Dáil Éireann debate -
Wednesday, 8 Nov 2000

Vol. 525 No. 3

Written Answers. - Private Rented Sector.

Ivan Yates

Question:

290 Mr. Yates asked the Minister for the Environment and Local Government if he has any statistical analysis to show the level of investment in the private rented residential sector; if this has decreased arising out of the implementation of the Bacon reports on housing; if this will result in higher rents to tenants; if his Department has carried out any assessment in relation to the appropriate level of increased supply of units in the private rented residential sector; and if it is his policy to achieve any such target. [24956/00]

Minister of State at the Department the Environment and Local Government (Mr. Molloy)

Since coming to office, I have commissioned three reports on the housing market from Dr. Peter Bacon and Associates. Each of these reports contained evidence of strong investment demand for residential properties. The most recent report, The Housing Market in Ireland: an Economic Evaluation of Trends and Prospects, published in June 2000, referred to the buoyant demand for residential investment properties and also to evidence that investor activity was pricing first time purchasers out of the market, particularly at the lower price range.

The Government has responded positively to the findings of these reports in Action on House Prices, April 1998, Action on the Housing Market, March 1999 and earlier this year in Action on Housing. Government strategy, which is proving effective, is to increase housing supply to meet demand and to improve affordability, particularly for first time purchasers. In Action on Housing the Government adopted a number of measures, including changes to stamp duty, to ease the burden on first time buyers and owner-occupiers and to discourage speculative investment which was negatively impacting on the ability of first time buyers to enter the market. A temporary anti-speculative tax was also introduced for a period of three years to discourage short-term speculative investment by those seeking to make a quick capital gain, with exemptions for landlords who comply with specific regulatory requirements, indicating a commitment to the long-term availability of the accommodation for renting. Recent evidence, indicates that first time buyers are gaining an increasing share of the new housing market, which may be attributed to reduced investor activity in response to the measures introduced in Action on Housing and to increases in housing output at the lower end of the market.

As regards the issue of higher rents for tenants following the Bacon reports, the Irish Auctioneers and Valuers Institute survey data for rents showed increases in Dublin of 24% in the period November 1997 to November 1998 and 15% in the period November 1998 to November 1999, the larger increase relating to a period during which the first Bacon report was produced and before the full effects of the Government's response would have been felt.

The Government aims to develop a thriving, diverse and well managed private rented sector. In addition to measures designed to increase the overall supply of housing, actions taken in recent years include specific incentives for the provision of rented residential accommodation in urban renewal areas and for the provision of student accommodation. In relation to income tax relief in respect of rent paid by tenants in the private rented residential sector, this Government increased the ceiling for persons under 55 by 50% and doubled the ceiling for those over 55. This Government also established a Commission on the Private Rented Residential Sector to make recommendations on a wide range of issues relating to the sector, including improved security of tenure, maintaining a fair and reasonable balance between the respective rights and obligations of tenants and increasing investment in and the supply of accommodation in the sector.

The report of the Commission on the Private Rented Residential Sector, published in July of this year, identified a growing need for accommodation in the private rented sector and set out a number of recommendations to increase supply, including recommendations aimed at increasing long-term investment in private rented accommodation. I intend to submit to Government comprehensive proposals in response to the report, including my response to the commission's recommendations relating to supply incentives, as soon as possible.