I move: "That the Bill be now read a Second Time."
The past five years have been turbulent and traumatic in the housing market which has fed into and driven much of the current economic crisis. An obsession with residential property as an investment class rather than as a place of shelter, a home, was driven by the failed pro-cyclical policies of the past decade. Homeownership, a noble aspiration, was mutated into a speculative mania and a whole generation was forced, or encouraged, to chase an out of control housing bubble. When the music stopped, the damage to individual households and the wider economy was clear to see. Spuriously inflated property prices, lax lending policies and weak central oversight have bequeathed large-scale negative equity and the spectre of repossessions to a large segment of society.
Many people are struggling to pay their mortgages or at risk of losing their homes. What should be viewed as a place of comfort and shelter is now, for too many, a millstone, a cause for constant concern. In my first year as Minister of State with responsibility for housing, I have become acutely aware of the real difficulties people are experiencing. There is no question that we face a difficult path in finding a solution to the housing crisis. It will not be solved overnight. There are no magic bullets. What is needed is sound and humane decision-making, imaginative policies that produce the greatest possible housing yield for the widest range of people at the best return to the taxpayer and, critically, an understanding of and a learning from the mistakes of the past.
We must not return to the unsustainable, unprecedented growth that represented the boom years. The greater the boom, the worse the bust. We must seek to provide a moderating structure that allows for sustainable and long-term growth again. If we can do this, the suffering and hardship being experienced will not be in vain. For all these reasons, I am absolutely committed to the development of a genuinely sustainable approach to housing policy which will have the interests of communities at its heart, be based on choice, fairness and equity across tenure. It will be a policy that will enable all households access to good quality housing appropriate to their household circumstances and in their community of choice. I am committed to a vision of housing where people once again view their house as a place for hearth and home, not as a failed investment.
We must approach housing differently now. The Government's housing policy statement, published in June 2011, marked a profound change in the State's approach to housing policy. This short statement was based on several fundamental principles and goals that will form the basis for reform. It is a framework document that does not claim to contain all the answers to the issues it raises. It takes account of the dramatic cycle of growth and collapse in the residential property market. In that context, it charts a way forward for housing policy by placing explicit emphasis on choice, equity across all housing tenures and delivering quality outcomes for the resources invested. This will serve as the framework for a sequence of legislative and policy initiatives in the short to medium term. Key to these aims will be the move from a focus on the promotion of homeownership to a more equitable treatment of tenures. If there is one lesson this crisis has taught us, it is that homeownership need not be the ultimate goal. This does not mean the Government is turning its back on homeownership or that we are seeking to impede people from realising their valid homeownership aspirations. Far from it. The reality is that, for the majority of households, homeownership will continue to be the tenure of choice, a fact recognised and welcomed by the Government. However, there are other households that may not want, or may not be in a position, to own their own home. Our goal for such households is to provide for choice based on household circumstances and needs rather than the expectation of house price growth.
The current crisis has given us an opportunity to reassess our attitudes to housing and homeownership. The emergence of rented housing as a real viable housing option is part of this reassessment.
A well balanced housing sector requires a strong, vibrant and well-regulated rented sector and the rented sector is an integral part of our housing policy for the future. Naturally, important steps have already been taken to bolster the status and stability of the rented sector and this Bill is another important step on that journey.
The Residential Tenancies Act was passed in 2004 and represented the most significant legislative reform in the private rented sector in more than a century. Prior to 2004, the rental market operated in a crude and fragmented manner. There was little or no security of tenure for tenants and recovery of possession presented a nightmare scenario of long and expensive court proceedings for landlords. Even minor disputes arising during the course of a tenancy had no avenue of resolution other than the courts. Standards in rental accommodation were notoriously low and while minimum standards regulations had been in place since 1993 they were already out of date and characterised by low levels of enforcement. The combination of these factors resulted in the absence of a secure, regulated rental market that could offer a real, attractive longer-term housing solution to people searching for a home. Rented housing represented a tenure choice of last resort. It was perceived as being only for student housing, bed-sits, a short-term solution or the only solution for the most marginalised and vulnerable in our society who could not afford anything better.
Thankfully, this is not the private rented market of today. More people are renting now than ever before. Figures from the 2011 census show an increase of almost 64% in the number of people renting from private or approved housing body landlords since the previous census in 2006. Since the proportion of overall home ownership has declined by 5% the rental market now accounts for 29% of the total housing market. In the eight years since the passing of the Residential Tenancies Act and the establishment of the Private Rental Tenancies Board, PRTB, we have seen significant strides in the development of the private rental market and it is largely unrecognisable from what it was at the turn of the millennium.
The Residential Tenancies Act 2004 introduced real security of tenure for tenants in the private rented residential sector for the first time. It set out minimum obligations for landlords and tenants and provided access for tenants and landlords to a cheap, informal and independent dispute resolution service. The Act laid out conditions for rent reviews and prohibited the charging of rents in excess of market levels. It set out fair procedures for the termination of tenancies and provided for notice periods linked to the duration of a tenancy. Since a portion of the tenancy registration fees collected was set aside by ministerial order it has provided for the funding for an exponential increase in rental standards inspections by local authorities. In 2003 only 2,000 inspections of rented dwellings were carried out by local authorities, but by 2011 the corresponding figure was almost 20,000. This has contributed to a significant improvement in the standard of rental accommodation available to tenants today and the final implementation of the 2008 Housing (Standards for Rented Houses) Regulations in February next year will continue that work. Most important, the Residential Tenancies Act created the conditions for the growth and development of a sustainable, well-regulated rental market. This development has meant that rented housing today is no longer viewed as a tenure of last resort but as a tenure of choice.
The Residential Tenancies (Amendment) (No. 2) Bill 2012 builds on what has been achieved by the Residential Tenancies Act and the Private Residential Tenancies Board and provides for the further development of the rental sector in future. The Residential Tenancies Act and PRTB have achieved considerable success since 2004 and the Bill will build on that success. While it contains several significant policy developments it is evolutionary rather than revolutionary legislation. The Bill is set out in five Parts with 43 sections. I will refer to the main provisions in some detail.
Perhaps the most significant achievement of the Bill, if enacted, would be the extension of the remit of the Residential Tenancies Act to approved housing body dwellings. Approved housing bodies generally provide rental accommodation for families and persons with specific categories of need who are on the social housing list. However, the relationship between these tenants and their approved housing body landlords is not generally provided for in either the Housing Acts or the Residential Tenancies Acts and they operate on the basis of lease agreements, the various Landlord and Tenant Acts and common law. Formal regulation of the tenant landlord relationship in the sector lags behind the private rented sector considerably and there is an urgent need for a modern legislative basis for approved housing body tenancies. The Bill will afford the same rights and obligations afforded to landlords and tenants in the private rented sector to those in the approved housing body sector. This is a logical follow-on from the June 2011 housing policy statement, which set out the key role envisaged for the approved housing body sector in the delivery of social housing. In view of the ongoing development of the approved housing body sector and its greater role in social housing provision, the Government is committed to improving governance and formal accountability generally in the activities of the sector.
Approved housing bodies are at the heart of the Government's vision for housing provision. As part of this process, it is critical that assurance is given to stakeholders in respect of the stability, viability and capability of the sector. Governing bodies, tenants and potential investors must have reassurance that the sector is well-managed and stable and is a good long-term investment. To this end, my Department is committed to the development of a regulatory framework for the sector that will support its long-term growth. The extension of a formalised structure for mediating the tenant landlord relationship is a logical corollary to this project.
Part 2 amends the Residential Tenancies Act 2004 and provides for the application of the Act to dwellings let by approved housing bodies to tenants who have been assessed under the Housing (Miscellaneous Provisions) Act 2009 as having a housing need. Section 3 as published provides for the exemption from the provisions of the Act of tenancies in which care and support services are provided to the tenant as part of the tenancy agreement. The decision to exempt these types of tenancies was made after extensive consultation with the sector and on the basis that the services provided could be more effectively delivered outside the confines of the Act. However, as a result of further consultation with the approved housing body sector following the publication of the Bill, I have decided that it will be possible to extend the remit of the Act to even more of the approved housing body sector than originally envisaged, and I propose to amend the Bill on Committee Stage to provide that there will be no additional exemptions for approved housing body tenancies, save those provided for in the 2004 Act. The result of this amendment would be to extend the rights under the Residential Tenancies Act to an ever greater number of approved housing body tenancies, in the order of 20,000. It should also simplify the wording by which extension of the Act to the sector will be achieved.
Section 3 ensures the 2004 Act will apply to dwellings let by local authorities to approved housing bodies when they are sublet to social housing tenants, notwithstanding the fact that local authority dwellings are exempt. Sections 4 and 6 place restrictions on approved housing body tenancies to certain entitlements under the 2004 Act. Specifically, section 4 provides that tenants in approved housing body dwellings may not assign or sublet their tenancies and section 6 provides for a similar restriction in respect of succession rights. On foot of this initiative to bring the approved housing body sector within the remit of the Residential Tenancies Act, and in recognition of that fact that the legal framework no longer applies solely to the private rented sector, the Private Residential Tenancies Board will be renamed as the Residential Tenancies Board.
Extending the 2004 Act to approved housing body tenancies will create a unified legislative base for the private rented and approved housing body sectors, assisting movement between tenures and making more efficient use of rental stock throughout the public and private sector. Creating a unified legislative basis will assist in the objective of affording equal treatment to households in similar economic circumstances and is consistent with my belief that broadly similar rights and responsibilities should apply to all forms of rented accommodation. I am seeking to accommodate households on waiting lists in all tenures using excess private housing under leasing schemes and other such initiatives. Movement between tenures for such households is greatly facilitated through a common legislative base. Naturally, this progression raises the inevitable question of how best to deal in the long term with local authority tenancies. While the Bill will not address this issue, it is clear that further specific action will be required in this area and that a great deal of further thought, research and consultation will be required before proposals are produced in this regard.
The PRTB was established as an independent statutory body under the Residential Tenancies Act on 1 September 2004. The principal activities of the PRTB include the registration of private residential tenancies and the resolution of disputes between tenants and landlords as well as the provision of information, assistance and advice to the Minister on the private residential rented sector.
The PRTB has achieved much since it was established, but more remains to be done. It is recognised that it can take a considerable time before cases are heard by the PRTB and it is essential that we supply the board with the necessary tools to reduce delays as much as possible. However, it must also be acknowledged that the number of dispute cases referred to the PRTB has grown by 25% since 2008. At the same time, staff numbers have decreased by 53% from their peak as a result of the relentless downward pressure on public service numbers.
Notwithstanding these challenges, the PRTB is actively pursuing a range of modernisation initiatives such as outsourcing of work and shared services, and it is hoped that in the longer term this will enable the PRTB continue to do more with less and significantly reduce delays. The PRTB's investment in ICT is a key element in its corporate plan and modernisation agenda under the Croke Park agreement. A new tenancy management system came on stream in mid-2012 and will considerably reduce processing times in 2013. This Bill will also contribute to reducing delays by streamlining procedures wherever possible. However, it must be recognised that there will be considerable challenges for the PRTB in the years ahead in dealing with an increasing workload as well as the addition of some 20,000 approved housing body tenancies to its remit. These are challenges that the Government is committed to helping the PRTB to meet.
Part 3 of the Bill provides for the separation of the quasi-judicial and administrative functions of the board and for a reduction in the maximum number of board members from 15 to 12. The purpose of this amendment is to allow the board to focus exclusively on the corporate governance, financial management and wider policy issues affecting the PRTB. The 2004 Act provides that the PRTB may offer a mediation service to landlords and tenants who wish to resolve disputes. Part 3 of the Bill includes amendments to sections 95 and 96 of the 2004 Act, the aim of which are to encourage the use of mediation. The amendments simplify and streamline the mediation process by removing unnecessary procedural steps and it is hoped that as the rented sector continues to mature and landlord and tenants work together to sustain long-term tenancies, there will be an increasing interest in the less confrontational mediation stream of the board's dispute resolution processes.
Part 4 of the Bill provides for the merger of the rent tribunal with the residential tenancies board. The rent tribunal was established under the Housing (Private Rented Dwellings) (Amendment) Act 1983. The role of the tribunal is to determine the terms of the tenancies, including the rent, of dwellings formerly controlled under the Rent Restrictions Acts. The merger of the rent tribunal and the PRTB was announced in 2009 on foot of the Government decision on the rationalisation of State agencies. The merger of these two bodies has been in place on an administrative basis since 1 October 2009; administrative support services to the rent tribunal are provided by the PRTB, and the chairperson of the PRTB is the chairperson of the rent tribunal. The Bill gives legislative effect to that administrative arrangement and provides for the dissolution of the rent tribunal.
While the Bill addresses a wide range of issues, there are some other aspects still under development which I hope to bring forward for consideration during the Bill's passage through the Oireachtas. In particular, I am keen to progress a number of key ongoing concerns within the private rented sector, such as the illegal retention of tenants' deposits by landlords and the over-holding of rented property by tenants. We have made significant progress in dealing with the complex legal and policy issues arising on these and other topics but it was not possible to finalise the necessary provisions in time for inclusion in the published Bill. I look forward, however, to tabling detailed amendments on these topics later in the legislative process.
I look forward in particular to making progress on the programme for Government commitment to establish a tenancy deposit protection scheme. Only this week I received a detailed research report on this topic that was commissioned by the PRTB and I expect that this will guide my thinking on how best to offer the greatest protection to tenants in this area at the least cost to the Exchequer. The report flags a range of complex issues on which decisions will be required but, with careful planning, a sustainable scheme can be developed to further boost the operation of the Irish rental market. I am hopeful that I will be in a position to make specific proposals on this matter in the context of the current Bill. I have arranged for the report to be published on the Department's website today, if anybody wishes to read it.
The Residential Tenancies (Amendment) (No. 2) Bill 2012 represents a significant evolutionary step in the development of the residential tenant-landlord regulatory environment. The extension of the Residential Tenancies Act to approved housing bodies is an important step towards achieving a wider regulatory framework for the voluntary and co-operative housing sector in the coming years. This will bring greater transparency and accountability to this important sector, which is playing an increasingly active role in social housing provision. The extension of the regulatory framework to cover the tenant-landlord relationship in the local authority rented sector is a logical further step, though one for another day.
This is a forward-looking Bill that recognises the need for additional operational efficiencies by the PRTB in the delivery of its functions and the broadening of its remit in order to ensure the good working of the private rented sector. Most of all, it will contribute to the continued development of the rental sector as an attractive long-term housing option and a crucial factor in the development of a sustainable housing policy as we continue on the road to economic recovery. I commend the Bill to the House.