The terms of this motion bring together two very important themes or factors, namely, privately-owned rented accommodation on the one hand and, on the other hand, the abolition of domestic rates.
The abolition of domestic rates is my responsibility. In order to accomplish this and to fulfil our undertaking we brought a motion before the House on 6 July that was passed and from that date the necessary preparations were made for derating domestic dwellings, community halls and secondary schools. This will be followed by a Bill—the Local Government (Financial Provisions) Bill, 1977 —that will come before the House very soon. It is almost ready. In that legislation I shall deal with the issue that is involved in this motion, namely, ensuring that full benefit will accrue to people in private rented accommodation as a result of the derating of that accommodation.
Quite a number of people are involved. The landlord of a premises usually included in the rent an amount in respect of rates which tended to increase from year to year. It is the intention of the Government to ensure as far as possible that tenants get the benefit of derating. It is a complex problem and there are legal complications in ensuring that this will happen and that it is complied with in accordance with the wishes of the Government and of my Department.
I wish to make clear my attitude to the motion before the House. I have considerable sympathy with the objectives of the motion. I believe the people who tabled it were well intentioned. However, I have a real reservation at this stage as to whether the aim of the motion can be achieved by the means put forward, namely, a Fair Rents Tribunal. I am still to be convinced that the setting up of this kind of tribunal now would be the best way of achieving what we want, namely, to give the benefit of derating to the tenants concerned. I have not closed my mind completely on it but I do not think it will achieve the result all of us would wish.
It is a very complex problem. The setting up of such a tribunal involves considerations far beyond this single issue. I am confident that the best way to help those concerned is to use existing statutory provisions in addition to the provisions contained in the forthcoming legislation. This will be a quicker and better way to achieve the purpose of the motion before us. I hope I shall be successful in this. In due course Deputies will have a chance to debate in this House the merits and demerits of what will be involved.
This debate would not be taking place now if the Government had not taken action on derating, as promised in the manifesto and in accordance with our commitment given five years ago. Were it not for the fact that the Government took the necessary action and brought about derating of domestic dwellings we would not be faced with this problem. Fianna Fáil grasped the nettle. We said we would do that in 1973 while the National Coalition had a different approach. They believed in doing it in stages. At first they removed the health charges from the rates and thereafter reduced rates by 25 per cent. They were late converts to the need to remove rates on domestic dwellings, community halls and secondary schools. Their approach was different from ours and the public recognised this when they elected us. We have not failed the public who supported us.
When we made our decision to derate domestic property we had to consider whether the relief should apply to owner-occupied dwellings only or, whether it should be extended to rented accommodation such as we are discussing now. We decided it would be wrong to exclude that sector. It is not easy to ensure that such people get the benefit of derating. We all know that there are difficulties involved between landlords and tenants, in particular those who pay rates in their weekly or monthly rents. However, landlords have been given the relief and we must try to ensure that tenants also benefit.
Once the principle of derating rented accommodation is established the question arises of how to ensure that relief is fairly passed on to tenants. I should like to point out that some weeks ago I mentioned in the House that I will be including this in forthcoming legislation. There are different categories in rented accommodation. Firstly, there are local authority tenants. Before January last I sent a circular to each housing authority instructing them not to collect rates from tenants of their rented accommodation from January. We have 103,000 dwellings provided for letting by housing authorities and tenants of such properties are getting the benefit since January.
Domestic rates relief applies also to private rented accommodation and this was dealt with in a more general circular which was sent to housing authorities before January. This made our commitment clear to the housing authorities, that the full benefit of domestic rate reliefs should be passed on to tenants of rented accommodation. Where inquiries are received from either landlords or tenants, housing authorities were asked to make it clear that domestic rating relief would extend to all housing accommodation. The authorities were asked to point out that landlords should reduce these rents by the amount of the rates relief grant on properties.
The Rent Restrictions Act, 1960, provides statutory backing for this instruction as far as rents of controlled dwellings are concerned. With the removal of rates from houses, amounts added to the rents of controlled dwellings under the Rent Restrictions Act, 1960—amounts corresponding to the rates paid by the landlord—no longer constitute "lawful additions" to the basic rents of those dwellings. Tenants of such dwellings have available to them, therefore, the remedy of serving a notice on their landlord under section 13 of the 1960 Act reducing their rent to an amount equal to the lawful rent. An estimated 45,000 dwellings are covered by the above provisions.
Deputy Horgan adverted to this point, but he appeared to link it to sections 19 and 20 only of the Rent Restrictions Act, 1960. By referring only as he did to the special provisions applying to small controlled dwellings in certain appointed areas, he may unwittingly have given the impression that the right to secure a reduction of rent is available only to tenants of this special category of controlled dwelling. This, of course, is not the case. As I made clear in my reply to a parliamentary question, as reported in Volume 303, columns 1604 to 1608 of the Official Report, quoted by Deputy Horgan, all tenants of controlled dwellings are entitled, following domestic rates abolition, to secure a reduction in their lawful rent. The general provision applying is, as I have said, section 13 of the Rent Restrictions Act, 1960. The provisions of Part III of the Act mentioned by Deputy Horgan are of application to small controlled dwellings only.
In much the same way, small dwellings under the Local Government (Rates on Small Dwellings) Act, 1928 —that is, mainly rented houses or flats with a valuation of not more than £8 in Dublin and not more than £6 elsewhere—will also benefit fully from domestic rates relief. This will be the case whether dwellings are controlled under the Rent Restrictions Acts or not.
In many other private lettings, the tenant, as part of his contract of tenancy, had always accepted direct liability for the rates due on a dwelling. Again, where this is so, the benefit of domestic rates abolition is guaranteed to him under the terms of his contract.
I think it is important to emphasise that existing provisions already guarantee the passing on of domestic rates relief in the case of a majority of tenancies in the country. I also accept that in certain cases, especially where shorter term lettings are involved or where a unit of letting does not correspond to a unit of valuation on the rate books tenants often had not been paying rates as such. It may be assumed that in such cases the rent which the tenant pays reflected in some way the cost of rates even though no amount would be specified in the demand from the landlords in respect of rents.
I can assure Deputies that the forthcoming Bill will be designed to ensure that, as far as possible, the benefit of rates abolition is felt also in those cases. In general, it is my intention to place an obligation on landlords, who before 1 January 1978 paid the rates on dwellings occupied by their tenants, to make to the tenant by way of proportionate set-off in the rent an allowance equal to the amount of the rates in question. I would suggest to Deputies that further discussion could more usefully take place when the terms of the Bill have been circulated and the Bill itself is before the House.
The solution proposed by the motion is the setting up of a fair rents tribunal. This would involve the extension of rent control to the whole of the private rented sector. As such, the proposed solution goes far beyond what the motion is attempting to ensure. It would go far beyond the issue and the aims we are discussing. I think Deputy Horgan admitted this in a limited way last evening.
The experience of rent tribunals in other countries is not very encouraging. It is a complex and expensive organisation to set up with serious indirect costs for the community in general by way of increased public expenditure. Considerations of organisation and finance could be described as secondary if it achieved all we wanted it to achieve. The question is—would it? It is by no means the case that it would. There seems to be a connection between the extension of rent control and the falling off in supply of accommodation where the control applies. This has been the experience not only abroad but here. There was a drastic decrease in the supply of unfurnished rented accommodation here between 1946 and 1971 as reflected in the censuses. In 1946 there were approximately 161,000 unfurnished rented units. By 1961 this had fallen on 100,000 and by 1971 to 65,000. Estimates at present in regard to 1981 show that it will be so low as 42,000 if it follows the existing pattern. As Minister with overall responsibility for housing I cannot regard this evidence lightly.
In 1975 a review of the whole area of privately rented accommodation was begun in my Department with the object of bringing forward solutions to the problems attending the private rented sector. That review has now been completed. Its purpose is to provide the background information and analysis which can form the basis of any proposals to be formulated in this area. The review deals with all aspects of privately rented dwelling accommodation including the availability, cost and suitability of such accommodation. In the course of the review, account has been taken of recent developments in other countries, notably the United Kingdom, in relation to privately-owned rented accommodation.
Regard has been had also to measures which had be taken and the effects which such measures had on the overall situation, particularly the effects on the supply and availability of such accommodation. As my colleague, the Minister for Justice, recently indicated in the House, the review has been circulated to other Departments for examination and for their observations on it. Pending the outcome of this examination it would, of course, be premature for me to disclose details of the review. The points mentioned by Deputies during the debate on this motion will, however, be taken into consideration.
I should like to add that my concern and that of local authorities for the area of private rented accommodation ranges a good deal beyond the matters which I have dealt with so far. Under section 70 of the Housing Act, 1966 housing authorities have power to make bye-laws regulating the physical condition of houses let for rent in their areas. Since 1973 when model bye-laws were circulated to housing authorities by my Department, 39 authorities have adopted bye-laws. Despite certain criticism of their operation the bye-laws are being administered with increasing effectiveness from year to year. In all cases housing authorities favour an initial approach to the parties concerned. They offer advice and are willing to have consultation with those concerned before resorting to enforcement measures. Only reluctantly do they resort to these when the persons concerned are not receptive of advice and suggestions and do not want to know about them. They are then forced to adopt enforcement measures.
As I said at the beginning. I am in sympathy with the motion. I am not convinced that it is the right way to do it; as a matter of fact I am convinced that the way I am proposing to do it, namely to have the necessary sections or section included in the forthcoming Bill, is the immediate way to tackle the issue. A rates tribunal would not be confined to this issue in isolation.
