I thank the Chairman and I thank the committee for the invitation to address it today. It would be helpful to the committee to take it through the work of the PRTB and our activities in 2010 by way of providing context for the statistics requested by the committee in its letter of invitation.
The Private Residential Tenancies Board was established in September 2004 under the Residential Tenancies Act 2004. Its functions are to maintain a national register of private rental tenancies, to provide a dispute resolution service, and to conduct research and advise the Minister on policy matters which impact on the sector.
On 31 August 2011 the PRTB had 251,000 registered tenancies. This represents 171,000 landlords and 536,000 tenants. Extracts from the register are available on our website. In January registration fees were increased by €20, the first such increase since our foundation, and the standard registration fee is now €90. The registration fee income funds the operation of the PRTB which is no longer in receipt of an Exchequer grant. A total of 20% of each registration fee also goes to fund local authority minimum standards inspections as per the directions we receive from the Minister for the Environment, Community and Local Government. The PRTB paid €5.6 million to local authorities for such inspections last year, but it should be noted that the minimum standard policies are set by the Department of the Environment, Community and Local Government and enforced by the local authorities.
The PRTB is involved in a major ICT project throughout the entire organisation. The first phase of this involved the roll-out of online registration facilities last November. Almost 35% of our landlord clients used this system in 2011 and this usage is growing steadily. Our new ICT facilities have also enabled us to engage in effective data exchange with other public sector organisations.
The Private Residential Tenancies Board replaces the courts for the majority of landlord and tenant disputes. Any registered landlord and all tenants, whether the tenancy is registered or not, can apply to have a dispute processed by the PRTB. We offer three dispute resolution mechanisms, namely, mediation and adjudication in the first instance and thereafter the outcome can be appealed to a three person tribunal. After a tribunal has reached a determination, the outcome can be appealed only on a point of law to the High Court. The fee for these services is €25 for mediation or adjudication and €100 on appeal to a tribunal. Since we offer a quasi-judicial service we must adhere to the same standards as the courts in terms of fair procedures. The Residential Tenancies Act is quite complex and very prescriptive in terms of procedures to be followed in our dispute resolution service. We may be subject to judicial review in any case.
I will now discuss the statistics requested in our invitation. During 2010, the PRTB received 2,230 applications for first stage dispute resolution, that is, mediation or adjudication, which represented a 20% increase on 2009. A total of 51% of applications related to tenancies in County Dublin and 49% to the remainder of the country. Of these applications, the two biggest categories of cases were deposit retention, which accounted for 43% of all adjudication or mediation applications, totalling 960 cases, and rent arrears complaints by landlords, which made up a further 31% of applications, or 690 cases. At this point in 2011, we are three quarters of the way through the year and rent arrears account for 32% of dispute applications with deposit retention accounting for 38%.
Disputes cases are heard by independent adjudicators appointed after an open competition run by the Public Appointments Service. Their determinations in 2010 were to order landlords to refund the full deposit in 42% of cases and part of the deposit in 37% of cases. The PRTB found that landlords were entitled to withhold the deposit in 21% of cases. Adjudicators have the discretion to award damages against landlords for wrongful deposit retention in addition to ordering the return of all or part of the deposit. They imposed damages in 21% of deposit cases during 2010.
At present, it takes an average of just less than nine months to process a case from dispute application to the making of a determination order by the board. The board of the PRTB has authorised that certain categories of cases be prioritised for hearing. Therefore, cases involving a tenant who is not paying rent but is over-holding in a property, instances of serious anti-social behaviour and illegal eviction cases can be processed in four to five months.
If either case party chooses to exercise his or her right under the Act to appeal the adjudication or mediation decision, the case will then queue for a further two to three months for a tribunal appeal hearing. The PRTB held 340 tenancy tribunals in 2010.
The PRTB has received some criticism for the delays in processing times which, though greatly improved, are not yet within six months, which in our corporate plan we aimed to achieve by the end of 2011. It should be noted that the PRTB significantly streamlined its business processes to reduce case processing times from 18 months to less than eight months between 2008 and 2010. In many cases significant delay is caused by tracing respondent parties to a dispute if the complainant has not provided a current address to serve case papers on the other parties.
The PRTB is working on an IT project to introduce online disputes and tribunal applications and electronic case management systems later this year. More critically, we are engaging with the Department of the Environment, Community and Local Government to amend the Residential Tenancies Act 2004. It is essential that the legislation is amended in order to allow us to further simplify our procedures.
As indicated earlier, the role of the PRTB includes the provision of policy advice to the Minister. As part of this role, the board periodically commissions research on the regulation of the private rental sector. In 2009, the former board of the PRTB commissioned research into the option of a deposit protection scheme. This research is publicly available on our website. At that time, the board noted that less than 1% of registered tenancies in a given year were involved in a dispute application for deposit retention. Based on the commissioned research, the board recommended that a proportionate response to the issue was that the Minister introduce an amendment to the Act to impose fines of two to three times the amount of the security deposit on landlords in cases where the landlord was found to have invalidly retained the security deposit. The heads of the Bill for the review of the Residential Tenancies Act 2004, which went to Government in July of this year contained provision for a system of penalties. The board also reminded all adjudicators of their individual discretion under the current Act to award damages should they find that deposit retention was unjustified.
The programme for Government, published in February, contains a commitment that a tenancy deposit protection scheme will be established to put an end to disputes regarding the return of deposits. The Minister has now asked the PRTB to commission a study on the feasibility of introducing a deposit protection scheme, which would be integrated with the existing regulatory infrastructure for the private rented sector. Those familiar with the earlier research will know it did not include any detailed statistical analysis of the cost and benefits of establishing a deposit protection scheme as the board was not recommending the establishment of a scheme at that point. However, the PRTB will tender for a full cost benefit analysis in the coming weeks. This is normal procedure under the regulatory impact analysis guidelines for a regulatory proposal of this scale. The PRTB will make recommendations to the Minister based on the outcome of the cost benefit analysis.
The decision as to whether or not to proceed with a deposit protection scheme is, of course, a matter for Government. As committee members are aware, it is not appropriate for us as a State agency to comment on Government policy in a committee setting. The board's concerns will be to ensure that the decision to establish a deposit protection scheme is thoroughly researched.
While the terms of reference have yet to be finalised, they are likely to include the cost of establishing and administering the new system, bearing in mind that the PRTB costs approximately €8 million per annum to run and the serious economic challenges facing this country. In other words, like the PRTB, it must be self financing. The revenue stream must also be considered, bearing in mind the market size in Ireland and interest rate fluctuations. Adequate staffing is also an issue, as the PRTB has struggled to operate and improve its registrations and disputes services with 70 staff. Under the employment control framework we are obliged to reduce this number to 33 by the end of 2013. At the same time, we will be expected to broaden our remit to regulate the social and voluntary housing sector. It is important that we are adequately staffed to provide the expected service to our clients, particularly if we have taken deposits from them. The terms of reference should also consider the simplification and computerisation of processes. The UK scheme hears only deposit cases, which are processed only on paper, with no oral hearings. There is no appeal except directly to the courts and 90% of client services are on-line. Therefore, it is important to remove the unnecessary complexities of the current Residential Tenancies Act and not merely to layer a new system upon the existing legislation.
The PRTB board and management are honoured to be invited to assist the Minister and the Department with this important research and to advise on what would be a fundamental change in the Irish private rental market. I thank the Chairman for the opportunity to address the committee. We will be pleased to answer any questions.