Eoghan Murphy (Dublin Bay South, Fine Gael) | Oireachtas source

I thank the Senators for their contributions. I will address Senator Warfield's concerns first. The different amendments are all related in many ways.

On the data issue, the NGOs say that landlords selling properties is the main reason people end up in emergency accommodation. The Residential Tenancies Board, RTB, says that it is actually rent arrears, that is, people not paying rent. Let us assume for a moment that the RTB is correct. We would be making a much stronger intervention if we did something about rent arrears. A tenant might build up arrears that are small in the scheme of Government expenditure but large for the tenant if he or she cannot pay it and for the landlord because he or she lets in order to afford the cost of the property. It would be much more affordable for the State to make an intervention when the arrears start to build up, rather than at the point when the tenant is evicted. At that point the landlord may have had such a negative experience of letting that he or she will get out of the game entirely. The RTB tells us is this is what is actually happening. If that is the case, it would be much better to make an intervention on rent arrears. Doing so would mean that the property remains in the rental stock and the family or individual is kept in the home. Part of the interagency group I set up in September 2017 is now working with the Minister for Employment Affairs and Social Protection. It is examining approaches to rent arrears and to identifying people in need, who might be embarrassed about approaching social protection services, to help them long before they receive a notice to quit.

Notwithstanding that, the NGOs say that the RTB data are not a full picture because they only represent people who go to the RTB. Those NGOs are the front line. People tell them why they have come to emergency accommodation services. We did a bit of work on this in the first quarter of this year. The data collected were actually incomplete, as four out of ten respondents did not give a reason and we were blind to an extent to the totality of things. I have met the NGOs and they have met the RTB. We are now trying to get much better data to better inform what we are doing. A new study, independent of my Department, will be commissioned to try to track that more accurately. That is one of the issues the Attorney General flagged to me when we were bringing this forward. He said the data are not thorough enough to support the changes the Senator is looking for, which raises the question of whether they would pass the constitutionality test. However we did not stop there. We kept on pushing. I understand the motivation behind these amendments. We are working to get a more solid picture of why people are presenting and what the appropriate and best interventions might be.

Regarding the other points, it is absolutely the case that if a 20-year lease is signed in the commercial sector it cannot be broken. It is exactly the same in the residential sector. If a tenant rents a property and signs a five-year or ten-year lease, the landlord cannot break that. That is the lease agreement. The problem is that people are not doing that enough. We are trying to find ways to incentivise people to get into longer lease agreements. We have talked about the tax treatment of such leases. Perhaps we could put something into our tax laws to create more of an incentive for people to enter into these agreements. Those conversations are ongoing. They have not come to a conclusion. It would be in the interests of the tenant, as well as the landlord, to be able to do that.

We must recognise why this is done in the commercial sector. When a landlord makes an investment to rent out a business in a building, he or she is not doing it to own the building at the end of 20 years, sell it and make money from it. The landlord is not spending on capital appreciation. These buildings depreciate over time because of changing building standards, technology, etc. The landlord invests in that lease and keeps the tenant in situbecause he or she wants the rent roll from that lease. Suppose I buy a leasehold where there is a takeaway restaurant. I am investing in that because I want the rent from the restaurant, which provides a steady yield every year. That is not why people become landlords in this country in the majority of cases. They do it for capital appreciation. They buy a second property on the understanding that its price will rise over 20 or 30 years. Despite the dips we have had, that is basically what has happened over the last 30 or 40 years. If an investor buys in the right area, the property value will rise. The owner takes a rent that will help with the upkeep of that property over that period and reinvests in it. He or she pays more than half of that rent in tax. This is done with the idea that when he or she retires 20 or 30 years later, he or she can sell the property and use that lump sum as a pension. Alternatively, because the mortgage on the property has been paid off, he or she may choose not to sell it and may use the rent as an additional income.

That is not really what we want in our rental sector. We do not want that kind of investment because it means a certain number of landlords always will be exiting the market because their personal circumstances determine that they should. That is why 70% of our landlords owning only one property leads to a much more volatile sector than in other European countries. We are trying to move away from that by having larger landlords come in and make their 20 or 30-year play within the regulations, which will be forthcoming under this legislation. They will be able to get a steady return, as they would if they took on rents for restaurants, takeaways etc. This will be a different type of rental sector to the one we have experienced. It was said that many landlords are operating on that basis but actually they are not. A small landlord does not necessarily have the disposable income to help a family member in need. That is why we believe that the need to move a family member into property is a good enough reason for a landlord to say to someone living in their second property that he or she has to go. This is connected to the reasons landlords invest in property. They may not be making a huge amount of money if they have invested on a capital appreciation basis. We also recognise that this means a smaller burden on the State. We do not want that to mean that the people living in those properties then find themselves in emergency accommodation. That is not what we want. We extended the notice periods to give people more time to vacate properties and find new accommodation. Looking at all these consequential amendments together shows how we can protect from those issues.

On another point that was questioned when I spoke, we also do not want to move the burden for servicing a notice to quit to someone who is not a landlord at all and has not been for 20 or 30 years. They might be a young couple who have bought a home and want to live in it and raise a family. All of a sudden they have to go through all these procedures with the RTB and potentially the courts. We do not want that to happen either. That is just shifting the problem to someone else. It is not solving it. That is why those amendments cannot be accepted.

We maintain that the 28-day period is fair for less than six months' renting. Tenants may want to exit an agreement as well.Would it be fair to say that tenants have to give six months' notice if they have only been in properties for 28 days? That will not work for anyone. Once a year has passed, someone outside a lease agreement will have four months to find a new place after only living there for 12 months. That is a very significant reform. I will come back to the point. If a tenant has a lease agreement it cannot be broken. If a tenant signs up to a two-year lease agreement, or if after a one-year lease agreement he or she signs another one-year lease agreement, he or she is protected. Such a tenant has more than four months.

Senator Ruane mentioned Part 4 tenancies, which were introduced under the 2004 Act. Once a tenant has been in a property for more than six months, he or she starts to accrue new rights. We have been discussing the notice-to-quit periods, but there are also others. A more recent change is that when a Part 4 tenancy termination expires, the tenant does not simply go back to zero with his or her landlord. Instead the tenant moves into a further Part 4 tenancy. A tenant is not treated less favourably than someone who has been living beside him or her for three years. We want tenancies of indefinite duration in order that tenants are not stepping in and out of Part 4 tenancies. In 2004 this type of protection was seen as enough. Since then it has been changed and improved but in reforming the sector, we recognise that we want people to move into indefinite tenancies of indefinite durations in order that their rights will always be there. The difficulty with the amendment as drafted is that it is not enough. Accepting it would unfortunately unravel the obligations under the 2004 Act without putting in enough for tenancies of indefinite duration to stand on their own two feet. We would take a step backwards by accepting the amendments. I know that is not Senator Ruane's intention. However I have worked in this job for the past two years and no aspect of it is ever as simple as, for example, defining a deposit as being one month's rent. There are always consequences which we must bear in mind to make sure we do not do more harm than good. It is not as easy as providing for indefinite durations or changing a part of the 2004 Act. We have to look at a lot around this. That is why it needs its own Bill. That is the next item of legislation that will come forward, subject to the support of this House.