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Dáil
‹ Leaders' Questions

Rising rents and rent pressure zones

Summary

Micheál Martin challenges the Taoiseach on the Daft.ie report, arguing rents have risen sharply and government responses show little grasp of the scale. The Taoiseach says rent pressure zones protect existing tenancies, accepts new-tenancy rents are still rising, and insists any further changes must be evidence-based.

The daft.ie report on housing rents makes for very dismal and depressing reading. It is another year of double-digit rental increases. Over the past number of years, the increase in Dublin has been quite shocking and is having a huge impact on people. In Dublin, rents have gone up 81% since 2010. Outside Dublin, that figure is 52% but that includes Meath, where they have gone up 81% and Louth, where they have gone up by about 78% in that seven or eight years. Rents in Cork, Galway and Limerick are up 65%. Alarmingly, only about 3,150 properties are available to rent now, which is 20% down on the number available this time last year.

Behind all these figures there are human stories. Many families are under threat of eviction and are extremely worried, having been given deadlines by landlords to leave their properties because they need to renovate them or give them to family members. Many families are now doubling and tripling up, as we know from our clinics. There are people coming in who are living with their parents or siblings and so on. There are young people getting their first jobs in cities and 40% to 50% of their income is going on rent. The student experience is becoming hazardous. It is almost impossible for students going to cities to attend universities and institutes of technology to get any place to rent at a reasonable cost. By any yardstick, for many families across the country, it is now the dominant measure of the cost of third level education.

Above all, it has an impact on homelessness. There are 9,000 people in emergency accommodation, including 3,000 children. Without doubt, the worsening situation in regard to rents is accelerating and making the homeless situation even more perilous.

All the initiatives undertaken under the various plans have failed. The rent pressure zones introduced in 2016 are ineffective in stemming the rent increases. Housing supply measures are very poor. Housing targets set by the Government have not been met.

A report on the tax and fiscal treatment of rental accommodation, published by the Department of Finance in September 2017, made ten recommendations, short-term, medium-term and long-term. It is extraordinary that not one of those recommendations has been implemented by the Government. There were approximately 212,000 landlords in 2012, whereas now there are only 175,000. There is a problem there. The Government received clear recommendations, yet it chose not to implement even one of them. Why not?

Comment on this
Leo Varadkar The Taoiseach Fine Gael

I will have to look at that report again. It was published some time ago.

Comment on this
Leo Varadkar The Taoiseach Fine Gael

I would have to see the recommendations and remind myself of them and then respond to the Deputy. In terms of the substantive issue, everyone in this House, and certainly the Government, is very aware of the impact that rising rents are having on many people. In some cases they risk driving people into homelessness. In many cases people are required to pay a huge portion of their post-tax incomes in rent, thus leaving very little money for other costs, whether child care or the many other costs of living. We acknowledge absolutely that rising rents are having an enormous impact on people, particularly those who are struggling to make ends meet.

That is exactly why we introduced the rent pressure zones. Let us not forget what they do. They now cover more than half of people who are tenants and those people now have their rent increases capped at 4% or less. They are not covered in the statistics published today by daft.ie because, as it acknowledges, they cover only new properties and new tenancies. Most people who are renting have been protected by the rent pressure zones and face rent increases of less than 4% as a result of actions taken by this Government and Oireachtas. Those whose rent has not gone up, or has gone up by less than 4%, will be very glad that is in place.

The daft.ie figures do not cover people covered by the 4% cap in the rent pressure zones, people already in properties. They refer to new tenancies and properties and it is a relatively small sample. There will be a bigger sample from the Residential Tenancies Board, RTB, when its numbers come out. They will cover rents paid as opposed to the asking rent.

The Government is doing many things but there are some major things. One is enhancing the powers of the RTB, turning it into a real regulator with more enforcement powers. Another is taking measures to encourage landlords, and it is important that we encourage them to stay in the private rental sector and that more landlords come into it. That is being done by measures such as restoring mortgage interest relief which had been reduced to 75% during the economic crisis and has been increased towards between 80% and 85% in recent times.

We are getting building again. It is very important that we build again. The Minister for Housing, Planning and Local Government is working on new guidelines, especially on apartment building to make it more economic to build apartments in our cities where housing is most needed. The Deputy mentioned student accommodation and there has been an explosion in the amount of student accommodation in recent years. It is being built and provided throughout the country and that will have an impact.

Comment on this

I do not know whether the Taoiseach lives in the real world because if he talks to any student or family he will learn that rents have gone through the roof. That is what the daft.ie report is telling us. There is no point trying to deny or obfuscate it or put a good spin on it.

The Taoiseach's reply indicating lack of knowledge of this report sums it all up. This was a substantive report undertaken by his Government five months ago. It was published in September, not some time ago as the Taoiseach says. Now he has to remind himself of it. He has to look at it again. These were the measures designed to retain and increase the supply of landlords in the market and he does not have a clue about them. That sums up the complacency around this issue of housing.

It is a national emergency. By any yardstick, it is a crisis in our cities and there is no point in trying to dress it up and say we doing this and that. I can go through all of the targets the Government set itself and it has failed to meet all of them. A total of 800 units were to be provided through a repair and lease scheme in 2017, but the number was zero. This was stated in the Government's own report which was published in September and the Taoiseach knows nothing about it. It is put away because there is too much focus on spin all of the time. Let us have some substance and action and achieve some results and outcomes.

Comment on this
Leo Varadkar The Taoiseach Fine Gael

As the Deputy acknowledged, the report was published five or six months ago. I am aware of and familiar with it, but, obviously, if I am to answer questions on specific recommendations made in a report published five or six months ago, I would like to actually read over it once again and see exactly-----

Comment on this

Will Deputies, please, allow the Taoiseach to respond?

Comment on this

He is talking back to me.

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Leo Varadkar The Taoiseach Fine Gael

The Deputy has chosen to refer to a report published last September. I recall and I am familiar with it, but, obviously, if I am to be asked detailed questions about the recommendations made, I would like to have an opportunity to at least cast my eyes over the report again before speaking about it. In terms of substance and actions, I have already mentioned some of them. First, we have introduced rent pressure zones. Most people who rent are covered by a rent pressure zone and have seen their rents increase by 4% or less. As they are not covered by the daft.ie figures, most are facing rent increases of less than 4% because of actions taken by the Government. We are enhancing the powers and remit of the Residential Tenancies Board to give it the power to be a proper rent regulator and we are also building. The Deputy can see the amount of student accommodation being built around the city in the past couple of years. He can see that house building is being ramped up in the private sector. We added 7,000 units to the social housing stock last year, which was very significant.

Comment on this

On 5 December 2017 the Taoiseach told the House that rent pressure zones were working and that 60% of renters had had the assurance that their rents could not rise by more than 4% per year. He also made the astonishing claim that rent pressure zones had never been designed to cover new tenancies and that they did not apply to them. The latest daft.ie rent report was published this morning. It confirms that in the 12 months since the rent pressure zones were introduced, rents have increased by 10%. This is the seventh report which indicates increases in rent which has been published since the pressure zones were introduced. All four daft.ie reports show rent increases above the 4% cap, but, crucially, the three ESRI Residential Tenancies Board reports which include existing tenancies show rent increases above the 4% cap in each of the three quarters. Therefore, on average it now costs in excess of €20,000 per year to rent in Dublin, while on average it costs at least €10,000 per year to rent outside Dublin. Rents have increased by 65% since 2011 and are now 19% higher than at the peak of the boom in the Celtic tiger period. How are ordinary people meant to afford this level of rent? They include young working people, young couples, students or later in life couples. Does the Taoiseach really believe they can afford such excessive rents? Have their incomes increased by 65% since 2011? Perhaps he might think they should ask their parents for the extra rent.

The rent pressure zones are not working. That is what the figures in all seven reports tell the Taoiseach. They have created a two-tier rental market. Long-term secure tenants have some protection, but those in vulnerable or new tenancies have no protection. The daft.ie report confirms that breaches of the 4% cap are widespread in the case of new tenancies. There is also a growing number of landlords who are charging existing tenants illegal under-the-counter payments above the 4% cap. Landlords outside the rent pressure zones in Waterford, Limerick and parts of Cork are actively encouraged to jack up rents to unsustainable levels within the rent pressure zones. Worst of all, the Taoiseach expects vulnerable tenants to police the system.

What has the Taoiseach got against renters? Is he blind to the plight of tenants because so many members of his parliamentary party are landlords? Is it because the Minister for Housing, Planning and Local Government has been captured by large-scale institutional investors or vulture funds or is it because the Taoiseach is so out of touch that he just does not understand how working people are able to keep a roof over their heads?

My questions are very simple. Will the Government now accept on the basis of evidence that rent pressure zones are failing? Will it move to introduce real rent certainty, linking rents to an index, such as the consumer price index, to give struggling renters a break?

Comment on this
Leo Varadkar The Taoiseach Fine Gael

I assume most of those questions were rhetorical and therefore do not require an answer. I imagine there are plenty of landlords in Sinn Féin; there are certainly plenty of people in Sinn Féin who own multiple properties, as we all know. So I think that is a pretty cheap shot.

Comment on this

That will please the Taoiseach's parliamentary party.

Comment on this
Leo Varadkar The Taoiseach Fine Gael

The purpose of the rent pressure zones was to protect people in existing tenancies from big increases in their rent that may cause them to lose their homes. The majority of people who now rent in Ireland are covered by the rent pressure zones and are seeing rent increases of 4% or less. There are, of course, exceptions to that, for example, in the case of substantial refurbishment and other things. The difficulty that arises is that for new tenancies and new properties, rents are continuing to rise at double-digit rates.

Therefore, what is the solution? The solution is to ensure there is more supply in the rented sector. Today's report from daft.ie shows that only about 3,000 new properties are available for rent. The solution, therefore, must lie in ensuring we have an increase in supply, which is what we are doing. The Deputy can see the amount of student accommodation that has been built around the country in recent years and there is more to come. He can see the ramp-up in the building of social housing by the Government with 7,000 houses and homes added to the social housing stock last year, trebling the number of direct builds by local authorities. He can see an increase in private sector builds with approximately 17,000 new homes built last year. In addition, we are strengthening the powers of the Residential Tenancy Board to turn it into a proper regulator with more enforcement powers so that people are not expected to enforce these rules for themselves.

We need to be careful with any additional measures. I have heard what Dr. Lyons has had to say and what people from the Irish Property Owners Association and others have had to say. There is a risk that introducing rent controls that are too strict or too rigid could be counterproductive and could actually create even more of a black market in rent. We have seen that happening in places with very strict rent controls where people end up paying cash amounts under the table or subletting to others. We need to ensure we do not make those kinds of mistakes. We also need to ensure we do not do anything that discourages people from staying in, or coming into, the private rented sector. Landlords get a very bad press. While some of them deserve it, they do not all deserve it. We need to ensure we reverse the decline in the number of people who are renting out properties and measures can be taken in that regard.

Comment on this

I know the Taoiseach has difficulty with counting when it comes to housing. In fact, given that he cannot even tell us how many new homes were built last year, I can understand why he is struggling with the rent pressure zone figures. He is right that the daft.ie report only considers the asking rents for new tenancies. However, the ESRI-RTB reports look at all tenancies. In quarter 1 of last year, they increased by 7%; in quarter 2 of last year they increased by 6%; and in quarter 3 of last year they increased by 9%. The data on all tenancies indicate that the 4% cap simply for the tenants covered by it, simply does not work.

It is not that we want rent controls that are too stringent; we would just like some that work. My non-rhetorical questions are the ones the Taoiseach avoided the first time. Will the Government accept that rent pressure zones on the basis of evidence are not working? Will it move to introduce genuine rent certainty, so that families are not paying astronomical rents they cannot afford or being forced into homelessness because of the failure of the policies the Government introduced in 2016?

Comment on this
Leo Varadkar The Taoiseach Fine Gael

The rent pressure zones are relatively new. We will need a series of data over more than a year and a bit to assure ourselves whether they are working. Let us not forget why they exist. The rent pressure zones are there to ensure we limit rent increases for those who are renting already - more than half of the people who are renting are now covered by them - and are not seeing rent increases of double-digit levels. The Deputy mentioned increases of 4% and 6% - not 9% in one quarter. We will need to see that develop over more time. The Government is always open to new measures and new actions that can assist new tenants and all those who are renting. We need to ensure we do not do anything that is counterproductive. The big concern I have is that the policies proposed by Sinn Féin would be counterproductive because it would result in the entire private market becoming frozen. We would see people essentially doing what happens in other places where there are very strict rent controls, paying extra amounts of rent or cash under-the-counter-----

Comment on this

It has already begun.

Comment on this
Leo Varadkar The Taoiseach Fine Gael

-----subletting on to other people who then pay much higher rates. Alternatively very rigid rent controls could result in builders being unwilling to build, and landlords being unwilling to rent out their properties and instead selling them on.

Well-meaning measures can sometimes be very contradictory.

Comment on this

They are massive. Some €20,000 a year.

Comment on this
Leo Varadkar The Taoiseach Fine Gael

We need to ensure that any changes that we make are evidence-based.

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