Wednesday, 10 July 2019
Local Government Rates and Other Matters Bill 2018: Committee and Remaining Stages
Senator Gavan's colleague gave an example in the House. If the 24-month period applied, it would still be more profitable for the landlord to hold the property out of letting for 24 months, let alone 12 months. The purpose of the 12-month change is to ensure that there are a limited number of protected structures that are let out. It was felt after the passage of the most recent legislation in this area that there was a potential loophole left that could cause an unintended consequence whereby some of the existing protected structures that are let and some that might be let into the future for housing would not be let. In the example the Senator has given, even if his proposal were to be adopted, it would not prevent the landlord from holding the property out of letting for two years. He or she would still make substantially more money by doing that.
To give the specific answer, before my officials turn on me again, concerns have been raised that it is not possible for works undertaken to protect the structures to qualify for an exemption from the 4% per annum rent increase restriction applicable in rent pressure zones and that this might result in a loss of such units to the sector. Amendments to section 19 of the 2004 Act, enacted in May of this year, provide for works to improve building energy ratings as qualifying for the exemption. However, because protected structures are exempted from BER regulations, work to improve their energy rating cannot qualify. It was missed at the time the legislation was passing. In recognition of this and to encourage continued investment in protected structures for use in the rental sector, the Bill proposes to amend section 19(5)(a) of the 2004 Act further to allow the first rent set under the tenancy of a protected structure dwelling that was not rented out in the previous 12 months to be set at a level that does not exceed the market rent. Thereafter the 4% rent increase restriction will apply. For dwellings that are not protected structures, a vacancy period of two years prior to the rent setting will continue to be required to qualify for the exemption.
Enactment of the amendment to this Bill during the immediate aftermath of the 2019 Act should help to eliminate a potential negative impact by those changes on the planned refurbishment of protected structures in the rental sector and should help maintain the supply of that particular, albeit small, category of rental properties. It is true that a protected structure in a rent pressure zone might become vacant and a landlord could decide to keep it off the rental market for 12 months to qualify then for the exemption. We must remember that a landlord renting out a protected structure who decides to take this course of action will do so at the loss of a year's rental income. This would likely be a substantial loss, particularly in Dublin or any of the rent pressure zones. It is highly likely that the number of landlords with rented protected structures choosing to take this course of action would be low. I think it would be very low because there are just not that many protected structures being rented at the moment. We should be doing more to encourage protected structures back into active use. The return of the property to the sector 12 months later, even at a higher rent, is still preferable to its permanent loss to the sector. Without this exemption, it is likely that protected structures in the rental market that are in need of refurbishment will not be refurbished or will be sold on the open market with a possible loss of the dwelling to the rental market. We have to secure the supply of much-needed homes that comply with minimum standards for rental accommodation. A key point to remember is that the 2004 Act provides significant protections of tenants from eviction. Any suspected so-called economic eviction should be referred to the Residential Tenancies Board for resolution and redress. The amendment in this Bill should stand to benefit both tenants and landlords. We are talking about a very narrow category of dwellings.
Senator Mulherin mentioned vacancy levels in the centres of many of our towns and cities. Many of the buildings in the centres of towns and cities are protected structures. I was speaking at an event in City Hall in Dublin recently. I was having some tobacco outside the door and one of the ushers was there. We were talking about the upstairs of the buildings across the road from us. They are beautiful brick buildings, I do not know from what era. They are all vacant, most of them protected and not let out. We should be doing more to ensure that protected structures become available on the rental market. The effect of Senator Gavan's proposal would be to ensure that we would have fewer.