Tuesday, 14 May 2019
Residential Tenancies (Amendment) (No. 2) Bill 2018: Second Stage
We are acting on the advice of the RTB in terms of what is a priority for the first Bill and what can wait until the second Bill. The issue of deposits was high up on the list a few years ago but has fallen. That is not to say that we will fail to deal with it but, in the interim, something else has happened which is interesting. The interest market has gone in a different direction. The Senator quoted figures for the money that might be involved in a deposit protection scheme. The record might show that she referred to thousands of euro but we are talking about more than €330 million that would have to be managed in a deposit protection scheme. That is the equivalent of a bank. The RTB cannot manage that money. Who is going to manage it? That needs to be decided. Then we need to decide who is going to resolve deposit disputes and to make sure that it is done quickly. I am a former renter and I know that people need a deposit back from one property to secure the next one. That is not going to be possible if people are waiting for four weeks or more to get their deposits back. We need to make sure that when a deposit protection scheme is introduced, it will cover its own costs and will not involve an additional cost for the tenant or the landlord. It must also be efficient when it comes to releasing the money. We must determine who is going to manage the money and resolve any disputes. I have committed to bringing a report to the House shortly on how such a scheme might work.
On the question of the definition of a deposit, there was a lot of talk recently about landlords looking for two months' rent as a deposit but the RTB has said that it is not receiving many complaints in that regard. A deposit should be one month's rent and no more. If we are going to define that in legislation, we need to make sure that we are closing all of the loopholes so that landlords do not simply ask for one month's deposit and two month's rent up front. What if a landlord wants to charge an additional deposit because a tenant is bringing in a couple of pets? How do we capture these issues while remaining fair and balanced? We can do all of this. It is not rocket science but it just was not ready for this legislation. We must also recognise the new proposals that have been included in the Bill only recently, including the extension of the RPZs, the closing of loopholes and the actions on short-term letting. These were not in the Bill initially and have only been introduced in the past month or two because they were deemed to be a priority. It is not that we do not want to do something on deposits; rather we are teeing that up for the next rental Bill.
On short-term letting, our aim is to protect home sharing because the sharing economy is fantastic when it works well. People who have their own home and who want to go on holidays with their family for two weeks decide to let their property out to someone else while they are away. The money they make from doing that will meet some of the cost of their own holiday and why not? Others might have a spare room in their house and decide to let it out during the year, when it suits them. That helps with mortgage repayments or some other expense and, again, why not? We are going to allow home sharing to happen where it is the owner's residence. We are going to allow it all year round when it is just a room in the owner's residence. If the owner is leaving the residence to home share, there is a cap of 90 days. If it is a second property and it is in a rent pressure zone, then I am sorry but that cannot happen any more. The reason we have rent pressure zones is that there is such a high demand for rental accommodation among people living and working in the area and that has to be our priority. While we have to be concerned about tourists and where they are going to stay, as was pointed out here today, thousands of new hotel rooms are being built at the moment. The other parts of our country where short-term letting is the only tourist accommodation available will not be affected. This is linked to the RPZs because the legal advice is that we had to link it to something that shows that there is pressure on rental accommodation. We had RPZs in legislation so that is what we have done. I recognise, as Senator Humphreys said, that parts of the country are not in RPZs but there is pressure on rental accommodation there. However, I had to work within the framework of the legal advice I was given. Senators asked about that legal advice and how it was tested. I have been back and forth with the Attorney General time and again on this legislation as it evolved. This relates to the issue of rent transparency as well, on which amendments have also been tabled. I wanted rent transparency at the individual property level. That was my ambition. As we progressed, I received varied advice on this and went back and forth on it.I was told that we could not do it at the level of the individual house, so we have been identifying where we can do it in legislation at aggregate level, whether that is by street or other area. The building of an annual rent registration capability, which is so important to understand what is happening in our rental sector, will allow us to do that. That will come, but not at the level that I would like. Had we included it, the risk of the legislation crashing on the rocks at a later stage was too great. It would have been unwise to risk it over that issue given everything else that the Bill is trying to do.
I understand what people have heard from some people about substantial refurbishment and we are looking at this. We do not want to deter people from investing in their properties. However, we want to ensure that, where they do so and look to get outside the rent caps in place, they have made a proper investment. They may have increased the floor space of the property to allow for a larger kitchen or playroom because there is a family in the house. They may have allowed for disability access or increased the building energy rating. There is good news on the climate front as well if we can do that. There are other things we can do under our housing policy and planning policy. We can improve the community and our impact on the environment and the climate as well.
Tenancy termination periods are being lengthened significantly. This will be of greater security to tenants who might be at risk of homelessness.
Why is so much student accommodation being built? It is built to a lower standard than homes and apartments because students do not need the accommodation size that a family or a young professional couple might need and because they enjoy more social spaces. Normal rental accommodation could not be built to that standard and that is why it is going up so quickly. It is needed but, as it happens, it takes pressure off other parts of the rental sector. Three students will no longer rent an apartment in the IFSC. They will go into student accommodation and free up the other accommodation, hopefully, for people working in the IFSC or those who want to live there. That is only one example. Six students might have rented a house in Cabra. They will no longer need to rent a house there because there is now student accommodation and that house will be freed up for a family or for professionals working in the area. Student accommodation is being covered under the rent pressure zone legislation in terms of the inflation that is allowed.
Reference was made to the Irish psyche and ownership. That may be true but perhaps that is changing as well. The most important issue is that we have choice. Young people starting off now will work in many different jobs in different countries. They do not necessary think that home ownership is for them in the next five or ten years. They need to have flexibility and choice. Unfortunately, there are people today who were not able to buy a house at a different stage in their life for whatever reason and who are approaching retirement age. Their means of income will be limited to their pension. They need to be able to rent in a secure way for five, ten, 15 or 20 years. They need to know that their pension will not be simply bulldozed by unsustainable rent increases.
As we bring about rental sector changes and more choice we have to bring about certain key measures. We talk about a more modern mature rental sector, a more European-style rental sector, more choice and more balance but what do we mean. We mean increased supply. We have made changes to regulations and planning permission is being approved for thousands of apartments. We mean far better standards, but also different standards depending on the type of accommodation being rented. We mean cost rental accommodation. This means guaranteed below-market rent for a significant period. That is the Vienna model. It works in other cities and it can work here. We also mean affordability not only for those getting below-market rent but also people having some certainty or stability around what kind of rent increase they might accept. Only four years ago rent controls were unthinkable in Irish politics. A year after that, we introduced them. Three years later, we are extending, deepening and improving them. The public attitude to housing and how it should be provided is changing. I believe the Oireachtas is responding, although it can never respond quickly enough. Anyway, I believe we are now starting to understand that we have a different type of responsibility from that we might have had in the past. While we recognise our responsibility to people who are most vulnerable and who need our help the most - that is why we have the provision of social housing - it is not enough to say that one person is entitled to social housing and will get the support but that if another person is not entitled, he or she gets nothing. We recognise now that there is another cohort of people who are working but who also need support with affordable rents or affordable homes to buy. These are the moves we are now making under Rebuilding Ireland.
The modern rental sector also requires security, longer leases and longer notice-to-quit periods. It requires moving to tenancies of indefinite duration. The next Bill will address this and incentivise landlord and tenants to enter into three, five and ten-year lease agreements. What people do not seem to understand is that if parties have a three-year lease agreement today, it cannot be broken because the landlord wants to move back in with notice to quit. He or she has to observe that lease agreement. We want more of these in the sector, not less. We also want stability in supply, which we have not had, unfortunately, in recent years. We want stability in affordability and price too, something we have not had either. We are building all these components. When we have them we will improve circumstances for tenants and landlords alike.
In combination with all of that, we are in the middle of a change management programme with the RTB, moving it from being a board to an independent regulator with all the powers it needs to properly and robustly defend the rights of tenant and landlord alike. That is the kind of vision we are aiming for.
I thank Senators for their time and for staying to listen to me respond. I look forward to the engagement we will have on the amendments tomorrow. I appreciate the fact that Senators are giving this special attention this week, which is important.