Seanad amendments Nos. 1 to 3, inclusive, 5, 7, 8 and 10 to 12, inclusive, are related and will be discussed together.
Residential Tenancies (No. 2) Bill 2021: From the Seanad
If I may, I will deal with all of the Seanad amendments together, as they all relate to changing rent pressure zone, RPZ, restrictions. I am grateful for the opportunity to return to the House with the Bill, as amended by the Seanad. There have been 13 amendments to the Bill since it was passed in the Dáil. Some are substantial and others are technical. I will run through them very quickly.
Amendment No. 1 is technical. It amends section 1, dealing with definitions in the Bill, to remove the definition of "Minister". The full title, the Minister for Housing, Local Government and Heritage, is used in section 5, which is the only reference in the Bill to the Minister. This is just a technical amendment.
Amendment No. 2 inserts a new section 4 to provide for a technical amendment to section 12 of the Residential Tenancies Act 2004 relating to the obligations of landlords. The provision obliges a tenant to furnish a tenant with a statement in writing of how the rent was calculated and set under the tenancy of the dwelling, having regard to section 19 of the 2004 Act, rather than having regard only to section 19(4). The effect of the amendment is that a landlord's statement will also cover the calculation of rent in accordance with the new section 19(4A), which provides that any rent increase in an RPZ area cannot exceed any inflation recorded in the harmonised index of consumer prices, HICP, values.
Amendment No. 3 inserts section 5 to amend section 19 of the 2004 Act and provides for rent-setting. From the coming into operation of section 5, the formula provided in section 19(4) shall no longer apply in capping the maximum rent increase in RPZs, that is, the current 4% limit. The formula will be replaced by a requirement that any rent increase in an RPZ shall not exceed any rent increase determined by the Residential Tenancies Board's, RTB, rent pressure zone calculator reference to the HICP values, in accordance with the new section 19A of the 2004 Act. The RPZ calculator will calculate any permissible rent increase that may apply. The user shall input into the calculator the date the rent was last set and the amount of the rent last set, and the calculator will produce the amount of the maximum permissible rent increase, if there is to be an increase. Rent increases are not compulsory and are a matter for the tenant and the landlord, but the maximum will be set at the HICP value.
That is a significant change from the current situation. There is no legal obstacle to a rent reduction and no legal requirement that a rent increase must apply.
The calculator shall compare the HICP value contained in the table published by the RTB on, or most recently before, the date the rent was last set with the HICP value contained in that table published by the RTB on, or most recently before, the date that any rent increase is being determined by that calculator. Any difference between the two aforementioned values shall be calculated as a percentage by the calculator. If that percentage is a positive value, that is where there is an increase in the HICP values over the period in question, it is applied by the RPZ calculator to the amount of the rent last set to produce the amount of any permissible rent increase. If that percentage is zero or negative, then the calculator will advise that no rent increase can be applied. As I said, this does not prevent a landlord or tenant from agreeing a rent lower than that currently being paid.
Any table of HIPC values published by the RTB shall be based on the all-items harmonised index of consumer price values in respect of Ireland, which is published by the Central Statistics Office, CSO, with reference to Eurostat data. As Minister, I am empowered under the Bill to prescribe an alternative index published by the CSO and containing data that correspond with the HICP values for the purpose of calculating any permissible rent increase. I do not expect to have to prescribe an alternative index, but I will have the power to do so if the all-items HICP index becomes unsuitable for our purposes during the period between now and 2024. From the coming into operation of section 5 of the Bill, the RTB will establish and maintain the said calculator and publish a table of HICP values to assist with the lawful setting of rents in RPZs. My Department is working closely with the RTB to ensure that every assistance will be available to the sector from the passing of this Bill. The calculator will be up and running and the HICP table will be published without undue delay.
Amendment No. 5 inserts a new section 7 into the Bill to amend section 22 of the Act of 2004, which provides for notices of rent. Section 7 of the Bill inserts a new paragraph (g) into subsection (2A) of section 22 to require that where section 19(4A) applies to a dwelling which is in the RPZ, that is a new rent increase restriction linked to the HICP, a notice of new rent served on a tenant shall "state how [an] increase in the rent last set...[for] the dwelling was calculated or, where section 19(4A) does not apply, [to] state [exactly] why it does not". An exemption from the RPZ rent controls applies where a rented dwelling is new to the rental market or a substantial change to a rented dwelling has occurred to warrant an incentive. There are no changes in this respect in this Bill, this is just a reference to the previous Act.
There is an Opposition amendment in this grouping, which I will address now if Members wish and if it is permissible. These amendments were all in one grouping. The Opposition amendment to Government amendment No. 5 proposes to grant me, as Minister, discretion regarding the designation of particular RPZs. Section 24A of the Residential Tenancies Act 2004, as amended and enacted by the Oireachtas, provides that "The Housing Agency, following consultation with the relevant housing authority, may make a proposal...to [me as] the Minister that an area [should] be prescribed" as an RPZ. Following receipt of such a proposal, the law provides that, as Minister, I shall request the director of the Residential Tenancies Board to conduct an assessment of the area and to establish whether it meets the criteria for designation as an RPZ and then to report back on whether the area should be designated as an RPZ. For the purposes of the Act, "area" is defined as either "the administrative area of a housing authority" or a "local electoral area within the meaning of section 2 of the Local Government Act 2001". There is no provision for any other type of area to be designated as a rent pressure zone, including a part of a local electoral area, LEA.
For an area to be designated as a rent pressure zone, it must satisfy the criteria set out in section 24A(4) of the Residential Tenancies Act 2004, as inserted by section 36 of the Planning and Development (Housing) and Residential Tenancies Act 2016. Those criteria specify that the annual rate of rent inflation in the area must have been 7%, or more, in four of the last six quarters and the average for rent registered in the area with the RTB in the last quarter must be, "in the case of the county of Kildare, the county of Meath, the county of Wicklow or a local electoral area in any one of those counties, above the average rent in the State (other than the Dublin Area)" or "in the case of any other county or local electoral area, or any city, city and county or local electoral area situated in such city or city and county, above the average rent in the State (other than the Greater Dublin Area)". Section 24A(6) provides that "Where a local electoral area is prescribed by order as a rent pressure zone and, subsequently, any local electoral areas are duly amended in a manner that affects the area of the local electoral area so prescribed, then the order shall continue to have effect as if the local electoral area concerned had not been so amended".
I cannot provide legal advice, but I understand that the effect of section 24A(6) of the Residential Tenancies Act 2004, as amended, in respect of the designation of an RPZ applies to the area within the LEA boundary which stands on the date of designation. Subsequent LEA boundary changes do not affect the RPZ designation. Accordingly, it would not be possible or appropriate to redraw an LEA boundary for the purposes of becoming an RPZ. The RTB rent index measures rent increases in LEAs using the 2019 boundaries then in effect for those LEAs. There is no specific measure to calculate rental increases broken down into any lower levels. The Housing Agency and the RTB will continue to monitor national rents and if any LEA, in its entirety, meets the designation criteria, then it will be designated as an RPZ. I cannot accept this Opposition amendment to amendment No. 5. This Bill is urgent in nature and must be passed by the Dáil today with a view to early enactment. This is the reason we did not want to flag some of these changes publicly in advance. I thank, in particular, the two Opposition Deputies to whom I had intimated on a previous stage that changes were coming down the line. In fairness, I knew that was understood. We did not want there to be any unintended consequences from the legislation coming forward. If we get this Bill passed today, we want to get it enacted as soon as possible. We have an early signature motion for the President to sign the Bill as well.
Amendment No. 7 inserts a new section 11 into the Bill to amend technically section 115 of the Act of 2004, which provides for the redress which may be granted by an RTB determination order. Section 11 of the Bill technically amends section 115 to ensure that an RTB dispute adjudicator or tribunal may make a declaration under section 115(2)(b) as to whether an amount of rent set under the tenancy of a dwelling complies with section 19. If the declaration is that amount does not comply, then the declaration shall be accompanied by an indication from the adjudicator or tribunal as to what amount, in his or her opinion, would comply with section 19.
The technical change in section 11 of the Bill is to provide a general reference to section 19 in section 115(2)(b) of the 2004 Act, and by doing so, to cover the new section 19(4A) regarding the RPZ rent increase restriction of no more than the HICP inflation rate. Amendment No. 8 inserts a new section 12 into the Bill to amend technically Schedule 2 of the 2004 Act by extending the list of improper conduct by a landlord subject to Part 7A concerning complaints, investigations and sanctions. The RTB will be given the power to investigate, with or without complaint, and sanction any landlord in contravention of the new section 19(4A), which refers to the HICP-linked rent increase restriction. The Bill already contains an amendment to Schedule 2 to provide that improper conduct shall include the seeking of unlawful payments in respect of any deposit or advance rent payment. We discussed this aspect on Second Stage as well. An RTB sanction can cost a landlord up to €30,000 and there is a serious deterrent in place to combat improper conduct.
Amendment No. 10 empowers the Minister to commence the new section 5 of the Bill, which requires that any rent increase in an RPZ shall not exceed any rent increase determined by the RTB’s rent pressure zone calculator with reference to HICP values in accordance with the new section 19(4A). I intend to commence section 5 as soon as possible and urgently following the passing of this Bill. All other provisions will commence automatically upon the passing of the Bill.
Amendment No. 11 is a technical amendment identifying the provisions of the Bill that take account of recitals. Amendment No. 12 proposes consequentially to amend the Long Title of the Bill to reflect that a new section 5 is to be introduced into the Bill, requiring that any rent increase in an RPZ shall not exceed any HICP inflation.
Sinn Féin is not opposing these amendments. I will not repeat the broader debate we had on whether this is the right policy as we had that debate during Private Members' time this week. However, I will raise a number of concerns I would genuinely like the Minister to consider following the enactment of the amendments to the Residential Tenancies Act he has just outlined.
In the press release announcing the change from the 4% RPZ cap to linking rent reviews to the harmonised index of consumer prices, the Minister said that the average HICP figure over the past four years was around 0.7%. That is factually correct. However, the problem is that, according to the latest figures from the Central Statistics Office, the annual change in the HICP is 1.9%. It has clearly been on an upward trajectory for the past nine or ten months. There is a wider European debate going on about where inflation is going to go, and many people believe it will continue on that upward trajectory for the next 12 to 18 months. There is also some discussion about changing the nature of the HICP calculation to include domestic home purchases. Given the nature of house price inflation here, that could further boost it upwards. I urge the Minister and his officials to keep a close eye on that. Rather than wait for the HICP to hit 4%, the Minister should intervene much earlier. If he does that, he will have the full support of Sinn Féin. We differ on the policy we would like to see implemented but any easing of the pressures on renters will not be opposed by our party.
The second issue I urge the Minister to reconsider, in the context of further amendments to the Residential Tenancies Act due in the autumn, relates to areas outside the rent pressure zones. The Minister knows very well that when a rent pressure zone is established, the area immediately outside it experiences a higher than normal level of rental inflation and eventually gets incorporated into the RPZ. The Minister shared that view when he was in opposition. That has been the experience of the RPZs since 2017. Landlords close to the RPZ become fearful that at some point they will be incorporated into it and they set rents at the rent review accordingly. It is a self-fulfilling prophecy because they raise rents repeatedly until the area meets the RPZ criteria. We also know from recent rent indexes from the Residential Tenancies Board and Daft.ie's quarterly reports on asking prices that some of the most significant rental inflation has occurred outside the urban centres, particularly in midlands counties and some parts of the western seaboard. I have a real worry that, because the Minister is leaving biennial rent reviews based on existing market rent in place, it could have a disproportionately negative impact in those areas. Again, all I am urging the Minister to do is to get his officials to monitor closely what is happening and intervene where necessary.
My colleague, Deputy Buckley, will speak to his own amendment but I want to make one point on it. I understand very clearly that the original legislation set the area as the local authority or local electoral area, LEA. However, as the Minister knows, there are a certain number of rental markets that spill over the edge of a local electoral area. That happened in Limerick and Deputies from Limerick city pleaded with previous Ministers to take action on that issue. It was only when rents spiralled out of control that RPZs were eventually expanded to the LEA. There has to be a way of taking sub-LEA data from the RTB rent index. The RTB has told us those data are available at the level of district electoral divisions, DEDs. Between now and when he next amends the Residential Tenancies Act, I ask the Minister to consider an amendment to that legislation to allow, in those small instances, the inclusion of DEDs that are clustered beside an LEA where there is clearly an increase in rental activity particular to the DED and which does not extend across the LEA. This would ensure people at the edges of cities and towns do not fall foul of unfair rent increases.
It is very important that renters have complete clarity. Is the Minister in a position tonight to tell us the date on which these changes to the legislation will take effect? That clarity would be helpful. As I said, we are not opposing this legislation. We have a different view on what should be done now but we certainly would not oppose anything that gives any level of relief to renters, even if it is not the full level of relief we would prefer.
Likewise, I will not be opposing this legislation, although I do have a different view as to what the best approach is. As the Minister is aware and as Deputy Ó Broin has noted, there is a lot of commentary at the moment suggesting we might be heading into a period of significant increases in inflation. We all hope that will not happen but KBC is reported today as saying we are heading into a "noisy and nasty period of inflation". This commentary and analysis is based on the increase in the price of raw materials, how that is affecting crude oil prices, and utilities then putting their prices up. It is also due to the household savings that have been built up by some households and the pent-up demand that will be released as we come out of Covid. That will happen in the context of rents already being too high and unaffordable. It would also be a huge injustice if renters face increased rent and utility prices on the back of inflation from pent-up demand and household savings when most renters will not be participating in that extra spend at all. They would not have those household savings and they will be hit with increases in utility bills at the same time as potentially higher rent increases. What measures will be in place to monitor inflation increases? When will the Minister step in if inflation increases beyond a certain point? How quickly will he act on that? That is what people want to know.
There are issues around what happens outside rent pressure zones. Is this something on which the Minister hopes to act in the autumn when he brings forward additional legislation on renters? There are ways around these rent protections for tenants, in which some landlords participate. People have come to me who have been evicted and then the property is renovated - or sometimes just repainted - and it goes back up on the market at a much higher rent. That is a problem. Is that something that will be dealt with in the legislation the Minister is hoping to bring forward in the autumn?
I welcome this Bill. It will effectively mean that people who are renting will pay less of an increase than they would have if this Bill were not passed. Like other Deputies, I am very happy to support that. The Minister has also capped the upfront payments for new tenants at one month's rent and one month's deposit and he is working on other measures for later in the year to support renters. This says a lot about his commitment to people who are renting. The Bill we are passing today will effectively replace the current model of renting with a cost rental model, which it is to be hoped will become the predominant model in this city and across the State.
I have two questions for the Minister. First, when will this legislation take effect? Second, while in reality the 4% figure for rent increases was often higher, when tenants got their increase they knew the landlord was not allowed increase the rent by more than 4%. That was well understood. If all the Members of this House were asked what the current rate of inflation was, they might not be able to pin it down. It is important we communicate with tenants and make that figure easily understandable.
Perhaps there should be an annual publication of it and some element of an advertising or social media campaign around it would also be important to allow tenants to know what ballpark they are in. My fear would be that a well understood limit of 4%, albeit higher than what the Minister is proposing, might be replaced by a figure that is not well understood, and thereby landlords could slip increases that were higher than this legislation intends through the cracks. I welcome the great progress in this Bill, which will see people pay less of an increase than they otherwise would.
The 4% RPZs were a total failure. I do not doubt that this is an attempt to improve matters and hopefully it will do so somewhat. I want to flag that there should be no rent increases for tenants in the present situation or any time in the foreseeable future, particularly in the areas most affected by completely unaffordable rents. That is where the RPZs are located. Against the background of rents of €2,000, €2,500 and €3,000 per month and even more for pretty basic private rented accommodation, even rent increases that are less than 4% and linked to the HICP are not acceptable.
I will not vote against the Bill because it is a marginal improvement on the current situation but I want to flag that we will still find ourselves in a significant crisis. Let us not forget that the inability of people to find affordable rental accommodation is directly contributing to the homelessness crisis.
It may be of interest to the Minister to note some encounters I had. They are straws in the wind. When I was walking into Leinster House this morning, I was randomly stopped by two people. The first one was somebody who was outraged about the stamp duty issue and the second one was a building worker who said that he was in a place where he was paying about €500 or €600 per month in rent, which was manageable, but that he had to leave that place. He had started looking around for places to rent and he could not find anything for a single individual that was less than €2,000, which is completely unpayable. This Bill will not address that. Does the Minister have a plan to deal with that fact in the short term?
We addressed it in the affordable housing Bill.
That will not deal with it in the short term. I have mentioned the St. Helen's Court residents on multiple occasions to the Minister, the previous Minister and probably the Minister before that. They are banjaxed. They are waiting for the vulture fund that has successfully evicted them en masse from an apartment complex and they are overholding because the eviction date has passed. They have nowhere to go, they are vigorously looking around and they cannot find anything even remotely close to being within HAP limits or their income limits. Their landlord has evicted them because it wants to increase the rents. They were all paying roughly €1,000 per month and the previous vulture fund tried, before the RPZs came in, to increase their rent by 60%. It has used various mechanisms to try to get them out over the last four years and it has finally succeeded. These people now have nowhere to go and to me that is unacceptable. If they are waiting for the vulture fund to seek an enforcement order on the RTB adjudication, they will be in the District Court, the judge will tell them they are out and the council will say it has nothing for them. I ask myself what we will do about this. Given that situation, we should have a complete ban on evictions until we can address that. If the Minister says his affordable housing scheme will sort it out for them he should ban evictions until it does. The problem is that in the immediate term, that building worker I met on the street and those people in St. Helen's Court simply cannot find affordable rental accommodation. They are working people and they may be in homeless services in a few weeks because of that fact.
I would be interested to hear if the Minister has any view on another matter. Along with Deputies Ó Broin and Cian O'Callaghan, I took part in a debate with thejournal.ie the other day about housing policy and it had an expert group that was meeting beforehand. Those experts were recommending that there should be maximum rents based on square meterage and this is in line with People Before Profit policy. That happens in other countries and that is what should happen. Rent boards of local authorities should simply inspect any properties that are being put up for rent in their area and they should state what the maximum that can be charged for it is. Roughly speaking, those ceilings on what can be charged should be aligned to what is affordable for people on modest and average incomes. There can be exceptions around that but that should be the broad principle. That is what is necessary.
I accept that this is an effort to try to improve things but it will not deal with the rental crisis or the homelessness that is flowing from same. It should deal with that. The Minister has often said that he wants to stop people going into homelessness. I can promise him that they will continue to go into homelessness until we address that, and for the moment at least, ban evictions that are no-fault or economic evictions.
I want to be clear on why we put in the amendment because I want it on the record. We tabled the amendment because of the fact that the RPZ legislation was based on the electoral areas. I mention two areas in particular - Carrigaline and somewhere in Meath. One half of the Main Street in Carrigaline will be in an RPZ and the other half will not because of the redrawing of the boundaries. That is not intended to be a loophole or anything but we wanted to flag it. The bonus in this, which was probably not intended, is that we have given the Minister the extra power to make the decision on the basis that the electoral boundary cannot be split in two, with one half of a town exempt from RPZs and the other facing high rents. I thank the Minister for his patience today. It is more about inclusion than exclusion when it comes to the RPZs.
I thank Deputy Buckley for his amendment. I have addressed the Government amendments I have brought forward but I want to deal with a number of the questions that have been asked. The issue of Carrigaline has been brought to my attention by the Deputy, by my colleague, the Minister for Public Expenditure and Reform, Deputy Michael McGrath, and by others. We will have an opportunity to deal with this in the autumn. This is the fifth tenancy Bill I have brought forward within a year and in fairness to all Members, most of them agreed to the Bills unanimously and they were supported by all parties and Independents, which is good. We need to strengthen the rights of our tenants and strengthen our tenancy market. Within this Bill are significant changes to deposits, with maximum deposits to the value of two months and that is something we need to do. There will be a maximum of one month's advance one month of a deposit. I mention student rents and the notice period students would have to give. These changes would apply to all tenants. I also mention the extension of the eviction and rent increase ban for those most acutely affected by the Covid pandemic up to January next year.
In response to a number of questions on when this will happen, I emphasise that there is an urgency with this. Should the Bill pass this evening, which we hope it will, it goes to the other pillar of the Oireachtas, which is our Uachtarán.
I would imagine the Bill will be enacted as expeditiously as possible but I cannot speak for the President. We want this Bill in action as soon as is legally possible. Once the Bill passes this House, it will go to the Áras.
Deputies O'Callaghan and Ó Broin have raised an issue with regard to inflation and the harmonised index of consumer prices, HICP. They said we need to watch it, which we do. Over the past three years, we have seen an average of a 0.73% increase in the HICP but, of late, that figure is approximately 1.9%. That has happened for a number of reasons, including Covid-19, Brexit, the blockage in the Suez Canal and other things. I will monitor that. I needed to bring in something relatively quickly that can be independently verified. That is what we have done. The Deputies will see within the Bill and in my response to the amendments that I have left open the option to look at other indices as well. That will provide the basis for me should we need to put in another cap.
These are good steps towards comprehensive change and they build on some of the other changes we have brought forward in previous Bills around flagging rent arrears at the very first stage they happen and other things such as that. We are intent on reducing rents for people. We have just brought in cost rental and it was passed by most here today. That is in place. We want to increase secure rentals.
The issue of tenancies of indefinite duration is still something which I intend to address. I am not sure whether all that work will be ready by the autumn but I hope to be able to advance it. There are many other good things we can do. I was not being facetious when I said the affordable Bill has some solutions for the rental sector that are not immediate but will build a cost renal system. That is important. A number of things are going to work together.
I have addressed Deputy Buckley's amendment. There will be an opportunity in the autumn to look at a potentially better system of doing this. I do not mind saying that I would like to see a rental control system for the private rental market that is fair and operates throughout the country. We can look to continental Europe to derive some of the better examples of how we can do that. I have been conscious to ensure anything I have done up to now has been proportionate, particularly considering we have been through a pandemic. I also recognise the fact we have lost quite a lot of stock in this space. When that happens, we see homeless numbers increase. Those numbers have, thankfully, continued to decrease of late. That is not being complacent about it. I have a particular focus on ensuring we keep driving down homelessness.
I very much appreciate the constructive nature of my colleagues' engagement on this important legislation. We have moved it as a matter of urgency through the Seanad and the Dáil. We had a good debate in the Seanad and another here. These are some of the amendments that have come forward. I hope I have addressed all of the questions that have been asked me of me. We will have to keep the inflation piece under review and look at other indices. We will be coming back in the autumn with a more comprehensive piece to add to the five pieces of rental legislation that I, as Minister, and the Government have brought forward in a short time. That legislation contains significant changes that have strengthened and enhanced tenants' rights. We are now reducing rents. Only a few weeks ago, Members of the Opposition rightly raised the issue of the 8% increases and those increases will not pertain with the passing into law of this legislation. We do not want to see that. Rents are high enough and too high in many areas. That is why linking rents to the HICP, which is effectively linking them to inflation, is the fairest way of doing that.