Simon Coveney (Cork South Central, Fine Gael) | Oireachtas source

I have a copy. The Senator can have it. I might go off-script at times; I have a reputation for doing that.

As I said, there are acute pressures in the rental market and I outlined some of those. Those stresses are borne out by the latest data from the Private Residential Tenancies Board, PRTB. The PRTB index for the second quarter of this year shows that private rents rose by almost 10% across the country compared with the same period last year. In Dublin, rents are now 3.9% higher than their previous peak in 2007. Rents are also increasing outside Dublin, although they remain at about 11.2% off their peak levels. Those numbers are broadly in line with the trends reported in the recent daft.iereport for the same period. There is no question that the increases are placing huge pressures on tenants, particularly those who are seeking to access new accommodation and, in particular, on many people who are simply being priced out of the market, as has been pointed out, or put at serious risk of homelessness.

The core issue behind almost all of the pressures throughout the housing market is lack of supply. For the rental sector, the best way to reduce and stabilise rents in the long term, and benefit the entire sector, is to increase supply and accelerate delivery of housing for the private and social rented sectors.

Rebuilding Ireland - an Action Plan for Housing and Homelessness aims to increase and accelerate housing delivery across all tenures to help individuals and families meet their housing needs. It sets out over 80 actions the Government is taking through new policy, new legislation and innovative measures in the budget to achieve that aim.

A strong and viable private rental sector can play an important role in the housing market and our wider economy. It can provide a housing option to those who either cannot or choose not to enter the owner-occupied market but still have sufficient means to meet their own accommodation needs. It can provide a housing option to meet rising demand and promote flexibility and better alignment to a more mobile labour market, making it easier for individuals and families to pursue job opportunities or adapt their accommodation to changing family circumstances.

It can also reduce the macroeconomic risk of an over reliance on home ownership. We have seen examples over the past decade where states with relatively large private rented sectors, such as Germany and Switzerland, have been better insulated against housing booms than states with small rental sectors like Ireland and Spain. The rental sector in Ireland has traditionally been regarded as a residual sector in which households who would prefer either to own their own home privately or access permanent social housing must serve time in on their way to their true tenure of choice.

The rental sector in Ireland has doubled in size over the past two decades. Almost one fifth of the population now live in the rental sector. Growth in the sector has been driven by a range of factors including a reducing reliance on home ownership as a tenure of choice, as well as demographic factors including inward migration from the European Union, decreasing household size, and increasing rates of new household formation. Notwithstanding that, the rental sector here needs to develop and mature in order to provide a viable, sustainable and attractive alternative to home ownership rather than serving as a temporary refuge or a staging post on the route to home ownership.

Severe supply pressures, rising rents, security of tenure issues, limited, but nonetheless unacceptable, examples of poor accommodation standards, and a shortage of professional institutional landlords are impediments to delivering on a strong, stable and modern rental sector that offers real choice for individuals and households while contributing to economic development.

With regard to rent levels, important amendments to the Residential Tenancies Act introduced last year 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 also. These changes are important, but clearly there is need to do more.

While I appreciate the motivation behind the Sinn Féin Bill, I strongly believe that the proposal to tie rents strictly to the consumer price index may well exacerbate the problem we are currently facing. It may force some existing supply to exit the market and discourage future supply for the sector. The experience in jurisdictions where strict and blunt controls such as that proposed have been introduced is generally not a happy one. Rent control has been shown to negatively impact on supply, make tenants even more vulnerable, and create strong black market distortions and inefficiencies that can emerge from time to time.

I see rent predictability, as part of a stable rental sector underpinned by a sustainable investment environment, being of benefit to both tenants and landlords. That is why the Rebuilding Ireland document commits to developing a real and meaningful strategy for the rental sector, with a major focus on supply but also including new mechanisms for both setting and reviewing rents. We plan to have that done by the end of the year. We will start our consultation towards the end of next week and would be interested in anything people have to say in a constructive manner.

In advance of the publication of the strategy before the bend of this year, I am advancing other legislative changes. In case people think we are not acting in this area, we are by taking some early actions to which we are already committed. They are in the Rebuilding Ireland document, and they have already gone before Cabinet in terms of legislative approval. We are advancing their early introduction in the Housing (Miscellaneous Provisions) Bill 2016, which I will shortly introduce to this House. This Bill will introduce new measures to ensure tenants remain in situwhere a landlord proposes to sell more than 20 units in a single development. It is being referred to as the Tyrrelstown amendment, and it will provide for enhanced enforcement and dispute resolution powers also for the RTB. We are saying that when one institutional investor sells a development to another, the tenancies in that development will not be affected through that sale. We need much more consideration on whether we will do something similar for much smaller developments or individual houses or apartments that may be owned by landlords that only have one or two properties. We will consider that and examine it in detail.

In terms of increasing supply, the Bill will introduce temporary fast-track planning arrangements for large-scale housing developments and streamline the existing process for local authority developments and developments by approved housing bodies, and support a very significant increase in the supply of dedicated on-campus student accommodation, freeìng up thousands of units in the wider rented sector currently occupied by students. There are approximately 25,000 students in the private rental sector, and many of them have four or five students per house. We are not saying that will free up 25,000 houses, but it will certainly free up about one third of that number. There are approximately 10,000 new student accommodation units in the pipeline, either in preparation for planning, in planning or with planning and about to start construction.

Yesterday’s budget contained more measures designed to encourage a strong supply response in the rental sector. For example, the Government has announced the restoration of 100% interest relief for residential landlords on a phased basis, 5% at a time, moving from 75% to 80% next year and continuing on to 100% over the next five years. We are also extending the Living City initiative to include rental accommodation, and we are removing the existing square footage cap.In other words, we are trying to encourage investment in derelict property, primarily in city and town centres, so people can invest in it and make it ready to be rented. That makes much sense. We are increasing the ceiling of the rent-a-room scheme from €12,000 to €14,000. In other words, we want to attract people financially to rent a room in their homes to students if it suits them to do that. By moving the level from €12,000 to €14,000 of tax-free income, there is a really strong sweetener in doing that. It will also have an impact on supply.

I am determined that the strategy will provide a vision of the role that the rental sector will play in the short, medium and long term in the context of the Government's objectives for a housing sector overall as set out in Rebuilding Ireland. It will contain a range of actions focused on the four key areas of security, supply, standards and services. In terms of security, we will look at bringing greater tenure and rent certainty to landlords and tenants, and in terms of supply we will examine how to maintain existing levels of stock while encouraging investment in additional supply, including through affordable rental. We will launch the detail of that scheme in the coming weeks. In addition, measures on standards will continue to improve the quality and management of rental accommodation, while actions on services will broaden and strengthen the role and powers of the Residential Tenancies Board to more effectively provide services and empower tenants and landlords. In other words, if there are disputes between tenants and landlords, we need earlier outcomes to solve them.

We have more to do to allow this area to evolve into a mature, stable sector in which there is a true balance between the rights and responsibilities of landlords and tenants. Supply of new rental accommodation at affordable levels is key to this balance. The strategy for the rented sector, which will be in place by the end of the year, will lay out measures to address immediate issues affecting the supply, cost and accessibility of rental accommodation.

I agree with the speakers who have said they will oppose this motion. It is well intentioned, and I do not mean that in any kind of patronising way. There is a problem for many people because of the pressures they are under arising from rent inflation. An effort to solve that using the blunt tool of simply putting in rent caps without anything else would have a very significant and potentially very negative impact on supply in the medium term. Ultimately, we need to see dramatic investment in that area. I look forward to working with everybody in this House in the context of the housing legislation we will introduce in the next few weeks, I hope, and Members will be able to see some of the measures we are introducing right now. I hope to get engagement in the broader consultation that we will facilitate in the next few weeks in the context of trying to put a balanced rental strategy in place that can deal with a multitude of different pressures, ensure that supply continues and that predictability around the management of rents also improves from a tenant and landlord perspective.