General Scheme of the Residential Tenancies (Amendment) Bill 2018: Discussion (Resumed)

This is our second session of pre-legislative scrutiny of the General Scheme of the Residential Tenancies (Amendment) Bill 2018. On behalf of the joint committee I welcome from Threshold, Mr. John-Mark McCafferty and Mr. Gavin Elliott; from the Irish Property Owners Association, Mr. Tom O'Brien and Ms Margaret McCormick and from the Union of Students in Ireland, Mr. Michael Kerrigan and Ms Amy Kelly. As previously agreed by members, we will not hear an opening statement from the witnesses as the submissions from the witnesses have been read by members in advance of this meeting. Instead, we will go straight to questions from members.

Before we begin, I wish to draw the attention of witnesses to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, they are protected by absolute privilege in respect of the evidence they are to give to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given. They are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. 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 Houses or an official, either by name or in such a way as to make him or her identifiable.

I thank the witnesses for the submissions they sent in earlier and for appearing before the joint committee today. A number of Deputies on the committee had indicated to the Minister for Housing, Planning and Local Government, when he brought the heads of the Bill before us, that we were mindful to support and to assist him in trying to get the legislation through before the end of the session. However, we still felt it was important to bring in a range of witnesses to express their view. The Residential Tenancies Board, RTB, appeared before us earlier in the week.

I request the witnesses to record their key concerns with the legislation or suggestions of which we should be mindful in terms of getting the detail of what is being proposed in the heads of the Bill correct. At the centre of the Bill is the two civil sanctions for breaches of the rent pressure zones and the non-registration of tenancies. When the representatives from the Residential Tenancies Board were before us, one of their points was that while they welcome these additional policing powers, they have a problem with data because while people register their tenancies they do not necessarily update that information with the RTB if there is no subsequent Part 4 tenancy. Therefore, the board's ability to police, even with the new legislative framework, will be dependent on having a lot of good quality data. The RTB suggested as an additional amendment to the Bill, an annual registration but not necessarily with the current registration fee for a tenancy. If landlords were required to register the tenancy each year, that would mean the RTB would have up-to-date information on the tenancy, the rent and so on, from which it could extrapolate on whether there were potential breaches in certain areas. Do people think that is a good idea? Do people think it would be a good idea but in certain contexts? I am thinking in particular of the representatives from the Irish Property Owners Association who represent the landlords and how they would see that pan out.

The other issue we discussed was student rent and we wanted representatives of the USI to appear because there has been concern recently about certain student rents. I did a recent radio interview with a property agent from Galway who was arguing strongly for legal clarity on whether student licences are covered under the Residential Tenancies Act 2004. It is almost like some landlords are using the ambiguity to undercut others. I am interested in whether people think this is an opportunity to deal with that matter. Representatives of the RTB were clear when they came before the committee in indicating that student licences are included under the terms of the Act. They were explicit about that and said they were always of that view. They encouraged students to contest cases if they felt landlords were in breach of this. I am interested in people's views on that.

We are not looking to overly burden this legislation but there is an opportunity to revisit some matters, including the Focus Ireland amendment. Too many families have been issued with vacant possession notices to quit. That is continually driving the numbers of families presenting as homeless. Is this an opportune time to deal with such an issue? We will have a further opportunity later in the year to come back to other matters related to the Residential Tenancies Act but some of us are trying to establish whether one or two additions to this Bill such as the clarification on student accommodation or measures to help prevent family homelessness might be worth considering.

Mr. Tom O'Brien

I thank the Deputy and I note his opening comments on the acceptance by the wider constituency of members of this forum, and that they have no issue with and accept the terms of the Bill. There might be disappointment that the Deputy is the only member who has taken the time to attend and listen to our views. The Deputy first dealt with rent control measures, which are at the heart of this. We are disappointed but not surprised by the provisions in the proposed Bill. The wording of the legislation is extremely one-sided. Everything seems to be captured with respect to sanctions and fines for landlords who breach the legislation but there is not much about tenants who default or do not pay rent. There is nothing in there to support or in any way acknowledge landlords who may have tenants in place since 2012 or 2013 sitting on rents that may be 40% or 50% below current market values. There is nothing to balance or address that matter. If one breaches the tax code and, for example, does not file a tax return, there is a sanction of €3,000. If a landlord overcharges rent by €50, the sanction could be up to €30,000. The proportionality of sanctions relative to the crime is completely out of sync with any other walk of life or business.

At the heart of this and all other legislation introduced since the downturn directed at the buy-to-let or property sector have been intervention and measures impacting on property owners. These include tax and general procedural matters but they have all come with a cost and burden to the property owner and, in most cases, with little opportunity to pass them on to a client, which is at odds with practice in many other businesses.

The legislation comes on the back of what is an unprecedented supply issue. There has been much focus on rent and on sanctions for, and control of, landlords because of the supply issue. The population is increasing and the economy is recovering but housing supply is decreasing. Independent evidence indicates that for every three properties sold in the buy-to-let sector, only one remains in the sector. Supply is going down but demand is going up. Regardless of this or any other Bill that is introduced, that will not change. There must be intervention and support aimed at people willing to invest in the property sector.

Investment in the property sector is not a quick process and one does not get in and out in a couple of years. There are substantial entry costs and one assumes substantial debt obligations. The returns are relatively low, taking into account that 53% of income goes on tax and there are mortgage repayments. On what basis do members feel landlords should take on an investment with a return of less than 5% before tax in circumstances where they not only have financial obligations but there is a legal framework that is difficult to follow unless they are practising solicitors or barristers. It is complicated and I wonder how or what the average investor with one or two properties - 92% of people are in that bracket - will make of this legislation in terms of compliance. One could quite unwittingly contravene the legislation, finding oneself in a serious position, facing criminal and financial sanctions that could lead to bankruptcy. I am interested in understanding the basis on which members feel the legislation will in any way address the supply problem. If they were considering investment in property, would they feel that stacks up on a financial basis? Would they be comfortable with the legal obligations that must be taken on? This is not big business and, in many cases, it amounts to a small personal pension plan. There are approximately 300,000 tenancies with only 6,000 are in dispute. It is not a business in which there is rampant disregard for the law. There are not so many disputes that we need a legal framework that is so complicated and that is unprecedented anywhere else in the world. It does not necessarily relate to this sector but Airbnb has stated that the regulations governing the short-term letting of property in Ireland are unprecedented not only in Europe but in the world. They are among the most serious and stringent rules that the company has come up against.

We have no regulations for short-term letting.

Mr. Tom O'Brien

No, but I refer to the proposed legislation.

There is no proposed legislation.

Mr. Tom O'Brien

There is.

We have suggestions.

Mr. Tom O'Brien

It is clear and its proposals mean one cannot rent out full units or do any more than 30 days.

I do not wish to pick a fight but none of those is in our committee recommendations.

Mr. Tom O'Brien

It is a matter of public record. The Minister has made public statements about it and listed the conditions. One must have planning permission. I am not making this up and it is out there.

There is a need for planning permission at the moment.

Mr. Tom O'Brien

Members can look it up. There are statements in the public domain about what is coming down the track. The chief executive of Airbnb worldwide has commented on it. It is not something we are making up.

I will send Mr. O'Brien our report, which is different from what he has mentioned.

Mr. Tom O'Brien

I am interested in understanding where members believe the incentive is to invest in property in the circumstances I described. There is the matter of financial returns and legal obligations to be taken on. I understand a political agenda is driving this but, nevertheless, the problem is greater than politics. People face sanctions and penalties for renting out a one-bedroom apartment. If they rent it at €1,050 when they are meant to rent it at €1,020, they face a fine of €30,000. There needs to be a reasonable and proportionate basis to what we are considering. If everybody is honest around the room, they would admit politics rather than economics or need is driving this. We would like to bring reason to the debate.

We would like clarity on rent control and caps, particularly as they relate to the imbalance between properties that are below the market rate and those being newly brought to the market. Most of the properties newly brought to the market are from REITs, which do not pay tax. Investors such as us pay 53% tax on our received rent but we cannot increase that to market value. The REITs can buy new stock and they do not pay income tax. They can rent at the full market rate and we would like that imbalance addressed. There are people who were good to tenants in the downturn and did not increase rents when the market increased, although they could have. They may have wanted to look after a good tenant in that way. We have many examples of that, although they will never hit the media. Those people need redress under this legislation.

We would also like clarification on the definition of when and how one can escape rent cap measures by refurbishing a property. It is currently a fudge.

It seems that one cannot avoid the rent cap without insulating one's entire house and building an extension, even though one could transform an apartment for €10,000 or €15,000 and make it a more enjoyable residence for a tenant. However, under the current definition it is hard to see how or if that would allow a landlord to avoid the rent cap. We would like clarity and some detail on that issue rather than a blanket fudge.

We seek clarity on the termination of tenancies. A landlord could unwittingly err in a notification to a tenant at the end of a four-year tenancy and be stuck with an additional six years because of a technical error on the notice or it not being in the prescribed format even though the intention and substance of what was done was in order.

We would like rent arrears to be addressed. We have numerous examples of people who have taken disputes to the RTB on over-holding and rent arrears. The tenant can appeal the decision and continue not paying rent, knowing that when he or she eventually has to leave at the end of that process, he or she will not be pursued for the rent because the RTB does not have the funds to do so and, even if it did, the tenant will not have the rent anyway. We would like a fair acknowledgement that if landlords have to go through the elongated process to have a person not paying rent removed from a property that, as in any other commercial dispute, there would be a requirement of security for costs whereby a tenant could not appeal a notice of removal for not paying rent if he or she did not lodge the rent in court. A tenant would have to lodge the rent with the RTB prior to disputing the case in order that the board has the ability to compensate the landlord should the tenant lose the case. It is only fair that if one takes a case in any aspect of business, one is required to show that one is good for damages in the event that one loses, and that should be the case in this regard.

Overall, we are disappointed but not surprised by the Bill, which is one-sided. I am a little concerned by Deputy Ó Broin's opening comments that several members support the legislation and are seeking to move it to approval. I wonder why we were invited to the committee if that is the case. On the basis that supply is at the heart of this issue and that people are leaving the market because of the financial and legal obligations that are now upon them, I urge a rethink in favour of property owners.

Mr. Michael Kerrigan

The majority of our concerns relate to student accommodation, which is the responsibility of several Departments. Mr. O'Brien mentioned support for people looking to get into the market and invest in the market. Higher education institutes are eager to get into the market. We have been waiting years for a borrowing framework for institutes of technology that seems no closer to being delivered. A grant for higher education institutions to invest in student accommodation is needed and it was recommended in a 2015 HEA report. The student accommodation strategy launched last summer identified an excess demand for 23,500 beds in Ireland last summer, which is to increase to almost 26,000 next year and will still be at almost 21,000 in 2024. Solving the student accommodation crisis will go a long way to solving the accommodation crisis in the private rented sector. Recent international research indicates that students who live close to or on campus have higher rates of retention and scores on development scales than commuter students.

Higher education institutions have come to rely heavily on income from international student fees, particularly in the past five years. Ireland is expected to have another 37,000 international students by 2020. Those students spend significantly in the economy and there is associated income from their friends and family who visit as tourists. However, the availability of on-campus accommodation is a prerequisite for attracting international students.

There is significant demand for bed spaces for students with disabilities for various reasons. The Minister of State with responsibility for higher education, Deputy Mitchell O'Connor, stated in the Dáil a number of weeks ago that price is a function of supply and demand, but with the projected excess demand in 2024, we cannot continue to wait for supply to meet demand. We can wait no longer for a borrowing model for institutes of technology. Room prices have risen to more than €1,000 per month. We cannot be content to try to minimise the increases but, rather, we must see prices decreasing.

The main issue we have with the Bill is not what is in it but, rather, what is missing. We have raised concerns with the committee over the lack of regulation for purpose-built student accommodation. Deputy Ó Broin mentioned that the RTB addressed issue that before the committee. Students at NUI Galway have made several complaints and we look forward to hearing the outcome of those complaints.

For several years, USI, along with the Departments of Education and Skills and Housing, Planning and Local Government, ran a homes for study campaign aimed at getting homeowners with spare rooms to rent them to students. Such homeowners can earn up to €14,000 a year tax free through the scheme. We hope to increase that number by €4,000 by the end of 2019, which we hope will alleviate some of the demand on student accommodation. However, the Residential Tenancies Act 2004 outlines that it does not apply to a dwelling in which the landlord resides, which has caused significant issues for students living in digs-style accommodation that we encourage them to take on. Such landlords are not obliged to provide a rent book or statement of paid rent and there is no legal requirement for the accommodation to meet minimum physical standards. Notice of termination is decided upon by the landlord and, although it is supposed to be reasonable, that is not defined. The landlord is not obliged to register with the RTB, while the student cannot use the board's dispute resolution service if a disagreement arises and is not protected under the Equal Status Acts, which prohibit discrimination on the basis of gender, civil or family status, age, race, religion, disability, sexual orientation or membership of the Traveller community. We would like this Bill or another to address the issue of protecting students in purpose-built accommodation under the Residential Tenancies Act.

Mr. Gavin Elliott

Overall, we welcome the Bill. It promises to strengthen the rent pressure zone legislation, will increase tenants' rights and provide a degree of rent transparency although it is certainly not everything for which we asked . We have some concerns and there are some provisions which we would like amended.

I agree with Mr. O'Brien on a couple of matters. The first is that this is another amendment to incredibly complex legislation. It has long gone beyond the stage where a member of the public can read the legislation and understand what he or she is supposed to do to follow the law. It is getting to the stage where not only must one be a solicitor or barrister to navigate the legislation, but also one who specialises in residential tenancies law. Two amending Bills this year will add to that complexity. We may be asking for the moon but we would like the Department to consider redrafting and restating the entire Act. That would take time but it would be well worth doing. Perhaps the committee could pressure the Department in that regard.

We echo the concerns on resourcing and funding outlined by some members when representatives of the RTB appeared before the committee. If the new sanctions regime is to succeed, the board must be properly resourced. There have been intermittent resourcing issues for a long time and we are a little concerned that sufficient money will not be allocated. We support the sanctions regime. It is currently relatively limited and only applies to certain scenarios.

In response to Mr. O'Brien's comments on proportionality, there is a potential fine of a maximum of €30,000, which is divided into €15,000 in costs and €15,000 in fines. It is limited to that amount to keep it within the jurisdiction of the District Court. Proportionality is built into the Bill because it is an administrative sanction and must be so, as it would not be constitutional otherwise. The proportionality is clearly spelled out even in the heads of the Bill.

We wish to raise a wider concern about the interaction between the new sanctions regime and the dispute resolution mechanism of the RTB. For example, what happens if an investigation concludes with the landlord being fined but there has also been a breach of a tenant's rights?

Can a tenant then bring a dispute on the back of that? It would be a strange scenario if a tenant could walk into the RTB and lodge a dispute with a report or sanction from the RTB in his hand and say he or she now wants compensation because the RTB sanctioned the landlord. We need a little bit more clarity on how they interact.

I will refer to something the Minister has spoken about in the past as a potential option. That is a legal definition in the Act of "likely to constitute substantial change" and "substantial change of nature". They are very important phrases for the purposes of the rent pressure zones and for evictions. A legal definition, although difficult, has to be tackled.

It is a more technical point but we very strongly welcome the changes in head 6 to section 41 of the 2004 Act. It is very welcome housekeeping in terms of the Residential Tenancies Act. I do not think anyone would argue that the current interpretation of the RTB is the same as the intended interpretation of the Oireachtas when it passed the Bill, which is that a further Part 4 tenancy is a new tenancy. The language used in the Bill does not really reflect the intention of the Bill. It is important housekeeping.

There is a question for the committee but also for Members of the Oireachtas more generally. There is a concern about the wording in head 9 on the notice periods, particularly the 28-day notice period, for a notice that is found to be invalid where the time period has expired. The wording in the heads of the Bill could result in an unintended consequence in cases where a landlord deliberately issues a notice of termination with one day given as a notice period which is found to be invalid and the notice period thereafter is 28 days. It is clear the intention is if a notice is deemed to be invalid for reasons other than incorrect notice period, when a dispute is lodged with the RTB and the notice period has expired the notice period will then be 28 days. That is not explicit in the way it is drafted. It would potentially leave a massive loophole in the legislation.

The rent register is not everything we asked for. It will not address the problem we raised. The RTB has acknowledged that. It is really not rent transparency. I think it has said it is a step along the way. We have no particular issue with the proposals except possibly to warn of the potential for tenants to be given only enough information to be suspicious but not enough information to demonstrate their rent is lawful or unlawful. A situation could arise where a person goes to an advocacy organisation or a Deputy and asks them what to do because he or she knows the rent on the street and he or she is paying considerably more than the rent on the street. The best advice in that scenario might be to lodge a dispute with the RTB. It can be done online and it costs €25. The landlord will then have to prove the rent is lawful. It could lead to the unintended consequence of the RTB responding to speculative cases because people are not being given enough information to know whether the rent is right or wrong. They are being given just enough information to know it might be right or wrong, in which case it could lead to more cases before the RTB. From a resourcing perspective it is an issue for the Government but, more generally, it is something no one would really want to see happen.

On the issue of student accommodation, we agree with everything that has been said by the USI. We also echo what was said by the RTB. It is our belief that an awful lot of student accommodation agreements between landlords and students that are termed licences are actually tenancies. Clarity is required on the issue and we welcome the Bills from Sinn Féin and Fianna Fáil on that issue.

On the wider issue of licensees, it is a very complicated issue. There is an awful lot of very delicate balancing to be struck between the rights of homeowners, in some instances, and licensees. It is something we encourage the committee to have a look at in the medium term. It would require an awful lot of careful examination and it is probably appropriate for a committee such as this to examine. Beyond student accommodation, lodgers and people on the rent-a-room scheme are also licensees and have very few rights. The equality legislation, which does not necessarily cover residential tenancies, covers the provision of accommodation. In some instances the equality legislation would protect licensees from discrimination but not in every case, particularly where somebody is sharing his or her primary residence.

In terms of opportunities for amendments, I can direct the committee to our website which has lots of them. I will outline some of the smaller opportunities for amendment in this Bill. I am cognisant of the fact there is another one on the way. We would like to see a definition of rent to help navigate the RPZ rules. We would like to see clarity on things like service charges, parking charges and extra charges. We would like to see that tackled by a definition of rent so we have certainty about what rent means. We are harping on about it. Section 34(b) of the Residential Tenancies Act has no purpose anymore and should be deleted. It allows for evictions for no reason at the beginning of a new further Part 4 tenancy. Given that section 42 disappeared at the beginning of 2017, there does not seem to be any reasonable purpose for section 34(b).

We are quite exercised about the issue of receivership, given that 2,900 buy-to-let properties were included in the Ulster Bank sale and 4,000 in the PTSB sale and there may well be more coming along. That is an enormous number of individuals who are now in a very precarious position. There are an awful lot of landlords who are in a precarious position as well. We would like to see movement on that. I understand the Minister has indicated that something is coming along. However, it has been delayed considerably.

I will respond to some of the issues raised. We agree entirely that the tax treatment of landlords is something that needs to be looked at in detail. The tax treatment of landlords has to be rebalanced in their favour. They labour under a relatively unfair situation.

In terms of pursuing rent, the enforcement of determination orders is now dealt with in the District Court which is very welcome. It will help both tenants and landlords considerably in enforcing RTB determination orders. That is still to play out but we do not see any particular difficulties with it.

It is not everything we asked for. It will not solve problems in many cases but we do not have any particular issues other than the ones we have raised. It is dependent on the will of the RTB and the Minister in resourcing it.

Does Ms McCormick want to come back in?

Ms Margaret McCormick

There are quite a number of issues. It is amending legislation but it is not balanced. It is substantially in favour of tenants and is not balanced for landlords. It will sanction landlords on one side without dealing with the problem of rents that are substantially below market rent. That needs to be in the legislation. It needs to be added in to give any sort of balance. We are criminalising people who may have just one choice. The choice from their banks is to increase their income and payments. The market and the law are telling them they cannot do it even when they are substantially below market rent. If they do increase it, they are breaching legislation. If they increase the rent, they may keep their properties. These rents are below market rent. If they do not increase the rent, the banks will repossess. We have 22,000 buy-to-lets in arrears. We have a massive problem.

The other thing about the rent pressure zones is they do not take into account long leases. The market is looking for security and some landlords gave security and long leases including indefinite leases in some cases. RAS leases had requirements around when rent could be increased built into them.

Many of these leases are based in the initial legislation. They now have to comply with the rent pressure zone provision introduced in the new legislation. In some cases, rents can only be increased every three years. The law also sets specific timeframes for tenancies. The people who have provided the lengthy leases and the security of tenure we were looking for are the people who are substantially disadvantaged. The legislation needs to be amended to allow for an increase in rents that are substantially below market rent. This could be a once-off, or something a landlord could be allowed to do over a period of time. This must be done to make this legislation balanced.

On the technical problem around the termination of tenancies, I welcome that where a previous notice has been technically wrong this can now be rectified within 28 days. We have no problem with that, assuming the correct notice was given in the first instance, but we need to look at the problem around the first six months and at the end of tenancy. If a person wants to serve notice of termination of a tenancy he or she must do so before the tenancy ends and this must be done correctly. The legislation is really difficult in this regard. Barristers come to us for advice on it and solicitors also have difficulties with it. A landlord trying to negotiate it has severe difficulties. It is really easy to get it wrong. If a tenant does get it wrong, he or she cannot serve it again because a new tenancy will have come into play and for six years. It is really important that this be addressed in the legislation.

As stated earlier by my colleague in regard to rent arrears, there a are small number of tenants who, on signing a one year lease, are not paying a penny from start to finish. The law is allowing this. The law states that the rent must be paid during the tenancy but it also provides for an appeal. We need to provide in law that during the appeals process rent must continue be paid to the landlord or the RTB. Approximately 92% of landlords have less than three properties and 70% have only one. We are losing landlords and properties from the market because of this.

Mr. Tom O'Brien

On that point-----

I would like to bring in Deputy Barry at this point. I will call Mr. O'Brien again later.

I am happy to allow Mr. O'Brien to make his point.

Mr. Tom O'Brien

If it is a criminal offence to overcharge rent, why is not a criminal offence to not pay rent?

I take Mr. O'Brien's point.

I want to direct my questions to the representatives of the Union of Students in Ireland and Threshold. Before doing so, I would like to comment briefly on some of the issues that have been raised by the representatives of the IPOA. I congratulate the association on its gallant attempt to persuade the committee that landlords are one of the most oppressed groups in Irish society. The information and data provided to this committee and to Members as public representatives tells a different story. For example, we were recently informed that the average return on an investment in residential property in this State is 7.08%. When compared with 27 other European Union countries, not only is the return here higher than in any of those 27 countries, it is higher by some distance.

Reference was made to Airbnb. We would love to have more information on what is going on in this area but Airbnb does not share its data. Anecdotal evidence suggests that increasingly Airbnb is moving from an informal sharing arrangement between people, householders and so on to an opportunity that is making significant money for investors and speculators. Across Europe, in cities like Barcelona, Berlin, Paris and Amsterdam, regulation has been introduced but Ireland is lagging behind in this regard.

On refurbishment, I can cite a dozen or more examples of landlords in Cork city who have got around the rent pressure zone requirement by laying new carpets and painting the inside of a house. This practice is rampant. According to recent statistics from the Central Statistics Office rental income over the last few years, albeit before profit, has increased by more than €1 billion per annum. If the IPOA has an issue with that I suggest they take up with the Central Statistics Office. I have not been convinced that landlords are among the more downtrodden groups in Irish society. I do agree with the representatives of the IPOA that there is a political agenda here. Unfortunately, that political agenda is different to the one indicated. There is a political difficulty with the fact that 37% of the largest party in this Parliament and 33% of the second largest party are landlords. I am not suggesting that they act as a conscious group or lobby but their thinking is informed in significant measure by their vantage point within society and this is one of the reasons for the delay in introducing the legislation that is needed to protect the rights of tenants.

I will now move to questions. My first question is to the representatives of the Union of Students in Ireland. I was recently informed by a person involved in a student union in a college in Cork that she was aware of at least three students who study by day and sleep in their cars by night because they cannot afford the rents being asked by landlords in the vicinity of the college. The issue was taken up in the local media and it became a talking point for a day or two. Another issue that she raised with me, which I tried to highlight and I think is a more significant issue, is that bedrooms in at least 25 residences in the vicinity of the college have been partitioned off to cater for between nine and 15 students. She also said that the landlords had attempted to gain legal backing for this on the basis of it being hostel type accommodation. Many of these properties are owned by one landlord. By my calculation, there are close to 400 students in this situation.

Has that come across the USI's radar and, if so, and would Mr. Kerrigan like to comment?

The representatives of Threshold gave a very interesting presentation. Their points about some of the unintended consequences have been noted, particularly the point about the 28 days which the committee would do well to look at. The representatives of Threshold on the ground in Cork city will be familiar with this case. It relates to substantial refurbishment as grounds for issuing notices to quit. The Leeside apartments were purchased last year by a vulture fund. Notices to quit issued within a matter of days. It is not a question of applying a lick of paint or throwing down a few carpets; substantial refurbishment is indeed taking place here. The apartments have been turned into a de facto building site with Kango hammers while people are trying to live their lives, put children to sleep and so forth. Everybody knows that when the work is done the rents there will be substantially increased, possibly up to being doubled. Do the representatives of Threshold have a comment to make on such a scenario? What legislative changes would be appropriate to stop such profiteering at the expense of ordinary residents?

Mr. Tom O'Brien

It is refreshing to get the opportunity to address comments such as this because often we see in the media erroneous and irrelevant comments thrown out that have no basis. Deputy Barry's first point related to return. Return is a function of annual rent over capital value. That figure of 7%, which is high for Dublin, is a gross figure. Minimum financing costs on that investment are 5%, which brings it down to 2%. Tax is applied to the profit at a rate of 53% before account is taken of service charges, repairs, PRTB costs and LPT. Therefore it is a heavily negative return, not a positive return. That 7% is gross and before costs. While 7% sounds good in the media, the reality is that it is a negative.

I know the Deputy cited an example of somebody who applied a lick of paint to a property in Cork and got outside the rent cap. How did they get out of the rent cap? Did the RTB come out and approve that or was it something that was done outside the rules? The latter must be the case because a lick of paint would not qualify as refurbishment. It is nice to throw that anecdote out there and it sounds good. We represent compliant landlords. Our body does not have members who flout the rules. We hear about such landlords and we would sanction and admonish those who are flouting the rules. We do not hear those cases but I know the media pick up on them because it is a good story and it furthers the political agenda.

The Deputy threw out a figure of rents having increased by €1 billion. I would like to know what the pool of rent or total rent is. In 2010, rents reduced by 50% from where they had been. That is a matter of public record. I am a landlord and I can tell the Deputy it was 50%. When rents have increased by 50%, they have increased by 50% following a drop of 50%. While it sounds good again, the reality of it is different.

In addition, during the period in which rents increased, costs also increased. We had the introduction of the local property tax, more punitive tax measures and the application of the universal social charge to rental income. I do not know what planet people are living on, but if they believe landlords should invest in property and essentially offer a charitable service where they offer accommodation for less than market costs and make a loss, while generating additional taxes for the public good, that should be stated as public policy. We would then see a further reduction in the rent pool. Would Deputy Barry invest in property on the basis that he would not cover his costs and would operate at a deficit, but he would be acting in accordance with his conscience and offering a charitable service? That is how the system is working.

I am surprised at some of the comments from Threshold, whose core objective is to cater for its tenant base. That is an appropriate aim which I understand but the organisation is continually pushing against the landlord, driving an anti-landlord agenda and making things more difficult, costly and onerous for the landlord.

People do not rent property because they love it and they get enjoyment out of it. They do it because they are trying to provide for a pension. At some stage people will decide to invest in shares instead of investing in property. It is a dry investment and they get 5% or 6% per annum with none of this nonsense around regulation, being tripped up on technicalities, being taxed to the gills and having debt obligations. That is what is happening. We are seeing a shrinking in the property investor population. For every three properties sold, one is being rented out. In two years' time, the position will be even worse. We will have great regulations. Landlords will not be able to move without getting clearance from the RTB. The tax authorities will be all over them and the politicians will have dealt with them. However, we will not have any stock and that will create a bigger issue than the problem the country faces now.

The Deputy is correct in saying there is a political agenda, but all the political agenda has done is to drive down supply. If the real aim is to help tenants and decrease rents, the politicians are failing abysmally.

On the issue of Deputies being landlords, maybe they are; I do not know. However, that is not evident in any of the rules that have been introduced since 2010 or 2011. There is absolutely no landlord bias. I would have to say fair play to Deputies because if they are landlords, which is not evident, they have taken the hit.

The Deputy mentioned the Union of Students of Ireland. I do not where the media get these examples, but they always find the one case where a landlord has divided a house into 15 units. While it happens, every single business has rogue operators. That includes building, distribution, etc. The landlord business will never be an exception to that. By pulling out the exceptional case and drafting a series of laws and introducing costs to deal with the exception, if that is where we are going, that is fine, but it is bad legislation in that context.

Deputy Ó Broin and my colleagues from Threshold raised the issue of the resourcing of the Residential Tenancies Board. We would welcome an increase in resourcing because the system does not work for us, just as it does not work for tenants. Resourcing should not be increased at the expense of the landlord. If everybody in the room was being objective, we would all agree that the RTB is a tenant body and not a landlord body. We have been before the board of the RTB and if one looks at determinations and the issues that arise in the RTB, they show it is a very pro-tenant body. To the extent that resourcing needs to be ramped up in the RTB, it should not come at the expense of the landlord. I question whether the tenant should have an obligation to part-fund the registration fee. At the end of the day, the RTB's role is to protect the tenant's interest and the tenant surely should make a contribution to that fee.

We represent compliant landlords. We have regular meetings, many of which focus on educating the landlord. We accept this legislation is coming and it is onerous and complex. However, landlords need training; professionals would need training on this. Whether we streamline the legislation into one Act or otherwise, people need training. As a body that is trying to educate landlords and ensure we do not have the kinds of issues the legislation is designed to address, the IPOA should receive some degree of State funding - through the RTB or some other body - to facilitate training. This could involve RTB staff coming in to talk to our members. If we are trying to act on behalf of responsible and obedient landlords, operating in a very tough legislative and tax regime, surely funding could be provided to allow that training.

Mr. Michael Kerrigan

Deputy Barry made some comments on homeless students. The worst comment I heard in recent years also related to Cork. A mature student in UCC, who stayed in the university until late at night when it closed, would sleep under a bridge until it opened the following morning.

That case was not too dissimilar to those of the students mentioned.

We see that large numbers of students are living in small rooms throughout the country, especially in the major towns and cities, including Dublin, Cork, Galway and Maynooth, where there have been serious accommodation issues in recent years. Rogue landlords are in the minority, but they exist and simply because they are a minority does not mean we should do nothing about it. These rooms are not only being taken by students but also working professionals and foreign nationals because they are desperate. Students are working in precarious jobs and do not get the grants that were available five or six years ago. Students are desperate because grants have not increased in value, whereas the student contribution has increased by 375% since 2008 and the costs of accommodation have increased significantly.

We do not have enough purpose-built student accommodation. Students are being forced into the private rental sector where they are at a disadvantage straightaway. The vast majority of students seeking to rent do not take 12-month leases because they move home for the summer to work or whatever. When a student is looking for a nine-month lease at the start of the year, he or she is at a disadvantage. They must also look for a new lease every year, which means they pay a new rent and it is always at the higher rate of market rent. Students are always disadvantaged and cannot compete with young professionals or families.

Ms Amy Kelly

I wish to highlight several points. We can pick out one or two of the hard cases but there are also many hard cases on our front. I was vice president for welfare for two years in Galway-Mayo Institute of Technology Students Union and I saw the hard cases on a daily basis. They were common; it was not a question of dealing with one every couple of months. When asked about basic heating in the house, students were told it was a privilege for them to have heating. These are the issues that students in particular come up against when looking for rental accommodation.

If students have a concern during their tenancy, they are afraid to make a complaint because of fear of eviction and something else happening during their tenancy. This is particularly the case for digs-style accommodation, which is what we are before the committee to speak on today. Many students do not want to open their mouths because of fear of what may happen if an issue arises. Such accommodation is what we are relying on during the academic year. We are in June and many leaving certificate students are doing the leaving certificate. They are not thinking about accommodation, but others have been thinking about it since they started the process of choosing a college course. This is because the media has been reporting, rightly, that most purpose-built student accommodation is 80% or 90% booked out with a small percentage reserved for incoming first-year students. That is a concerning statistic. There is a heavy reliance on digs.

The issue is not one of changing legislation but of introducing legislation for digs-style accommodation because there is currently no protection for the tenant. The law is completely in favour of landlords. The terms and conditions of a tenancy in digs-style accommodation is at the landlord's discretion. I will offer some examples from my time. We think of digs-style accommodation as being close by or across the road from the campus at which the student is studying. During my time in Galway-Mayo Institute of Technology we had students based in the Dublin Road campus or the Cluain Mhuire campus who were living in accommodation as far away as Claregalway or Athenry. They had to rely on poor public transportation because they were coming from other parts of the country. That was as close as they could get to their campus.

There are issues with facilities. Usually in digs-style accommodation facilities are completely at the discretion of the landlord. Students may not even be able to use the kettle in the house. They may only have the facility of the bedroom and many are not allowed to have even one visitor to the property. It is solely a matter of sleeping in the accommodation and then leaving. Some students may be told they can have food. I have met students who were very upset because the food they were being provided with was substandard, for example, chicken nuggets and chips and the cheapest of cheap food. If these students have a disagreement with their landlord which they want to resolve, they have nowhere to go to resolve it, even if they have contracts or a written agreement.

August is the busiest time for incoming students. During my final summer in GMIT students union people who were willing to rent out digs-style accommodation were coming to our reception desk. A student would come at the same time and we would introduce the parties there and then. The accommodation was not even getting to the stage of being advertised publicly. That is how much of a crisis we were in. We were getting people in at the same time and meeting them there and then, such was the demand.

Students are not being taken seriously in the rental market, especially with regard to tenants' rights. There are cases in which landlords are not listening to students. As officers throughout the country, we are fighting on behalf of students with Threshold. I was in frequent contact with Threshold during my time. The charity was very helpful with advice. The situation for students is not right and needs to change, in particular with regard to digs-style accommodation. We need to fix this problem.

Ms Margaret McCormick

The supply of homes is the responsibility of the State, not the private rental sector. The sector is part of the solution but it is not the cause of homelessness. Investors invest in the sector and its role is to provide homes. However, the sector is not the reason we have a homeless problem. It is the responsibility of the State to ensure adequate homes for its people.

We seem to be in the position where the private rental sector is now seen as the solution for everything. As a result of the large amount of legislation and the different tax treatments, it is almost impossible for a landlord to navigate the sector, between housing standards, the Residential Tenancies Act and all the legislation that has been introduced to deal with the sector. So much is involved that instead of encouraging people to enter the private rental sector, we are discouraging them from doing so.

The nature of the market is that only 10,000 accommodation units are provided by real estate investment trusts and similar companies. Some 92% of landlords have fewer than three properties. We have legislated out of all proportion for normal investors, given that 70% of landlords own one property. We are back to the position where every time some problem arises in the sector, it is brought back to the landlord being responsible, but that is not the case. I will accept that, like in every walk of life, there are bad landlords and tenants, but that is not reflected in legislation.

The rental sector must be made far simpler but many aspects of this Bill make it far more complicated. Issues will arise that will make it far more difficult. Consideration is being given to the issue of extended tenancy. Previously, a tenancy had a start and a finish under the legislation. Now, a tenancy is be extended. I do not know how anyone managing a property can get around this and understand it. In addition, landlords are to be sanctioned if they do something wrong. Market rent is no longer market rent because we have rent pressure zones. The legal definition no longer applies to market rent. Every time the legislation is changed there are unintended consequences. The number of tenancies registered with the Residential Tenancies Board has declined by 7,000 and we know we have far fewer landlords available now.

We knew when bedsits were being removed that it would create a problem and we saw landlords exiting the market. We can see landlords exiting the market now. We now have an exit strategy, especially for older landlords. They are the very people who bought properties and rented them out as a form of pension arrangement. They cannot navigate the sector and their rents are substantially below market rates. We have to stop and try to be fair to the sector. We need to be fair to both tenants and landlords.

Does Mr. Elliot wish to comment?

Mr. Gavin Elliott

I will address the point Deputy Barry made on the case in Cork. I am aware of the issues in the Leeside apartments. I know both Deputy Barry and Councillor Ryan have been active in supporting the tenants and Threshold in Cork has been assisting. I do not want to talk about that case in particular since the adjudicator has not come back yet and it may be appealed. On the issue of substantial refurbishment and change, we have a legislative regime which envisages three different levels of landlord intervention in a property. In ascending order, there is routine maintenance, substantial refurbishment, which means a notice of termination can be issued, and a substantial change in the nature.

At the very least, we need to put those three levels on a legislative footing and give some sort of definition of what those levels are. It is a matter for the committee and the Oireachtas to decide whether the intended purpose of the substantial change in the nature of exemption has succeeded, in the first instance, and whether it is worth a candle in respect of the abuse of that particular section. The intention was to not allow a situation where landlords simply allowed apartments or houses to fall into deterioration because they could not raise the rents on them more than 4%. It is a question, again, that we need more statistics to address and it is for the Oireachtas to decide whether it should remain in the legislation.

Mr. John-Mark McCafferty

I have a general comment because we have given detailed specific comments. We operate on the basis of what families and individuals come to us in the context of the housing market, so we witness the acute situations many people find themselves in. We respond with advice, information and advocacy - that is with both a small "a" at the Residential Tenancies Board and a big "A" in this type of work influencing policy. That is our agenda and it is based on fairness, on responding to the housing market as we see it and on a mission to prevent families and individuals from becoming homeless, as many now are. We stand in that breach between people holding on to or losing their home. That is our agenda. I want to make that response in respect of the comments made this morning.

Does Mr. O'Brien want to come back in?

Mr. Tom O'Brien

I will address that point and I accept it. When people find themselves in those circumstances, however, it is up to the State to cater for them - it is not up to private individuals to do it at their own cost. Reverting to the issue of substantial refurbishment, it costs about €15,000 to do a basic refurbishment of a two bedroom apartment. The difference in enjoyment of that apartment that a tenant will have pre and post the refurbishment scenario is substantial. I am interested in knowing why Deputy Barry feels the landlord should not be able to charge more for that apartment on the basis that he or she has substantially improved the quality of the living environment.

I have a couple of points for Ms McCormick and Mr. O'Brien. I am genuinely not anti-landlord. I am probably one of the few Deputies living in the private rental sector who likes living there. In most of the debates here and in most of my public commentary, we acknowledge that the vast majority of landlords are compliant and provide a good service. We want to see a restructured private rental sector in the future. That would be good for tenants because it would give them security of rent and tenure and also good for the landlords who make that investment because they could make a fair return. I repeatedly say that publicly and here as well.

I accept the sincerity of the witnesses' points and I ask them to at least consider the sincerity of ours. Ours is not a political agenda. We have two problems. We have far too many accidental landlords who got into landlordism as a passive investment but it is not a passive investment, it is an active one. Many people took on substantial liabilities when they got into that situation. I accept that people who bought a single investment property at the height of the boom are now in difficult financial circumstances. That is a real social and economic problem. Our other problem is that rents are rising far too high for working families - not for social housing tenants and I will come to that in a second.

Looking at the RTB rental index published yesterday, it was 7.8% in Dublin in the last 12 months and 7.1% overall. People's wages have not gone up that much. I accept that a category of landlords is unable to make a return of any kind. The flip side of that is a growing number of families, particularly working families, cannot afford the asking rents of €1,800 to €2,000 to €2,200. They are not exceptional cases, they are standard. We have to have a conversation at some point where, instead of us butting heads on some of the substantive issues, we have to be able to sit down and work out how we fix some of that. We are not going to agree on it all but how do we fix some of it?

Ms McCormick and Mr. O'Brien are here because those of us on the committee take our job seriously. We are open to being persuaded that we deal with some of the points raised in the detail of how the legislation is drafted, and I think we can do that, or we are open to being convinced that this is the wrong thing to do or that there are other things that could be put in, either now or in the next Bill. The witnesses should not think that we invite them in here and do not listen. We genuinely do and I am going to go through a couple of the points where I agree with them. I want to highlight first, however, some of the points where I do not necessarily disagree but I do take a slightly different view.

Part of the problem with our public debate is that we think of landlords as a homogenous group and they are not. There are single property landlords who have properties from before the boom and who do not have mortgages, or do not have significant mortgages, and they are making significant profit. A large number of landlords, accidental and deliberate, bought properties during the boom and they are the people that the witnesses were talking about. In many instances, they are making a loss on their rental properties and I accept that. Some of them are in mortgage difficulty with their primary residences as well. We also have many professional landlords, who are medium-sized operators, who are making a profit.

The witnesses are right, and Deputy Barry and I raise this regularly, the new institutional investors - the real estate investment trust, REITs, and the capital funds - are getting disproportionate treatment in respect of tax. They have no tax on the rent roll, no tax on capital gains and, if they are structured properly, from their point of view, no dividend withholding tax. The playing field is not level and there is no dispute on that. Many of us spend much time arguing against all of that because it creates all sorts of difficulties.

There is a heavy level of State subsidy going into the rental sector. I refer, for example, to tax relief on the interest portions of mortgages. That is a significant cost lost to the State annually. It is also increasing - it increased from the last budget to this one and it will increase again. The Government wants to restore it to 100% and it is currently available at 100% to people on the housing assistant payment, HAP. I am not saying that to offset the difficulties that the witnesses outlined. All I am saying is that it is legitimate, as a landlord representative organisation, to raise local property tax, LPT, and other rising costs but there are also increasing tax deductions available. Over 100,000 rental tenancies are subsidised by the State, some at very increasing costs. Homeless HAP is now paying out €1,800 to €1,900 for families. Standard HAP is close to the market rent in large parts of Dublin. It is important that we put all of those facts out there. There is much subsidising of the private rental sector and that has to be acknowledged.

On short-term lets, I will send the document to the witnesses to let them know what we are proposing because this committee put much work and spent a lot of time looking at this issue. We think the Minister is moving in this direction. We are not proposing to close down short-term letting and the regulatory regime that we unanimously agreed is less onerous than Barcelona, Madrid and New York. It is closer to what exists in London. We think it is a fair set of proposals. Airbnb has a particular business model and an aggressive lobbying strategy and that is its right. If the witnesses look at our proposals, they will see that they are different from what they may have read in the newspapers. They are certainly not restrictive in any way. I agree with the witnesses that we need training for landlords. If we think about it, a taxi driver has more regulatory and training requirements before they can get into a taxi and drive somebody around. The home I live in as a tenant, however, has very little in respect of professional support and training requirements for landlords.

I would therefore be strongly in support of that and of additional resourcing through the RTB and to representative organisations to help landlords to professionalise. I think Threshold has been calling for this for years, as have others. I agree with Ms McCormick about the now confusing relationship between HAP, RAS and long-term leasing. An increasing number of RAS landlords are exiting the scheme completely because of what they see as disadvantageous treatment. Many of us have raised this in the Dáil, in committee and with the Department privately to see how we might resolve it. Again, we do not always disagree with the representatives of property owners but there are areas where we are in agreement.

One of the points the RTB made very clearly was that it is not in favour of criminal sanctions. It thinks it is the wrong route to take and wants a civil sanction regime. The RTB made the point very clearly that it wants to be able to distinguish between an administrative error or genuine mistake and vexatious breaches of the rules. This is why I think Mr. Elliott's point about the sliding scale of sanctions is absolutely right. It is not the case, and it would be wrong of us as a committee to suggest, that if someone makes a small error, he or she is liable for a €30,000 fine. That is not the intention of the Bill, and we will certainly not suggest that when we get into the detail of it. However, the purpose of enforcement is to ensure that, no matter how many people breach the rules, the sanction for doing so is too great for them even to think about it. This is not only beneficial to the tenant; it is actually beneficial to the vast majority of landlords, who are trying to do a good job. If 1%, 5% or 10% of landlords break all the rules and undercut the law-abiding landlords, it is not good for the landlords either. I therefore encourage the Irish Property Owners Association to consider that some of this regulation, if done right, will actually be beneficial to the members it represents because it levels the playing field between that percentage of landlords, whatever it is - we do not know - who break the rules and those who abide by the law.

I wish to make just a few quick points before we finish.

We are running out of time now.

Does Deputy Barry wish to come back in as well?

I want to finish because this is an important engagement, and we would like to see more of it. The reason we are supportive of this in principle is that if one looks at what is happening with the rent index, it is clear that a very large number of landlords are either availing of exemptions, correctly or incorrectly, or breaking the rules, and it cannot be left to tenants, particularly vulnerable tenants, to police the rules. Therefore, all I ask of the representatives of the Irish Property Owners Association is to engage with us, when the Bill is published and they see the final detail of it, to tease out some of the other points it raises. We are open to such engagement. However, the rising level of rents is not sustainable for the people paying those rents. If we can have a conversation about how we might address the concerns of landlords who are in difficulty, who I believe are in the minority, and if we level the playing field between the REITs and investment trusts, I think there will be things we can work on. Likewise, the length of time it takes to deal with a vexatious tenant is not acceptable, and I do not think anyone here would argue otherwise. If the representatives of the Irish Property Owners Association want to have a serious conversation about this, many of us are more than open to it because the process does not work for good tenants or good landlords either.

Despite the fact that we support the Bill, some things the representatives have said have given us food for thought. However, just as they think we are all anti-landlord, if they were to engage in a slightly different way with us, I think they would be surprised that stabilisation of the rental sector in the interests of tenants and landlords is actually what most of us want. I think this could be achieved by a more constructive dialogue.

I do not intend to get into a long back-and-forth with the representatives of the Irish Property Owners Association.

We do not have time to get into a long back-and-forth, thank God.

Perhaps we can continue the discussion in different forums. There are votes coming up in the House.

I will respond to one question I was asked which relates to substantial refurbishment. The majority of people who come to my constituency clinic and who are facing notices to quit are being evicted on the basis of not being able to afford rent increases above the caps brought in on the back of "substantial refurbishment" or are being asked to vacate in order to facilitate "substantial refurbishment". I am aware of many cases of rent increases above the 4% that are being sought on what I would consider, and what the residents would consider, to be spurious or relatively spurious grounds. Unfortunately, however, not every tenant has the information, the knowledge and the confidence to take cases to the Residential Tenancies Board. I have come across many people whom I could have advised otherwise, but they come to me after the fact. This happens all the time. Then there are the cases, such as the Leeside apartments case, in which a corporate entity looking at an investment opportunity to increase rents very significantly - in this example, perhaps a doubling of rents - invests serious money in refurbishment, which no one denies, but people who have lived there for years, people who have young kids, people who are on low incomes and people who are unable to find accommodation elsewhere, given the scarcity of lettings, the number of people queuing for each letting, etc., face eviction. This is wrong. There are other cases, which are perhaps the cases to which the representatives of the Irish Property Owners Association have pointed, in which a small investor landlord must carry out significant work on a house and feels he or she is entitled to a rent increase above 4% on the back of that. The point I would make is that we are living in exceptional times. There is, if not officially declared, in reality a housing emergency in this country. More than 10,000 people, if the figures were computed properly, are officially homeless. This does not count the number, double or treble that, of people who are unofficially homeless - couch-surfing and so on. That people are being put out on the street on the back of rent increases, irrespective of how justified a landlord might feel in seeking the increase, on the basis of investment he or she has put into the house, is just not acceptable, in our view, in the context of a housing emergency.

The debate will continue, and I am happy to continue it, but I do not think we have the time here.

Not today. We will now go back to the witnesses for a quick response. Mr. O'Brien wishes to come back in. I ask him to be quick if he can.

Mr. Tom O'Brien

Going back to Deputy Ó Broin's and Deputy Barry's comments, what we have is probably a theoretical argument. I absolutely accept that there are accidental landlords in the market. If the policy is that these people should not be in the market, let us get into the debate as to where the rental market is going. The REITs have no appetite to acquire units on a piecemeal basis, one here and one there; they want lot sizes together as they are easier to manage, etc. Who will provide the rental stock then? The choice is either the private accidental landlord, the small landlord, or perhaps the professional landlord, as Deputy Ó Broin says, or the State - perhaps a combination of both through the housing agencies, etc., or the private investment community. However, if we accept that the private investor gets into the market, we are into a theoretical discussion as to what return someone should get on his or her money for investing in a market. Are we asking people in the private community - this goes back to Deputy Barry's point - to take on and provide accommodation at substandard returns or at a cost to the landlord? This is really what much of this comes back to. If the private community says this is not something it is willing to do or, most likely, can afford to do, we are back to the argument that the State should really step in and provide accommodation and cater for the people to whom Deputy Barry refers. It is not fair to ask the private community, regardless of whether an individual believes it would be a nice thing to do, to house people at its own expense. People pay a lot of tax in this country. Despite what is put out in the media, Ireland is a high-tax country on a personal tax level. People already pay their way through taxes, and it is not fair to ask them to subsidise housing in addition. If that is where we are going, I suggest that policy should be aimed at boosting supply and perhaps increasing the role of the State in the rental market.

My second point is just based on anecdotal evidence. Members can take it whatever way they want. I accept that rents are rising but I deal with this business every day of the week and there is a ceiling on rent because, as Deputy Ó Broin rightly said, wages are not rising at the same level as rents have been. Rents have risen from a very low level, but wages have not risen as much. Essentially, assuming there were no rent caps, if one put up one's rent by 10%, I can tell members one would be waiting to rent it because people would not be able to afford to rent it. Most people will not take on a rental commitment in excess of what they can afford.

There is a fine line between pushing rent up to a level where the landlord will not get any inquires and keeping it at a level that is affordable. The market will only pay what the market can afford. I would have thought or I am pretty sure that without the rent cap rents would have stabilised. There is an affordability element. People only earn so much and they can only afford to pay so much. They cannot rent for more than what they are earning. On a logical basis, rent could not have kept on increasing, regardless of whether rent caps came in.

Reference was made to interest deductibility. Interest rates are very low. There is already a reduction in interest relief that is claimable. It is not a major incentive to landlords.

I urge the committee to consider one point. If criminal sanction is the way we are going, then to incentivise tenants to pay their rent there should be criminal sanctions if tenants do not pay their rent. I am not being smart oe facetious, but we cannot have it on one side and not on the other. Let us suppose a landlord overcharges rent by €30 per month and is subject to a criminal sanction, but a tenant does not pay any rent for two years and there is no criminal sanction. There has to be a balancing.

Do the Threshold representatives want to come in on anything?

Mr. John-Mark McCafferty

We will leave it.

Mr. Michael Kerrigan

I wish to come in on one of the last points raised. Mr. O'Brien said that without the rent caps we would not have seen such an increase. I do not believe that. We have seen a 7.8% increase in the price of rent in Dublin and 7.1% across the country. The increase is significantly higher for student accommodation. Rent caps have helped in some way. We need only look at the purpose-built student accommodation that has not necessarily been seen as operating under the rent caps. We have seen a 27% increase in student accommodation in DCU and 18% increase in student accommodation in NUIG. The rent caps are not perfect, but, believe me, they are better than nothing.

Ms Margaret McCormick

I am keen to say that everything is being based on new rents not on existing rents. The amount of new rents with the Residential Tenancies Board index is something like 80,000 per year. Most people are in accommodation already and are on rents substantially below market rent. The daft.ie website did research on this. The company said that existing tenants were at a rate of 25% below the market. We are looking at all the new tenancies. Legislation and everything else is being based around it, whereas the other people that are being-----

I want to make a factual correction. The RTB index is based on all rents.

Ms Margaret McCormick

No.

Let us be clear. The RTB index-----

Ms Margaret McCormick

It is for new tenancies only. The RTB will not base it on-----

This is important.

Speak through the Chair.

This is very important.

Ms Margaret McCormick

The registered-----

Excuse me, please speak through the Chair. Deputy Ó Broin, you may come back briefly. We are not going into this argument.

The RTB index is based on all rents and all registered tenancies. What the Residential Tenancies Board representatives told us the last day was that existing rents are actually underestimated. In my case, my tenancy was registered in 2010, but I have had two rent reviews since then. The RTB index includes my rent from 2010. Therefore, the index is a slight underestimation and daft.ie has a slight overestimation. It is probably somewhere in between. That is simply a factual correction.

Ms McCormick do you want to come back in? We are finishing up after that.

Ms Margaret McCormick

The Residential Tenancies Board told us that the index was based on existing tenancies as they are dealt with now. The RTB will not use the previous year's tenancies because the board is not happy to accept the accuracy of the information it has got. The RTB is only using the tenancies registered with the board in a given year. The other tenancies will have already been registered in previous years.

We will agree to disagree. I thank all the witnesses for attending today and engaging with the committee. The committee will publish a report in the near future.

I propose that we go back into private session to discussion some housekeeping matters. Is that agreed? Agreed.

The joint committee adjourned at 12.35 p.m. until 5 p.m. on Wednesday, 20 June 2018.