down in the RTA. No changes are proposed to the controversial provisions on anti-social behaviour. Apart from the proposed amendments to the rules on mediation, there are no plans to streamline the dispute resolution process more generally or address the significant problems with practical enforcement of PRTB orders. Fundamental revision is needed, together with adequately resourced supporting measures, to promote awareness of rights and obligations among landlords and tenants in order to reduce the scope for disputes.

A deposit retention scheme on the basis of the model successfully used in the United Kingdom has been promised by the Minister and will be a vital component in a fully functioning, vibrant rental market. When will these changes be forwarded to Senators? Given the high volume of disputes brought by tenants owing to the withholding of a deposit, an effective scheme would have a far greater impact on speeding up the work of the PRTB than any name tinkering. A new system would further stabilise the rental market and bring greater certainty to both tenants and landlords, thereby creating a stronger overall market. The UK scheme is based on two options. The first is the custodial scheme, whereby the landlord pays the tenant's deposit into a central pot. At the end of the tenancy the money, plus a small amount of interest, will be paid back to the tenant from the central pot. The second option is an insurance based scheme, whereby the landlord keeps the deposit but pays a small premium to a dedicated insurance company. If there is a dispute, the insurer will pay the tenant the deposit and then recover it from the landlord. What type of scheme is the Minister of State considering?