Rent certainty and rental strategy
Deputy Gerry Adams, Deputy Brendan Howlin and others challenged the Government’s new rental strategy, calling for rent certainty and questioning its adequacy. The Taoiseach defended the package as comprehensive and targeted, explaining rent pressure zones, tenancy protections and exemptions for new or refurbished homes.
Today the Taoiseach's Government launched its long-overdue and long-promised propositions for the residential rental sector. Despite the Government's reluctance to support rent certainty in the past, Sinn Féin had hoped rent certainty would be part of the Government's plan. We had hoped some relief would be given to the more than 700,000 citizens struggling with increased rents. The case for introducing rent certainty could not be more obvious. Rents have risen by almost 12% since this time last year and continue to rise because the Government has failed objectively and abjectly to address the rental crisis. The current annual rental increase is the largest on record. Four households per day are losing their homes. Last month's daft.ie quarterly rental report showed average rents throughout the State are now more than €1,000 per month. The figure for Dublin is more than €1,500. It is out of control. Rents are already at unsustainable levels. Today's announcement lacks ambition and will actually compound the difficulties faced by citizens.
The most glaring omission is the absence of a system of rent certainty linking annual rent reviews to an index such as the consumer price index, as proposed by the Dáil Committee on Housing and Homelessness. What has been produced is an ad hoc package by an ad hoc Government supported by an ad hoc Fianna Fáil Party that plucks the arbitrary figure of 4% out of nowhere to be applied to rent increases annually in Dublin and Cork. This means that those currently renting an average-priced property in Dublin will pay an extra €2,314 over the course of the next three years. In Cork, the increase will be €1,628. Does the Taoiseach think people have this kind of money? Does he think they can afford this? What about those who live outside Dublin? The old rules still apply. What about people in Galway, Castlebar, Sligo or other parts of the State? Rents in my constituency are now at an average of €913 per month. This represents a 15% increase. In Dundalk, people are paying €400 extra; in Drogheda, almost €700. Citizens need the Government's help. They have not got it. Today's announcement will copper-fasten a wider housing crisis that Fine Gael and Fianna Fáil have consistently refused to deal with.
The two parties voted against Sinn Féin's rent certainty proposals three times. Why did they do so? Why will the Government not introduce rent certainty? It says it cannot interfere with the market. It says it is okay to force through emergency laws to cut public services and wages, it is okay to reward the greed of private bankers and it is okay to force struggling families to pay this bill, but it will not introduce rent certainty.
The Government could do it today if it wanted. It could link rent increases to the consumer price index. Will the Government do this?
Comment on this
In the past hour, the Minister for Housing, Planning, Community and Local Government has launched publically the rental strategy which has been worked on extensively in recent months. The rental strategy covers a number of areas relating to security which will bring greater certainty to tenants and landlords. It covers supply and will maintain levels of existing rental stock and promote additional supply through a variety of measures. It covers standards to improve the quality and management of rental accommodation. It covers services in respect of broadening and strengthening the role and powers of the Residential Tenancies Board to more effectively provide key services to tenants and landlords. There will be an extensive discussion on this today at the Oireachtas committee.
Obviously, this is an issue that is complex and not easy to resolve. The fundamental flaw in the situation that has arisen regarding the construction sector has been the lack of supply of housing. That is the fundamental issue. Rents in this city, Cork and a number of other areas throughout the country have begun to increase. It is happening to an extraordinary extent in Dublin. The Minister now proposes to intervene in the market to bring predictability in respect of the increases allowed and the time limits imposed. This measure is being taken to limit the scale of increases in rent and to provide predictability and certainty for tenants, many of whom are hard pressed, in houses in two cities where there is a distinct shortage of supply. This is not a blanket intervention in the market for an indefinite period. It is focused and targeted on areas subject to increases in rent over a period as determined and approved as rent pressure zones by the Minister for Housing, Planning Community and Local Government.
I do not accept the argument of Deputy Adams in respect of this not going far enough. This has been a difficult situation for the Minister to attempt to rectify. Obviously, the housing market nationally suffers from a serious lack of supply. This is where the other elements of the comprehensive housing strategy brought in by the Minister are focused. A time limit is set out in a focused and strategic way in the interests of tenants and landlords.
Comment on this
The Taoiseach says this has been a difficult situation for the Minister; God help him facing this situation. We have heard it all before - Enda-speak, platitudes and plamás. The Taoiseach says it is quite complex. The bottom line is the Government has refused to act on rent certainty once again. The Government and the other team across the floor have created the biggest housing emergency in the history of the State. Under the Taoiseach’s Governments, there has been one certainty where wealth has been transferred from the poorest to the better off and social mobility has been reversed. Poverty and inequality have increased.
Today, the Government and Fianna Fáil, if it supports the Government with its confidence and supply agreement, have guaranteed that citizens renting in Dublin will pay €2,300 more for exactly the same property in three years' time. They have ensured that inflation and the cost of living are going to increase savagely. They have guaranteed knock-on pay demands in the private and public sector and ensured that people are going to be priced out of their homes. I will ask the Taoiseach again. Why does the Government not bring certainty to these tenants?
Comment on this
This is a comprehensive programme. I am sure Deputy Adams has not read it yet. He might make time to read it.
Comment on this
There are too many landlords. That is the problem.
Comment on this
There are a number of key actions, first, to introduce rent pressure zones to provide rent predictability in areas where there is unsustainable rent inflation. That includes this city and Cork. Evidence of that is before our eyes and we either do nothing or something. The second action is to provide more effective termination procedures for non-payment of rent and the third will place restrictions on the use of sale as a reason for ending a tenancy, something the Minister has referred to as the Tyrrelstown amendment.
The fourth action is, through engagement, to encourage banks and landlord borrowers to agree sustainable solutions to buy-to-let arrears which result in properties being retained in the rental sector. The fifth action is to review how landlord obligations are addressed during receiverships of encumbered buy-to-lets in order to secure protections for tenants. The sixth action is to improve enforcement of the Residential Tenancies Board's determination orders. The seventh action is to encourage longer-term lettings by allowing unfurnished lettings, as in other jurisdictions, subject to the introduction of an appropriate standard and a minimum lease term of ten years. This plan, which is in the interests of hard-pressed tenants who are experiencing severe rent inflation as a result of the lack of supply of housing, is one element of a comprehensive housing strategy that focuses on dealing with housing right across the spectrum. It will be the subject of extensive debate and discussion in the committee and the Dáil over the course of this week. It is in the interests of tenants and landlords.
Comment on this
Last Thursday, the Minister for Housing, Planning, Community and Local Government urged the Dáil to reject the Social and Affordable Housing Bill 2016, which was proposed by the Labour Party. According to the amendment he proposed, our Bill "pre-empts" the delivery of the commitment in his action plan for housing and homelessness to publish "a strategy for the rental sector". We now find ourselves in a daft position. The Government announced its strategy for the rental sector earlier today. In two days' time, the House will be invited to vote down a housing Bill on the basis that it is premature in advance of the publication of the strategy. I hope all Members of the House remember on Thursday that this was the reason given by the Government for not providing rent certainty. The Minister, Deputy Coveney, promised last week that the rental strategy would, above all else, provide "predictability for landlords and tenants and... improve security of tenure", so we cleared the decks and waited expectantly. To put it bluntly, the Government has failed the test today.
The only way the Government can stand over this excuse for a strategy is by admitting that it has no real grasp of the nature and scale of the problem. Tenants are facing increasing pressures, such as increasingly unaffordable rents, insecurity of tenure and poor standards. Many single people and families now spend 40% of their net incomes on modest private rental accommodation. As we have just heard, rents have increased by an unprecedented 12% in the past year. It is obvious that one solution is to increase supply, but that alone is unlikely to stabilise or reduce house prices or rents. Everyone apart from the Government and the Fianna Fáil Party now agrees that rent control is needed. This view is shared by Threshold, Focus Ireland, the Simon Community, the Peter McVerry Trust and the National Economic and Social Council. The all-party Committee on Housing and Homelessness recommended that rent reviews be linked to the consumer price index or a similar index. There is virtual unanimity on doing this, but for some reason that is not enough to persuade this minority Government and Fianna Fáil.
As the Taoiseach knows, rent regulation is the norm in Germany, France, Belgium, the Netherlands, Denmark and Sweden. He is aware that the Labour Party did not become converts to rent regulation in opposition. We did our best to get movement on it when we were sitting on the other side of the House. The Taoiseach knows how ferocious the lobby on these issues was and remains. He will agree that a concerted campaign waged by Irish and international property and mortgage interests against any form of rent regulation has so far held sway. When a representative of the biggest landlord in the country was interviewed in The Irish Times last month, he referred to the Irish rental market as "a great market". He said that his company would be content with 3% annual rent increases but, astonishingly, the Government and Fianna Fáil believes that a 4% limit on rent increases is acceptable. I suggest that such a measure is not enough. I ask the Taoiseach, even at this late hour, to accept the consensus that rent controls are required in the crisis market that currently exists and to allow the Labour Party Bill that will be voted on in the Dáil on Thursday to be agreed.
Comment on this
The Labour Party is perfectly entitled to put forward its Bill. It is focused on keeping rent in line with the consumer price index nationally. This would undermine completely the ability to supply the necessary number of houses to help ease this situation. Other elements of the Bill are compatible with what the Minister has produced today on behalf of the Government such as, for example, longer tenancies through a variety of arrangements with landlords.
Comment on this
They can charge what they want.
Comment on this
New dwellings are exempt under this programme, as are completely refurbished existing dwellings, which brings them within the scope and scale of what the Minister is talking about. This is targeted and focused. The Deputy's Bill seems to be a national clampdown. Landlords, in the vast majority of cases, are owners of private property and, clearly, there is an issue in respect of determining what rent increase might apply. The Minister is proposing - under an assessed and agreed system - where pressure exists for rent inflation over a period, to set a cap on the rent increase that can be levied. Within that, the rent pressure zone would apply for a three-year term. There may be additions or areas may drop out, but this is based on balancing the opportunities for tenants to have predictability and certainty and to have much longer tenancies available to them, with incentives for landlords to continue to supply accommodation that can be rented.
There has been a significant increase in the number of tenancies over the years. People are happy to enter into tenancies that are compatible with their needs and this can only be effective where the issue with the supply of houses is dealt with. That is the other focus of the programme being introduced by the Minister. Clearly, that is a fundamental issue that has been lacking since the collapse of the construction sector a number of years ago. This is part of the overall housing strategy approved by Government, and, hopefully, accepted by Members in the context of giving predictability and opportunity, while at the same time offering a balance between the availability of existing tenancies. New houses and completely refurbished existing dwellings are exempt. This is a time limited, focused strategy to allow the opportunity for supply to come on stream.
Comment on this
The Taoiseach is arguing an increasingly lonely, isolated and unsustainable position. Does he not accept the view of those on the front line, including Threshold, Focus Ireland, the Simon Community, the Peter McVerry Trust and even the NESC on these matters? Are they all wrong in respect of this issue, with only the Government and Fianna Fáil in the right?
The Government is proposing an allowable rent increase that is a multiple of any index? It is eight times the consumer price index. How could that be justified? Someone paying €1,500 a month could under its plan spend an additional €19,000 in after-tax income on rent over the next three years. That is an extraordinary amount, which could be devoted to alleviating household pressures. It is just not acceptable.
I refer to the notion that the only pressure zones are Dublin and Cork. The Taoiseach is famous for talking to people over the garden wall and on his travels around the country. He knows that these rental pressures exist in counties Louth, Meath, Kildare, Wicklow and Wexford and probably elsewhere too.
Comment on this
They can, but not under the Minister's plan. He is arguing about a plan that he published 40 minutes ago.
He might at least have given us the chance to debate it.
Comment on this
The Deputy is arguing about it and he has not even read it.
Comment on this
I have read the Minister's leaks this morning.
Comment on this
We would like the Dáil to be treated with some respect. We would like to see it before the Minister sends people out to present it in the media. The bottom line is we have a real crisis in terms of sustaining people in their houses. Would the Taoiseach accept that the Bill to come before us on Thursday merits at least being passed on Second Stage so that we can debate it on Committee Stage?
Comment on this
Perhaps if the Deputy had taken the time to look at the designation process, the housing agency in consultation with the relevant local authority-----
Comment on this
It proposes that an area be designated - I thank Deputy Burton - as a rent pressure zone, RPZ. The Minister requires that the Residential Tenancies Board, RTB, will prepare a report based on the recent price data which it collects and uses to compile the quarterly RTB rent index, whether the criteria for designation are valid or not. The criteria for that designation are whether in the area concerned annual rent inflation has reached or exceeded 7% in four of the past six quarters and the average rent in the most recent quarter is above the national average rent.
Comment on this
-----the Minister will then make the order and that order applies for three years. It is a focused targeted strategy to deal with the question of predictability and certainty for tenancies but also to give the opportunity for accommodation to continue to be rented. New houses and buildings are exempt as are fully refurbished existing tenancies. Areas can come into the RPZ or drop out of it depending on the assessment in terms of rent inflation over that period.