JOINT COMMITTEE ON THE ENVIRONMENT, HERITAGE AND LOCAL GOVERNMENT debate -
Tuesday, 30 Jun 2009

Residential Tenancies Act 2004: Discussion with Irish Property Owners Association.

Chairman

We now come to item 4, the Residential Tenancies Act 2004. Members will remember a request by the Irish Property Owners Association to make a presentation on the Residential Tenancies Act 2004. I welcome the delegation comprising Mr. Stephen Faughnan, chairman, Ms Margaret McCormick, information, development and press officer, and Mr. Frank Lahiffe, consultant. The format of the meeting will involve a brief presentation followed by a question and answer session. I want to allocate 30 minutes to this session because following that, we will meet the Private Residential Tenancies Board.

Before Mr. Faughnan begins his presentation, I draw attention to the fact that members of the committee have absolute privilege but the same privilege does not apply to witnesses. 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 by name or in such a way as to make him or her identifiable.

Mr. Stephen Faughnan

I thank the Chairman and members of the Joint Committee of the Environment, Heritage and Local Government for giving us this opportunity to meet them.

The Irish Property Owners Association, IPOA, was established in 1993 to represent property owners in the private rental sector on whatever platform was necessary to develop and defend their rights. The private rental sector is a vital part of the housing market. More than 450,000 tenants are housed in the market and it is crucial that the rights and obligations of both owners and tenants are fully respected in legislation. Unfortunately, that is not the case. In the past few years much legislation has been enacted which has and will have serious implications for the private rental sector. Some operational aspects will have devastating effects on individual investors and the future supply of affordable rental accommodation.

In July 2008 tax relief on refurbishment was withdrawn. In October that year the budget introduced a levy of €200 per dwelling on rental property. There was an increase in the levy on rental income from 1% to 3%, with a 10% increase in capital gains tax and a 10% increase in capital acquisitions tax. There was also a 0.5% increase in VAT. In January 2009 we had the EU energy directive, BER certification, under which certification costs €250 to €350 per unit. In February this year we had the Housing (Standards for Rented Houses) Regulations 2008. It is estimated that complying with these housing regulations or standards will cost, in the case of a pre-1963 dwelling, €10,000 to €15,000 per unit of accommodation plus €25,000 for the common areas therein. It will also involve the loss of rent as a result of a reduction in the number of units in the properties and a loss of rent during the process of refurbishment. Also, in the current banking environment, no lending is possible to carry out these works. In April there was a supplementary budget in which capital gains tax and capital acquisitions tax were further increased by 15%, the income levy was doubled from 3% to 6%, and there was a reduction of 25% in mortgage interest relief. In June rent supplement was reduced by 8%. All this, together with reductions in market rent, negative equity, banks not passing on the ECB reduction of 3.2% to property investors, is currently estimated to cost in the region of €50 million a month to buyers of letting properties.

The private rental sector is mainly governed by the 2004 Residential Tenancies Act which was introduced following the report of the Commission on the Private Rented Residential Sector in 2000 and the PRTB ad hoc board 2002-04. I served on the commission which concluded with a signed document by all organisations the interests of which were represented and which was acceptable, for the most part, to the IPOA. However, when the legislation was passed in 2004, the IPOA was unable to recognise any measures that were in property owners’ interests, but we did recognise the increased tenants rights which had been enhanced, given further strength and named by the then Minister for the Environment, Heritage and Local Government, Deputy Martin Cullen, as a tenant’s charter. The legislation extended to 126 pages and 202 sections. It was so complex that legal people found it difficult to understand. We have on many occasions requested changes to structures and for simplification of the Act but, unfortunately, to date, no meaningful changes have been introduced. However, we understand the current Minister with responsibility for housing is carrying out a review of the Act and we hope this will be a welcome intervention in providing a level field for owners as well as tenants.

It is interesting to note that we submitted a comprehensive proposal in March 2007. To date, we have received no response to that submission. However, we will be submitting a further comprehensive submission in the near future.

While the Act is in its current form, with what property owners see as many flaws, its operation by the Private Residential Tenancies Board leaves much to be desired. The IPOA believes the PRTB has failed dismally to efficiently implement the functions it was set up to perform. We have a board appointed by the Minister for the Environment, Heritage and Local Government which seems to amount to nothing better than a talking shop. The main purpose of the legislation was to streamline the letting of private rented accommodation and provide for a fast track system for resolving disputes, a task heretofore carried out by the courts when delays of up to one year were being experienced in resolving landlord and tenant disputes.

The current chairman, with seven years' experience chairing both the ad hoc board and the Private Residential Tenancies Board, presides over a part-time board which is ineffective, has inefficient practices and has excessive bureaucracy. To cap it all, only 75% of its members are available to sit on rent tribunals. It is hard to see how such a board can be responsible for the effective running of this important statutory body.

It currently takes approximately six months to get registration receipts and there are problems with the dispute resolution service at which it can take up to nine months to get a hearing followed by another two months for a decision. If the decision is appealed to a tribunal, it takes a further three months for a hearing and another three months for a second decision. After that, it takes another six months to enforce a determination order through the courts. These delays are unacceptable and unsustainable. How are property owners in the private rented sector able to maintain the law?

Ms Margaret McCormick

Anti-social behaviour, shouting, loud music, parking issues, threatening behaviour, parties and littering are all common problems and contributory factors include alcohol and drugs. Anti-social behaviour disturbs the quiet enjoyment of neighbours, who become stressed in their own homes and have difficulty sleeping, which affects their health. If those neighbours are tenants they can leave the adjoining properties but if they are owner-occupiers they have no choice but to suffer while waiting for the decision and enforcement through the courts. The neighbours, in turn, blame the property owners, who are innocent and have complied with legislation.

Tenants can reside in properties for up to two years without paying rent, causing severe financial hardship for property owners, and this may lead to the repossession of rental property and, in extreme cases, the loss of the owner's own family home. The validity of notices of determination are often queried as a delaying tactic and can cause delays for the process of selling or refurbishing properties. It also causes difficulties where property owners need a property for themselves or for a family member.

We need dispute resolution to be prioritised for anti-social behaviour, rent arrears and deposit retention. We need hearings, decisions and determination orders to be completed within ten days. Appeals should be considered very carefully before granting a tribunal because these have been used as vexatious or delaying tactics. Tribunals should be heard by the District Court, where judges are more experienced not only in the Residential Tenancies Act 2004 but in general legislation. On payment of a registration fee a receipt should be automatically generated, allocating a number to the case within seven days.

Mr. Stephen Faughnan

At the end of all this, the tenant might still not pay outstanding moneys. The board has no interest in pursuing the case and may be unable to if the tenant has gone away. Property owners, as a consequence, might never be able to recover money due and the State, through the PRTB, has assisted the tenant in this situation by not applying the section of the legislation which states rents must be paid during a dispute. Section 86(1)(a) of the Act states that, pending the determination of a dispute that has been referred to the board, “the rent payable under the tenancy concerned and the rent payable under any sub-tenancy arising out of it shall continue to be payable”.

Contrast this with the fine of €70 which an owner may have to pay for late registration of a tenancy and members will get a small flavour of why the legislation is skewed against owners of private rented accommodation. The State is also complicit in anti-competitive practices by not considering private rental properties to be a business and in forcing down rents for those on rent supplement. I know these matters are principally ones for the Minister for Finance and the Minister for Social and Family Affairs and we have taken them up with both, as we have with the Competition Authority. They have a bearing on this committee, however, because of the rental accommodation scheme.

In excess of 450,000 people, approximately 12% of the population, live in private rented accommodation. Some 88,800 people for whom we provide homes are recipients of rent supplement. It is the Government's duty to house people but it chooses the cheap option of the private rented sector. It is clear from all this that the market for private rented accommodation is liable to shrink as a result of either malfunctioning legislation or its malfunctioning operation. This will force the State to put more resources into public accommodation of one sort or another. The private rented sector provides a very valuable service to the State and, like any other business, those in the sector should be able to work on a level playing pitch where the market dictates success or failure. In excess of 95% of property in the private rented sector is owned by family units, which are similar to farming units but they do not enjoy the benefit attached to that sector. We are grateful for the opportunity to put our case directly to the committee. We would be happy to take any questions or comments.

Chairman

I thank the delegates for the presentation. I will call Deputies Lynch, O'Sullivan and McCormack. I will give members of each party an opportunity to ask questions. As another group will give a presentation I urge speakers to be brief.

Deputy Ciarán Lynch

With respect to the group to come, I expect it would like some time to address the committee and we do not want to rush it. I thank the Irish Property Owners Association for attending. I agree with the concluding remarks made by Mr. Faughnan, namely, that the private property sector plays a crucial role in the provision of housing, especially in the absence of the roll-out of social housing provision by the Government. The private rented sector has filled the void that has developed.

I note that Mr. Faughnan also indicated that the private sector has been left to the market and that the interference with rent allowance is disturbing those market forces. One cannot have it both ways and say that rent allowance was a contributory factor to the rate at which rents were set in the past. Now that the Minister is capping rent allowance and is ring-fencing it within the sector, the association appears to be objecting to that even though it had no objection to the payment of rent allowance in the past.

Mr. Faughnan referred to difficulties with the Private Residential Tenancies Board, PRTB. There are two ways of looking at the PRTB. There are the systems in which the PRTB operates and the delays in those systems, and there is the concept of the legislation and the structures of the PRTB. I do not think Mr. Faughnan is suggesting that we should repeal the Residential Tenancies Act 2004 and that the PRTB should be abolished. I share his view on the operation of the PRTB and how it deals with disputes and the registration process. Is Mr. Faughnan suggesting that the PRTB should be abolished?

I would like to hear more about the 75% of the board that is involved in disputes. That was the result of a High Court case. The IPOA has representation on the PRTB. How effective is its role in that regard? Is the delay in the registration of tenancies due to registrations not being completed fully by the IPOA so that critical information such as PPS numbers and other details are not included in the registrations forms? That would create a delay, as it would with social welfare or any other applications that require a PPS number. Are members of the IPOA not submitting the required information on their forms? I am interested to hear the views of IPOA members on adjustments to rent supplement. Rents are dropping substantially in the private sector and the amount of money paid in rent allowance should reflect that.

I have spoken previously with Mr. Faughnan about the fact that €50 of the fee charged to landlords for the registration process goes to local authorities to carry out inspections. It is in the interests of the IPOA that inspections are carried out because in order for the product it is providing to have value, it must be put on the market at a minimum standard. I assume that the better the standard of product, the better the value for money in the open market.

What is the Irish Property Owners Association's view on how inspections are being carried out by local authorities given that the association's members are paying for those inspections? Is there a certain bias where local authorities are inspecting new premises instead of premises which are eight or ten years old or older where more difficulties would be identified?

From the inspection figures from across the country, I am sure the association's representatives will be aware that some local authorities have appalling inspection levels. When the County and City Managers Association came before the committee last week, I made the same the point, that some local authorities have inspection rates of less than 2% or no inspections, and even when breaches are identified there are no follow-up inspections or prosecutions in some local authority areas. I would be interested to know the IPOA's views on the inspection regime as it currently operates.

Since concerns were expressed at the time of enactment of the Residential Tenancies Act 2004 that this might have a negative impact on the private rental sector, the sector has grown significantly. There were 160,000 registrations in 2004 and I understand the current figure is approximately a quarter of a million. If we go by registration, the sector has grown significantly. There might have been a certain percentage who were not compliant over the years, but surely not 100,000 over the past four years. It shows that 80,000 or 90,000 new properties have come into the area over the past four to five years.

I was interested to hear what Ms McCormick had to say about anti-social behaviour and I would be interested to hear her suggestions on this. The IPOA is well aware that I contacted the Minister of State, Deputy Finneran, about a review of the Residential Tenancies Acts and the PRTB being carried out. That review is under way and the closing submissions are due on 16 August. Rather than merely coming in and stating that there are problems with the PRTB, what specific changes to the operation of the PRTB and the Residential Tenancies Acts, which is also under review, would the IPOA suggest?

The other issue I note from the IPOA website is that of licensee arrangements. This is not for tenants because, according to the legislation, licensees are not tenants. I note the IPOA advertises, promotes or informs the public on its website of licensee arrangements. A footnote to these promotions states that this is outside the scope of the Residential Tenancies Act 2004. Somebody might interpret from this footnote that this is a rogue's charter. Would the IPOA like to see licensee arrangements brought within the scope of the Residential Tenancies Acts as part of the review? How does it see the licensee arrangement being tidied up? I note that several cases that have been adjudicated upon — I share the IPOA's concerns about the delay on adjudications — have been found not to have license arrangements at all but tenancies which should be registered with the PRTB.

I share the concerns of the IPOA regarding the delays faced with the PRTB. However, given that the vast number of these delays are a result of deposit disputes and that the vast majority of these disputes have been adjudicated upon in favour of the tenant, what is the IPOA's view on the creation of a national rent deposit scheme whereby the deposits, which are the tenants' not the landlords' money, would be held in a national trust account where a mechanism for a more speedy resolution of deposit disputes could be dealt with? In such a scheme, there would be a structure where the landlord would be given his or her money in a short period. Ultimately, it would speed up much of the work of the PRTB. It is the significant factor in the backlog and if that arena of dispute was removed and dealt with differently, there would be a better service for members of the Irish Property Owners Association in terms of registration. I am referring to red card disputes involving anti-social behaviour, the damaging of property or people over-staying their lease periods.

Deputy Christy O’Sullivan

I welcome the representatives of the Irish Property Owners Association, which has an important role to play in housing. People visiting my clinics have given both sides of the argument and I consider the scale has tipped too far towards tenants. That is my opinion and others may have theirs. It is important that there is such a private tenancy association because many who play outside the box give the industry a bad name. We should try to bring the people concerned back into the fold and regulate them to the same standard as members of the Irish Property Owners Association.

Local authorities have an important role to play. I have seen properties given to tenants that are only inspected by landlords or the association. It is important that another party should see the property before it is rented in order that he or she can adjudicate on its original condition and upkeep by the tenant. A great deal of damage is done to properties but in most cases the tenant gets away scot free. A great deal of work must be done in this regard and the local authorities are in the best position to do it.

I do not think I would like to be involved in this business because I consider the scales have tipped towards the tenant. A great deal of work remains to be done in this regard. I do not have the answers, but people involved in the business must have ideas; they could make recommendations to help move the issue forward.

Deputy Pádraic McCormack

I welcome the delegation. Delays in dispute resolutions were addressed earlier, but what could the board do to shorten them? It was suggested in the report that rent supplements could be paid directly to property owners. The Ministers for Finance and Social and Family Affairs were contacted in this regard. What response did the representations receive?

Chairman

At this stage I will ask Mr. Faughnan to respond as best he can. We will then take further questions.

Mr. Stephen Faughnan

I will respond as best I can as a lot of information is being sought. Some of it was given previously, but if we cannot answer any questions today, I would appreciate it if they were put to us in writing. As it is a complex issue, it is difficult to answer every question in detail.

The first question related to the 75% representation figure of board members at the tribunal. Currently, there are restrictions by the board but we are not at liberty to know the reason. A number of people on that board are unable to serve on tribunals. Apart from the fact that those who serve on tribunals do so on a part-time basis, most have full-time jobs. This is a job for the boys as far as I am concerned. That the board should be depleted by a further 25% is worrying as it means the number of disputes is increasing and they are not being dealt with in the manner we would expect.

Deputy Ciarán Lynch

Just to clarify. Threshold cannot make up that other 25%, neither can the IVAI, so it is not exclusively the IPOA that is exempted from being part of those disputes. That 75% representation is also put on what might be seen as vested interests who sit on the board. Am I correct?

Mr. Stephen Faughnan

The Deputy is correct. That is what we understand but we are not at liberty to know.

Deputy Ciarán Lynch

As I understand it, the IPOA has two members on the PRTB so, perhaps, Mr. Faughnan can tell the committee.

Mr. Stephen Faughnan

We had one member who we nominated previously but that person defected from the Irish Property Owners Association to another organisation and no longer represents the Irish Property Owners Association. We have one nominee who was appointed by the Minister in April 2008. There are many problems which we have outlined as best we can. The PRTB is certainly way off the mark in regard to its response to these problems. We consider that the board is not doing a full-time, comprehensive job in implementing the legislation. There are several areas I can go through but that would delay the committee.

There are situations where the board should be much more aggressive in its approach and should have full-time personnel to carry out its functions, including dealing with anti-social behaviour as mentioned by the Deputy. Anti-social behaviour is a growing problem within the private rented sector. Many people being excluded from local authority housing under legislation are ending up in the private rented sector and are causing problems through anti-social behaviour. If we give a notification to a tenant, which is seven days, to vacate a property because of serious anti-social behaviour, at best it might be six months before a decision is made by the board to have that person excluded. That is not fair given the dangerous situation in the house arising from the root cause. In that case, what is most likely to happen is that those living in the property move out. As Ms McCormick pointed out, there are neighbours who do not have the choice to move out and they too are victimised by the anti-social behaviour. The PRTB could do much more to rectify that anomaly.

A second issue concerns notice to vacate properties, for whatever reason. In the event of non-payment of rent, we give 14 days notice in accordance with the law. We give 14 days to allow payment to be brought up to date and, failing that, we give 28 days notice. The tenant disregards those notices so we have to refer the matter to the PRTB. During that process with the PRTB, while we wait six months, nine months and, in some cases, two years, our tenants sit in our property, pay no rent and are answerable to nobody while we have to pay our mortgage and outgoings on an ongoing basis. The board allows that to happen as I outlined under section 86(1)(a) of the Act. Rent must be paid during the process of a dispute. It is a disgrace that this does not happen. There are property owners who have accumulated losses of €20,000, €30,000 and €40,000 because of this issue not being properly addressed by the board.

The Deputy said that registration has not been completed by properly owners. We have with us a four-page form which requests detailed information including PPS numbers from landlords and tenants and various other information. Two years ago we submitted a one-page form which would cover the entire situation and would be much more simple and user-friendly but we did not even get an acknowledgment.

One cannot blame the private rented accommodation sector in all cases. Difficulties arise in getting PPS numbers from some tenants, especially non-nationals. As Ms McCormick outlined, what should happen when one applies to the board for registration and something like a PPS number is missing is that the application should be registered and receipt of the money acknowledged. The information should be provided within a certain time, rather than leaving it for six or 12 months when the tenants might have left and new tenants might have come into the place. The board has much to do to become more efficient in the acceptance of application forms. I acknowledge that situations arise in which property owners and their agents will leave out, for one reason or other, vital information. However, receipt of the money should be immediately acknowledged. Moreover, in the case of an application for a driving licence, the responsible authority will respond to the effect that a particular section has been incorrectly filled in. I do not discern any reason the board cannot give effect to such a practice.

As for rent supplement adjustments, Deputy Lynch stated we were not dropping them to meet the requirement of 8%.

Deputy Ciarán Lynch

I simply ask how the association's members are responding to the directive issued by the Minister whereby a new calculation regarding rent allowance is to be used. Second, I refer to Mr. Faughnan's concluding comments in which he stated it was "clear from all this that the market for private rented accommodation is liable to shrink as a result of either malfunctioning legislation or its malfunctioning operation." He also stated:

I know these matters are principally ones for the Minister for Finance and the Minister for Social and Family Affairs and we have taken them up with both, as we have with the Competition Authority. They have a bearing on this committee, however, because of the rental accommodation scheme.

Is Mr. Faughnan claiming the change to the rent allowance subsidy is having an impact on the market? While this is the case, since its inception, rent allowance has had an impact on the market. An examination would show that following the introduction of rent allowance, rents grew significantly in the private rental sector. I understand the State pays something like €300 million every year in rent allowance and the amount for the southern region alone is €75 million. The State is paying a significant amount of money in rent allowance and, therefore, is a player in the private rental sector. The market always has been determined by the State's involvement therein since the rent allowance scheme was first implemented. It is not valid to state an adjustment to the position in respect of rent allowance constitutes interference with the market, as the State already was interfering with the market.

Chairman

Deputy Lynch should allow Mr. Faughnan to conclude because other members who have not yet contributed wish to do so.

Mr. Stephen Faughnan

On that point, the rent supplement adjustment was set as a fixed rate reduction of 8%. Prior to this, rents for properties to which direct rent supplement was applicable probably were 20% below the market rate, while those to which the rental accommodation scheme, RAS, was applicable were another 5% to 7% below that figure again. The Government is setting the scale for rental accommodation outside of what is stated in the legislation. The 2004 legislation states it must be market rent. Therefore, the State is rent fixing and rent controlling, a highly dangerous area to go into.

Deputy Ciarán Lynch

Was it not already doing so last year?

Chairman

The next member to speak will be Deputy Tuffy. Several members have indicated their wish to contribute but have not yet so done.

Mr. Stephen Faughnan

While I accept that, the Deputy knows my thinking in this regard and I will revert to him on it at a later stage.

Deputy Ciarán Lynch

It is unfortunate that Mr. Faughnan did not have enough time to discuss these issues.

Mr. Stephen Faughnan

Yes, it is unfortunate.

Chairman

I want to give every other member an opportunity to contribute. Deputy Lynch will be able to come in after they have contributed.

Deputy Ciarán Lynch

Some 250,000 households are registered with the PRTB, with which Mr. Faughnan and his association deal on the other side of the table. It is a very important factor. While it may be timely that the joint committee is meeting the PRTB on the same day, when an organisation such as the Irish Property Owners Association is invited before the committee, it is important to give it time. We could meet outside while having a cup of coffee or can meet as a joint committee. I take on board the suggestion that we can follow up some of these points at a later date. With representatives of the Irish Property Owners Association before the committee, we can either allow time to consider their presentation or we can fast-track it and move on to the next point on the agenda.

Chairman

The Deputy is right in that we want to give time to the committee as a whole, not just to one member. Several members have not had an opportunity to speak. The next members to speak will be Deputies Tuffy and Scanlon and Senator Coffey. I am trying to be fair to the entire committee. When other members have spoken, Deputy Ciarán Lynch may speak again. I do not want to cut him short, but other members must also have a chance to speak.

Mr. Stephen Faughnan

Deputy Lynch has mentioned that approximately €50 of the €70 application charge goes towards the cost of inspection of private rented accommodation. Since the introduction in 1996 of the registration of private rented accommodation with local authorities, up to 2004, €9 million was paid to local authorities to carry out inspections, which was its legal function. However, little was done and some of them carried out no inspections, which was an absolute disgrace. Many property owners argue that we should not mention this. However, those landlords who are compliant with the legislation and keeping standards up to date are being bad-mouthed by a few. There will be always a few who will disregard regulations, be they tax or health and safety regulations. Without an inspection process carried out in an effective manner, we are wasting our time with legislation. The legislation has been changed, but who will carry out inspections but the same local authorities? How effective will they be?

The Private Residential Tenancies Board has increased its take from the fee of €70 by 100%. It now takes €40 compared to the previous figure of €20. That means local authorities are down to a figure of €30. How can local authorities carry out inspections for that sum when they would not carry them out for €50 in the past four or five years? Furthermore, if we are to support the board by subscribing €50 from the €70 fee, it is high time we had a say in the process in order to have the anomalies ironed out and allow landlords proper representation.

Chairman

I will call Deputies Tuffy and Scanlon and Senator Coffey.

Deputy Pádraic McCormack

Will Mr. Faughnan be allowed to answer my two short questions?

Mr. Stephen Faughnan

Deputy McCormack commented on the issue of dispute resolution.

Deputy Pádraic McCormack

Has the group heard from the Ministers for Finance and Social and Family Affairs?

Mr. Stephen Faughnan

We made an application to meet both of them. The Minister for Social and Family Affairs has arranged for one of her deputies to meet us in this regard. We are meeting representatives of the Competition Authority to discuss anomalies highlighted in the budget which are affecting the private rental sector. Did the Deputy also mention the issue of dispute resolution?

Deputy Pádraic McCormack

I mentioned delays, but Mr. Faughnan has dealt with that issue.

Chairman

Mr. Faughnan is waiting to hear about a meeting with the Minister.

Deputy Pádraic McCormack

He should let me know when he receives notice of such a meeting.

Deputy Joanna Tuffy

I thank the representatives of the association for coming before us. In their presentation they argue that the process as it stands is pitched very much in favour of tenants as opposed to landlords. I do not agree. One can consider the issue of protected rents, etc., but the process has moved very much in favour of landlords in recent years, although there is still some protection for tenants.

I have come across many good landlords who are conscientious and have contacted me about problems their tenants have encountered on various issues. I know there are some very bad tenants also. What is not put across in the paper is that many landlords have been making a mint out of tenants and the State in the past few years. The reason there is such a need for private landlords is the Government not providing enough social housing compared to a few years ago. The rents charged have been in excess of the average mortgage repayment for a similar house. Estates with many rented properties are ruined because many landlords do not maintain properties. Grass is not cut and none of what one would expect to be done to maintain a house is done. Anti-social behaviour, a major problem in estates in my constituency, is not tackled. There are lower to middle income families who have bought houses in private estates and who are faced with the prospect of those estates becoming rundown because of the proportion of rented properties.

Tax relief has been available for landlords in recent years. The State has spent a fortune on rent supplements. I have come across someone who is paying €1,200 in rent for a three-bedroom house in Lucan, the same price as last year, despite the fact that an equivalent house in the area has dropped in price by €100,000 in the past year. The last paragraph of the presentation states, "It is clear from all this that the market for private rented accommodation is liable to shrink as a result of either malfunctioning legislation or its malfunctioning operation". It will shrink because it was not sustainable. We cannot carry on with landlords being paid a fortune for private rented properties occupied by people who should be in social housing, as they were traditionally. Does the association have some plan to work with the Government to come up with a more affordable arrangement if it is providing the equivalent of social housing? Even with new rules and the amount of rent supplement that will now be paid, it is still too much compared to the average mortgage repayment. It is not sustainable in the current economic environment. What does the association propose should be done in this regard?

Deputy Eamon Scanlon

I thank the delegates for their presentation. It is good to get both sides of the story. The Irish Property Owners Association referred to having one member on the PRTB? Is it entitled to one or two?

Mr. Stephen Faughnan

It is at the discretion of the Minister.

Deputy Eamon Scanlon

The Irish Property Owners Association had two representatives on the board.

Mr. Stephen Faughnan

No, one was appointed in 2004 when the legislation was brought into operation. That member defected to another organisation and is now representing that organisation. We nominated a new person in April 2008 who was appointed by the Minister as our only nominee.

Deputy Eamon Scanlon

The Irish Property Owners Association is represented on the board.

Mr. Stephen Faughnan

Yes.

Deputy Eamon Scanlon

There was a serious accommodation problem in the past. I refer to the west. The supply of accommodation available means everyone has a choice of where he or she wants to live and the price he or she wants to pay. Standards have risen, rightly so because people deserve the same standards as if they were living in their own private house. Landlords have responded to this. If they do not, they will not be able to rent property because of the supply available.

There are serious problems, some of which are associated with anti-social behaviour. I am aware of one case involving a constituent. One man had a house rented in Dublin. He is not a millionaire but an ordinary individual who lived in the house and then rented it to a single parent. He charged rent of approximately €1,100 a month. Rent allowance amounted to €900 a month and the balance was to be paid by the tenant. The tenant stopped paying the balance, but due to the fact that interest rates had fallen, the landlord was prepared to live with the situation. The position remained the same for approximately 12 months until the community welfare officer obviously received a report to the effect that the tenant's partner was living in the house. On foot of this information, the community welfare office halted the payment of rent allowance. The tenants are still living in the house, but the landlord has not received any rent for seven months. I contacted the PRTB in respect of the matter and must state the conversation I had with the person with whom I spoke left a great deal to be desired. The landlord was eventually obliged to offer the tenants €3,000 in an effort to have them vacate the premises. This shows the position on people's rights has gone crazy.

I take the point that action must be taken in respect of disputes. People cannot afford to wait between seven months to two years for a dispute to be resolved. Tenants should be obliged to pay their rent to the PRTB or an independent person until such time as disputes are resolved. Landlords have no recourse in cases such as that to which I refer. A tenant can leave a property not having paid rent for nine, ten or 12 months and his or her landlord will have no avenue open to him or her in obtaining the moneys owed. Landlords such as those to whom I refer are struggling to pay mortgages, some of which are second mortgages.

There is no doubt that we need to restore balance to the situation. I am glad representatives of the PRTB have come before us in order that we might thrash out the issues and problems that have arisen.

Senator Paudie Coffey

I thank the delegation from the Irish Property Owners Association for coming before us to outline their position. They were extremely frank in their remarks and shot from the hip. They were correct to take the opportunity to do so.

The fact that there are over 450,000 tenants is an indictment of the social housing programme. It is obvious that those in the private sector identified an opportunity in this area and seized upon it. The Irish Property Owners Association represents the people to whom I refer. I have a certain amount of sympathy with landlords who have invested in property. They are not like the landlords of old who owned many properties. The most common form of landlord is the ordinary individual who bought a second home as an investment, either for pension purposes or as a nest egg. Many of these individuals are probably exposed to the type of abuse of their second homes which our guests outlined. I have a certain amount of sympathy with them in this regard and the committee will certainly be examining the role of the Private Residential Tenancies Board in the area of dispute resolution.

Local authorities and the Department of Social and Family Affairs are often happy to pass responsibility for problem tenancies to those in the private sector. I am aware of instances where local authority houses were not allocated to problem tenants but where rent supplement was granted to the latter when they rented private accommodation. Local authorities then come the heavy and, as is their obligation under legislation, proceed to inspect such accommodation and enforce the relevant guidelines and regulations in respect of it. The role played by private investors must be recognised. These individuals are stepping into a breach that was more or less created as a result of neglect in our society.

There are always a few bad eggs who create problems and in the private rented accommodation sector there are some landlords who do not have good standards. However, I am of the view that the local authorities have the power to intervene and, where necessary, enforce the regulations. I would like to be provided with information on the number of inspections local authorities carry out. I am of the view that the number is quite small because the local authorities do not have the resources to allow more to be carried out. Private rented accommodation providers have a role to play and have done so in the past and I would like them to be given more support. Anti-social behaviour is not just a problem for the private sector as local authorities also have problems in that regard.

The delegates made very serious charges against the PRTB, calling it a talking shop and suggesting it was ineffective and inefficient. We can go into those issues later when we hear the next presentation but I am very concerned that dispute resolution takes almost twice as long as aimed for in the PRTB's performance indicators. The board states that it aims to deal with disputes within six months but, according to the figures given by the Irish Property Owners Association, it can take up to nine months, with a further two for a decision. If a tribunal is appointed it can take a further six months. That is 17 months from the date of a complaint to a final decision and it is totally unacceptable for those exposed as a result of the trying times in which we live.

The delegates also refer to the fact that legislation requires rents to be paid during a dispute but that the PRTB does not enforce the legislation in this regard. That is a concern to all of us.

Mr. Stephen Faughnan

I will first respond to Deputy Tuffy's questions about the standard of housing estates in her area and how some units are not being looked after. New legislation requires a landlord to carry out maintenance on a property and keep it in good order in keeping with the locality so a change should be brought about in this regard. She also asked about prices in Lucan. There may be a fixed tenancy agreement for €1,200 a month but when it is reviewed under the legislation it should be reduced in accordance with the market. These properties cost a lot of money at the time they were bought and their owners are in negative equity. They need rent to pay their outgoings and have paid a lot of money to the State in stamp duty and tax.

Deputy Joanna Tuffy

Has Mr. Faughnan any plans for the future in this regard? Could an alternative scheme be agreed with Government? The Government cannot afford to pay out the level of rent it has been paying.

Mr. Stephen Faughnan

We are in a difficult situation at the moment but we provide a large number of properties for the State at very affordable prices. It saves the State capital expenditure in acquiring the properties in question but tenants make their own prices these days and that adds to the difficulties of landlords.

Chairman

Have members any further questions?

Deputy Ciarán Lynch

I will ask Mr. Faughnan a couple of questions about a national deposit scheme and the issue of disputes. The presentation by the PRTB reads:

Deposit retention complaints have consistently been the single largest category of cases submitted to the PRTB for resolution. Deposit cases increased from 35% to 43% of all cases between 2007 and 2008. They represented nearly 61% of tenants' cases during 2008. In 76% of such cases during 2008, it was determined that landlords should refund to the tenant part or all of the deposits which they had retained.

Deposits belong to tenants, not to landlords, and I have concerns about the serious consequences for tenants, particularly those on low incomes and those who need to move house, when deposits are retained. A total of 76% of rulings were against members of the Irish Property Owners Association. Such cases are a significant contributory factor to delays in dealing with red card issues such as anti-social behaviour, about which the IPOA had complained. I am not too sure about the sum of €3,000, but it sounds like extortion. One should go to the Garda with the information, not the PRTB.

Deputy Eamon Scanlon

The Garda cannot do a thing.

Deputy Ciarán Lynch

It is extortion if a tenant says he or she will not vacate a property, unless he or she is paid €500 or €3,000. Such cases should be drawn to the attention of the Garda. If it is happening, it should be brought to its attention because it is a criminal act. It amounts to far more than anti-social behaviour.

Chairman

A vote has been called in the House.

Deputy Ciarán Lynch

Could Mr. Faughnan give a brief response on the deposit retention scheme? Would it be a better service for his members, given that they hang on to deposits inappropriately which results in delays and which means genuine cases cannot be dealt with in a timely fashion by the PRTB?

Mr. Stephen Faughnan

If one is entering into an agreement with a tenant, one completes an application form for the PRTB and in most cases a licence or tenancy agreement. One completes all the necessary forms for the services to be transferred to the new tenant. At the end of a tenancy the services should revert back to the landlord or be transferred to the next tenant. I do not see a necessity for a deposit retention scheme, in the sense that the PRTB has a dispute resolution mechanism to deal with disputes. If the system is working efficiently and effectively, cases involving deposit retention should be satisfied within a maximum of ten days. A landlord and tenant should agree that if all or a portion of the deposit is to be held back, this must be documented and signed by both parties in order that the tenant or landlord can go to the PRTB and outline the situation. The PRTB should be able to contact both parties to establish the facts and solve the problem immediately.

Deputy Ciarán Lynch

Is it not implied by the statistics that landlords are rolling the dice on the deposit issue? What is happening is that they hang on to deposits and take their chances with the PRTB. The figures reveal that in 76% of cases landlords are acting inappropriately. Does that not concern Mr. Faughnan and his organisation? He needs to bring that information back to his membership. We are taking on board what he said and will raise the matter with the PRTB and the Minister, but surely he will inform his members that they are causing delays and that 76% of judgments by the PRTB are against them? The implication is that landlords perceive deposit money to be theirs when it belongs to their tenants and that they are taking their chances with the PRTB. I am aware of cases where, even after the PRTB had ruled the money had not been handed over, court orders had to be issued for sums such as €250 and €500 when it costs more than €700 a day to adjudicate on cases.

Chairman

We will have to suspend the sitting because of the vote.

Mr. Stephen Faughnan

There is a scale; at a minimum the amount of deposit retention schemes affected——

Chairman

I must suspend the sitting because there is a vote in the Chamber. When we come back, I propose to deal with the Private Residential Tenancies Board. I thank Mr. Faughnan for his presentation. We will bring up the issues he raised with the Private Residential Tenancies Board. The IPOA members are free to remain and listen to proceedings.

Mr. Stephen Faughnan

I thank the Chairman and committee members.

Sitting suspended at 4.50 p.m. and resumed at 5.05 p.m.