John Cummins (Fine Gael) | Oireachtas source

I again welcome the Minister to the House and I acknowledge the commencement of this very important legislation in the Seanad. It is a commitment he made and I am sure all Senators will join me in thanking him for living up to his word in that respect. Everyone, across the parties, acknowledges the need for the speedy passage of this legislation. In fact, that is the reason the Joint Committee on Housing, Local Government and Heritage approved the pre-legislative scrutiny waiver. In that spirit, I am sure all of us will put our shoulders to the wheel to ensure this legislation gets safe passage through both Houses in speedy fashion.

This legislation seeks to place a cap of 2% on rent increases in rent pressure zones. I am sure the Minister will be the first to acknowledge that it is never good to continually change rules in this space as it brings uncertainty into play for tenants and landlords. However, when we introduced legislation prior to the summer recess to link rents to the harmonised index of consumer prices, it was stated that he would keep it under review and, if necessary, further action would be taken, which is exactly what we are doing this evening. As the Minister rightly pointed out, inflation was running at 0.75% over the past three years and is now running at 5.1%. The Bill before us will limit rent increases to the harmonised index of consumer prices, or 2%, whichever is less. As we know, the reason inflation is running considerably higher now is a result of rising energy costs, not only in Europe but worldwide. That is having a distorting effect on the HICP.

We will hear many calls from the Opposition on Committee and Report Stages today and next week for a rent freeze, which sounds great in theory but, as I said previously, every action has an equal and opposite reaction. We do not have to look too far away to see the impact of such a move. The left-wing Berlin state government introduced a five-year rent freeze to much fanfare in 2020, proclaiming it would resolve everything. However, 12 months later, supply had reduced by 50% on average and Germany's supreme court ruled the measure unconstitutional, meaning those who benefited from lower rents have potential back bills to pay to landlords. It is easy to propose measures that are undoubtedly popular when in opposition but in government everything has to be weighed up. From speaking to those involved in the rental sector, from estate agents to landlords and those seeking a rental property, it is clear that the very last thing we need in an already constrained market is a further reduction in the number of properties available for rent.

This Government wants lower rents. That is why we are rolling out a cost-rental model for the first time in the history of this State. Based on the Vienna model, it will compete with the private rental sector and individuals and families will have secure long-term tenancies of at least 25% below market rents. In our Housing for All plan, 18,000 units have been earmarked for delivery by 2030. I believe there is major potential to significantly increase that figure. As the model is proven over the course of the next 12 months, I expect that will be the case. Everyone acknowledges that supply is key for housing. We have to acknowledge where we have come from. Output has increased from 4,500 units a year in 2013 to 20,584 units in 2020, despite Covid-19 shutdowns. The rolling 12-month average of house commencements to the end of September now stands at more than 30,000, which is a very good indication that supply is ramping up and starting to come on stream for those who need social and affordable housing and private houses.I know that everybody in the sector is committed to assisting us in meeting our targets of an average of 33,000 units per year up to 2030.

Sections 5 and 6 of the Bill provide for an amendment to Part 4 of the principal Act to allow for tendencies of unlimited duration. At present, as the Minister said, tenants enter a Part 4 tenancy after six months and this can be ended at the end of six years by the landlord without a valid reason such as the property being sold, it being required for use by a family member or that extensive refurbishment needs to be carried out, an anomaly in the system that this legislation is now closing. While the average private tendency only lasts for 3.79 years, it is no longer appropriate that a tenancy can be validly ended after six years without due reason to validly terminate. I welcome this change in the Bill.

Section 7 proposes to amend section 134 of the principal Act to provide that where a landlord applies to register a further Part 4 tenancy up until the day before the requirement for annual registration under sections 22 and 23 of the Residential Tendencies Act 2019, which we expect to come into play in quarter 1 of next year, no annual registration fee shall apply in respect of that further Part 4 tenancy. The annual charge will then come into play at the end of the further Part 4 tenancy when a new tenancy of indefinite duration commences.

When the Bill was first drafted, it was intended to apply this section only to the approved housing body, AHB, sector. However, following engagement by me and others, it was agreed to extend this to all landlords, which is appropriate. It would not be fair to allow just the AHB sector to benefit from this waiver while a small landlord with one, two or three properties or even an accidental landlord would be levied for six years and then have an annual charge commencing at the start of next year. I acknowledge the work of the Minister's officials in taking on board that change and in reducing the commencement period of the other section of the Bill to six months.

This is very important legislation. I thank the Minister for bringing it before the Seanad expeditiously. I wish the Minister every success in his role. We are here to support him in that at every turn.