Seanad debates

Tuesday, 24 January 2023

Nithe i dtosach suíonna - Commencement Matters

Rental Sector

2:30 pm

Photo of Michael McDowellMichael McDowell (Independent)
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I welcome the Minister of State to the House. The topic I have tabled for consideration as a Commencement matter is a matter of huge importance and grave urgency. A recent report in The Irish Timesconfirmed my own impression of the private rented-dwelling market, which is that landlords are selling up. Some 40% of houses now on the market are as a result of landlords selling. The reason for this is appallingly obvious and comes down to the fact the Government has hopelessly mismanaged the relationship between private landlords and their tenants and properties. This is not a novelty. In the past, the Department in question abolished, as best it could, bedsits and caused 10,000 to 12,000 people, at the bottom end of the property ladder, to lose their home. Now we have a situation wherein if one lets a house for more than six months, one cannot recover possession of the property except for four stated reasons: first, that one wants to sell with vacant possession; second, one wants to refurbish the property, in which case, one is obliged to offer it back to the tenant; third, that one has planning permission to redevelop the property; and, fourth, that one wants it for a member of one's family. Apart from those reasons, one cannot get one's property back from a tenant at the moment.

All of that is compounded by a Sinn Féin policy initiative which states they want to bring about the situation whereby if one wants to sell a property, one must sell it with the tenants in situso that anybody who has been there for six months can stay there effectively forever. The property must be sold with the tenants in occupation. On that issue, the concept of "tenant" has been changed yet again by a colossal mistake in the Department, in the Custom House thought process, to encompass anybody. If, for example, a landlord lets a house to three people who share it, after a while they are entitled to bring in other people and disappear themselves. Thus, the landlord ends up with three people he or she did not originally have as tenants because the onus is on the landlord to establish a good reason the substitute tenants should not be able to stay there forever as well.This is crazy because it means that if you let out a house fully furnished to a high standard, and I had an executive let property that was very successful, so I know about this and I got out of the market for the reasons I am describing, the Government is now saying you will never get the property back - if Sinn Féin has its way, you will never ever get it back - and you are responsible for things like fridges, cookers and everything else, you let with the house in the beginning.

The time has come for the Government to cop on to the fact that it has driven out landlords and tenants and is now being helped by Sinn Féin's helpful policy proposal. The Government has driven out landlords from the private rental market. Some might ask whether this really matters because if a landlord puts a property up for sale, somebody will buy it. That is not a good response because the people who buy properties are different from those who can only afford to rent. There are families who cannot afford to buy for one reason or another but who need houses that they can rent and bring up their children in.

A big US real estate investment trust that lets out a tower block of apartments that are empty and unfurnished is entirely different from a landlord who lets out a fully furnished house. If the Minister of State wants to know why landlords have left the market, it is because of Government policies and nothing else.

Photo of Mary ButlerMary Butler (Waterford, Fianna Fail)
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The Government is committed to supporting the continued participation of landlords and growing their investment in the rental market. Budget 2023 provides for a doubling of the cap on deductibility for a landlord's pre-letting expenditure for previously vacant properties to €10,000 per property. The requirement for vacancy for associated expenditure to qualify for such tax deductibility has been reduced from 12 to six months. Under action 2.8 of Housing for All, the Department of Finance reviewed the recommendations of the 2017 working group on the tax and fiscal treatment of landlords. The Government provided further assistance to landlords under the Finance Act 2022 via a Government Committee Stage amendment, passed in Dáil Éireann on 23 November 2022, to provide a new tax deduction of up to €10,000 for landlords who undertake retrofitting works while the tenant remains in situ.

The Residential Tenancies Acts 2004 to 2022 regulate the landlord-tenant relationship in the residential rental sector and set out the rights and obligations of landlords and tenants. Section 34 of the Acts provides that a landlord must state a reason for the termination in any Part 4 tenancy notice of termination served and that the termination will not be valid unless that reason relates to one of the following: the tenant has failed to comply with the obligations - other than the obligation to pay rent - of the tenancy; the tenant has failed to comply with the obligation to pay rent under the tenancy; the dwelling is no longer suited to the needs of the occupying household; the landlord intends to sell the dwelling within the next nine months; the landlord requires the dwelling for own or family member occupation; vacant possession is required for substantial refurbishment of the dwelling; and-or the landlord intends to change the use of the dwelling. To be legally valid, the landlord must also simultaneously forward a copy of any notice of termination served to the Residential Tenancies Board, RTB. Further procedures and requirements apply in the case of tenancy terminations grounded on failure to pay rent.

According to recent RTB research, the ongoing exit of smaller landlords from the market is a consequence of multiple factors, including legacy issues from the financial and property crash of 2008 and a challenging regulatory environment. The Society of Chartered Surveyors Ireland recently reported that four in ten house sales in quarter four of 2022 were due to landlords exiting the market. Its report cites the regulatory environment and low net returns as reasons for divestment.

Building upon budget 2023, the Government is continuing to examine and consider the need for any further financial measures to assist landlords.The Minister has commissioned a review of the rental sector which will take into account the significant regulatory changes over the past several years. The Government will continue with its recommendations. The review will make recommendations on how our housing system can provide an efficient, affordable, safe and secure framework both for landlords and tenants. This would be very welcome. The review will include a thematic review of the principal and relevant elements of the rental market, and its conclusion will be utilised to inform future policy direction for the rental market. The review will include a public consultation as well as targeted engagement with the various external stakeholders.

Photo of Michael McDowellMichael McDowell (Independent)
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I appreciate that this does not fall within the Minister of State's area of responsibility, and I take that into account. However, what she said reflects a litany of confessions of failure. The reality is that there has been a mass exodus of landlords from the market. They are not being attracted back by tax concessions of the kind that have been announced. Telling a landlord that he or she can depreciate cost of fridge over a shorter period or that pre-letting expenses will be more deductible than in the past is no consolation for somebody who is losing control over their property. The the Minister of State's comment to the effect that the Department engages with all relevant stakeholders, including the Attorney General, the RTB and landlord and tenant representative bodies, means nothing. The Government has driven private landlords out of the market. What is happening in this regard is going to continue. What the Government is proposing to do, according to the Minister of State, will not end what is going on. The result is that fewer people will be able to rent houses. Only those who can afford to buy will be able to occupy houses throughout Ireland.

Photo of Mary ButlerMary Butler (Waterford, Fianna Fail)
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I will relay Senator McDowell's thoughts back to the Department. The Senator has made some valid points. We know that many landlords are exiting the market. Many of these people were accidental landlords who might have inherited or bought houses.

Photo of Michael McDowellMichael McDowell (Independent)
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Yes, or they may have married or whatever.

Photo of Mary ButlerMary Butler (Waterford, Fianna Fail)
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Many of these individuals never intended to be landlords landlord, and the find themselves in difficult circumstances at present. This can be seen throughout the country. I agree with Senator McDowell on that and on the point he made that they are not encouraged to remain within the framework of what they can really do.

The review of which I spoke is already under way and will be progressed as early as possible. Any change to the Residential Tenancies Act will require careful consideration, taking into account the constitutionality of protected property rights of landlords. As stated, the Department engages with all relevant stakeholders, including the Attorney General, the RTB and landlord and tenant representative bodies, to ensure that any proposed legislative changes are made in a careful, fair, measured and balanced manner. However, the Senator should rest assured that I will take his views on the matter back to the Minister. There is grave concern across Government about the number of landlords exiting the market.