Tuesday, 14 November 2017
Housing and Rental Market: Statements
The House will now have statements on the report of the Joint Oireachtas Committee on Housing, Planning and Local Government entitled, The Impact of Short-term lettings on Ireland's Housing and Rental Market. I call the Minister.
I want to thank Members of the Seanad for providing the opportunity this evening to discuss the report of the Joint Committee on Housing, Planning and Local Government on the impact of short-term lettings on Ireland’s housing and rental market and our plans in Government to address this. I want to thank the committee for its work in preparing the report on the sector. I am pleased that, broadly speaking, the recommendations of the report mirror the anticipated approach I hope to propose.
The strategy for the rental sector, published nearly a year ago, recognised the potential issue of significant numbers of properties being withdrawn from the long-term rental market for use as short-term tourism-related lettings. It recognised the negative impact this would have for the supply and availability of residential rental accommodation. As the committee’s report states, it is difficult to accurately measure the extent of the different forms of short-term letting and to estimate the impacts on the rental market and the availability of housing, but we are aware there is real potential for a more substantial impact in the future.
Accordingly, I established a working group made up of representatives from my Department, from the Department of Finance, the Department of Business, Enterprise and Innovation, An Bord Pleanála, Fáilte Ireland, the Residential Tenancies Board and Dublin City Council to develop proposals for the appropriate regulation for management of short-term tourism-related lettings, taking into account the Government’s overall housing and rental policy objectives. I have asked this group to report to me before the end of the year.
There are three broad categories this may affect, namely, homeshares, occasional short-term letting of apartments and full-time short-term letting of apartments. I support the practice of homesharing, that is, people providing overnight and short-term accommodation in their own homes. It is a good thing. It can be an important source of income, helping homesharers to meet the costs of mortgages, rents or other household expenses and hence support tenure security. It also supports tourism and associated economic activity and even social and cultural exchange. Homesharing does not reduce the number of residential units available in the economy.
In contrast, the reason that we have to carefully monitor and in some cases restrict short-term lettings is that they may divert landlords, who normally provide residential rental accommodation, to short-term letting to tourist and business traveller customers. Similarly, people may purchase or rent properties specifically for short-term letting as an investment option, taking them out of residential market. Short-term letting under either of these scenarios would involve a direct loss of units in the rental sector or the broader housing system. This would mean less long-term and secure accommodation available to the growing numbers of families and people who need it in high-demand areas, and this cannot be allowed to continue.
I recognise the potential positive impacts of short-term letting through platforms like Airbnb, such as increased economic activity and tourism revenue. However, in a context where the housing system is under sever pressure, the positive impacts may be outweighed by the negative ones. Nor do we want to deny people the opportunity that short-term letting, in traditional bed and breakfast accommodation or via online platforms, gives them to let out rooms in their homes as a means of earning some extra income.
Recognising this essential duality in short-term letting - the difference between the homesharing host and the commercial operation where properties are used primarily or entirely for short-term letting - is key to both our understanding of the sector and the policy and regulatory response. This is strongly reflected in the committee’s report and recommendations and strongly influences my own thinking as we move to developing long-term proposals to manage this issue. Fortunately, we have not been affected by this problem to the same degree as other cities, and thankfully we can learn from approaches already taken elsewhere.
We have to develop a nuanced policy response to this issue, one that provides clarity to property owners and enables individuals to rent their apartments in a way that protects their neighbours and is consistent with the existing planning of their dwelling. The policy response must distinguish between the occasional letter and the structured full-time short-term lets of some landlords, which remove those properties form the local rental market. It should also recognise that in many parts of the country, there is less pressure on the rental sector than, for example, in the centre of Dublin, and so a nuanced, balanced approach is needed to help everyone get the best out of their local situation. In some places, short-term letting will pose a risk to the rental stock, while in others it could provide an important opportunity for landlords to make profitable use of properties they have difficulty letting. We should not forget the positive impact that increased occupancy can have on local services and businesses in places where occupancy might traditionally be low.As such, the primary goals of the regulatory proposals are to reduce the market impacts of short-term rentals on the long-term residential rental market; facilitate the use by resident householders of unused capacity in their homes for short-term letting and the associated economic benefits for them and the local economy; ensure the quality of accommodation services provided, consumer protection and safety; and limit and mitigate the costs associated with high volumes of short-term lettings borne by residential communities.
What is currently envisaged is a licensing system for intermediaries, such as websites and management companies, and persons renting out single rooms and entire properties as short-term lets. The precise details regarding inspection, monitoring, enforcement limit setting and fees, as well as the consideration of local factors, are still being finalised by the working group. As a first task, the working group was asked to develop guidance for local authorities when considering planning applications for short-term letting. This work has been completed and a circular was issued by my Department last month. I would like to take the opportunity to clarify some points that have been raised in regard to the circular.
The purpose of the circular is to address issues where an application is made for permission under the Planning and Development Act 2000 for a material change of use for short-term letting purposes. Let me be very clear. The circular has not made any change to the planning and regulatory framework in regard to short-term letting. It simply provides transitional guidance to local authorities until a more developed regulatory structure can be finalised.
The circular applies to apartments only, not houses, because of the different rules already in place about a material change of use. Importantly, planning regulations have traditionally recognised that home sharing and overnight guest accommodation is permissible in certain circumstances in houses, but not apartments, without a need to obtain planning permission. I wish to explain and clarify that point. The owners of homes are in full control of the area surrounding their homes, whereas apartment owners share facilities such as doors and corridors surrounding their homes. Therefore, we have to treat houses and apartments a little differently, not because of the impact on the owner of the property but because of the impact on the other owners in a shared facility setting such as an apartment block.
Under the Planning Act, all development, including a material change of use, requires planning permission unless specifically exempted under the Act or associated regulations. Short-term letting in apartments, therefore, may constitute a material change of use and, if it does, requires planning permission. It is up to the owner of a property to seek guidance from his or her local authority as to whether a change of use permission may be required. This is the current position and has not been altered by the recent guidance.
The Department is open to assisting web-based platforms, such as Airbnb and others, to provide the necessary information on their platforms, where they do not yet do so, to ensure that property owners using their services are fully aware of the applicable planning requirements and on how to meet them. The guidance provides that when considering an application for planning permission for a material change of use in an apartment in order to allow short-term letting, consideration should be given as to whether the short-term letting will be for more than 60 nights, will cater for more than four guests and involve more than two rooms, and whether more than 20% of the apartments on any floor of the building are being used for the activity. This refers to applications for apartments only and does not relate to houses.
This guidance is a first step. The broader licensing and regulatory approach on which the working group is developing proposals will provide the nuanced and comprehensive framework I believe we need to meet our varying goals within the sector. I will revert to both Houses with any proposed amendments to the planning code which may be required on foot of the working group’s report.
One thing I would particularly point out to Senators is that throughout the committee's examination of short-term letting and its impacts, all stakeholders agreed there is a lack of quality data in order to inform an evidence-based approach to the problem. Most stakeholders consider that short-term lettings are having an adverse impact on the residential rental market, in particular in Dublin, but much of the evidence presented is anecdotal or based solely on opinion. To try to remedy this, Dublin City Council, in conjunction with Fáilte Ireland, is commissioning a study to assess the impact of short-term letting on Dublin’s residential housing market. In addition, any proposed licensing regime will need to generate quality data so that policy makers in the future will be better informed.
Before concluding, I would like to refer to today's reports from the ESRI on house prices and from www.daft.ieon rents. Both reports point to a strong demand for housing, bolstered by economic recovery and falling unemployment which, coupled with a tight supply of housing, is exerting a strong upward pressure on house prices and rents. A continued and sustainable supply of new homes across all tenures is the solution. The Rebuilding Ireland target is to increase the annual supply of new homes to 25,000 by 2020
Regarding the ESRI special article on house prices, the report published today seeks to determine whether house price growth is divorced from key economic fundamentals, that is, employment levels, population growth and disposable income. The ESRI paper was produced under a joint research programme, operated by the ESRI with the Department of Housing, Planning and Local Government. The conclusion is that prices appear to be at or close to the levels expected, based on our economic recovery, and there is no evidence that other factors, such as a credit bubble, are responsible for price inflation.
While the results of the paper underscore the challenges we face in the housing area, it is important that research such as this is conducted to inform our understanding and to provide a sound empirical basis for policy responses. The clear message from the paper is that the ongoing recovery in the economy will continue to exert upward pressure on house prices. In view of the strong growth envisaged, the ESRI notes that Government policy needs to focus clearly on housing supply, and that is the focus of the Government’s Rebuilding Ireland - Action Plan for Housing and Homelessness.
Regarding the www.daft.iereport on rents, we are well aware that there are acute pressures in the rental market driven by rising demand, the economic recovery, a lack of supply -- which we are discussing today - and the high costs which highly indebted landlords face in servicing their mortgage loans. These pressures are borne out by the trend highlighted in the data, which is upwards, but I would dispute the reported rate of increase. It is important to note that the www.daft.iedata measures rent asking prices, which tend to be higher than the rents actually being paid. The low number of properties being advertised on www.daft.iemeans that the figures are based on a relatively small sample and may not be entirely representative.
The rent index report issued by the Residential Tenancies Board, RTB, is based on actual rents in registered tenancies. Its figures are based on excess of 20,000 registrations each quarter. The RTB data is used by the Government to monitor rent prices. The RTB’s rent index report for quarter 3. 2017 is expected next month and will provide information on actual rents agreed for tenancies established in quarter 3 2017. However, if we look back to quarters 1 and 2 we find the average rent increase over those two quarters was less than 4%.
There is no doubt that rent increases continue to place significant pressures on tenants, particularly those who are seeking new accommodation. The data in the report further underlines the need for and the relevance of the Government’s rent predictability measures. The Department carried out a review of the rent predictability measure over the summer, based on the RTB data for the first two quarters of 2017, which involved public consultation and input from local authorities. The review found that the rent measures and the rent pressure zones, RPZs, are not fully achieving their desired effect, due to non-compliance by some landlords with the RPZ requirements, such as, for example, using the refurbishment exemption to charge higher rents, and some tenants being willing to pay over the legal rent increases permitted. On foot of this review, I announced a number of changes that will be made to strengthen the impact and effectiveness of the RPZs. These will clarify and tighten up the rules for exemptions and make it an offence to charge rents above those permitted by the legislation. The RTB will be given the powers to investigate and prosecute landlords who implement such increases.
Government policy is clearly focused on increasing housing supply and particularly the supply of homes at more affordable price points. The ESRI analysis underscores the need to boost supply across all tenures, that is, private, rented and social housing, to meet current and pent-up demand and mitigate any further increases as the economy recovers.
I would like to thank the committee for its thoughtful and substantive report on the impact of short-term letting and for the recommendations which it contains. They are and will continue to be extremely helpful as we move forward with the design and establishment of an appropriate regulatory framework to protect our housing and rental supply and also take advantage of the benefits that this new and growing shared economy provides.
I thank the Minister for coming before the House and sharing his report. I am a member of the Joint Committee on Housing, Planning and Local Government. Clearly. This is a very complex issue. The Minister is correct in stating that there is a lack of data sets and hard facts on this issue. I presume the committee's recommendations are available online. We made 13 recommendations following a lot of discussion and engagement. We heard from Airbnb and other platforms. We tend to focus on Airbnb, but there are other ways to source short-term letting. One issue is the resourcing of local authorities in terms of carrying out inspections. Any regulations, controls or legislation we may introduce will not work unless enforcement powers and resources are provided to local authorities.
I wish to acknowledge the work of the committee Chair, Deputy Maria Bailey, and thank the committee members, who put a lot of time and work into the recommendations. I also wish to thank the committee secretariat which serviced the committee well.
I wish to raise a few points with the Minister. I take it that he has taken all of the recommendations on board. I refer to the second recommendation, namely that a licensing system be introduced for short-term lettings. That is important. The third recommendation was that casual short-term lettings of up to 90 days in a given year should perhaps be examined, which is related to planning issues. The eighth recommendation was that a review of current planning and development laws and regulations should be carried out to establish whether they are robust enough to prevent abuses of the system. That is important.
The eleventh recommendation was profound, in a way, and strong. It was that the current memorandum of understanding between the Department and Airbnb cease as the committee did not believe it was sufficient or appropriate.Finally, the 13th recommendation is "that adequate resources be provided to local authorities in order for them to undertake a systematic inspection and enforcement regime". That is really important. I am glad the Minister has taken the report on board, or at least that his working group will look at all these issues. Will the Minister share with us when he intends for the working group to complete its work?
I thank the Minister. I am not just saying this because I am on the committee, but the report was very extensive. There was huge public engagement and consultation. After a lot of close scrutiny it was decided that we should be very focused on the key issues. That is why we made 13 recommendations.
The growth of short-term lettings such as Airbnb across the globe has presented a set of serious challenges for regulators who are catching up. The State has an important role to play in ensuring proper planning is fully adhered to and the housing market protected. Fianna Fáil is in favour of the 90 night limit put forward by the report. This will not discourage homesharing but will prevent the loss of homes from long-term renting into professional short-term letting. Preliminary research conducted by Dublin City Council in March 2017 on the extent of Airbnb activity in Dublin suggests that a total of 6,729 listings existed on Airbnb for all of Dublin, with 5,377 listings located within the Dublin City Council area at that time. Of these, 50% were listings for entire houses or apartments only. The committee also heard evidence that there are currently more short-term rental properties available in the Dublin 1 area than there are traditional rental units, and that at least 30 former rented units have been lost in the past 18 months as a result of changing use for the purposes of short-term lets.
Just this morning I checked Airbnb for availability tomorrow night. I did not pick tonight as I am sure there will be an extra burden on all hotels and rentals as a result of the Ireland-Denmark game. For tomorrow, there were 306 entire apartments or homes available to choose from in the Dublin city centre area. That was only 10% of the entire listing. Based on that, over 2,000 have been booked already for tomorrow night. Some 243 hosts had more than one property and these 243 hosts accounted for 913 properties between them. This highlights how 15% of hosts possessed 39% of entire home listings on the Airbnb platform on that given date. There were 1,103 entire homes booked for more than 80 nights in all Dublin during 2016. In Dublin, a typical host on Airbnb earned €5,000 and hosted for 51 nights in 2016.
Outside Dublin, there were 960 Airbnb hosts in Cork in one year. In the period from September 2015 to August 2016, earnings for a typical host in the south-west region, taking in Cork and Kerry, were €3,900. On October 23 the Department of Housing, Planning and Local Government issued a circular stating that planning permissions for short-term lets should be refused if there was a short-term let of over 60 days. The guidance was unclear over who had to apply for permission and on what grounds it would be granted or refused. It also outlines a refusal of permission for stays of more than five nights or for more than four people, which would rule out families and week long holidays. This was met with bewilderment and confusion by stakeholders. Why has 60 nights been selected? What is the basis for just four people? The guidance is contradictory and confusing and risks damaging the sector without actually properly regulating it.
The Department convened a short-term letting task force which is due to issue recommendations by the end of 2017. In response to Dáil questions last month the Minister, Deputy Murphy, stated the planning circular gives guidance on current planning laws but the task force recommendations will set out the basis for a new regulatory framework. I cannot understand how we can make it so difficult. There are plenty of international examples out there. In San Francisco, hosts have to register with the authorities and if Airbnb advertises an unregistered property, it can be fined $1,000 a day for each listing. In Berlin, people who let more than 50% of their apartment on a short-term basis without a permit risk a fine of €100,000 and London has imposed a 90 night limit per year on short-term lets.
This Government loves a good task force, review, report, or expert group. It loves kicking issues down the road so as not to deal with them, but this is not complex. Despite the Taoiseach’s statement at the weekend, we are all in agreement that we have a homelessness crisis and that any measures to address it should be taken. There can be no doubt that the lack of long-term rentals is directly feeding into the homelessness emergency. The Government’s confused circular from last month needs to be replaced with clear regulation around the 90 night limit.
I welcome the Minister and thank him for the debate we are having. I commend the committee of which Senator Boyhan is a member for the work that it has done. As a former Chair of a committee, I think the debates we are having here, and which should also be held in the other House, are of extreme importance given the matters on which joint committees work. The previous Ceann Comhairle, Deputy Seán Barrett, made a proposal to have debates in the Houses on reports produced by the committees. The Houses of the Oireachtas Commission and the Business Committee should expedite that proposal because it is important to have debates on the work of committees.
I commend the Minister for this work and his proactivity. Undoubtedly the report which we are debating tonight and the issue of the housing sector are matters in which we are very much immersed, because we all live in communities in which we recognise the importance of social housing, private housing, rentals and short-term letting. We all desire the delivery of more affordable housing and we are working towards it. That is what Rebuilding Ireland is about. Contrary to what Deputy Swanick said, the Taoiseach is very much aware of, and is very committed to, the issue of housing and has prioritised it in his tenure as leader of the Government. I ask the Senator to read Rebuilding Ireland and to look at Building a Republic of Opportunity and the Taoiseach's speech last Friday night in order to see his commitment to the issue.
We can have ideological differences about the procurement and provision of housing. I agree with the Minister on homesharing. I welcome his nuanced approach to the issue and what he said, which Senator Boyhan pointed out, about having an evidence-based approach. It is what we need and the committee's report has said as much. If those of us who are old enough to have been students in the 1970s and 1980s cast our minds back, many families in Bishopstown, where I live, had students in their houses. This was called "digs". They paid to have a room, meals were provided and the family had the positive experience of having a student in the house. As the Minister said in his speech, it also allowed the family to raise extra money. We need to further explore the Minister's points in respect of his primary goals in the areas of the market, the facilitation of householders who are renting, and the quality of accommodation, along with mitigating costs.
If I might digress for a minute I will return the Minister's final point in his speech, about the ESRI and daft.iereports. I commend Government and Cork City Council. Some €155 million will be expended by Cork City Council, with Government, on the provision of 634 units, which underlies the importance of housing for this Government and for the Fine Gael Party. That money is for the construction of social housing in Cork city. It belittles the usual mantra which will hear from some in this Chamber regarding Fine Gael and its social housing policy. Senator Ó Clochartaigh may well look at me with amusement. We will be delivering €155 million over a list of projects across northside-----
Yes. This €155 million demonstrates the commitment of this Minister to the delivery of social housing. Senator Ó Clochartaigh can speak to the people in Sheridan Court, the people who are waiting for Dean Rock estate or the people looking for housing in Skehard Road. They know that this Government will deliver. We do not just talk or put up placards, we put foundations and bricks and mortar in place and we deliver houses. That is the Fine Gael Party's record in Government. I would be happy to have that debate with the Senator on any platform.
The number of social units being constructed in Cork is actually greater than the number being built by the private sector. That is a source of worry and I hope we can see it addressed. The other issue of concern to me is that last July, in a series of extraordinary meetings, Cork City Council passed eight Part 8 development applications.They are with the Department and are at varying stages of finalisation. I hope that as a consequence of this debate and the good work of people such as Valerie O'Sullivan and Brian Geaney on Cork City Council that the budgetary approval which has been given can be expedited. These eight Part 8 developments will create more social housing units and will enable people to come off the lists for Cork City Council. It is important these projects are expedited because people are waiting for these houses.
The Minister referred to affordable housing. We all want to see that addressed in the short term because we all know of people who do not qualify for social housing who cannot afford to buy and are paying exorbitant rents. We must urgently examine the area of affordable housing schemes. I know the Minister has plans for this. These are the people who fall between the cracks, and this problem must be addressed. I recognise that Rebuilding Ireland provides a roadmap, and the Government has increased the available funds to €6 billion. If one were to compare that with the budget in the North passed in the House of Commons, what does it provide for housing? That is a question that should be answered.
Rebuilding Ireland is a whole-of-Government approach to housing and ensures that Government gives significant support. That commitment was demonstrated by the Minister, Deputy Eoghan Murphy, in Cork recently, opening a wonderful scheme for young people in Bishopstown in recent weeks. These people were not at home or in college but who are now in college and are able to reach their full potential. These are young men and women who want to make a contribution, the Government recognised there was a need and came in through Cork Foyer to do that.
As part of the ongoing debate, we should look at the capacity of the construction sector regarding labour skills and financing. We can discuss banks and pillar banks and housing agencies. I hope the Minister will return to the House so that we may have a wider debate on future policy in housing and do so in a philosophical manner. Approved housing bodies may be the favoured vehicle in some quarters, but I believe local authorities are best as they can deliver in a more timely manner.
I commend the Minister on his approach since taking office. Despite criticism, he has got to grips with the situation and has displayed an understanding of the issue. He meets people and discusses issues, rather than asserting that his way is the only way. I have seen his ability to engage and discuss at first hand. I commend him and thank the committee for the report.
Sinn Féin commends the work of the committee and calls on the Minister, Deputy Eoghan Murphy, to act on the recommendations and bring forward the necessary legislation needed to enact them. Rental figures released today by daft.ieshow that rental pressure zones are not working, since they have not even managed to keep rents stable. These pressure zones were meant to be the Government’s great plan to at least cool the rental market before the bigger issues of supply and freeing up units could be addressed. Without being glib, the sticking plaster solution has not worked.
Several points jump out from daft.iereport. Rents have now risen for 21 consecutive quarters and show no sign of stopping. The quarterly increase in rents between June and September was 3.4%, the fourth largest recorded. Four of the five largest recorded quarterly increases in rents have happened since the start of 2016. From the data in this report, it is clear that landlords are breaching the 4% cap set by the current legislation on a wholesale basis. Unfortunately, as with most issues within the private rented sector, the tenant is responsible for ensuring that landlords comply with the new legislation.
The figures for Galway are disgraceful. Rents in County Galway have risen 14.5% in the last year. A search for three bed properties available in Galway city today on daft.ieshows landlords are seeking up to €2,200 a month for a very ordinary three bedroom house, with seven beds in the three rooms. Recent comments by the Taoiseach on the ability of people on average wage to buy what he called an affordable house of €315,000 show how out of touch he and Government are from the reality of the national housing crisis. I note that Fianna Fáil has commented this morning on these figures calling them “scandalous”, yet at the same time it has opposed every effort by Sinn Féin to address the underlying issues of soaring rents and family evictions. Sinn Féin has introduced numerous Bills and proposals in these Houses on rent control and rent certainty, homelessness, protecting mortgage holders and so on, but the real scandal is that Fianna Fáil has supported Fine Gael to defeat these measures every time. Our proposals would have saved young families thousands of euros, allowing them to save for deposits and give them some hope that they may at some stage escape the clutches of greedy landlords. Fianna Fáil is as much to blame for this appalling situation as Fine Gael.
The report we are discussing from the Joint Committee on Housing, Planning and Local Government came about due to a chronic shortage of properties in the private rental sector. Landlords renting properties on short-term lease platforms have seen their profits increase greatly while the available rental stock for ordinary citizens and families has dramatically decreased. The impact of short-term lettings on the rental market is not only seen in Dublin, it is a nationwide phenomenon. The submission of the Simon Communities to the joint committee states: “The complete lack of affordable housing across the Irish housing system is at the core of the housing and homelessness crisis." It notes that:
Ireland’s private rented sector is not working for private renters or recipients of State housing payments. As rents spiral upwards and supply falls, rent supplement and HAP payments are becoming increasingly ineffectual leaving recipients locked out of a crowded and increasingly competitive market, increasing their risk of entering or re-entering homelessness.
The approximate scale of short term rentals in Ireland can be estimated by conducting an Airbnb letting availability search in key locations nationwide, as the Simon Communities did for the week of 19 - 23 June. Looking at Galway for that week, for instance, there were 185 "entire place", or full house, rentals available, representing only 27% of total listings, which suggests there were 685 such properties in Galway alone.
When one compares Airbnb figures in Galway with those for longer term lets on daft.ie, on 1 May 2017, there were 13.5% more properties to let on a short-term basis on Airbnb than the total number of properties for the combined provinces of Connacht and Ulster on daft.ie. That is why we must examine the report’s recommendations very seriously and why the Government needs to implement some of them.
The committee made the following recommendations: that a two-level regulatory regime be introduced via primary legislation in relation to short-term lettings with a strict regime of regulations targeted at entire properties, short-term commercial lettings at one level, and a less stringent second level focused at those who rent out their primary residence for a period of 90 days or less per year; that a licensing system be introduced for short-term lettings and short-term letting platforms and that such a system should require platforms to register all hosts with the relevant local authority and to share information on letting type, availability and use with the local authority, and the revenue generated by the host with the Office of the Revenue Commissioners; that casual short-term lettings of up to 90 days in a given year should be exempt from planning permission. Any short term letting in excess of 90 days should require change-of-use planning permission; that a study of the impact of short-term lettings on Ireland’s housing and rental market be commissioned, focusing particularly on Dublin 1 and Dublin 7 and the ripple effect which may have been experienced in the surrounding localities; that in order to track properties shifting from long-term letting to short-term letting that landlords be required to provide a reason for a tenancy ending to the Residential Tenancies Board and the local authority; that each local authority is adequately resourced and each establish a role with specific responsibility for short-term lettings; and that the working group establishes the data required in order to continuously monitor the impact of short-term lettings.It states that, on foot of this, a system should be put in place for short-term letting providers to be required to provide the Department with these data. It also states that a review of current planning and development laws and regulations should be carried out to establish whether they are robust enough to prevent abuse of the system.
The report recommends that local authorities begin strict enforcement of Article 10(4) and that they should ensure that apartments being used for short-term lettings have the necessary planning permission. In recommendation 10, it suggests that the working group engage with stakeholders from other jurisdictions to establish the regulations or amendments they introduced to curb the impact of short-term lettings. It also recommends that the memorandum of understanding between the Department and Airbnb be ceased as the committee does not believe the memorandum of understanding is sufficient or appropriate. It states that educational material to help inform short-term letting hosts of their legal rights and responsibilities should be posted on the website of the Residential Tenancies Board and that adequate resources should be provided to local authorities in order for them to put in place a systematic inspection and enforcement regime of short-term lettings and to publish periodically the results of these inspections.
We ask that all these recommendations are taken on board and that the Department would indicate to us a timeframe as to when it intends to implement those recommendations. We commend the work of the committee. However, I note that Senator Buttimer made a number of comments about housing being built in certain areas.
We are often accused of fairytale economics but Senator Buttimer is suffering from fairytale construction syndrome. The people who are thronging daily to our offices looking for somewhere to live do not see enough evidence of those houses being built. We need to see action in this area as well as the others I have outlined.
I thank the Minister for his time today. I also thank the Joint Committee on Housing, Planning and Local Government for conducting work in this relatively new and rapidly developing area of the housing crisis. It struck me as I was reading this report, which is timely and welcome, that a sort of reversal of roles has taken place as the issue has developed. On the one hand, we have Irish citizens who are becoming homeless due to our broader housing crisis being housed in hotels by the Department of Housing, Planning and Local Government while tourists who used to stay in those hotels are now staying in the spare rooms, apartments and houses which our homeless population should be living in as their homes. This problem affects every part of the housing chain. As more medium and long-term rental opportunities are sucked into the market for short-term lets for tourists, we become, at the top, less attractive in terms of foreign direct investment and relocation opportunities as a result of Brexit. In the middle, families, younger professionals and students are suffering a worse quality of life due to the greater demand and consequent higher prices for private rental accommodation. At its absolute worst, the issue is causing people to be homeless as low-income families and individuals are simply not as profitable for landlords as short-term rental opportunities.
A couple of specific issues in the report are particularly glaring and need to be addressed immediately. The first is the absence of data. We are fumbling around in the dark without impartial State statistics. That an Oireachtas committee examining a crisis in our housing market has to rely on tripartite data from Airbnb, a secondary website that has data related to Airbnb and Dublin City Council, where none of the figures seem to correlate with each other, is not an acceptable standard on which to formulate housing policy. Airbnb, as an actor in the market, could have an alternative motive and we cannot rely on it to formulate policy given it could be at fault or in need of regulation itself. The main opposition view in this report is presented by the Irish Property Owners Association, which claims that these short-term lets are not affecting the rental market. We should not have to rely on a group with a potential vested interest in the current arrangement, given the perceived flexibility it gives property owners, especially when it denies this is a real problem while at the same time admitting that the problem is following the same trends as in London, where the problem is now prevalent. As a result, it seems clear that the Department needs to impose registration and licensing requirements on landlords immediately and start collecting comprehensive and regularly updated data, in line with recommendations 2 and 7 of the report. We need data to be independent of market actors and the Department can fill this role easily.
In terms of the issue of regulation, one line from this report really stuck out to me which was that “[t]he private rental market remains the main access route for people leaving homelessness”. I suppose that the statement is true but that the private rental market is framed as the number one pathway out of homelessness took my breath away for a second. As the report illustrates, there is a lack of strong and stringent State regulation of the private rental sector at the moment and it is therefore concerning to me that this is how we allow our homeless population to re-enter the housing market. I do not accept that the private rental market should be the primary route out of homelessness. I worked in the homelessness sector for a long time and saw people move out of homelessness into rental accommodation and end up back in a cycle of homelessness.
The rental market is not secure or predictable enough to be moving vulnerable people from hostels and hotels straight into it. If the sector is going to remain the main pathway for at least the immediate future, the Minister needs to act immediately to strengthen regulation in this area. However, I recognise the progress that has been made on this broader issue to date, particularly the Planning and Development (Housing) and Residential Tenancies Act passed in the Oireachtas last Christmas. The committee recommendations in this area are strong and I urge the Minister to take them on as Government policy. Recommendations 1, 2, 5 and 6 are particularly constructive. However, in terms of the two-tier regulatory structure, I am strongly of the view that we should at least consider, as an emergency measure, completely banning short-term rentals of entire homes which are not primary residences to bring those properties back into the housing supply immediately. Perhaps this would be a radical move but it was done in Berlin last year in response to a housing shortage and it would be a strong and proactive response to the issues raised in this report.
In terms of responding through legislation to the issues raised in the report, a number of practical steps jump out from reading it. First, the exemption from planning permission for overnight guest accommodation in Article 10(4) of the 2001 regulations needs to be amended and updated. From my reading of it, the exemption appears to stem from a different era and was most likely drafted with family-owned bed and breakfast accommodation in mind. It needs to be changed to reflect how rapidly this market has expanded. Second, the report clearly outlines that there is a lack of clarity and definitions in the housing regulations. We need State definitions, whether in primary legislation or regulations. These would include what constitutes a primary residence, the difference between homesharing and short-term rental activity and the definition of a short-term let.
I welcome the committee’s opposition to the memorandum of understanding with Airbnb and agree that it is inappropriate. We would have better clarity on the market if better data were collected but, considering there are other actors in this market too, the memorandum will not comprehensively address the issues raised. We need to augment the obligations on Airbnb to supply the Department and the Oireachtas with up-to-date and accurate information on the use of its platform. The data supplied to the Committee on Housing, Planning and Local Government were incomplete and we should be taking a proactive role in ensuring Airbnb's responsibility to declare usage is stricter. I also welcome the references to liability in these lets. This is an issue of great concern and the possibility for termination of tenancy, if a landlord finds out, would force more people back into the market and even homelessness. I hope the Minister is considering this issue and draft legislation along these lines. I would welcome a chance to contribute to the process when it comes to the Oireachtas. An update in this respect would be appreciated.
I welcome the Minister to the House. I agree with Senator Ruane in much of what she has said. Some of the provisions in the planning legislation and, in particular, the exemption about which she spoke were designed for a different era. We now need to bring in amending legislation to deal with this. Senator Swanick referred to 15% of the number of hosts possessing 39% of the entire home listings. This is now big business for some people. The owner of a guest house who has an income of more than €37,000 a year must collect VAT. Given that 15% of the number of hosts own 39% of the entire home listings, what is the VAT position of these people? I am not going after those who have one house and want to get an extra bit of income by providing this service.I am not talking about them but about the people who have turned it into a major business. It is an area to be examined.
Senator Lynn Ruane touched on the next matter, the breach of covenants in leases. I am talking about management agreements in apartment blocks. I am not clear on whether there is compliance with management agreements or covenants in leases or deeds conveying these properties if there are lettings such as this. The position can easily be adjusted in apartment blocks if there is not sufficient wording in documents to prevent something like this from happening. This is where a building is provided for residential use only.
Another matter about which I am concerned is insurance. Is there adequate insurance provision? I have gone through the report, but I have not seen any real reference to the insurance element. For example, if there is an incident - we hope there never will be - will insurance cover be provided if property is damaged or parties are injured? In a recent "RTÉ Investigates" report we saw huge numbers of people occupying properties. If there was to be a major incident in any of these properties, the insurers would argue there had been a breach of regulations or compliance with the conditions of the insurance agreement and they might not pay out. This is something the Department must examine and on which it should engage with insurance companies. It should seek clarification on it.
Senator Lynn Ruane has said she is not satisfied that this is the full detail of the number of properties involved and that there are 5,377 listings for Airbnb. What information do we have that all of the 5,377 listings have notified their insurance companies in that respect? This is very important and we must deal with the matter.
There is also the matter of fire safety. I know that the "RTÉ Investigates" report had a different angle on lettings, but is there adequate provision in all of these premises for fire safety? The television programme also referenced the lack of staff in local authorities to carry out inspections. The Department must take up this issue with each local authority to ensure there is an adequate number of inspections, no matter what the area. We did this in the restaurant and food outlet sector, in which there is strict regulation of inspections, but we do not seem to have the same process in place for the letting of properties. It is important that we change that and have an adequate number of staff in every local authority to carry out inspections in order that the regulations can be complied with in full. We can all speak all day about new regulations, but if we do not have adequate supervision, the system of regulation will be absolutely useless. It is important that that issue be dealt with also.
I thank the Minister for dealing with this issue. I also thank the committee for its extensive work and bringing forward its proposals.
I, too, thank the committee for the work it has done. This is a very important matter which many Members have raised several times. That is why I was so anxious for it to be debated, as many people had put much hard work into it. I want to get away from the use of Airbnb because we are talking about short-term lettings. If anybody were to google it, he or she would very quickly find approximately 15 companies in Dublin operating in the short-term letting market, including Booking.com, Dublin Short Lets, Dublin City Apartments, Dublin at Home, Dial-a-Short-Let, Housetrip.com, thekeycollection.ie, Homestay, etc. The previous Senator used the 5,377 listings figure, but the number is far greater than that for Airbnb.
When I walked out my front hall door this morning, there were six people standing on the street, waiting for their keys to get into various houses. The six houses would normally have been for working people in the long-term letting market, but they have now been moved to Airbnb. I am sure that when I return home this evening, there will be somebody pulling a suitcase up the road and using his or her phone to find a certain street with the Airbnb rental property. I am not referring to people letting a room but the whole house. I am talking about two up and two down traditional working class housing in Dublin 2 or Dublin 4. This morning I was in Portobello speaking to people about ensuring they were on the register in time for the referendum to repeal the eighth amendment of the Constitution. I followed a car around the area and when the boot was opened, out came the towels and shampoo; the person was servicing a small terraced house as an Airbnb let. When I asked the driver what he was doing, he told me that it was his full-time job. He travels around the city centre turning over houses previously in the long-term letting market. A local woman pointed out that what would have traditionally been civil servant accommodation - a house with six apartments - was now a Airbnb rental property with a constant turnover. Why would one not do this when one sees the figures? On the south side of the city one could make up to €160,000 per year on a two-bedroom Airbnb rental property with a 75% occupancy rate. One could make up to €150,000 on the north side. I will not reference the north-south divide, but these units are lost to families.
Senator Lynn Ruane mentioned the idea of tourists in homes and families in hotel rooms. That is common in the city. We have received report after report and do not need an in-depth investigation. There are multiple signs across all sites. At Spencer Dock a three-bedroom unit will make €94,900 per year with Airbnb. It would have been built for a family or working people within the city. That is for what planning permission was granted. We cannot keep turning a blind eye to this. Another example is an affordable city flat in Dublin 4, with a rental figure of €1,050. Total rent every year is €54,000. The list could go on and I found those after only a couple of minutes on the Internet.
There are indications that several private companies are advertising for Airbnb rental properties that they will fully maintain. They will change the bed clothes and shampoo in properties across the city centre. A gentleman who lives on the north docks spoke to me this morning. He had bought an apartment which he wanted to make his family home. There are 640 apartments in the development. Last summer he took time out to investigate how many of them were in the short-term letting market full time. There were 300. We have a problem and must take our heads out of the sand to deal with it.
People ring me constantly to tell me their communities have been hollowed out, with homes beside them now being party homes. Last week a young woman in the city centre rang me to tell me that she would have to put her apartment up for let as the two two-bedroom apartments above her were constantly being let. Last bank holiday weekend she had to call the management company which contacted the landlord who then called An Garda Síochána.This was after several incidents. The landlord said he had no idea what was happening; he just let the property on Airbnb. I accept there are 16 other platforms.
Nearly 50 people in the two apartments above her had been partying for the weekend. She needed to work to pay her mortgage. How can she do that with a party of 50 people making noise over a bank holiday weekend? In fairness to the gardaí, they wanted to do something but needed the public order unit to deal with the issue because there were too many people for a single garda to manage. The landlord walked away and said he could not manage the situation.
I am hearing such complaints on an almost daily basis from Stoneybatter to Ringsend and Pearse Street to Phibsborough. Communities are being hollowed out by short-term letting. Families bought homes only to find that their streets are being turned into hotels. Those who bought apartments see hotel-style trolleys in corridors, and sheets, towels and shampoos being changed as would happen in a hotel. People who have to go to work every day to pay their mortgages have invested their lives in these homes.
This does not include those across the city who are homeless and could rent homes, and workers who want to rent apartments but are competing with rents of €160,000 per year for a two-bedroom apartment. How can they compete with that? That is not covered by our planning specifications.
The Minister said we may be able to do something about apartments, but we have no mechanisms for houses. I have seen good, solid inner city communities turned into holiday lands. That is not what they are meant for. They could house families.
We all want a quick fix for the housing crisis. If there was action on this issue we could provide 2,500 units for the long-term letting market. I have met landlords who told me they have four or five houses in Stoneybatter and that is their business. I have been asked how I dare to interfere with their rights. I explained that they are family homes and that the area is zoned as a residential area for families rather than holiday lets. They told me they let the houses on a long-term basis, but can make 100% more in short-term letting.
We cannot wait for more reports. I have raised this issue with the Minister of State, Deputy English, the Minister of State, Deputy Phelan, and the Minister, Deputy Murphy. When the Minister, Deputy Murphy, was in the House on 28 September he talked to me about a licensing procedure. I read his contribution to the debate. He said:
A licensing system is probably the best way to go. There is a group working on this. It will be led by the Department of Transport, Tourism and Sport.
That Department has skin in the game on this issue. It is interested in tourism numbers and bringing more tourists into the city, and fair dues to it. I am interested in families getting into homes and solid working class communities across the city which have been hollowed out. To allow the Department of Transport, Tourism and Sport to lead on a licensing issue such as this is unacceptable.
I have a Bill on the Order Paper for the regulation and registration of short-term lettings. I am quite happy to withdraw it and offer it as a Government Bill. Let us move forward. I have heard about studies from the Minister, Deputy Coveney, and the Minister, Deputy Murphy, yet every day families are competing against short-term lets.
I have spoken to auctioneers across the city who have told me people are looking for two-up, two-down houses for short-term lets. Such houses are where working people traditionally lived, but they are now been turned into holiday lets. I am angry. This is a new model of housing in the city. We turned a blind eye to it over the past two years.
It is insulting to talk about a memorandum of understanding with Airbnb when it has not stuck to one memorandum of understanding across the continent. Each city had to introduce legislation and regulation, and we will be no different. The sooner we do so the better. If we are really serious about this housing crisis, we can turf tourists back to hotels and put families back into homes. It is up to the Minister to do something about it.
I thank Senators who made contributions. I am deputising for the Minister for Housing, Planning and Local Government, Deputy Eoghan Murphy. I will try to address some of the specific issues which were raised. I have made a list of the questions I cannot answer directly and I will try to get responses to them.
As I am sure we can all agree, home sharing fulfils an important and valuable contribution in terms of tourism in our economy, as well as providing a valuable source of income for home-owners. Home sharing where the dwelling involved is the permanent or long-term residence of a person or family does not reduce the number of residential units available in the economy. The Government wants to enable responsible home sharing in ways that do not affect the availability of long-term residential rental properties.
As the Minister, Deputy Murphy, stated earlier, the aim is to facilitate the short-term letting of accommodation within permanent residences while protecting the existing stock of residential property in areas of high demand, safeguarding neighbourhood amenity and consumer protection and generating revenue to address negative externalities of short-term letting, to which Senator Humphreys referred.
The short-term lettings market caters to a distinct market which otherwise would not be served. Short-term lettings typically cater for people who fall outside of normal hotel customers, including those looking for a more local experience and, in some cases, those with lower incomes. It is important that such visitors to Ireland are catered for and not be denied this experience due to an overly restrictive regulatory regime.
Any proposed licensing regime must have cognisance of the relevant local effects short-term letting can have on a community. Naturally, where a rent pressure zone is in place, it may be desirable to try to curtail the number of entire properties availing of the short-term letting market. Conversely, in areas where there are vacant properties and low demand for rental accommodation, there is potential for a licensing regime to encourage short-term letting, thus incentivising tourism activity and provided a source of income for vacant property owners.
We have planning laws and will make sure they are enforced properly. As a first step, the working group has developed guidance for local authorities in regard to the appropriate approach for planning decisions related to short-term lettings and a circular in this regard was issued to all local authorities last month. The working group is now working on proposals for an appropriate comprehensive regulatory approach for short-term tourist related lettings and the identification of any necessary amendments to legislation required to give effect to such regulation. The guidance circular is not expected, or intended, to resolve all the issues related to short-term letting. The broader licensing and regulatory approach on which the working group is developing proposals will provide the comprehensive framework to do this.
I note the recommendations in the report proposing a review of the current planning regulations and, in particular, the proposal to introduce specific exemptions from the need to obtain planning permission in cases where short-term lettings do not exceed a certain day limit in a year. Planning control and regulation is one important element of the broader issues being considered by the Department’s working group. The group will report before year end on the appropriate regulatory approach for short-term lettings and any necessary amendments to existing legislation, including planning legislation, which may be required. The working group’s report will also be informed by the useful and timely joint committee report and its recommendations which we are discussing.It is important to note that the Planning Act provides that exemptions from the requirement to obtain planning permission in respect of specific forms of development may be provided for when they are considered to be consistent with proper planning and sustainable development. This is a key test for any proposed planning exemption. In addition, as required under the Planning Act, any proposed amendments to the existing exempted development regulations require approval from both Houses of the Oireachtas before new regulations can be signed into law and brought into effect. Therefore, we will revert to both Houses with any proposed amendments to the planning code and, specifically, the exempted development provisions that may be required on foot of the working group’s report.
Under the Planning Act, all development, including a material change of use, unless specifically exempted under the Act or associated regulations, requires planning permission. Any development that is carried out without planning permission or that does not comply with the terms of a planning permission is unauthorised development and may be subject to enforcement action by a planning authority. Responsibility for enforcement action in regard to any breach of the planning code is a matter for individual planning authorities and extensive enforcement provisions are provided for in Part 8 of the Act. However, the Department issues periodic reminders and guidance to planning authorities on planning enforcement generally. In May 2013, a ministerial policy directive was issued to all planning authorities, reminding them of their statutory obligations under Part 8 of the Act relating to enforcement. The directive required that planning authorities ensure that sufficient and appropriate human resources are made available for enforcement purposes. It also required planning authorities to undertake appropriate monitoring of planning enforcement and directed them to prioritise large-scale unauthorised development and enforcement cases.
On planning enforcement related to the issue at hand, the Department has issued two departmental circulars to planning authorities, in December 2016 and October 2017, which, among other things, advise them to take a proactive approach to enforcement, particularly to ensure that short-term letting activity is in compliance with the existing planning code. In addition, the Department will be requesting planning authorities to provide information on their enforcement activity in this particular area and on a periodic basis going forward.
Any proposed regulation or licensing regime must be easy to use. The average home owner providing a short-term letting facility will not be doing so on a large scale. They simply wish to earn some extra money to help with the mortgage or some other expense or perhaps to have their property occupied while they are away themselves. This needs to be encouraged, not impeded. The application process needs to be straightforward, with the administrative burden on both the homesharer and the State kept to the minimum necessary to ensure compliance and the protection and safety of consumers.
The point Senator Humphreys makes is a valid one. I know parts of Dublin city that have changed in recent years and there are districts of the city with quite a number of short-term lets. I accept the Senator and others have said we have had too many reports. This report is due before the end of the year. To ensure we introduce regulations that do not have other knock-on effects, I believe we can wait the three or four weeks until that report is finished.