Aideen Hayden (Labour) | Oireachtas source

I move:

That Seanad Éireann: - notes that one in five households in Ireland now lives in the private rented sector;

- further notes that approximately one third of all private rented households receive State support to pay their rent under the rent supplement scheme;

- notes with concern the difficulties that households are experiencing in maintaining and accessing private rented accommodation due to rapidly rising rents, especially in urban centres;

- welcomes the strong priority given by the Tánaiste and Minister for Social Protection, Deputy Joan Burton, to addressing the housing shortage that has given rise to these difficulties; and

- further welcomes the social housing strategy announced by the Minister for the Environment, Community and Local Government, Deputy Alan Kelly, to deliver 35,000 social homes and 75,000 more secure homes in the private rented sector by 2020 and the large capital investment package put in place to support its roll out.

I welcome the Minister of State and thank him for taking this debate. I also welcome representatives of NABCO, Threshold and the Society of St. Vincent de Paul to the Visitors Gallery. I also note the presence in the Visitors Gallery of Mr. Tom Dunne, a former chairman of the Private Residential Tenancies Board, PRTB, and the Commission on the Private Rented Sector in 1999 and 2000.

As everyone is aware, we are facing a housing crisis, although there is light at the end of the tunnel. The Government has published a number of strategies in this regard. It has published a strategy to kick-start the construction sector with Construction 2020, an ambitious strategy to end long-term homelessness by 2016, and the social housing strategy which will prove, in time, to be the key in the recovery of the social rented sector which has been neglected for some time. However, it would be fair to say we do not have a strategy for the private rented sector.

In 2004 we passed the Residential Tenancies Act which was considered to be cutting-edge legislation at the time and which changed the rental market in Ireland substantially by providing for a degree of security of tenure. It provided for the establishment of the PRTB, which aims to resolve disputes between landlords and tenants. It also provided for the registration system we have in place today, under which approximately 85% of landlords are registered with the PRTB. I accept that the 2004 legislation was momentous and replaced the system under which the most a tenant could hope for in the absence of a lease was 28 days notice. That said, the legislation is more than a decade old and the situation in Ireland has changed very significantly since. One in five families today live in private rented housing. That number rises to one in four in Dublin and one in three in Galway. Effectively, the private rented sector doubled in size between 2006 and 2011 and is predicted to increase to 25% of the housing market before the end of the decade.

The motion is a composite one covering both the private rented and social housing sectors. My colleague Senator Denis Landy will deal with the social housing aspects. I will focus my attention on where we need to go in reforming the private rented sector.

We must face the reality that renting is a long-term scenario for many Irish people. That point was made starkly recently when there was a lot of media attention focused on new Central Bank rules put in place to ensure people did not sign up to mortgages that they could not afford. The aim of the rules is to ensure we do not go back to the housing bubble we saw in the past. In reality, the new rules mean that many people are facing a future in which they will not be able to enter into home ownership. Additionally, we have traditionally looked to the private rented sector to house lower income tenants who have not been able to access social housing. We now have a scenario where 32% of the entire private rented sector is being subsidised by the State through the rent supplement system. We have had a failure for many years to address the issues in the social rented sector, most of which is the responsibility of local authorities. We have seen a very significant increase in the numbers on housing waiting lists, particularly since the early 1990s. This has meant the private rented sector has become a long-term housing option for those who are dependent on the State for housing through the rent supplement system. In reality, generation rent has become the future many face today, regardless of their preference.

While it is not within the remit of the Minister of State at the Department of the Environment, Community and Local Government, the issue of rent supplement and rent caps is one which needs to be addressed urgently. Rents are rising spectacularly, particularly in urban areas and most notably in Dublin, but the rent caps have not risen to reflect this reality. Unfortunately, we are seeing instances of people being economically evicted or forced into homeless services because rent caps do not enable them to either keep or seek rental accommodation. This issue must be addressed. However, as a country, we cannot continue to follow the market, particularly in a situation where there is a serious lack of supply. Therefore, I ask the Government to consider very seriously the idea of rent regulation.

A number of European countries have strong and robust private rental sectors that provide for significant security of tenure and higher standards of accommodation than here. There has been a lack of focus on the private rented sector. Until recently, it was the norm to accept poor standards of accommodation. There has also been a failure to regulate some of the worst excesses of the market. In particular, we have seen cases of people who are ostensibly in secure accommodation under the legislation but whose landlords are now claiming that they require the accommodation for family members or that they need to sell it. This means that people are effectively losing what little security of tenure they have.

Ireland is effectively an outlier in terms of regulation, particularly with regard to rents. Through the 2004 Residential Tenancies Act, we have a measure of rent regulation in that rents can only be increased once annually to market levels. However, we are in a scenario where rents are spiralling out of control in many areas, particularly in Dublin, and organisations such as Threshold and the Society of the St. Vincent de Paul are reporting that clients are facing rent increases of between 30% and 50%. We must address the issue of unaffordable rent increases that bear no resemblance to the cost of providing accommodation. I appreciate that work is being done by organisations such as Threshold, of which I am chair, in providing the tenancy protection service, but in reality rents continue to rise and rent caps do not resolve the issue. Dealing with it on a case by case basis, as is the strategy, is not solving the problem. Therefore, we need a rent system to provide certainty. Rent increases must be reasonable and predictable if the private rented sector is to function properly. There must be a real option for individuals and families to make a home in the private rented sector. Families need to know that their children will be able to attend the same school in 12 months time if they are to put down real roots in a community.

Many arguments have been made against the idea of introducing a rent certainty model, particularly about its constitutionality. However, there is sufficient evidence, including in the recent DKM report, to suggest the constitutionality of what is known as third generation rent regulation would not be an issue in the Irish context. The argument was also made in the aforementioned DKM report that rent controls might drive landlords out of the market. However, we see that countries where there is greater regulation of the private rented sector and where there are rent controls such as the Netherlands, Germany, Belgium, France and so forth actually have much larger private rented sectors than here. We are dealing with a housing market that is very volatile and unpredictable. It can be argued that predictability is actually very good for investment in the sector in the longer run. We have a scenario where landlords can charge what they want, which means that we are dealing with a market that is effectively out of control. Having certainty would be in everyone's interests. If the market were to become more stable, there would be fewer instances of tenants over-holding.

Tenants cannot afford to pay new levels of rent and as a result they remain in a property because there is no option for them to move out or to move anywhere else. In the long run it does not favour landlords who are no longer getting any form of rent. Often it could be some years before a tenant may be moved out of a property. I know this issue will be addressed in the residential tenancies (amendment) (No. 2) Bill but a predictable market is good for landlords and tenants. In recent decades we have seen the Irish housing market rise and fall and at the end of the day we do not appear to have learned the lesson that stability in the market is better in the longer run for the overall market and for landlords and tenants.

The quality of rented accommodation is an issue. Some 58% of the almost 18,000 private rented dwellings that underwent initial inspections by local authorities in 2013 were found to be below minimum standards. The 2013 figures also reveal that no inspections were carried out and no inspection data were provided to the Minister of State's Department by 31 out of the 87 local authorities while other authorities only carried out a handful of inspections. The bottom line is that we have a scenario where those figures are not improving significantly in spite of the fact that more resources have been made available by local authorities to inspect rented properties. I suggest we need an NCT for rented housing. A landlord should not be entitled to rent out property that does not have a certificate of fitness and it should be an automatic offence to do so. With the proposed introduction of the housing assistance payment this would be a good way for local authorities to deal with the scenario where many properties do not meet minimum standards and they have difficulty in enforcing the additional law.

I wish to raise the issue of the deposition protection scheme and seek some clarification on it. The unlawful retention of deposits is still a major cause of disputes in the sector and has resulted in tenants, effectively, becoming homeless or remaining in substandard properties. We have a situation where there is a significant amount of arrears of mortgages in the buy to let market and receivers of rented properties are receiving rent but are not undertaking any of the obligations of the landlord. We need to have a change in the law that puts receivers into the shoes of landlords where they are receiving rent and it should be their responsibility to ensure that repairs are carried out.

I do not think any Government has had such a complexity of housing challenges. We have dealt with the international financial crisis, fuelled in this country by an unsustainable housing market bubble, the collapse of the banking system, the deep level of housing debt and negative equity which has not washed through the system yet, rising repossessions and homelessness, all of which are major challenges. The bailout programme has restricted our ability as a Government to act in this area. However, we see some light at the end of the tunnel and we must use this opportunity wisely if we are to avoid making the same mistakes. Our social housing strategy is relying on the private rented sector. Some 75,000 of the units under the social housing strategy are to be delivered through the private rented sector particularly through the housing assistance payment, HAP, which I believe will be an important step forward for tenants in that they will be enabled to work and pay rent according to their means. If that strategy is to work properly it must link with the private rented sector strategy. The private rented sector needs substantial reform if it is to be a long-term housing option in terms of security of tenure, certainty around rent and absolute guarantees of appropriate standards of accommodation.