Committee on Housing and Homelessness debate -
Tuesday, 17 May 2016

Residential Tenancies Board

Chairman

I wish to draw your attention to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this committee. However, if you are directed by the committee to cease giving evidence relating to a particular matter and you continue to so do, you are entitled thereafter only to a qualified privilege in respect of your evidence. You are directed that only evidence connected with the subject matter of these proceedings is to be given and you are asked to respect the parliamentary practice to the effect that, where possible, you should not criticise or make charges against a person or persons or an entity by name or in such a way as to make him, her or it identifiable. The opening statements will be published on the committee website after the meeting.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable.

I am pleased to welcome the representatives of the Residential Tenancies Board, Ms Rosalind Carroll, Ms Janette Fogarty and Ms Kathryn Ward. We have received your submission and it has been made available to the members of the committee. Ms Carroll, please begin your opening statement and we will take it from there. Members will then have a number of questions.

Ms Rosalind Carroll

I thank the Chairman and committee members for the opportunity to address the committee today. I wish the committee well and I am very happy to assist it in any way I can. I am accompanied today by my colleagues, assistant directors Janette Fogarty and Kathryn Ward.

In my statement today, I will concentrate on the rental sector. However, the dynamics of the rental sector are part of a much broader housing system and any policy recommendations or development in the housing area needs to consider fully the implications of that policy for all parts of the housing market. What I will briefly set out, based on the experience of the Residential Tenancies Board, are the current trends and issues affecting the rental sector, the steps that have been taken to date to address some of these issues and some thoughts on approaches to these and potential future issues.

The Residential Tenancies Board, RTB, formerly the Private Residential Tenancies Board PRTB, was established in 2004. It has 324,000 tenancies registered, representing 172,000 landlords and 705,000 occupants. Its remit is to regulate and support the rental housing market by operating a national system of tenancy registration, providing a quasi-judicial dispute resolution service for tenants and landlords and conducting research and providing advice to the Minister on matters impacting the sector. We produce a quarterly rent index based on one of the most extensive rental databases in the country.

Our remit has also just recently been extended to include approved housing bodies, otherwise known as housing associations, which provide housing for approximately 30,000 tenants. This change and hence our recent name change means that both tenants and landlords of these properties are now also protected by the residential tenancies Acts and have access to our dispute resolution services. This is an important development as it breaks down the traditional distinction in the rental sector between social and private rented housing and moves us closer to models elsewhere where those differences cannot necessarily be identified.

The rental sector has grown considerably over recent years. Census 2011 showed that one in five were renting in the private sector and if the social rented sector is included, this figure increases to just under one in three. Therefore, the rental sector makes up a significant component of housing tenures in Ireland and this is likely to be a continued feature of our housing market into the future. The growth in the sector can partly be explained by the downturn in the economy, decreased mobility with fewer first-time buyers and the lack of new supply. It can also, however, be partly explained by long-term societal changes, and population growth. In particular, a rise in migration has given rise to an increasing demand for rental accommodation, 75% of non-Irish nationals were renting from a private landlord in our last census. Combined with this, there are more people living alone, and more people who need more flexible tenure options to facilitate more mobile work requirements. This means there is an increasing demand for rental accommodation. It is particularly important to take cognisance of these shifting demand patterns as they suggest that a significant part of our society will rent rather than own their homes. Therefore, we need to consider not just the much recognised need for more supply but specifically the need for more supply of rental accommodation.

The need for more supply is evident from the increasing level of rents across the country, which are being driven up by a lack of supply. According to our 2015 quarter 4 rent index, rents were 9.8% higher nationally than in quarter 4 of 2014. This is still 9.1% lower nationally than the peak in quarter 4 of 2007. What is a matter of concern is not just the increase but its pace. While in Dublin rents for the first time passed their peak levels in 2007, being 0.4% higher than ever before, the rate of increase has started to decline in the Dublin area. However, pressures on availability are still evident, with availability of rental accommodation nationally the lowest on record.

The trends in our annual number of new tenancy registrations also evidences the pressures on the rental sector and the lack of supply. Annual tenancy registrations peaked in 2011 with nearly 112,000 tenancies registered in that year but that has dipped consecutively in 2014 and 2015 while our overall numbers of registered tenancies have increased. This suggests that tenants are staying longer in their properties.

The volume of disputes referred to the RTB has increased steadily in recent years. This is to be expected given that ours is a large sector and the fact that we have undertaken education and awareness campaigns. What is significant is the changing nature of the disputes referred to us. Cases involving disputes over deposits used to be our most common dispute type whereas now rent arrears and over-holding make up our greatest number of cases. Such disputes account for over 33% of cases compared to 20% in respect of deposit disputes. Rising rent levels mean that tenants are finding it more difficult to meet rental payments, leading to a greater number of disputes regarding rent arrears and over-holding issues.

The overall vision of the RTB is to have a well-functioning rental housing sector that is fair, accessible and beneficial to all. This is a challenging vision in the current environment. The Minister has introduced a number of legislative changes to address some of the issues in the market. These include: new rent certainty measures whereby rent cannot be reviewed more than once in any 24-month period; an extension of the notice period of rent review from 28 to 90 days; a requirement on landlords when undertaking reviews to provide details of three similar properties in the area; and an extension of notice periods for both landlords and tenants in respect of termination of longer-term tenancies of up to 224 days for the former and 112 days for the latter. Stronger verification procedures are required in terminating a tenancy where the landlord intends to sell or refurbish a property. Measures have also been introduced to ensure that both tenants and landlords know more about their rights and responsibilities.

It may be premature to assess how far these measures will go in addressing the current issues. As some of the measures have been introduced on a temporary basis and will expire at the end of 2019, it is important to consider not just the very real and immediate issues but also what the future of the rental sector should look like. In this, the committee is urged to consider the short-term and long-term implications of any policy proposal.

The vision of the RTB sets out that we should have a well-functioning sector that is fair, accessible and beneficial to all. We need to recognise the fact that renting will be a much more common choice for Irish households in the future. We need to accept and welcome a larger rental sector that is reflective of our modern economy and of a society with a more flexible and mobile workforce. We should no longer view the rental sector as a residual sector in which people serve their time on the way to something more long-term in nature. To accomplish this, we need the rental sector to be attractive to tenants and landlords alike.

There are a number of specific challenges to be addressed if we are to achieve this. How do we balance the needs of the tenants with the needs of the landlord? It is certain that we need a willing landlord and tenant to enter into a tenancy agreement. How do we ensure that we build to rent as well as building for purchase by owner-occupiers and that we build accommodation appropriate to our changing demographics? In the future, how do we ensure competition in the market to keep rents competitive?

At present, we estimate that approximately 80% of our landlords own only one or two properties. The profile of landlords is starting to evolve, however, with REITs and institutional investment now playing a bigger part in the sector. Looking at examples elsewhere, institutional investment in the rental sector, while common, is balanced between for-profit and not-for-profit providers. How do we deal with the immediate challenge of the 29,000 buy-to-let mortgages in arrears of over 90 days? How do we consider the needs of people as they grow older in rental sector and their disposable incomes reduce? How do we transition to whatever policy paths are chosen, taking account of the current profile of the sector?

Although a strategy specifically for the rental sector will not magically solve the much wider supply pressures experienced in all sectors of the market, it is critical to bring certainty to tenants and landlords on the long-term future of this sector. Investors need certainty - but so do tenants - on issues such as security of tenure and rent regulation. When looking at the overall housing landscape, it is also necessary to have an understanding of what tenure mix we are aspiring to and to develop suitable policies to make that mix happen. In a modern society and economy, a vibrant rental sector is vital. It is important that the rental sector does not become the forgotten sector again.

The RTB's role is not to develop policy but to regulate the sector in accordance with the legislation within which we operate. However, the services we provide in the rental sector give us a unique insight. We will support in any way we can the development of solutions to the current housing crisis and will continue to raise awareness of the rights and obligations of tenants and landlords to support a well-regulated sector.

Chairman

I thank Ms Carroll for her opening statement and invite members to put their questions.

Deputy Maureen O'Sullivan

I am looking for the more definite proposals the witnesses would like the committee to pursue in regard to the difficulties they are having with the work they are doing. We know about the pace of rent increases. The legislation probably made the situation worse rather than better and I wonder whether that is the experience of the witnesses.

I am interested in hearing about the length of time it takes to settle disputes and the issues that are raised with the witnesses. There seems to be a disparity between settling a dispute and the implementation and enforcement of what has been agreed. I am interested in hearing the witnesses' views on that.

Tenants, in particular those in substandard accommodation, have a fear of making a complaint to landlords because of to what that could lead. Many tenants are living in very substandard accommodation. What can be done to remove their fear?

Deposits are still an issue. People are left waiting for their deposits to be repaid and need to rent a different property but do not have the required deposit.

Deputy Bernard J. Durkan

I welcome the witnesses and thank them for their submission. I compliment them on their work in determining disputes to the satisfaction of tenants. I have attended a number of meetings. They have done extremely well in establishing a respect for their office and coming down on the side of the person who is most vulnerable in a given situation while at the same time observing the rules and regulations.

Unfortunately, I do not agree with their assessment of the societal change to the effect that in the future we should rely more on rental property. In fact, that is the cause of our problem. I attended a meeting some years ago when that idea was first floated on the same grounds, namely, that it would facilitate society and job relocation to a greater extent than previously. It did not work that way.

In fact, it made rents as expensive as mortgages, which is the case today, and gave relatively no security of tenure to tenants. It placed a large amount of power in the hands of those providing properties. I do not want to go into all of the rights and wrongs because I am a strong supporter of the need to provide properties for direct purchase, either through local authorities or for allocation to tenants in the public sector or for purchase by potential owners in the private sector.

One of the problems associated with the boom was the extent to which multiple properties created a bubble for multiple speculators who, in turn, made massive fortunes from land and building properties to such an extend that nobody could afford rents or mortgages. I do not want to reiterate what I said. A person on my salary or that of the Chairman cannot afford the current average mortgage or rent. They are the things upon which we need to ponder.

Deputy Kathleen Funchion

I agree with a lot of what Deputy O'Sullivan said. I thought we would have a bit more detail on proposals. I would like to know about the length of time taken to resolve disputes. I do not expect the witnesses to have the information to hand but I would like a further breakdown, even on a regional basis, on the number of disputes and the length of time taken to resolve them. My experience is that people do not report problems in the first instance or abandon cases halfway through the process because they are afraid their landlords will kick them out. I would like to hear the comments of the witnesses on that.

Chairman

I ask Ms Carroll to address those questions first.

Ms Rosalind Carroll

I will start with the comments of Deputy O'Sullivan.

In response to the first question in terms of more definite proposals, the RTB is a regulator and we do not make policy and, therefore, we have not strayed too far from that except to talk about the facts more than anything else. That is probably something we have a strength in trying to bring to the fore. That said, in 2014, we produced a report by DKM Economic Consultants, which went to the Minister with a series of recommendations - one of which related to rent certainty, and there were other recommendations on tax relief. The main recommendation in the report, which was independent of us, was that one needed to tie in tax reliefs with any regulation on the other side and that there had to be a balance between the two in order that it would not impact on supply. In terms of going further - I know the committee has talked about more measures on rent certainty, sale and security of tenure - some of that was discussed within that particular report. It is fair to say the issues that arose in 2014 have only increased since then so I would not take that report as being definitive. It was written at that time and the situation has continued to evolve since then.

The main point is that it is a matter for the policy makers and the Minister to make a decision on the recommendations of this committee in terms of what will be introduced. From the RTB perspective, we must think about the reactiveness of any decisions that are introduced, for example, if a further regulation is prompted on foot of the process. We must also think about the profile of our sector. I referred to the 29,000 landlords who have mortgage arrears of more than 12 weeks. We have indications that between 60% and 70% of landlords currently have a mortgage. Of those, we know perhaps 25%, if not more, are talking about wanting to sell. The difficulty with introducing regulation is how and when one gets there, for example, what is the direction of travel in order that one does not spark a reaction whereby one might want a more professional rental sector in the future but in the meantime, the 80% of landlords we currently have that own one to two properties decide to sell their properties tomorrow because they know that something is coming in.

Mention was made of rent certainty measures. Our experience is that they were talked about for 12 months and people started to increase their rent from 12 months prior to the discussions starting to take place and there was probably a little uplift straight after they came in. Our next rent index is not due out until June so we do not know if rents are starting to dampen as of yet. The reality is that we must bring certainty to where we are going or people will start to react in ways that we cannot determine. That is one of the key messages I want to give. It is not the role of the RTB to say one should do this or that, but we need a clear direction of travel for tenants so that they will understand where they want to go in the market but also for landlords in terms of increasing the supply of rental property and to try to give some understanding to the existing market in terms of where they will go. We must ensure that we do not create unintended consequences. Given our profile and knowledge of the sector, that would be where we could offer some assistance.

The length of time on disputes has been significantly reduced in the past three to four years. Now we provide two services in the case of disputes. We have a free mediation service and the waiting time for it is only four weeks to get an order. If a tenant or landlord chooses to go down the adjudication route, one is talking about two to three months to get a determination order. Those times compare to an average of approximately 18 months previously. Three or four years ago that is where the RTB's timelines were, which indicates that significant efforts have been made.

It is also worth mentioning that the mediation service we now provide is the first of its kind. There is no other telephone mediation service in Ireland. It is a non-adversarial approach in terms of trying to address issues between tenants and landlords. It has led to a situation wherein we have far fewer appeals which means both landlords and tenants are happy following the process and do not appeal further up the line.

Deputy Maureen O'Sullivan

What is the length of time from an adjudication to the implementation of the order?

Ms Rosalind Carroll

In terms of due process, if a party wants to appeal that to a tribunal, they have 21 days in which to do so. Therefore, by the time the case is heard, it can add a further two to three months to the process. Thereafter, if a party does not adhere to the determination order, it is a case of going to the courts. In terms of going to the courts, currently we approach the Circuit Court. The Circuit Court sits at different times throughout the country and we do not have any control over those periods. They vary depending on adjournments and so on. Therefore, we would not have a specific timeline on that for the Deputy. The only aspect we have control over is the period up to the tribunal and getting the determination order from that.

The Deputy mentioned substandard accommodation and the tenants' fear of making complaints. Currently, we do not deal specifically with the standard of accommodation. It is the remit of the local authorities to do that, although we will hear about a dispute if a tenant makes the complaint, but we fund the inspection services provided by local authorities to the tune of approximately €2 million per annum. My understanding is that the Department is examining a more efficient method for the inspection of properties. More inspections would mean fewer complaints from tenants and that fear would return. Proposals being examined are more shared services opportunities to try to increase the number of inspections that can take place. So far, we have funded up to €30 million in terms of inspections by local authorities.

The Deputy mentioned deposits. As he is aware, the amended Residential Tenancies Act provides for a deposit protection scheme. That is due to become operational in 2017. A significant amount of work needs to be done by us to prepare for that as the scheme involves a significant amount of money in terms of a potential €200 million to €300 million that we could end up holding. We need extensive IT services but we also need to be in a position where we can hand back that money quickly to tenants without causing their situation to worsen in terms of moving on. The timeline for that is 2017. We are beginning the procurement process in terms of the services we need to provide for that. As I mentioned in my opening statement, 20% of our cases are related to deposits, which is a decrease from the position previously. That means we have only 1% to 2% of disputes in our overall tenancies so quite a limited number of cases are coming through to us.

Deputy Durkan mentioned the reliance on the rental sector. I did not mean to insinuate that we should rely on the rental sector. I believe it is inevitable that we will have a bigger rental sector than traditionally was the case when we consider incoming migration. As I said, 75% of non-Irish nationals are currently in the private rental sector and we also have an economy whereby more workers coming into the country are choosing to rely on the rental sector.

The third point I would make in terms of that is that, from what we can see, tenants are staying longer in the sector. Therefore, their reliance on the sector is for a longer period than we would have seen in the past. Even if they are on a pathway to home ownership, they are taking longer-----

Deputy Bernard J. Durkan

Even though they cannot get out of the rental sector because they cannot save.

Ms Rosalind Carroll

Yes, and I am not commenting on whether that is right or wrong.

Deputy Bernard J. Durkan

I know. That is good.

Ms Rosalind Carroll

I am just commenting on the facts of the situation. I hope I have answered the Deputy's question on the disputes, and we can send further information on that.

Deputy Mary Butler

I thank Ms Carroll for the presentation. I have two questions. Ms Carroll said it is her organisation's remit to regulate and support the rental housing market, but how does it cope with the landlords who do not register or get involved? I had experience of that this week involving a single parent in a home where the landlord was trying to increase the rent for the second time in six months. He had already put up the rent when I got involved and pointed out the requirement for 90 days' notice but he knew he was just outside the timeline. Before somebody with some authority got involved, he was intimidating the tenant and she was finding it very difficult to cope. How does the board get involved in cases like that if the landlord is not registered with it?

I note the Residential Tenancies Board, RTB, has stated it has 324,000 tenancies and I am sure student accommodation must make up a large part of its remit, particularly when the colleges start up again. I will recount a personal case involving my son, who was in college in Cork. Four boys in a house were paying €350 per month each to make up a rent of €1,400. When I complained about the condition and cleanliness of the house, I was told to take a hike and to take my son with me as the landlord would have someone else in place within an hour and had a waiting list of 20 to 30 people. What role does the RTB play in such situations?

Chairman

I will take a few members together. I call Deputy Coppinger.

Deputy Ruth Coppinger

I wish to ask Ms Carroll about the massive increase in the private rented sector to which reference has been made. According to the figures of the RTB and the Department of the Environment, Community and Local Government, there were 282,918 rented properties at the end of 2013 and, without boring everybody with all the figures, basically by 2015, that number had increased dramatically and there now are 324,000 tenancies registered with 705,000 tenants. One must register just how big a sector this now is - so much for our love of home ownership - but how does Ms Carroll account for this increase? Is it because landlords are registering whereas they did not bother to so do previously? Alternatively, is it because, far from this flexible workforce that loves renting - a matter at which Ms Carroll hinted - there is actually no social housing and public house building has virtually ground to a halt? I agree with comments made and do not welcome this. Will Ms Carroll speak about what rights have tenants in Ireland compared with tenants in other countries? Can she provide some examples of security of tenure in Ireland compared with the position in other countries in Europe because this committee needs to hear about it?

As for another point to which Ms Carroll referred, members hear constantly that landlords will fly out of the rented sector if anything is done to inhibit them such as rent controls or anything like that. While such claims are made daily on the radio, despite the mild rent certainty measures that were brought in such as the two-year lease - which was not really rent certainty - there has been a major increase in the number of landlords in the sector. Does Ms Carroll agree this is all spoofing and there is plenty of money to be made in the private rented sector? As for the changing nature of landlords, Ms Carroll stated in her submission that more than 80% of landlords own only one or two properties, whereas the PRTB's annual report gave a figure of 84%. Does this mean the percentage has fallen by 4% or is the profile of landlords changing because of the entry into the market of real estate investment trusts, REITs, for example? What does the RTB think about such landlords and how they treat their tenants? For example, one of the biggest REITs is the Irish Residential Properties, I-RES, REIT, which has increased the number of homes it owns from 1,500 apartments in Dublin to a current figure of more than 2,000. Technically, it is the biggest landlord in the country. Over the past year, it has increased its average rents by 9.1% from €1,250 per month to €1,370 per month and the rent is much higher in some cases. Tenants of this REIT now are shelling out €172 per month more from their own pockets than was the case a few years ago. That equates to €2,200 taken from their pockets per year. I raise this issue because some political parties in the Dáil have welcomed these REITs into the country. The evidence appears strong to me that their introduction has had an influence on rents increasing in Ireland because if they increase rents, other smaller landlords will follow suit. Members heard terms like "vulture lover" earlier and I will not go there again.

Chairman

Please do not. Thank you, Deputy.

Deputy Ruth Coppinger

The Chairman is welcome. For example, the Green Party and even the Labour Party welcomed REITs into the private rented market recently, as did the Department of Finance. As that Department gave them tax breaks, it must have welcomed them. Why would one give a tax break if one did not seek to have more of them?

I wanted to ask about rent arrears and over-holding. Ms Carroll says that disputes have changed and it is no longer the deposit, which used to be the big thing. Rent arrears and over-holding now make up a large number of the board's cases. This is probably an obvious question but it needs to be asked - why has that now changed? Why are people over-holding? It means that people stay in a house or apartment beyond the time they have been told to leave. Is it because, in the cases mentioned, the lease has ended or that people have actually gone beyond notices to quit?

Would Ms Carroll agree that the reason people are over-holding is not because they have suddenly become greedy but that the alternative is homelessness and that is why they are over-holding? If tenants do not over-hold and remain in the property, they will be on the street literally and in emergency accommodation.

Chairman

I thank the Deputy.

Deputy Ruth Coppinger

It is important because the people out there who are listening to this have to understand that if they do not over-hold, they will be seeking emergency accommodation with all the other people.

Deputy Barry Cowen

I have a brief question on staffing levels within the Residential Tenancies Board. They have been reduced in the past five years despite the fact that the workload, I am sure, has increased very much, particularly in the past two years. Could Ms Carroll comment on what would be the position if, for example, the committee recommended improvements in staffing and resources to deal with the existing backlog and the time it is taking to adjudicate and make recommendations on cases?

Ms Rosalind Carroll

Deputy Butler asked about landlords not registering and how we deal with that. The first thing to say, regardless of whether a landlord is registered, is that a tenant is always entitled to make a complaint to the RTB. From a tenant's perspective, therefore, it does not matter whether a landlord is registered. That does not apply to landlords, by the way. If landlords want to bring a dispute to us, they must be registered.

Deputy Mary Butler

I thank Ms Carroll.

Ms Rosalind Carroll

In terms of our overall compliance rates, it is quite difficult for us to determine where we are with them. As regards the absolute measure of the number of properties and tenancies, the only place one can find that is in the census. The 2011 census figures suggest that we had a compliance rate of approximately 85%. In 2013, we brought in some measures with the Department of Social Protection and a new system for checking compliance and data matching with them. We believe our compliance rates would be significantly higher since then. That might address some of Deputy Coppinger's questions on some of the increases we would have seen. The number of landlords would have been specific to the 2013 year because of the increase in our overall compliance at that time. I hope my answer deals with that issue.

As regards student accommodation, we estimate that in the region of 11% of overall tenancies are held by students at the moment. That is based on the sample we did in the DKM survey in 2014 so I presume it has not changed that much. If anything, it will have dropped somewhat because of the supply issues. In terms of trying to deal with that, there is no tenancy created in that situation so we can only deal with a dispute where there is a tenancy. If there is not a tenancy and there is an issue with standards, one can still make a referral to the local authority in respect of the standard of accommodation. However, we cannot deal with an issue until the tenancy exists.

Deputy Coppinger asked about the number of landlords registering and why the number of tenancies is increasing. We had a higher number increase in 2013 due to a compliance issue. What is happening is that the amount of people in the rental sector is increasing incrementally. The number of new tenancies created is stabilising because people are staying longer in their tenancies. Then there are new additions happening every year, so we do believe that it is increasing incrementally.

Deputy Coppinger asked whether social housing was the main driver for that. It is difficult for us to know. When we register a tenancy we do not register whether it is a rent supplement or HAP recipient, they are just tenants to us. We estimate that about 100,000 people in the rental sector are in some form of relief from the State, whether it is rent supplement or the housing assistance payment.

The number would have been about 60,000 in 2004 or 2005 so there has been a net increase of 40,000 during those years.

I was asked to refer to other countries and examples elsewhere of regulation within the rental sector and there are many examples in Germany and the Netherlands. Rent regulation can be related to the consumer price index and there are other examples where a state might agree with rent setting and how rent setting is done for a particular district. The state would look at measures whereby one could only increase rent by a specific proportion and rents might be averaged over a four-year period. The state might say that one can only set rents within the average rent for a particular area over a four-year period so it dampens the overall effect of the increase over that period of time. Scotland has just introduced a new Bill that looks at rent pressure zones and controlling rents in these zones rather than affecting the entire rental sector. If a particular area has a particular issue, the local authority has the power to look at a rent pressure zone. This is another example of regulation. When we look at the rental sector in European countries, we can see that there is not such a major distinction between social housing and the private rental sector. Therefore, when one is introducing changes in regulation, the impact of them are slightly different. This is why I refer in my statement to understanding where we want to get to and the transition we need to get there in terms of the impacts it might have. I was also asked about what will happen if we suddenly introduce regulations in terms of exits from the market. The Deputy is right in the sense that we have no evidence in light of the recent rent certainty measures concerning any mass exodus from the market. In the past year, our landlord numbers have increased rather than decreased.

Chairman

Has the number of units of property gone up as well?

Ms Rosalind Carroll

We register tenancies and the absolute number of tenancies has increased to 324,000. We had 319,000 at the end of 2015 so that was only in December. In that period of time, tenancies continued to increase, as did the landlord numbers. Given the legislation, there is not necessarily always an incentive for a tenant or landlord to tell us when a tenancy ends so our figures are not absolutes. They are guides to trends but they are probably relatively accurate.

In terms of rent certainty measures, not all landlords always increase rents. Perhaps that is reflected in the fact that we have not seen exits from the market. The changes introduced have been limited. The question about exits from the market depends on how broad-changing the changes affecting the market one intends to introduce would be and how quickly they would be introduced - whether they will come in overnight or over a periodic length of time. 123.ie published a survey last week; I am not sure if the committee is aware of it. The survey included landlords in a relatively large sample. It echoed much of our original DKM survey. It said that at least 29% of landlords were looking to exit the market but were waiting for their properties to return to a certain value before they did so. The question mark relates not so much to the rent regulation side as it does to the sale side and whether questions arise in respect of whether one can sell with or without vacant possession and whether that would suddenly lead to those people making decisions to exit the market now. Likewise, questions arise as to whether the banks will start pushing on in respect of the 29,000 people in mortgage arrears. We do not know the answer to these questions. Many of these are unknowns. We can only look at the data. I am not here to tell the committee what to do. It is more a question of whether when it does it, it is aware of where the impacts might be.

Maybe it is about the direction of travel and having certainty on that and whether any uncertainties in the meantime will create more pressure points in terms of supply. That would be the main issue.

With regard to the security of tenure issue and the experience elsewhere, security of tenure is generally much stronger in our European counterparts and sale with tenants in situ is much more common. However, we are only at the start of a new culture of renting in this country and as well as changing the law, perhaps we need to consider a change of culture. It is common for people who rent commercially to sell with tenants in situ and that increases the value of the property at the point of sale. We work a lot with our stakeholders, both landlords and tenants, but the landlord representative groups to whom we have spoken have indicated that sale at the moment without vacant possession would lead to a decrease of approximately 25% in the property's value. Other countries protect against that in regulation by providing that people must sell with tenants in situ. They cannot evict tenants just because of a sale but if the property price is to change by more than 20%, that would be an exception. There are examples of trying to deal with those specific issues.

On the changing profile of the landlord sector, we do not have specific numbers. I referred to in excess of 80%. Our feel is that the REITs and the institutional landlords make up 1% to 2% of the sector but that is not necessarily 1% to 2% of the properties. We do not have the definitives on that yet but that is where we feel the figures are.

The Deputy asked my opinion on REITs and what impact they are having on the rental sector. Institutional investment in the rental sector has been called for as long as I have been in the housing business, which is more than 16 years. They have something to bring in terms of professionalism, quality of accommodation and so on. It is important to ensure competition in the market going forward and to monitor the rate of increase in significant landlords to ensure we suddenly do not have an overall investor of one size whereby the competition in the market would evaporate. I referred in my opening statement to how this is balanced elsewhere. The not-for-profit sector also provides rental housing to a much broader element of society and that helps to dampen the overall market.

The Deputy asked for an explanation as to why rent arrears are increasing. Our indications are rent arrears are increasing because people simply cannot afford the rents. The over-holding scenario tends to differ. There are genuine cases of over-holding and some of those come through our mediation service, which has been successful in securing voluntary agreements between landlords and tenants to give people time extensions to find properties where they think they can get a property in another three months rather than in a month's time. They are genuine cases where people cannot find alternative accommodation. There is a small cohort of people in over-holding cases which result from non-compliance. They are in arrears or they have never paid rent. The over-holding in those cases is slightly different. There is a mixture of cases, and over-holding only occurs in a small number of cases where people have not paid any rent whatsoever.

Deputy Cowen referred to our staffing levels. We had 70 staff at one point and that reduced to 33. We are now back up to 40 and we have sanction for a further ten, which is the result of the deposit protection scheme and the recent legislative changes.

Depending on how far the rental sector expands, that will need to be increased somewhat, and depending on what comes out in terms of the overall reform of the sector, we may need further resources. At the moment, we rely heavily on an outsource centre to provide our services. While we have 40 staff, there are more than 30 staff working in an outsource centre providing our front-line customer service. We also have legal providers who provide us with legal advice on our judicial-type services. That is an overall reflection of our services at the moment.

Deputy Mick Wallace

On the point about 80% of landlords owning only one or two properties, I do not expect Ms Carroll to have the figure now but could she tell us how many properties are owned by the top 20 individual owners and whether they are investment funds or individuals? How much property does the top 20% control in the rental sector in Ireland? Ms Carroll referred to the need not to scare people out of the market and said that already many of the landlords who own one or two properties are going to get out. Does she not agree that it is not necessarily an argument for a lack of control and regulation? Has she looked at what is going on in Switzerland, which I find very interesting? The vulture funds have purchased much good development land in Ireland, especially in Dublin, with a view not to building and flogging them but to building and rental. Kennedy Wilson and Heinz are here for the long haul. They see a very lucrative rental market and they will exploit it to great benefit. Ms Carroll speaks about competition but competition is disappearing because of the influx of vulture funds. Does she not see the impact of a cartel of vulture funds? I have given the example a number of times of a two-bed apartment in Dominick Street, which has gone from €900 a month to €1,500 a month. It is directly linked to the fact that a few small players have gained a serious foothold in the market here.

Has Ms Carroll looked at Switzerland? If a developer or investment fund buys land in Switzerland, when it is finished, the rent they can charge is determined by how much it cost to put them there. They have to open their books and prove every penny they spent so the state knows exactly what it cost to put them there. The rent is determined by that. They have another very positive initiative where if a landlord makes improvements to his property, he is allowed to charge more rent. He has to prove how much he has spent on the improvements, which makes the property better and encourages landlords to keep a better quality unit. Does Ms Carroll have any thoughts on that?

Ms Carroll has said that the new big landlord is more professional but he is also less affordable. I agree that the rental sector will grow. Even if we build a lot more social housing, as we should, fewer people will be able to afford to buy their home in Ireland. If we watch the rental sector grow and leave the best part of control and regulation to the markets, it will mean very little protection for the people who have no choice but to go into the rental market. What are Ms Carroll's thoughts on that?

Deputy Catherine Byrne

I thank the witnesses and have read their document. I concur with Deputy O'Sullivan's remarks on the standard of accommodation. Some of what I have seen is appalling and I am delighted to hear they are inspected. When properties are inspected and the landlord is asked to do certain things, is there another inspection to make sure it has been done?

Regarding rent certainty, people have informed me that they are being told the property will go up for sale. However, some months later the property is not for sale but the people have had to leave because the landlord is getting a higher income privately. That is what I can see happening with rent certainty.

Tenants are increasingly coming to me to find out what are their rights. What could be done to make people more aware of their tenancy rights? How could the committee enforce something like that in the future? What does the Residential Tenancies Board do for them?

Older people in the rental sector have increasingly reduced incomes. I would advocate that the council and voluntary housing agencies should build more for senior citizens. For the older people I deal with who are not in local authority senior citizen accommodation, the rents they are paying are huge compared with those of council tenants. Do the witnesses have any comments on that aspect?

Deputy Fergus O'Dowd

I am sorry for being late. I believe the Residential Tenancies Board's duties have been expanded recently to cover local authority tenancies and I have a question on that matter. This is not a criticism of anybody. Some tenants in local authority estates have been causing very significant anti-social problems. It may be drugs, alcohol abuse or dysfunctional people. They are intractable and have never been properly dealt with. I get very few complaints from people residing in private accommodation but I am getting some where local authorities own houses outside the local authority estate. How does the Residential Tenancies Board propose to tackle that problem? I believe the witness mentioned extra staff. Was that part of the board's ten extra people? How does the board see its role? It is critical to ensure that local authorities do their job. That is fair comment.

Chairman

I do not know if the witnesses have the answer to this question. Obviously a landlord completing the application must give details of the size of the house, who is living in it and so forth. From the information supplied to the Residential Tenancies Board, can it identify those properties that were bedsits rather than apartments? If it can do so, since the new regulations were introduced has there been a reduction in the number of bedsit units in use?

Ms Rosalind Carroll

I will start with Deputy Wallace's comments. Off the top of my head I do not have the top 20, but we will look through our data and send it to him. It is something I thought of yesterday but I do not have it. I will look and see. If it is not readily available, I am sure we can dig down into it.

I was not aware of the specific model in Switzerland, which sounds very interesting. In terms of where we are at now, I would question the cost of provision in the first instance and whether that would lead to a more affordable rent for people within that model. I do not know enough about it, but I am happy to look at it. Those are my initial thoughts.

I know cost rental has come up here on a number of occasions, which is basically providing for the level of cost. I have looked at that previously and in certain areas in Ireland, it would lead to increases in cost unless a significant subsidy is provided from the State. We need to think how those things would happen. The cost benefit does not come until 30 years later on the basis of a maturation whereby the development cost and the mortgage cost come down over that period of time. We need to see how much that would benefit Ireland in terms of economies of scale. While it worked well in European countries, at what scale would we need to introduce it here in order for it to have an overall dampening effect on the rental sector? Nobody has dug down and come up with a quantitative answer.

In regard to regulation of the rental sector and whether it has a dampening effect on supply, what is important from our point of view is that there is a strategy around where we are going with the sector such that we are aware of any likely impact of regulation on supply. I am suggesting not that we do not go there but that we be aware of any likely impact, including a fall-off of landlords and what will happen to the tenants concerned. The point I was making is not that we should not regulate but that if we are to do so, what we are going to do at the weak points where we think issues might arise such should not cause a greater problem. That might require us to think differently about particular issues.

The committee will be aware that under the tax measures introduced prior to Christmas as part of the overall measures to address the rental sector, landlords who register with the Residential Tenancies Board to participate in three-year tenancies under RAS, HAP and the rent supplement scheme can avail of 100% tax relief from Revenue in respect of those tenancies. In this regard, existing landlords had to register with us by 31 March 2016. We estimate that there are approximately 100,000 tenancies eligible for that relief, although that number may be reduced to 60,000 to 70,000 when mortgage holders are taken into account. To date, only 750 landlords have applied for it. I am not sure that as a measure it has gone any way towards addressing the issue, perhaps because no thought was given to how it would impact on the landlord. For example, the fact that it is retrospective means that it is only after three years that the landlord will get the benefit of the tax relief. Other issues include whether the interest rate, which is currently low, is an incentive and that if the tenancy ends during the three-year period, there is no benefit to the landlord. This is not about whether regulations or incentives and so on should be introduced rather our understanding of what is being introduced and any likely impact thereof.

Deputy Catherine Byrne spoke about accommodation standards and asked if local authorities re-inspect properties. I will pass over to my colleague, Ms Ward, who may be able to answer that question more specifically.

Ms Kathryn Ward

Yes, they do. When a local authority carries out an inspection of a property and provides a list of issues that need to be addressed, the local authority officers re-inspect that property to ensure the necessary work has been carried out. There is a legal avenue available to the local authority officers through which they can pursue landlords for failing to meet standards. We have a very good relationship with a number of local authorities. Many local authorities check our published register to see if a tenancy is registered. If they find there is a tenancy in existence that is not on our register, they refer the matter to us. We will then follow up from a registration point of view with those landlords. Where that engagement happens there is great success. It would be great if we could get to a stage where all of the local authorities carrying out inspections would likewise engage with us. If a landlord does not comply and register with the board we can take him or her to court, which can result in a criminal conviction.

Ms Rosalind Carroll

Deputy Catherine Byrne also raised the issue of properties being put up for sale and landlords using that as an excuse to remove tenants. It is an offence under the Residential Tenancies Act to do that. Deputy Byrne also spoke about the necessity for people to be aware of their rights. I am not sure that tenants are specifically aware of their rights in this area, which is an issue we need to work on. Currently, a tenant who has been served notice to leave a property and takes up the matter with us, which is later deemed valid, has a right of recommencement of tenancy in the same property.

Along with that, as I stated, it is an offence for the landlord and one we would take very seriously. Over the past week or two we had a quick look to see how prevalent that was, and of the disputes taken to us, it makes up less than 1% of current disputes. That does not mean it is not happening and it may mean that people just are not aware of their particular rights. It is an area we must do more on in order that tenants understand the issue.

We were asked more generally about what we can do to advertise and let tenants know about their rights. We have done two significant advertising campaigns and we will certainly continue to do that. We are also trying as much as possible to go out to community groups and other avenues through the local authorities and so on to get to tenants. On a more strategic level, we do not have a national tenant organisation in Ireland, which makes it very difficult for us even to engage with stakeholders. We speak with Threshold and organisations like it but there is no national tenant organisation so it is always difficult for us to communicate with the tenant. With the overall increase of non-Irish nationals in the rental sector, we have tried to ensure we produce materials in multiple languages and so on. We will continue to try to put ourselves out there more than we have done in the past. For example, we understand education and awareness is one of the critical issues for tenants in understanding their rights.

The Chairman asked about bedsits.

Chairman

What can be determined from returns?

Ms Rosalind Carroll

I will double-check with my colleague as we may be able to go back through them. We certainly do not have the figure off the top of our head but we may be able to look into it and report back to the committee with it and Deputy Wallace's information.

Chairman

That can be sent to the clerk to the committee so it can be distributed.

Ms Rosalind Carroll

I apologise as I forgot Deputy O'Dowd's question. We were asked about local authorities but they do not register with us. Approved housing bodies or housing associations register with us and local authorities are not currently under our remit.

Deputy Fergus O'Dowd

I have been informed that if there is a problem with a tenancy that was not resolved by the local authority, the Private Residential Tenancies Board could step in. Is that not correct?

Ms Rosalind Carroll

It is not correct.

Deputy Fergus O'Dowd

What if the case involves a private house owned by the local authority outside a local authority estate? Is there any role?

Ms Rosalind Carroll

No. We would have a role-----

Deputy Fergus O'Dowd

There is some role.

Ms Rosalind Carroll

With local authorities taking on responsibilities for the housing assistance payment, HAP, we would have cases coming through that.

Deputy Fergus O'Dowd

That is what it is.

Ms Rosalind Carroll

Under the 2014 Housing (Miscellaneous Provisions) Act, the power of the local authority with regard to anti-social behaviour is on a more strategic level. If there is a continuing issue with a tenant, there is power within that Act for the local authority not to give HAP in a specific area. That is one power. We have our power in terms of an overall landlord and tenant dispute. The landlord in that case is the private landlord. If a case is taken, we judge it on the evidence provided to us. Regardless of whether it is a tenancy involving HAP or a private rented dwelling, a third party can make a claim to us for anti-social behaviour.

Deputy Fergus O'Dowd

Yes. It is very important as the board can consider what the local authority is deemed not to have done.

Ms Rosalind Carroll

It is what the private landlord has not done. The local authority pays rent on behalf of the tenant. If the landlord has not taken action on anti-social behaviour and there is proven evidence, a third party can make the case that the landlord has not met his or her obligations. The case would be against the landlord and we would look at the dispute.

Deputy Fergus O'Dowd

The board may supervise the authority if it has not discharged its duties in dealing with an anti-social problem.

Ms Rosalind Carroll

I will go backwards a little to try to help in explaining the issue.

Deputy Fergus O'Dowd

Could Ms Carroll send us a note on it?

Ms Rosalind Carroll

I can send a note, but just to be clear-----

Deputy Fergus O'Dowd

Yes, because it is important.

Chairman

It relates to a private landlord with the payment coming through the local authority. Regarding one very specific point on that, Ms Carroll said that a third party can make a complaint if there is anti-social behaviour. Is it any third party or a third party that is adversely affected?

Ms Rosalind Carroll

Ms Janette Fogarty is our disputes expert so I will let her answer that.

Ms Janette Fogarty

Yes, it would be a third party that is directly and adversely affected.

Chairman

Therefore a public representative could not make a complaint on behalf of that person.

Ms Janette Fogarty

Under the new amendments introduced in 2015, a third party group, such as a neighbouring group or management company, can bring a claim on behalf of a third party that is directly and adversely affected. However, it is all based on evidence, so the third parties potentially would have to come before the PRTB and produce the evidence that there is anti-social behaviour. There are two types of remedy available. If one goes down the adjudication route, one is looking for damages, which is the only remedy that would be available there, but we have seen that mediation is an option in the case of third party applications because they can reach a resolution to the dispute themselves. Some parties feel damages are not an adequate remedy so mediation has been seen as a successful route to go down.

Chairman

I thank the delegation. That concludes this part of the meeting. I thank Ms Fogarty, Ms Carroll and Ms Ward from the Private Residential Tenancies Board. We will suspend for a couple of moments as the next witnesses come in.

Sitting suspended at 3.10 p.m. and resumed at 3.15 p.m.