Amendment No. 1 is consequential on amendment No. 3 and these two amendments may be discussed together.
Housing (Private Rented Dwellings) Bill, 1981: Committee and Final Stages.
I move amendment No. 1:
In subsection (1), page 3, line 22, to delete "the District Court" and substitute "the Fair Rents Tribunal to be established by regulations made by the Minister under this Act".
The purpose of this amendment is to create a special rents tribunal to handle what will almost certainly be a very large number of applications under this Bill. At present as provided for in the Bill these applications will be handled by the District Court. The District Court already has as much business as it can handle and perhaps is overloaded. The jurisdiction of the District Court is due to be increased sometime next year which means that it will have a great deal of extra business. In these circumstances it would be quite impracticable for the court to deal with applications under this Bill. Varying estimates have been made of how many applications there will be and it is no exaggeration to say that there could be anything up to 20,000. In these circumstances it is quite unrealistic to expect the District Court to handle them. It is easy to put the provision into the Bill that the District Court will handle them but from a realistic point of view it will not be able to handle them. Either the court will not get round to handling any more than a very small number of the applications or it will neglect existing business or some of the business which will be coming to it under the new jurisdiction coming in sometime next year. If the Minister is serious about applications under this Bill being processed, heard and dealt with properly — and I have no doubt he is serious — then it is quite impractical to ask the District Court to do it. In these circumstances the Minister should establish a fair rents tribunal consisting of a president who shall be a judge of the Circuit Court and six other members who shall, because of their particular knowledge or experience, be suitably qualified for membership of such a tribunal. If such a tribunal are established I have no doubt they will be able to deal much more expeditiously with the applications that are likely to arise under this Bill.
I also suggest that this amendment be made because the existing District Court does not have the expertise to give these applications the full consideration that would be necessary. Although the District Court has some experience in this kind of work, this will be a new type of application and for some years to come there will be a huge number of these applications. It is appropriate in these circumstances that there should be a new special tribunal to deal with them, a tribunal who will gradually build up the necessary expertise. Such a tribunal would be the appropriate body to deal with these applications.
For these two reasons, the impossibility of these being dealt with by the District Court, I am proposing this amendment.
I am very sympathetic to the objective Senator Eoin Ryan is seeking to achieve by moving this amendment. A very strong case can be made for establishing a fair rents tribunal to be the forum to decide on matters to be determined in this Bill, such as the question of the rent to be paid bearing in mind the circumstances and that the premises have been rent controlled earlier, and bearing in mind the provisions of the legislation including that section of 17 relating to the costs of the tenant being borne by the landlord. It is more appropriate to establish a fair rents tribunal than to use in the longer term the District Court for applications which will be made in these circumstances.
If this were a Bill dealing with the whole range of applications in the private sector — in other words if it were the measure which I hope will follow this as soon as possible to give greater security in the general private rented sector and to establish a procedure for the fixing of rents — I would hope that that procedure would include the setting up of a fair rents tribunal. I hope that when a Bill has been brought in to do that, the jurisdiction under this Bill will be transferred to such a fair rents tribunal. I would like the Minister in his reply on this amendment, to indicate whether the Government firmly intend to establish a fair rents tribunal to deal with a much broader range of issues than the matter we are dealing with here.
We all have to accept that this Bill is being introduced to cater for a situation brought about by a successful constitutional action in the Supreme Court and that the initial response was one of holding the position for a period of months and that, even in that time scale, given the complexity of the law involved — which nobody can understate or try to play down; these are complex issues of balancing between the rights of landlords and the rights of tenants in this area — it is reasonable at the moment to use the District Court as the forum because it is there, because it is geographically accessible. However, the District Court is not the appropriate forum in any considered medium or long-term span. The criticisms that can be made of it are very valid.
I would add to the points made by Senator Eoin Ryan the fact that for a number of tenants — such as elderly people, a very vulnerable section — the prospect of going to court is so traumatic, so worrying, that they simply will not go. The solution as far as they are concerned is that if they do not pay the rent the landlord is seeking from them by agreement then they will be brought to court. They will either try to see whether relatives can assist them in paying this increased rent or they will simply have to get out. The strain of the prospect of going to court is very real for the majority of the kind of tenants that we are talking about in relation to this legislation.
I hope that that the Minister will be able to assure us that he has the commitment to introduce a fair rents tribunal to deal with the fixing of rents in private rented accommodation in a very broad sense, broader than the provisions of this Bill. This has been a major policy consideration of the Labour Party for a very long time and it is necessary. A defect in our whole system is that we have not had accessible a fair rents tribunal long ago to settle the balance between landlord and tenant in relation to private rented accommodation. One great advantage of a fair rents tribunal is that they do not have the intimidating or distressing aura a court has for people who are not accustomed to it. Such a tribunal could build up considerable expertise and could be a much fairer and truer body to assess a fair rent in the circumstances. If the time had allowed this would have been a better Bill if the forum provided for it was a fair rents tribunal, but I am prepared to support this measure on the understanding that in a reasonable span the Minister will introduce legislation to establish a fair rents tribunal in a broader context and that he will look at the possibility of transferring the jurisdiction in relation to the former rent controlled premises which we are dealing with here to such a fair rent tribunal.
This Bill would not be before the House at all but for a decision of the High Court. The one thing that strikes me most forcibly about this amendment is that there is a right of appeal from the District Court to a higher court but there is no right of appeal from the rents tribunal if they are set up. I have not a legal mind but it seems to me that if these people are not satisfied in the District Court they can go on to another court. Senator Robinson said that people find difficulty in going to court, particularly the weaker sections of the community, but I think they would find a equally hard to go to a rents tribunal. For that reason I can not see that the amendment can be accepted.
As I said earlier today in my reply on Second Stage, a point laboured to some extent was the capacity of the District Court to meet the number of cases which would confront it as a result of this Bill. I have my personal view that you still would have considerable agreement between the landlords and tenants in a number of cases, I hope in the majority of cases. At this stage nobody can forecast what the pressure would be as a result of the numbers that could not reach agreement. The machinery is there at the moment and if full agreement is not reached the District Court is the only way in which agreement can be reached.
I accept Senator Robinson's point that it is a great trauma for some people, especially elderly people, to have to go before the District Court but, as Senator Reynolds said, there is considerable urgency about this measure. Part of the programme for Government from 1981 to 1986 is that rent tribunals will be set up to determine fair rents for the whole rented market. It was not part of the Government's programme, nor would it be possible in the time available, to set up such tribunals to deal exclusively with the rent control sector. It is the opinion of the Government that urgent problems arising out of the Supreme Court decision can and must be dealt with through the courts system which is the body with most experience in this area. It would be quite impossible to set up the organisation, recruit and train staff, obtain accommodation and set up the procedures for an entirely new form of rent determination in time to have it working when the Rent Restrictions (Temporary Provisions) Act lapses. This no more than implies the recognition of the reality facing us at the moment. For this reason I am not prepared to accept the amendment at this stage. However, the intention of the Government is to set up a rents tribunal but Senator Robinson would be aware of the difficulties it would entail before a rents tribunal could be put into motion. Certainly that would not be before this Bill would lapse and this is the urgency attached to this Bill. The District Court is the only machinery available at the moment to deal with the problem as it arises once this Bill is enacted.
Arising out of the Minister's reply, I am aware that it is in the programme for Government that legislation will be introduced establishing a fair rents tribunal for rented accommodation in the private sector. I would like to clarify if this is something that would be brought before us in this session. Are we going to see that legislation brought before this House?
The House is dealing with this measure because of a Supreme Court decision in a case which was especially chosen as a test case by the landlord in question. Fair enough, but there are many vulnerable people in both rent controlled premises and the private rented sector. It is a matter of urgent concern that we have broad-based legislation, that we establish fair rents tribunals and that we deal with this problem now. The Minister has almost given that assurance, but I would like him to give some indication of how far advanced the work of the Department is on this and how soon we can expect legislation on this issue. It is critically important that we see it extremely soon. More and more people are being driven further out fom the city because of very high rents. One-parent families and anyone an a low income find it extremely difficult to avail of private rented accommodation. The situation is open to exploitation because of no control on conditions under which a landlord can issue notice to quit. It has been a social problem for a long time and I would like to get from the Minister a degree of urgency in his intention to deal with it.
Is the amendment withdrawn?
No. The Minister of State has said that he does not know how many applications will be received under this Bill when enacted and that is quite true. On any estimate it is going to run into thousands, and if that it true there is no possibility of the District Court being able to deal with these applications in any expeditious manner. If we pass the Bill as it stands we are knowingly creating a situation in which the provisions and projection of this Bill will not be available to thousands of people who will wish to avail of its provisions because the District Court quite simply will not be able to deal with the applications.
In the circumstances it would be much better to face up to the necessity of creating this kind of tribunal. The Minister says that it would not be possible to set up such a tribunal before the Rent Restrictions (Temporary Provisions) Act runs out. In the first place I do not believe that it would be impossible to set up the tribunal. If the Department really get down to it and view it as a matter not only of urgency but of importance, then it should be possible to set up a tribunal within the time available. Even if it is not quite possible, if it needs an extra month or two, then the Rent Restrictions (Temporary Provisions) Act can be extended for another month or two to enable the tribunal to be set up. It is not an adequate answer. If there is the belief that the tribunal would be better way of dealing with this problem, then the fact that there are difficulties of setting up the tribunal in time should not prevent the most appropriate body being created to deal with the situation. I cannot accept this as a reason for not setting up what is the most appropriate way of dealing with the applications which will arise under this Bill. It will not be possible to deal with them through the District Court.
Reference has been made on the one hand to the fact that there is no appeal under a tribunal and on the other to the question of appeals from the District Court. It is true that you can appeal a decision of the District Court. On the other hand, many of the tenants making applications not only would be extremely reluctant to go to the District Court at all but, if they lost in the District Court, it is almost certain that they would not have the will to appeal or the finance either. From that point of view appeal from a District Court decision is theoretical rather than practical for the vast majority of people who would be involved. That is a disadvantage from the applicant's point of view but from a practical viewpoint a very serious disadvantage. If the tribunal have the expertise and experience, in most cases one can be assured that the decision given will be fair and acceptable and consequently the necessity for appeal will not arise, whereas in the District Court, where the matter will not be dealt with as expertly as one would like, there will be a right of appeal. However, that situation should not arise and would not arise under the tribunal. I urge the Minister, particularly as he has more or less conceded that a tribunal would in the long run be a better way of dealing with it, not to allow the fact that it may be difficult to set up one within the time permitted to sway his decision as to whether this amendment should be accepted.
I find myself in complete agreement with what Senator Mary Robinson said concerning the definition of a court and the use of the District Court in this matter. However, we must be practical. As the other Members have indicated, we must realise that in the setting up of a fair rent tribunal, what was envisaged by the partners in Government was a fair rents tribunal with far wider terms of reference than a fair rents tribunal envisaged under the amendment which we are discussing on section 1.
Indeed, if the Minister had sought to establish a fair rents tribunal with powers limited only to the consideration and determination of issues which arise in respect of controlled dwellings, he would have got a very frosty reception indeed from this House. When the question of the fair rents tribunal comes to be considered, there are very many more issues and areas of public interest considerably wider than the consideration of merely those dwellings that happen to be controlled dwellings by reason of fact that they were in existence on a particular date in 1941.
Consequently, while the District Court is by no means ideal, during the time between now and the implementation of the legislation in April consideration of the wider powers of the fair rents tribunal should be put in train so that the responsibilities of the court under this Bill can, under a Fair Rents Tribunal (Establishment) Bill, be transferred completely to the rents tribunal from the District Court.
Finally, I do not at all share Senator Ryan's fear that the District Court — I do not want to misquote him — will in some way be less experienced and, as a result of that, give less consideration to the matter. I have found in the District Court by and large that the Justices who sit in the District Court have an immense amount of common sense, are not over-worried about the legal rights of the situation and apply their own common sense. The common sense which they apply will be in favour of the tenant rather than the landlord. Consequently, the temporary granting of these powers to the District Court is more acceptable, to me, even though it is not altogether acceptable, than the establishment of a fair rents tribunal which would be seen to be a very limited body indeed and not to conform to the terms of reference which were envisaged by the programme of the Government when they took office. For that reason I do not support the amendment.
In my reply I may not have given a commitment to Senator Ryan that, in the event of the problems which he has envisaged in the amendment arising, in particular in relation to Dublin, and to a lesser extent, probably, in Cork, steps will be taken to ensure that the court will be able to deal with them. Beyond that, at this stage, I cannot go. I do not deny the fact that a problem could arise. If it arises it will be dealt with at that stage.
In relation to Senator Robinson's request for a commitment to a date for introduction of this legislation, being such a major undertaking, it would be impossible to say now when I would be in a position to introduce the legislation. However, I am aware that it is fairly high on the priority list of the Government. It has been discussed though, perhaps, not to any great extent. It is the intention of the Government to deal with it and I sincerely hope to be in a position to do so as early as possible. I would not like to be forced to make a commitment which I might not be able to honour, but sincerely hope that it will be as early as possible. A Fair Rents Tribunal is the most important and effective way of dealing with the problem. I am asking the Senators to accept the machinery of the District Court. Taking into account that there is the element of urgency attached to this Bill and that the only machinery available is the District Court, to repeat my undertaking, it is likely that there could be problems, particularly in Dublin, and to a lesser extent in other cities, but if these arise I can assure Senator Ryan that steps will be taken to ensure that adequate steps will be taken to put the courts in a strengthened position to deal with the problem.
May I respond briefly by saying that it is refreshing to hear a Minister who will not give a commitment that he cannot necessarily stand over.
I gave a few such commitments yesterday.
He stated that this is fairly high on the list of priorities. One of the advantages of debating a measure of this kind in the Houses of the Oireachtas is to get a sense of what other priorities representatives have and, to the extent that it is possible to do so, the message should go from this House that a fair rent tribunal is a very real priority for the Government. The legislation is necessarily complex but there are good precedents. Fair Rents Tribunals operate in a number of other countries. It is now the major way of dealing with problems of balancing the interests of landlords and tenants. There are examples from which we can draw, with a range of experience.
Again, I do not think that the question of an appeal is the problem. A system of appeal can be built in. As has been mentioned by Senator Ryan, unfortunately the question of an appeal is often a very remote prospect for the tenant concerned. An accessible, fair, reasonable tribunal is the first priority. I also was pleased to hear the Minister's assurance that if there are problems, they will be localised problems, they will be in Dublin and in other cities like Cork where a number of people may be affected.
It may be necessary to ensure that the courts can operate effectively. At the moment, there is a severe backlog in various levels of the court. It got caught in a severe backlog and it is a very serious problem. The Minister should actively monitor how the legislation is working and not just let it see its way through and allow delays to build up. Even with that, there are going to be a number of tenants who will not feel that they can exercise their rights. They will agree to a rent they cannot afford or will be forced to get out because they cannot afford the rent. Again, agencies like Threshold and the private rented tenants' associations should try to monitor the situation and inform the Minister of cases where there appears to be hardship, where a tenant could have a right to go to court but, for one reason or another, is afraid to do so. This information is extremely important so that we know the effect of this legislation and what effect the fact that it is the District Court which will be dealing with it will have on tenants on the ground.
- Blennerhassett, John.
- Bolger, Deirdre.
- Bruton, Richard J.
- Bulbulia, Katherine.
- Burke, Ulick.
- Byrne, Toddie.
- Carey, Donal.
- Conway, Timothy.
- Ferris, Michael.
- Higgins, James.
- Howard, Michael.
- Hussey, Gemma.
- Kearney, Miriam.
- Kennedy, Patrick.
- Lawlor, Patsy.
- Manning, Maurice.
- Naughton, Liam.
- O'Connell, Maurice.
- O'Leary, Seán A.
- O'Mahony, Flor.
- Quinn, Ruairi.
- Reynolds, Pat Joe.
- Staunton, Myles.
- Whitaker, Thomas
- Cogan, Barry.
- Cranitch, Mícheál.
- Donal, Séamus.
- Fitzgerald, Tom.
- Hillery, Brian.
- Honan, Tras.
- Hussey, Thomas.
- Kiely, Rory.
- Lanigan, Mick.
- Leonard, Jimmy.
- McGuinness, Catherine.
- Mullooly, Brian.
- Murphy, John A.
- Ross, Shane P.N.
- Ryan, Eoin.
- Walsh, Joe.
I move amendment No. 2:
In subsection (2), page 5, between lines 23 and 24, to insert the following paragraph:
"(c) any other person who has resided with a tenant for a period of five years for the specific purpose of providing domicilary care and attention.".
The purpose of this amendment is to add to those who seek protection. In many cases people of the kind mentioned in the amendment have left their own homes and very often left their jobs, in order to provide domicilary care and attention. As a result, they find themselves extremely dependent on their adopted homes. The purpose of this amendment is to give them the same protection which is given to the members of the family.
The members of the family have been defined in the Bill in a very liberal way. The range and kinds of relations who are covered are extremely wide. It could hardly be more liberal than it is, but it is fair to say that many of the people who would be covered and protected by that definition would be far less deserving of consideration than the kind of person mentioned in this amendment. Consequently, I would ask the Minister to include as an extra category to those already covered under section 1, persons who are residing with the tenant for a period of five years for the specific purpose of providing domicilary care and attention.
The designation of what is to be construed here as the family of the tenant, as set out in section 2, is very broad and includes all those who had protection under the Rent Restrictions Act. To accept this amendment would be to introduce a wholly new concept of entitlement to succession outside the family. I do not consider that this can be justified. It must be remembered that one of the reasons why the Rent Restrictions Act was declared unconstitutional was because of the over-extensive rights of the tenant to pass on this tenancy indefinitely. For this reason, therefore, whilst I sympathise with the thinking prompting the amendment, I do not propose to accept it. As the Senator is aware, the definition of the family is a fairly wide one and for the benefit of the House, I will repeat it. It is "the tenant's father, mother, grandfather, grandmother, stepfather, stepmother, father-in-law, mother-in-law, son, daughter, son-in-law, daughter-in-law, nephew, niece, grandson, grandaughter, stepson, stepdaughter, brother, sister, half-brother, half-sister, uncle or aunt," and also "such person is adopted by the tenant under the Adoption Acts, 1952 to 1976, or is the illegitimate offspring of the tenant (being the mother or the reputed father of such offspring) or is a person who was in a bona fide residence with the tenant for not less than six years before the tenant's death where the tenant was in loco parentis to that person. I understand the thinking behind this amendment, but cannot accept it.
I move amendment No. 3:
In page 5, before section 2, to insert the following new section:
"2. — The Minister shall by regulation establish a Fair Rents' Tribunal consisting of a President who shall be a Judge of the Circuit Court and six other members who shall, because of their particular knowledge or experience, be suitably qualified for membership of such a Tribunal."
I move amendment No. 5:
In subsection 2(b), page 6, line 43, after “under section 13” to insert “and has issued the tenant with a rent-book (in cases where this has not already been done) and for the purpose of recording each payment of rent, which rent book shall remain in the tenants' possession”.
The purpose of this amendment is to ensure that there is a rentbook so that a tenant will know exactly where he stands in relation to the amount of rent and the rent that has been paid. The section provides for a written agreement. It provides that where the terms are agreed between the landlord and the tenant, or are fixed by the court, they shall be set out in written form and signed by the landlord or his agent and by the tenant and a copy thereof shall be furnished by the landlord to the tenant. They shall not be enforceable by the landlord until he has registered the tenancy with the housing authority in accordance with the regulations for the time being enforced under section 13.
From a legal and technical point of view this is very necessary but from the practical point of view, from the point of view of the weekly or other rent it is far more important, from the tenant's point of view — or for many tenants anyhow — that there should be a rentbook, that he or she should know exactly what the rent is and that it has been paid and so on. This is an addition which in its own way would be just as important as the written terms of the agreement.
I ask the Minister to accept this amendment. It would be of great practical importance from the point of view of the tenant and in some cases even from that of the landlord.
Again, I am sympathetic to the objective sought to be obtained in this amendment, although it can possibly be achieved without a formal insertion in the Bill itself. It is certainly true that tenants have not, in a significant number of cases, had rentbooks which they should have had. It is true that a very significant number of tenants have not retained, or had, a copy of the agreement relating to the tenancy and do not know in any detail what the terms of the agreement are and are either afraid to ask for, or have been refused, a copy of it from the landlord, or more likely his agent. It is extremely important that tenants be given greater protection through procedural rights and guarantees of this kind. The section itself makes a very important first step in requiring that the landlord provide for the tenant a copy of the tenancy agreement. I would very strongly support the requirement that a landlord also be required to issue the tenant with a rentbook where this has not been done already and that this be used for recording the payment of rent.
The Minister has very considerable powers to make regulations, in particular power to make regulations in relation to the registration of rented dwellings. It would seem that the requirement of furnishing a rentbook would be a matter that could be—and, in my view, should be—covered by ministerial regulations as one of the procedural requirements for an effective registration. One of the important controls built into this Bill is that the landlord will not be able to avail of the facilities of the Act unless he has registered. That, in itself, will be a very important new achievement, in ensuring registration by landlords. As part of that, the Minister should not only seek to require that rentbooks be issued and that proof of this be furnished when the landlord comes to register, but also a number of other possible safeguards and controls, for example in relation to the provisions in this Bill on the size and suitability of the accommodation itself. All of this can now be much more effectively monitored and controlled because the provisions of the Bill are there to do it. I feel that the purpose of this amendment is one which I would support on its merits but it is one which can be achieved by the Minister through his power to make regulations, or can be achieved by declining registration of a landlord who has not been prepared to furnish a rentbook.
I should like to support this amendment perhaps in the form in which it comes but if the amendment is not, in fact, passed, I would join with Senator Robinson in pressing that this matter should be included in the statutory regulations because, very often, in the type of case that arises between landlord and tenant, one of the difficulties is that the record of what rent has been paid and has not been paid is in dispute and the tenant is generally in a very weak position as regards proving what rent has been paid or has not been paid where a rent book is not supplied. It is noticeable that, for instance, under the Family Law (Maintenance of Spouses and Children) Act, it is specifically made the normal method of payment of maintenance by one spouse to another that it should be done through the District Court office. One of the reasons for this is in order to establish an exact and provable record of what has been paid and what has not been paid. The provision of a rent book and the proper registration of rents in the rent book are a similar type of necessary record which strengthens the hand of those who otherwise may have been simply paying rent in cash. Very often this sort of tenant is not the kind of person who has a bank account from which he can pay by banker's order and have the bank record to prove his payments.
Basically, I support Senator Ryan's amendment but, if the House does not accept his amendment, I would join with Senator Robinson in pressing the Minister very strongly to include this matter of rent books and proper records within the statutory regulations.
I will give it consideration when making the regulations. At this stage my information is that it has not been successful in Britain and that it has been widely abused. It is, nonetheless, something which I will have examined when making the regulations. Whilst the principle that landlords should provide the tenants with rent books is a good one, I do not consider it really necessary in this case to include such a provision in the Bill. Already under this Bill a landlord is required to set out the tenancy agreement in written form, to provide a copy for the tenant, to register the dwelling and the rent at which it is let with the housing authority. The most important requirement is registering with the housing authority. The landlord cannot enforce an increase in rent either initially or on review unless the rent is registered with the local authority. The register will be a public register open for inspection. This, I consider, provides sufficient safeguard for the tenant and I would not favour imposing further statutory requirements on the landlord. This is something that should be left to the individual landlord and tenant and I do not propose to accept the amendment.
Arising out of the Minister's reply on the amendment which has been withdrawn, I have already expressed approval of this section in that it will bring in a number of important safeguards. Perhaps the Minister could give some indication of the requirements in relation to the registration of the tenancy. First of all, when the landlord registers the premises, will he, at that stage, be required to produce a copy of any agreement or, subsequently, when the rent is being fixed will he have to produce and leave with the office a copy of the agreement? How is it envisaged that this will work in fact? It is a very important provision and safeguard and I would just like to hear how precisely it is going to work in practice.
I am advised that the name of the landlord, and of the tenant, and the rent that will have to be paid will appear in the agreement. Whatever type of agreement is used it has to be registered with the name of the landlord, and of the tenant and the amount of rent for the premises.
The point I was making is that presumably the landlord does not go along and say, "This is the position and the rent is £10 per week" when, in fact, the rent is much more than that. In other words, what kind of proof is a landlord going to be required to bring along in order to register the premises?
I understand that if there are any irregularities it would be an offence and it would be pursued in that context.
The possibilities of enforcement do not give us much comfort in this area. We have by-laws that may or may not be enforced and, on the whole, are not enforced and we have small penalties for statutory offences. I am concerned to ensure that the system of registering the premises and the rent being paid by the tenants in those premises is an effective system. A good deal will depend on the actual evidence of ownership of the premises and that it is rented and evidence of the rent that the landlord will be required to bring along when registering. Perhaps this is something that can be dealt with in the statutory regulations but it is important to have that rather formal system registering the premises and of registering the rent. It probably will be the case that some tenants will check the registration but we are dealing with elderly, very vulnerable people, and we need to be very sure that the protection in the Act will be very effective and fully enforced.
I promise the Senator that I will look at it again when making the regulations. I would like to remind the House that there is a severe penalty of £500. It is intended to make this section effective. At this stage I cannot say any more on it but I will have a look at it in making statutory regulations.
It appears to me that one of the proofs that would be required in the event of the landlord seeking to recover money for arrears of rent or seeking to acquire possession of the property is that he had registered the property properly and that the proper rent was registered. If he did not do that, he could not force the tenant out. But it does not completely answer the point made by Senator Robinson because very many people are put under pressure and they pay up and the case does not go to court. These tenants, also, must be protected. They are probably the most vulnerable people. But ultimately, if somebody was being asked to leave the property, I presume the Minister will confirm that it would be then necessary for the landlord to prove that he had at all times properly registered the property.
That is correct.
It states here in section 4 that terms of every tenancy of a dwelling to which this Act applies shall be terms of agreement between the landlord and the tenant or by default shall be fixed by the court. I am just wondering if there could, in fact, be a whole host of different kinds of judgment made by a District Court justice. Would the Minister envisage, under the regulations, that some form of guidelines might by issued by his Department to assist district justices in this regard?
It is not envisaged that I or the Department would issue any instructions or guidelines of that sort to the courts. The courts will be completely independent in dealing with this matter.
In view of the fact that the Department of Justice rather than the Department of the Environment has, in the landlord and tenant legislation both for residential and for commercial properties, set out fairly clearly guidelines, specific rent review proposals and so on, does the Minister not consider that the Department which has overall responsibility for housing, has a responsibility to give some indication, some guidance to the courts? The courts are not specialists in the area of housing. Judges vary from court to court. Surely to obtain positive legislation in this area, it is not too much to ask the Minister to envisage that such guidelines might be offered.
There are specific guidelines laid down and any district justice would have regard to what is in the Bill. It would not be advisable to go any further than that in giving directives, such as the Senator has in mind, to the courts which will be, after all, making independent judgments.
I was going to make a point on section 17 in relation to liability for costs but maybe I should make it at this stage. This section provides that the landlord will be liable for the costs of a tenant reasonably incurred on an application to court. That is a procedure that I approve of and it is a good provision in the Act but we are talking here about the terms of an agreement between the landlord and tenant. If this is to be an agreement properly arrived at it is probably one in which both parties would require to be advised, in particular the tenant would require to be advised because it is very much in the tenant's interest to know precisely the protections offered even by this Bill. It is important so that the tenant will not simply be faced with a written agreement and told "sign here" without him fully understanding it. In those circumstances, it would appear that if the approach being adopted is that the Government are prepared to impose a certain liability on the landlord, if the landlord wishes to apply to the court, then there also should be the provision of assistance to the tenant to enable him to be separately advised on the tenancy agreement being entered into. That may mean that more agreements would in fact be concluded because the tenant would have the benefit of legal advice and assistance in relation to it. Alternatively, the tenant who does not have any advice — and we can take it that in the vast majority of cases agreements would be drawn up by the landlord's solicitors — would be under two pressures; first, the pressure of not being independently advised, being faced with this legal document, and secondly, the pressure of being told if he does not sign the landlord will apply to the District Court. The threat of that and the lack of any independent advice would, in many cases, mean that the tenant would either have to accept a rent that he or she would not be able to afford to pay or else would be put in a very disadvantageous circumstance. Could the Minister say if it would be possible to ensure that the tenant did have legal advice at the stage of approving the agreement?
If I take Senator Robinson's point correctly, she is seeking legal advice for the tenant in appearing before a court.
At the stage of concluding the tenancy agreement.
This is something which I could not accept. Most of this legislation is geared towards the tenant rather than towards the landlord. In the event of a court case, the onus is on the landlord rather than on the tenant to go to court. The tenant need not agree to the rent they are discussing. If there are any further problems, the tenant does not have to sign the agreement and the onus is then on the landlord to go to court. The landlord can be responsible, within reason, for the costs as far as the tenant is concerned. I could not accept the Senator's suggestion in relation to advice prior to the agreement.
Would the Minister be prepared to extend the civil legal aid scheme to cover the conclusion of legal agreements of this sort so that a tenant in these circumstances should be able to benefit from professional advice? The reason I emphasise this is because in the majority of these cases the landlord has the benefit of professional advice. This is a legal document and, in particular, in relation to the scaled provisions of the Act, it could be important for the tenant to have the benefit of professional advice at the stage of concluding the agreement. If that advice is not there then the tenant may be under a dual pressure. It is possible that the civil legal aid scheme may extend to the tenants who satisfy the means test and the most vulnerable tenants would possibly satisfy it and could go under the existing scheme and seek advice from the law centre. If that is the case it should be widely promoted as a safeguard to tenants that they ought to get professional advice on the agreement itself which the landlord is seeking to conclude arising from the provisions of this Bill. The tenant should have the benefit of professional help at that stage because if a lawyer is available to advise a tenant at that stage he can see whether the landlord has registered the premises, whether the rent which the landlord is inserting in the agreement is to be registered, and whether the scaled provisions in this Bill will apply as provided or, if there was to be some formula in the agreement for gradually increasing rent, that this was fair to the tenant concerned. This is very important because tenants are easy to intimidate, easy to bewilder and confuse and, indeed they may not have the ability to read a technical tenancy agreement. It depends on how this agreement is drawn up. In many cases, it may be totally incomprehensible to the tenant except for the figure in it. The accessibility of legal advice at that stage could be a more realistic help to the tenant than to know, in the abstract, that if they were to go to court that the landlord might be liable under section 17 of this Bill for reasonable costs incurred in doing so.
I would like to support Senator Robinson in what she says about the necessity for legal advice at this stage and to ask the Minister to ensure that at the very least the civil legal aid centres should be able to deal with this matter in regard to tenants who are at a low means level and, not only that they should be able to do so, but that it should be publicised that they would do so. I take the Minister's point that this Bill is in many ways giving new rights to tenants and is slanted, in a sense, in favour of tenants but it is of no use to some of these tenants to have these rights if they are unaware of the nature of them. Very often they are not capable of understanding legislation or, as Senator Robinson said, of understanding the kind of agreement that is presented to them. So the important thing is not only that they should have rights but that they should know they have rights. To say that if they go to court the thing will be properly looked into is not quite enough because virtually everyone has a distinct fear and distaste about going to court about anything and, perhaps, rightly so. The fact that the tenant is told he can go to court and get it sorted out there does not necessarily mean that a vulnerable elderly, perhaps ill-educated tenant is likely to take that step. He may just feel himself so much under pressure that he will sign the agreement and say it is all right. So, in addition to making the rights available, I feel that every step should be taken to publicise the kind of rights that are available.
I accept the points made by Senators Robinson and McGuinness. I can understand the trauma of people who are aged and widowed, as referred to earlier this morning, having to appear before the courts. I am equally aware that there are people who will be affected and who will have to have access to the court and who will not be aware of what their entitlement is under the Bill. That is accepted and that is not peculiar to this Bill but to a number of our laws. This is an on-going thing.
I understand that there would be at least some tenants who would have access to civil legal aid. There is no way in which I can include in this Bill a section giving rights to tenants. That is a matter for another Department. In that area we have gone as far as we possibly can in the Bill. There are some voluntary bodies who are there to advise tenants, who do an extremely good job in providing advice, and I would like to pay tribute to them. I am afraid I could not cover in the Bill at this stage the points which have been raised.
I move amendment No. 6:
In page 7, to delete subsection (2), lines 10 to 16 and substitute the following:
"(2) The gross rent shall be the rent which, in the opinion of the Court, would be reasonable and fair, having regard to the respective economic circumstances of the landlord and tenant, and the character and situation of the dwelling."
This is an effort to ensure that at least some regard would be given to the economic circumstances of both landlord and tenant. During Second Stage reference was made on a number of occasions to the probable plight of tenants under this Bill. We heard, indeed, some very impressive pleas, particularly by Senator Quinn, in regard to this problem and the situation in which tenants would be put by the provisions of the Bill. This amendment is an effort to deal with that situation.
The second part of the amendment deals with the character and situation of the dwelling, which ensures that, by and large, a fair rent will be fixed or that the situation will be looked at from the point of view of what would be a fair rent having regard to the type of dwelling it is and its situation. What the amendment suggests is that the court should be able to have some regard to the respective economic circumstances of landlord and tenant. This concept is already in the Bill to some extent in section 9, dealing with rebates. What the amendment proposes is that it should be looked at when the rent is being fixed. Quite clearly, the extent to which the court would be able to have regard to the circumstances of the landlord and tenant would be limited because if it went too far in that direction then, of course, there would be constitutional difficulties again in regard to the Bill. This is merely to extend this concept of having regard to the economic circumstances of the landlord and the tenant beyond section 9 to when the rent is being fixed. The amendment could play some small part in alleviating very difficult economic circumstances in which the tenant or the landlord, for that matter, might be placed.
The formula for the setting of a gross rent set out in section 6 follows principles set out in both the Landlord and Tenant (Amendment) Act, 1980 and in section 9 of the Rent Restrictions Act, 1960. In both these cases no reference is made to the circumstances of the landlord and tenant and such an inclusion would be a major departure from normal practice.
The use of such criteria in the setting of rents would also involve the court in adjudicating on what would be highly subjective matters and would increase the volume of litigation as both landlords and tenants sought to present their economic circumstances in a more unfavourable light. The letting value of a dwelling is something which should not be affected by the financial circumstances of the landlord and tenant. If a tenant, because of his circumstances, needs assistance it should be best provided by the assistance which the Government have undertaken to provide and which I now repeat will be provided for tenants faced with hardship in paying rents. In these circumstances I could not accept the amendment.
There is a problem that any legislation that is passed has to stand, if not by reference by the President, a constitutional test. Taking into account the circumstances of the landlord and tenant ties the hands of the Seanad in considering amendments to section 6. However, within the Bill itself there is an additional criterion which is used on one occasion in the Bill and which I would like to see included in section 6 which, as Senator Ryan has identified, is the area which will give rise to any hardship which may arise and in which the court will be asked to exercise its most subjective judgment. That hardship, according to the undertaking of the Minister, will be alleviated by money from the public purse. But that is no reason for not seeking to establish the correct position in any case and alleviate the public purse from the necessity of paying what could, in due course, turn out to be exorbitant rents to landlords.
What we are seeking here is the balance between the interests of landlords and tenants and I do not think that subsection (2) really solves that problem, particularly in the situation where we are going from a highly protective situation, which is in itself artificial and by reason of that has given rise to a certain profile of tenant and certain priorities among tenants, which priorities and profile of tenant will be changed substantially over the next four or five years.
I would like to introduce into subsection (2) a kind of criterion which is already in the Bill under section 11. I will just refer to that to explain what I mean. Section 11 deals with the compensation for improvements which would be payable to the tenant in respect of improvements which he carried out and such compensation would be payable at the termination of the tenancy. There is a system of valuation of the capitalised value of that and the suggested capitalised value is subject to a saving clause, that the court shall determine the amount of the capitalised value, but shall not exceed fifteen times such annual letting value. So basically what the Bill is seeking to do is to say that if the additional letting value created by the improvements were worth £100, then the maximum compensation which could be awarded to the tenant is £1,500. Effectively the tenant is being limited to a yield of £100 divided by 15 or 6.66 per cent on the money which he has invested. The same concept could usefully be introduced into section 2.
I would have put down an amendment but I was at a meeting of a committee of the Seanad when the House adjourned before lunch. I did not quite understand the circumstances of the adjournment. The Minister might consider what I have in mind — if not now perhaps in the context of an enabling Bill to include it before this Bill comes into operation in April — that is, that the annual gross rent shall not exceed a sum which is 5 per cent of the open market value of the property. The open market value of the property shall mean the sum which, in the opinion of the court, the property without further improvement would be sold for between a willing seller and a willing purchaser for use as a single unit dwelling to which this Bill applies. The purpose of that is to put a limit on the amount of rent which could be charged and to form a relationship between the investment which the landlord has in the property and the amount of rent he can get from it. If the property is an artisan dwelling — and many controlled dwellings are — and if without further improvement, it is worth in an urban centre, say, £15,000-£20,000, in the case of a property worth £15,000 in its present condition, not in its improved condition, for use as a single dwelling then the maximum rent which could be levied under my proposal would be £750 or 5 per cent of £15,000. If the property was worth £20,000, the maximum rent which could be levied would be £1,000. If the property was worth £30,000 the maximum rent would be £1,500. That would meet all the criteria of fairness which caused the previous legislation to be struck down by the Supreme Court. The achievement of a 5 per cent return on one's money in an investment which is as secure as house property and which appreciates in value is a moderately good return because it is inflation-proof. The type of yield which insurance companies and pension funds expect from property would lie in the region of between 5 and 7 per cent at present. This percentage is already recognised by the Bill in that it limits the amount of compensation which can be obtained by the tenant to a factor of 15 which is equivalent to a yield of 6.66 per cent. If my amendment read 6.66 per cent of the open market value of the property, it would be exactly similar to what is included in section 11 (2).
Guidance should be given to the court in arriving at gross rent. The criteria which it should use should be based on the fact that rental properties on houses on the open market yield quite a small return. If one was to buy a semi-detached suburban house in an urban centre of population at present for £30,000 one could not reasonably expect a rent of more than £30 per week for it for use as a single dwelling. If one divided it into flats and applied for planning permission, one might achieve a lot more than that. As a single dwelling one could not expect to receive more than 5 per cent of the open market value of the property. The fact that people buy a single dwelling is an indication of the security and value which is placed upon the inflation-proof element of their investment. The 5 per cent would be reviewed in five years' time and further reviewed in another five years' time.
I do not expect the Minister to accept this now because it is not realistic to expect that he would do so. It would be a useful additional safeguard for tenants in that it would indicate to the court the determination of the Legislature to ensure that the yields which landlords should get on house property should be quite low because of the extra security which that property gives by way of preserving the capital sum. This is a most important consideration and one which should be pointed out to the court because the court is used to hearing people getting 15, 16 or 17 per cent return on their money and might erroneously think that such a return is a necessary part of investment in something as secure as a house. For that reason, the Minister should give serious consideration to the introduction of this additional concept in a small enabling measure to be introduced prior to the coming into operation of this Bill. I am not looking for an absolute guarantee from the Minister merely a guarantee that he will consider the matter. That is all I can reasonably expect at such short notice.
I support the amendment suggested by Senator O'Leary. It would be a major improvement if there was——
There is no amendment before the House on this section except an imaginary one.
I used the word "suggested" because the Senator read out a very precise wording which could constitute an amendment. I accept the point that I am speaking to the section and that there is no amendment before us. The form of amendment suggested by Senator O'Leary would give objective guidance and a ceiling on the maximum rent that could be fixed by the court. It has the benefit of being an objective mechanism and takes account of inflation. It is geared towards the rise in value of the property itself. There is a need for some kind of ceiling because of the way in which the going rate may be ascertained. Take for example, a widow or an elderly single person living in rental premises at present where there are two rooms and a bathroom-wash-up area. Who would seek to become tenants of that property if it was on the open market? If, as is the case with many of these rent controlled premises, it is fairly central there is a demand from single young people on very high earnings, by comparative standards. Two or three young people working in banking, insurance, Aer Lingus and so on can pay between them a very high market rent because they have a considerable income and their outgoings are much lower. They can afford to pay that money and, therefore, what they would offer would determine the rent.
I support the suggestion put forward by Senator O'Leary. I do not see the need which he sees for an enabling Bill to bring this measure into effect. I do not understand that formulation. I would prefer to consider this on Report Stage in the form of an amendment. I do not like to be under the constraint, in relation to a measure of this social importance, that we cannot put forward amendments. The whole object of having a Bill discussed in the Dáil or the Seanad is that we have an opportunity to examine it, look at its social implications and put forward amendments. The amendment proposed by Senator O'Leary and some of the other amendments suggested are improvements to the text of this Bill and should be seriously considered even in the time constraint of the necessity to fill the gap created by the judgment of the Supreme Court.
Given that the market rent may be determined by a number of single persons who, combined together, can afford a high rent for properties which are sufficiently central to be attractive to them as a base, would the Minister clarify the meaning in section 6 (2) of the term "a willing lessee"? Will this be confined to one person seeking to be the lessee or is it possible that it could be a number of people coming together to share the premises? It is important to clarify that so that we know the market value we are talking about. I support the proposal for an amendment put forward by Senator O'Leary.
What I am replying to is something that is not really before the House. I said earlier this morning that this is not the end of legislation in this area. There will be subsequent legislation. While I have not had time to examine the points raised by Senator O'Leary, I accept there is some validity in them and they are worthy of examination. I undertake to have them examined. I cannot give any indication as to whether I can accept them.
Senator Robinson raised the question of market rent. The basis is similar to that in the Landlord and Tenant (Amendment) Act, 1979 disregarding any element for goodwill which relates exclusively to business premises. Subsection (2) specifies the criteria to be applied to calculation of the gross rent. It is to be the amount which the court considers a willing lessee would give and a willing lessor would take on the basis of vacant possession, having regard to the other terms of the tenancy and the letting values of dwellings of a similar character and situated in a comparable area.
What I am concerned about is if the willing lessee is three single people working in secure and well paid employment who want relatively central private rented accommodation and are prepared to pay a proportion out of each of their salaries, are they a lessee for the purposes of determining the market rent?
This section does not relate to any single individual. It could include a number of people. It is a general term rather than a specific one.
I assumed that was the case but I am happy to have it clarified. It reinforces the need for a ceiling and the need for having a fair maximum rent.
Many rent controlled premises are reasonably centrally located and the market value now is a very artificial one. It is what people like that are prepared to pay. It bears very little relationship to the premises themselves. There is a great scarcity, particularly in Dublin, of private rented accommodation that is centrally located. I am concerned that the market value would be artificially high. As it stands at present under section 6 there is no ceiling on it. The court, as I read section 6 (2) is obliged to bear in mind what the asking price is and if the landlord has a lessee and it is three people involved in banking or insurance who are prepared to pay £100 per week, then that is the market value. There is no ceiling on it. This is a matter that the Minister might consider for Report Stage. It is not a complex amendment and, as Senator O'Leary said when he suggested the formula for it, it is already a formula which we are applying to assessing the value that a tenant could get for improvements made on the tenancy.
In replying to what I have said, the Minister made the valid point that I did not have an amendment before the House. He pointed out quite forcibly to me the value of having such amendments before the House by the manner in which he dealt with my suggestion. I should like to assist the House by saying I disagree with what Senator Robinson said even though I appreciate her sentiment. I doubt that the situation is as bad as that. Subsection (2) states:
...the gross rent shall be the rent which, in the opinion of the court, a willing lessee not already in occupation would give and a willing lessor would take for the dwelling, in each case on the basis of vacant possession being given, and having regard to the other terms of the tenancy and to the letting values...
The letting values have already been discussed. The other terms of the tenancy include the fact that it is a premises which was previously a controlled premises and which is now occupied by somebody who has some considerable rights, even existing rights, under this Bill. "Having regard to the other terms of the tenancy" includes in this case the fact that it is a tenancy of a particular character and one of the essences of that character is that it is a tenancy to one person, it is a tenancy to a family and not a tenancy to a group of individuals. I hope that the proper interpretation of this section is that "having regard to the other terms of the tenancy" includes the terms of the tenancy which give rise to the right to have a fixed tenancy for the remainder of the unexpired portion of the relevant period and the other attendant rights. As a result, what we would have is a willing lessor and a willing lessee stepping into a tenancy as it exists and this would exclude the possibility of something being quoted which would include four or five people taking a joint tenancy in the situation described by Senator Robinson. I support her concern but I hope that situation is already covered by subsection (2). I should like an assurance that it is.
What I regard as the safeguard in this subsection is:
For the purpose of subsection (1), the gross rent shall be the rent which, in the opinion of the court...
That points out clearly that somebody cannot bring in a fictitious tenant with a high rent. The court will have access to all the relevant factors in relation to determining what would be regarded as a reasonable rent. This section provides the necessary safeguards because the rent is determined "in the opinion of the court". It meets the requirements which are the concern of Senators Robinson and O'Leary in that regard.
I missed part of this debate but I am familiar with the general position. Am I right in assuming that this clause can only be in the form that it is because of the provisions in the Constitution? The comparison between the value of what works may have been effected by the tenant, to which Senator O'Leary referred, is not calculated in the same way and, in essence, this is the way compensations under the Acquisition of Land (Assessment of Compensation) Act, 1919, which covered most of the compulsory purchase legislation, were assessed. In effect the hands of the Minister, the Attorney General's office and the parliamentary draftsman's office were tied both by precedent and the interpretation which was anticipated that the Supreme Court would put on the constitutional provisions. Is that not the case? We have little or no leeway.
It is the case, as with every other section, that it is subject to the Supreme Court.
On the reply that the Minister gave to the earlier points that I made, I am not reassured by the phrase "in the opinion of the court" because the court will form its opinion on the basis of the evidence offered in court. There is nothing to prevent a landlord coming into court and saying: "Here is a draft agreement in which I have a lessee, and the lessee happens to be three people combining together, who are prepared to pay me this rent." It is not fictitious, it is real. Therefore I do not see that that provision is helpful. The problem about the court is that it will not have the kind of informed opinion that a rents tribunal might have. The District Court will deal with this as part of its landlord and tenant application and then it will go on to deal with criminal work and other civil work. A district justice will be dealing with a range of cases. He will gain experience in time in the matter but there will not be an overall assessment of the property market and the detailed research that a tribunal might build up if it had special staff.
I did not follow what Senator O'Leary said about the other terms of the tenancy or how it would relate to the fact that is is a rent controlled tenancy. It seems that the fixing of the rent is done in relation to the market value to potential tenants who, by definition, would not be rent controlled tenants. They would be prepared to move in if the premises were up for rent and they would be prepared to come in at a particular figure. I fail to see how one can read in any qualification in the phrase "other terms of the tenancy". If the Minister can do that I would be very interested to hear it.
If the court fixes the new rent by reference to a rent which a willing lessee, who would be willing to have vacant occupation of the premises, would be prepared to offer, that willing lessee could not take up the tenancy in rent controlled circumstances but must be prepared to come in on the open market as a lessee. Therefore he would be prepared to pay whatever is the going rate for premises of that kind in a locality. By the nature of things many rent controlled premises are very well located. They are centrally located and it is for this reason that we must be concerned because there will be pressure on tenants to move out of them and/or go on the corporation housing list.
There is something in Senator Robinson's point. What yardstick will the court use? If four people swear in court that they are prepared to pay a given amount for a house in a particular area, that is the type of yardstick the court will use and that is ultimately what will determine the rent. It is worse than that. Suppose a house next door becomes vacant, is there not the danger that because people in one house are prepared to pay £300 a week this will affect the rent of the other houses? There will have to be some protection for tenants.
In relation to the point made by Senator Reynolds this is not the only area that the court will have access to. If somebody brings evidence before the court, whether it is fictitious or otherwise, the court will interpret it and I have every confidence in the court. The court will have access to information about what accommodation is available in a similar area.
That would be just as bad.
It could be, but we are confining the court to a very narrow margin. The court would have wider powers of examination than what was mentioned by Senators Robinson and O'Leary. If such a situation arose the court would have information on accommodation in similar areas. The court will determine what is a reasonable rent for a specific property and this is a safeguard. I accept that there is a danger that landlords may try to get an inflated rent for certain types of accommodation. It does not necessarily mean that the court would accept their evidence. There is sufficient protection there.
I hope the Minister is correct.
This is precisely the point. Courts do not suddenly pluck down from the air what they think is reasonable. They can only act on the evidence that is brought before them. That is the way courts function. Landlords do not have to be unscrupulous, lying or anything else to produce this kind of evidence. They can very readily produce it because there is a certain class of young professional people who will move into the centre of the city, look for these kinds of dwellings which they can get in a rather run-down nature and then spend a considerable amount of money on renovations. If I was a single person working in the Four Courts, as I do, I would be delighted to have a dwelling of this kind and would be prepared to offer considerable money for it. This is the kind of evidence that could be produced to the court. The idea that the District Court can spend a great deal of time carrying out a thorough examination of the whole area and the reasonableness or unreasonableness of the rent is fictitious. This is an advantage a fair rents tribunal would have compared to the District Court. This point was made before on the Courts Bill, 1980, in regard to the custody of children. The District Court has a long list to deal with and we are not always thinking of the Dublin Metropolitan District Court which is sitting in the same place all the time but of rural District Courts which have to get through a whole list in one day and then move to some place else the next day. It is not within the mechanics of the District Court to deal with a long and extensive investigation of this type and this is where I see the danger arising.
To add to what Senator McGuinness has said, what I think would be the case, where I see the danger potentially for some tenants and where I see the need for some kind of ministerial response vis-à-vis legal aid, is that the landlord in order to establish what a willing lessee would pay for property in that area would seek the professional services of an auctioneer or valuer. That person would come to the court and say that in an area of a half a mile of this property the following rents have recently been obtained by a firm on a certain date. There is an established procedure for such a method of valuation. Obviously if you are going in seeking the highest rent possible from the court you pick the most favourable examples. It is selective evidence and there is no obligation for it to be anything other than selective evidence. The landlord is marshalling the best possible face that can be put on his presentation of what a willing lessee would offer.
Similarly, and it certainly happens in commercial valuations that go to court, the exact opposite procedure attaches to the other side, with the lowest possible rents recently established within half a mile of the property and the court attempts to arbitrate between the two having regard to what other factors may be relevant. I am a bit concerned that in section 7 the landlord is simply obliged to give tenants a month's notice, informing them that he or she proposes to go to court to have the rents reviewed and in that time the tenants will have to obtain comparable professional advice if, as Senator McGuinness pointed out, the court is not to have biased or one-sided evidence placed on record before it, thus forcing the judge in the absence of any other information and having regard to the way in which the courts operate, to fix a rent which would be somewhat over the market level.
I fully recognise the constraints under which the Minister has to operate but I am simply asking him to recognise that that problem will exist. Perhaps in his reply he will give some indication of how he proposes to deal with it or what kind of provision, if any, he envisages in the regulations that might be made available for tenants. Would it be possible for tenants in a local area like that to avail of the services of the valuation office of the local housing authority who would be in a similar position and who could offer some advice? Unless there is some kind of recognition of the plight of potential tenants, either through the mechanism of free legal aid or through the availability of existing services, there is a danger that the court may fix a higher rent than what would necessarily be the case.
Senator McGuinness states that the court makes decisions on the basis of whatever evidence is available and that is quite true. I would refer her to the Bill which says "having regard to all terms of the tenancy and to the letting values of dwellings of a similar character to the dwellings and in a comparable area." In relation to the point raised by Senator Quinn, I accept the point that it is very likely that you would have a situation where landlords would bring along auctioneers and people to the court to try to increase the value of the rent. It is specifically stated in the Bill as well that this course would be open to the tenant and the court could determine it was reasonable that the landlord be obliged to pay the expenses. This section is as far as we can go in protecting the tenant.
Amendment No. 7 in the name of Senator Quinn has been ruled out of order.
Second Stage debate rightly identified this as essentially the nub of the problem that will likely occur to some of the tenants. I accept some of the points made by Senator Whitaker and by the Minister in his reply to Second Stage. We are not talking about the majority of landlords or the majority of tenants. We are talking about a specific potential category of people whose number is indeterminate and whose vulnerability will range quite considerably depending on what market forces operate, depending on what time they go to court and depending also in all honesty on how anxious the landlord is to extract or to obtain from the court his full commercial rights. There is nothing to prevent a landlord from reaching an agreement below what he or she would reckon is the market value of the property and what he or she would obtain from the court if they went to court.
In relation to the question that was raised by the Minister of something being outrageously unconstitutional, I should clarify my point. I think this House can interpret the entire body of the Constitution and honestly and sincerely put forward something which this House and the other House of the Oireachtas and the Government of the day may consider to be constitutional. The fact that they suspect that this present, rather conservative membership of the Supreme Court will give it another interpretation is not necessarily acting outside the provisions of Article 15. I am trying slowly but surely to come back on board the legal ship of good government and it is in that context and in that spirit I am making my remarks.
The problem in section 9 is that for some people, not for all, they will not be able to pay even 40 per cent of the rent that will be fixed by the court after the due processes in section 9 and the previous sections have been completed. The Minister has given on behalf of the Government, in this House and in the other House, very clear explicit commitments and I say without reservation that I accept fully the sincerity of those commitments. I have no reason to doubt them whatsoever. What concerns me frankly is the method and the manner in which those commitments will be made. The Minister of State referred to the proposal I made on Second Stage specifying a category of tenant, the elderly, the single, the widowed, someone getting a pension, on fixed income and so on and so forth and giving them special treatment. I think the Minister's reply was that it was not relevant to this Bill and, therefore, it could not as such be brought in. I think it is relevant to this Bill. In fact, had this amendment seen the light of day a little bit earlier, in some shape or form it could have been so incorporated by a willing Government to a willing Oireachtas. I say so because it is the local housing authority who will have responsibility for administering this Bill when it becomes law. The registration of the agreement, the inspection, the holding of the register and all the other things will be the responsibility of the housing authority in the area in which the dwelling or dwellings are located. I think it is fair to say that there is a consensus of concern to ensure that in the case of a tenant who through no fault of his own is unable to pay the market value of the property he has occupied for many years he should not be made homeless. We have of course suspended the normal forces of the free market for that category of person if he goes on to a local authority housing list. In many areas of our society we have suspended the normal forces of the free market in relation to health and education and in relation to access to justice.
There is that consensus in the House. I appeal to that consensus and to the Minister's own clear commitment in this area to consider the method that is implicit in this proposal, which is out of order, but which nevertheless I think will enable him at some stage, perhaps on Report Stage, to put some flesh on the commitment of the Government in relation to the way they propose to meet the crisis situation which may arise when some tenants cannot pay their rents. What I am now discussing is the manner in which the commitment will be made. That commitment is not in doubt but its manner of implementation is up for discussion. The Minister gave the impression in his opening speech on Second Stage that the social welfare supplementary allowance system in a generalised way would be the method to ensure that where a tenant is caught in the circumstances of having to pay rent in excess of his income he would not be made homeless.
I have done some research on this and I find that the situation in Dublin city would be as follows should such a system be invoked. Take, for example, a social welfare recipient — a non-contributory pensioner or a widow getting £27.75p. If he goes for a supplementary welfare allowance, for a rent allowance, his rent will be paid but his net income will be reduced to £18.55p and the balance of the money from the social welfare cheque, plus whatever money the community welfare officer decides to allocate, will be paid towards the rent. I am not very familiar with operations in this area but the practice apparently is that a maximum rent allowance of £5 will be made available. This is set out in the guidelines and it is administered through the health boards.
For any rent requirement in excess of £5, a separate individual application will have to be made to the Minister for Social Welfare and that would daunt the most fearless person. Let us be quite clear, the speed with which the Department of Social Welfare move is something which we all wish to see improved. Quite frankly, overloading it with another range of problems on 25 April or 26 April is not going to hurry up the process of improvement there. There will be some form of delay. Therefore, there will be a certain degree of worry and a certain degree of concern and the landlord may find that that person is in arrears of rent very quickly. It is the view of the Labour Party that the supplementary welfare system in its present form, or even in an amended form, is not the right method to deal with this particular problem for the reasons I have put forward and also because it is the only area effectively in which the community welfare officers would have to get involved. It is the only area of housing in which they are involved. There is a multiplication of public service involvement in the area of housing administration which I believe is both inefficient and counter-productive.
The Bill in at least four sections makes specific references to the local housing authority as the body on which responsibility would be conferred by the Minister in relation to administration of other sections of this Bill. I can readily understand why the Minister and the Custom House want to have nothing to do with the problems of rent and of payment but it is not a sufficient defence to say that it is not really relevant to the provisions of this Bill. I believe that this option is one that has been thought about in the Department of the Environment because it is a sensible option. There are many reasonable and good administrative procedures as to why it should be so and I will try to argue some of them in the House. I am specifically talking about those tenants who are going to be in need of assistance and certainly not the kind of person who undoubtedly exists and who has exploited a legal situation to his benefit. I do not think these people should be assisted further. I envisage a situation where the process of law takes place and where the court fixes the rent on the basis that we have just agreed to in section 6. That person would then be advised by the court that if he is not in a position to pay this rent he should go to the local housing authority immediately. In the Dublin area that person would go to Jervis Street which is geared to dealing with rents, and inspections and so on. The housing authority would send out an inspector and look at the accommodation of that person, for example, two rooms built 60 or 70 years ago or whatever, and assess what the rent would be relative to the person's income. This is happening every day in Dublin Corporation and other local authorities are in a similar position. The administration is there, the expertise is there and also the expertise to deal with people who get into rent arrears, who have problems in collecting rent and the security problems of collecting cash and so on. It is also under the responsibility of the Minister's Department but the Department are trying to say somehow or other the method of bailing out people in this instance is not relevant.
If they were to maintain that analogy, an old age pensioner would be assessed as a differential tenant and would pay rent similar to what an old age pensioner would pay in a local authority-owned property of a similar type and age with similar facilities. The differential rent system, as the Minister well knows, means that a rate is struck for each new dwelling as it is being built and it is subsequently adjusted. The base rent is established at the outset. That could be done instead of that person getting poor law relief, charity or social welfare to which there would be some resistance in some cases. Many of the people I am referring to would be people who might not be old age pensioners but who could very well have a fixed income from capital savings which debarred them from getting a pension until such time as they had exhausted their capital savings. It would remove what unfortunately exists at present, some of the stigma of getting this kind of assistance. They pay in their nearest rent office or, alternatively, the rent officer will come and collect as in the case at the moment. Dublin Corporation have such people on the road every week of every month. That takes care of one side of the equation.
The other side of the equation relates to the landlord. The landlord would be legally granted a rent subject to whatever discount remained in relation to improvements and so on but there would be a net rent due to that landlord in the first year which would be 15 per cent higher in the second year and so on over the five years. The local authority would pay that landlord the rent directly. In some cases if the landlord owned a house in which there were five or six separate tenancies it would be a combined rent cheque paid with a certain implicit degree of administrative saving. Let us not forget that we are talking about tenancies which by their very definition are not going to be short-term leases so there is going to be a fixed drawing cheque, something which could be set up on a computer programme and which would not have to be altered frequently. Rent reviews are every five years. It would have to be changed every year for the first five years and after that once every five years if the rent was changed and so on. There is potential administrative neatness and tidiness in such organisation. The local authority would have the cash flow of the tenant's money coming in and the money going out to the landlord on the other side. That is the problem, because the balance of the money going out the other side has got to come out of the Estimate of the Department of the Environment. The Minister and his officials and everybody within a mile of the Custom House have said that this kind of rent collection system is not relevant to the legislation. Perhaps I am being somewhat flippant and I do not wish to be, but I feel that it is immensely relevant to the entire legislation because it closes the gap in relation to all the other provisions.
The one fear that is shared by every Member of this House is that people who are unable to pay their rent and who have no alternative accommodation will somehow or other be made homeless through no fault of their own. There is nobody in this House who wants to see that happen. The Government recognise that and have clearly given a commitment that if there is any possibility it might happen they will make sure that steps will be taken to ensure that it does not. In my Second Stage submission I think I convinced a number of people that it is going to happen to some people and that the number could vary. I do not think that anybody in this House has any doubt that it will happen to some and that the Government have a commitment to ensure that these people will not be left homeless. The Minister referred to the social welfare provisions as being the code under which the rescue operation would be undertaken. I submit to the Minister that the Government have not yet finalised precisely how that social welfare system is going to function and that when they begin to analyse its application they will find that the Department are not willing to so operate it and, secondly, there are overlaps and bureaucratic duplications which have a cost implication which we do not need and which would be counter-productive.
That really is the nub of the submission which is made in this proposal which I fully accept is technically out of order because it will involve expenditure on the legislation. I accept that but the Minister should seriously consider the proposal. It has been discussed by members of the Labour Party. We feel that subject to somebody coming up with a better proposal, it is the most effective way of dealing with the problem which will undoubtedly arise. With this law about to be enacted we need some clear, hard-edged commitment to those people who are currently tenants. They should not be left wondering, as they have been for the past year, what is going to happen to them, what is going to be the outcome of, firstly, the Supreme Court decision, secondly, the temporary legislation which effectively froze it and thirdly, the system under which they will get assistance in the event of their not being able to pay their rent.
There is a degree of human anguish out there for many people and I have directly encountered it. If there was sincerity and passion in my contribution yesterday it was something I was communicating to this House because it had been communicated very clearly to me. It is the topic of conversation of many people, particularly elderly people when they meet socially in the areas in which they live. The Government should design a system to ensure that these people do not become homeless. The Labour Party believe that this is the system. We accept that it will cost money but the State has not made provision for them. The final advantage is that if you wish to devise through the budget and the Finance Bill 1982 a system that can equitably and within the law properly tax unearned income of those landlords who are not dependent on it as their sole source of income, then you have a very clear cut record of the way the money was paid in the first place. There is no gap in the transaction between the tenant and the landlord. It is clearly on record from the local authority to the recipient landlord, the amount and the date, and the possibility of evasion, which every Minister for Finance refers to at some stage in the two-hour budget speech, simply is not there.
Finally, there is a requirement in some of these sections whereby the landlord is obliged to do certain things and if the landlord does not do these things he will be in breach of this law. The process of policing it, as we know, is pretty limited at the moment but the landlord will have a far more healthy regard for the monthly source of the cheque than for this legislation when it becomes law. Because implicit in that situation will be the recognition by the landlord that the monthly source of the cheque is the local housing authority which simultaneously under another section is also responsible for policing various sections of the legislation.
That is the serious and considered submission which we are putting forward. At some stage in the process of this legislation, if that is possible, we would like a clear commitment from the Government that people will not be made homeless.
With regard to the rebates in this section, the section lays down a certain percentage for each year and the years are specified. It is not a question of the specified rebates operating for five years beginning on the date of decision by the court. In the course of my submissions on an earlier amendment, I suggested to the Minister that it might take a considerable length of time before applications to the court were heard, and when I say considerable time I have experience of other areas where there can be a delay of anything up to three years before an action is finally disposed of. In this situation because of the very large number of applications there are likely to be, if an application was not reached for perhaps two years what would the situation be in regard to a rebate for the time that has already elapsed? The reference is not to a rebate for each year beginning from the date of the adjudication by the court but for specific years. This may give rise to some very unusual circumstances and could mean that arrears of one kind or another might be involved.
Arising on an earlier amendment I suggested that some regard should be had to the circumstances of the landlord and tenant in arriving at a rent, but the Minister was unable to accept that. Nevertheless, in this section the circumstances of the landlord can be taken into consideration when deciding what the rent should be or what the rebate should be on the rent. We have the curious situation in this Bill that the economic circumstances of the tenant may not in any circumstances be considered but the economic circumstances of the landlord may. It seems that to that extent it is a discriminatory Bill.
I support the very clear and detailed submissions made by Senator Quinn as to why there is a need for the facility in certain cases to bring some tenants in under the differential rent scheme. The case is strengthened by the discussion we had on section 6 when it was clear that there is not any feeling as to the rent which the court may be obliged on the basis of the evidence offered to it to fix. We are faced as legislators with the bleak situation that we have vulnerable tenants who are in many circumstances old, on fixed low incomes in rent-controlled premises which have become very valuable because of their location in a very scarce market, where private rented accommodation is at a premium. I am thinking particularly of parts of Dublin that I know and I am sure the same is true of other cities. As legislators we have a responsibility to identify this problem and within the limits and constraints of the Constitution try to meet it. As the Bill stands at the moment we are failing at two ends. We are failing to import a mechanism, and here I support the type of mechanism that Senator O'Leary mentioned which is compatible with the Constitution. Why should it be impossible to devise an objective criterion for fixing the maximum rent proportionate to the value of the property itself, when it is not in conflict with the Constitution or with property rights? In various ways through planning controls we control the value of people's property. Similarly, I see no constitutional objection as such to a reasonable return in the rent which the landlord will get for his property but I do not approve of an open-ended situation where we know the demand is very strong particularly for private rented accommodation which is centrally located. Even if the court is required under section 2 or 6 to look at other properties the same would apply. The demand for them and the potential market value will also be high and will therefore be inflated by these factors but it would appear that the court would have to abide by the market value. In the absence of that kind of control it is at least reasonable to expect that a number of tenants will not be greatly assisted by this provision for rebate. The provision itself is very good. There will be rebates over a five-year period so that there would be an easing into the market rent, but it is of no use at all to a tenant who cannot stretch even perhaps to the first step in the rebate system. In such a case the market value and therefore rent fixed by the court on the application of the landlord is by a quantum factor totally out of the reasonable reach of such tenants and it would be impossible for them to stay there unless they were aided or assisted in some way.
Senator Quinn had reservations about trying to meet this problem through the supplementary social welfare system making a contribution towards the rent. In some cases the rent support will have to be quite significant once the market value has been fixed for the property. It is unlikely that that will work through the system for one of the reasons given by Senator Quinn, that a payment of more than £5 per week would require a special application and a special reference of the system. If the amount is £20 per week, that becomes a destabilising factor in the system itself in that through the social welfare system certain people are getting considerable assistance in their rent, more perhaps than they are getting in their allowance under the social welfare system, or almost as much again as in their allowance. There would be pressure on those people to move out of the rented accommodation and to go on the corporation housing list.
On a point of information, how much time have we?
The motion on the Adjournment will be moved at 8 p.m.
I had more or less concluded my submission in support of the proposal put forward by Senator Quinn in the form of the amendment which has been ruled out on the grounds that it would involve expenditure.
Senator Quinn proposed that where the tenant would not be able to pay the rent fixed and would not really benefit from the rebate system under this section because the rent itself would be out of reach even with the benefit of the rebate, it should be possible to bring the tenant within the differential rent scheme. He has put the case for this very strongly and cogently. He, emphasised — and I agree with him here — that it is appropriate that it would be the housing authority who would decide to allow a tenant to benefit from the rent differential and then administer the scheme, so that that would be the appropriate mechanism for doing it.
The more one looks at the provisions of the Bill the more concerned one must be at the lack of financial protection for tenants. In saying that, I and others who have been making submissions on these points have been emphasising the position of vulnerable tenants on low incomes who have been in rent-controlled premises for a long time and who would not be able to pay a significantly increased rent. There are, of course, other people who have exploited the system effectively as tenants who could have afforded a higher rent, and have benefited from the control of the rent.
The Bill seeks to strike a balance but it fails to ensure that there is, first of all, a ceiling on the maximum rent which the court would fix under section 6. Partly as a result of that, the system of rebates provided for in section 9 will not be sufficient protection for tenants. I share the view expressed by Senator Quinn that the proposal which the Minister suggested in his opening speech, that such tenants might be assisted through supplementary welfare and thereby their rents might be partly paid, is not going to work as effectively as a system of differential rent and that it would create considerable anomalies and difficulties in the system itself. It would potentially put great pressure on individual tenants. They would be under pressure if their community welfare officer was not particularly sympathetic to them, or thought that the amount in supplement of the rent was very large for a person living in that area and that they should move to another area, go on the housing list, be transferred to an old people's home and so on.
We need to be very clear, as legislators, about what our priorities are. We are committed to ensuring that we have protected and secured the position of vulnerable tenants who have been in rent-controlled premises, who have being made secure under the rent control Acts which have now been struck down by the Supreme Court and who must be given a similar security and a knowledge that they are in a secure position by the provisions of this Bill.
I feel very constrained and unhappy that it has not been possible to give this Bill the time, consideration and openness to amendments that one would like. I hope that on this very important issue — as Senator Quinn said it is the kernel of the effect of the Bill — the Minister can give a definite assurance that a mechanism such as is contained in this amendment could be adopted by the Government. It is extremely important that a significant number of people who are extremely apprehensive at the moment be reassured about their position. It is very important that we, as legislators, having identified the nature of the problem — that clearly has been done in this debate — ensure that the Bill passed, even in the urgent time-scale which is required, does cover satisfactorily the particular problem and provide protection for vulnerable tenants in the circumstances. I hope that the Minister will be able to give a very definite assurance on this and that he will accept the merits of the scheme proposed by Senator Quinn, which I support.
I agree with Senator Robinson about the time restriction in regard to this legislation. Because of a court decision and because of the extremely restrictive Constitution within which we are trying to initiate legislation it is very difficult to make a substantial input into legislation by way of amendment. The constitutional problems which have arisen in other debates in this House indicate how urgently our Constitution needs to be reviewed. Crusade or no crusade, obviously we have many problems in which the common good is not always protected, in spite of what the Constitution might piously say about it. Senator Quinn's amendment which has been ruled out of order sets down views with which many agree.
The Government have not yet specified which agency should deal with the matter of rebates or with the area of assistance when the inability of existing tenants to pay is determined. It is the feeling of most Senators that the proper agency to deal with that matter would be the Department of the Environment who are competent, structured, staffed and partly financed to deal with the whole question of rent, whether income-related or otherwise. I have concern for sections of the community living in rented type accommodation who are not social welfare recipients, who are on fixed or quite low incomes, who would be subjected to quite a lot of stress from landlords under this necessary legislation.
It has been suggested that the Department of Social Welfare might deal with this area simply because that Department in carrying out an existing odious means test go into a whole lot of areas involving private lives, for a whole lot of reasons which are obnoxious to many on this side of the House. We would not accept that that Department should use their energy in this way in regard to legislation that we might pass here. We are now voicing the opinion that it should certainly not be the concern of the Department of Social Welfare but of the Department of the Environment, who are the statutory body already set up in this field. Could the Minister of State give us an assurance that our views will be put to the Government, to indicate how the Seanad feels that the matter at ground level should be dealt with when these anomalies arise and when rents start going up as a result of this legislation?
I find it surprising that this section has given rise to the greatest concern among tenants. One must bear in mind the background to a section of the 1960 Act which was declared unconstitutional in relation to what was regarded as fair rent. Under this section a landlord can apply to the court to determine a fair rent. The section says that in the interests of the tenant it will be five years before that fair rent is paid — 40 per cent in the first year, phased 15 per cent each year and at the end of the fifth year the maximum rent which was determined by the court five years earlier will be paid. That is to ensure that it will not create a great hardship for the tenants involved and will ease their burden. Can one imagine the owner of rented property foregoing payment of a rent regarded by the court as a fair rent, in the interests of the tenant? This is what the section is all about.
There were a few points raised which I want to comment on. I did not say, as Senators Robinson and Quinn thought, that the new scheme of aid towards tenants in difficulty would be operated under the supplementary welfare allowance scheme. What I did say — and I sincerely hope this is what came across — is that the scheme that operated up to now under the supplementary welfare allowance scheme was the only assistance provided for tenants who were in difficulty or on low incomes. It is very difficult when I am pressed so hard, to give a clear-cut commitment on the assistance which will be available to those tenants who are in difficulty after 25 April 1982. I am not saying that this will be under the Department of Social Welfare. There will be a new scheme. I am repeating my own firm commitment and that of the Government that there will be assistance for those people who are in difficulty or on low incomes and who find themselves in financial difficulty as a result of the increase in rents.
An important point has been made by Senator Ferris, that under the supplementary welfare allowance scheme assistance was confined to social welfare recipients. I want to give a commitment to the Seanad at this stage that the scheme which will operate will go outside the area of social welfare recipients, that it will not be confined to that category of persons, but that it will extend to people on an income, who are not in receipt of any social welfare benefit, but who can prove that there is hardship, or difficulty for them in meeting the demands made by the increase in rent.
I had discussions earlier with Senator Quinn and I have noted points made by him. If I saw any merit in it, I would, before the new scheme is announced, make a submission to the Government regarding provision of aid under a differential rent system. There is no way that you can operate such a system under a local authority unless they are owners of the property concerned. A differential rent system operates in council houses and the only other way in which this could operate — and this is included in this section — would be if the local authorities were in a position to buy the rented accommodation. This is something which I do not envisage, I could not give any commitment to the Seanad here today because the costs would be astronomical.
There was a case made here by Senator Ryan, which I mention briefly in relation to section 9. This section has the effect of providing an important subsidy for tenants in the initial years of new tenancies. It is possible that this provision is open to constitutional challenge. However, the right of a landlord to apply for a reduction in the rebate where the circumstances so warrant greatly strengthens this section. In order to limit the extent of speculative gains to landlords, this right is restricted to landlords who owned the property before December 1960. That is very relevant. With effect from that date, rent control was put on a permanent footing. Accordingly, any landlord who bought a controlled dwelling subsequently did so in the knowledge that his return would be limited by the control on rent. He would, of course, have bought the property at a price well below its true value since it was a controlled property. The level of rebate is tied to particular years rather than to the date of the tenancy agreement, to limit somewhat the benefits to tenants of delaying proceedings.
It will be necessary to provide assistance to those tenants who are in difficulties and I can see this need arising in a number of cases. It is also very important, where State funds are being used to subsidise people who are in difficulty, to try to make sure, as far as possible, that some of that money does not go into the hands of landlords, also that by creating a system of subsidy for those people it would not have the effect of increasing the rent and that the subsidy would be directed towards those who are in need. I am sorry that I cannot go beyond the commitment that I made, or give specific terms. It would be very difficult for me to say at this stage, even if I had a free hand and had authority from the Government to say it, what kind of scheme would be introduced. It will require detailed examination and will not arise untill 25 April 1982, when the new Bill comes into effect. I can give an assurance that the scheme of assistance will be announced well in advance of that date. Beyond that I cannot go.
I would have hoped that the spirit of Christmas had extended a little more into the Chamber of this House, but they are hard times, even in the process of law-making, it would appear.
First, I accept the Minister's statement about constraint and the difficulty in relation to time. However, it would be useful if the Minister would, for example, give to the House his views on the administration of whatever rescue system is decided upon by the Government. Does he feel that such a scheme is relevant to his Department and could usefully be administered by the local housing authority since in the drafting of this Bill it has been decided that many other functions are relevant to the Department?
I do not want to speculate at this stage as to what kind the scheme will be and cannot give a definitive answer to Senator Quinn's question. I can give him an undertaking, not because of the spirit of Christmas or anything of that sort, but because it is worthy of consideration. The options and proposals mentioned by the Senator will be conveyed to the proper authority and will be considered before any scheme will be announced. Beyond that I cannot go.
I have one query on section 12. It is a question of definition on which the Minister could perhaps help the House. The section, as the House is aware, relates to the question of possession of dwellings. Paragraph (d) (iii) worries me slightly. It is about a dwelling being bone fide required by the landlord in the interests of good estate management. Perhaps the Minister might indicate what is intended there.
I am advised that that section was included in the Rent Restrictions Act.
Surely, the fact that it was in the previous legislation alone is not justification for its inclusion in this legislation? What does it actually mean?
Well, it could mean anything.
That is exactly my fear.
It is a safeguard if the planning authority for the area thought an improvement in the estate was necessary. It is included in that section as a safeguard.
Let me give an example then of how it might possibly be put to mal-use. There is a situation at the moment in Dublin where young couples with young children are simply barred from being offered accommodation by landlords in certain properties. They will not accept married couples. In fact, they will not accept couples of any kind and certainly will not accept couples with children.
They will not accept single parent families, either.
They will not accept children. The landlord could say to a household of a family with a young child, or perhaps a difficult or elderly person who objects to rock music or whatever, that it was "in the interests of good estate management',' to quote a phrase, that the landlord get vacant possession of that dwelling in the house, so that the entire house could be let to students who could annoy each other with their own respective noise and rock music. It is that kind of open-ended phrase that would worry me. The effect of it would be that someone who had security of tenure could be dislodged. The only compensation for which they would be eligible would be as set out in the last portion:
the landlord pays such a sum as the Court considers reasonable to meet the expenses incurred by the tenant in quitting the dwelling, together with a sum not exceeding two years' rent of alternative accommodation which is reasonably suited to the residential and other needs of the tenant....
I am pressing the point to emphasise how necessary the fair rent tribunal is and how necessary it is to put a proper corral around what this legislation really is doing. My fear is that it is conceivable that, in the interests of good estate management, it would be preferable to have a particular category of people, or to remove a particular type of tenant who, it was alleged, was causing problems. Is that the meaning that the court may take from that phrase?
It would depend on what the court would interpret to be in the interests of good estate management. It was included in the Rent Restrictions Act and there was no reason to delete it. There could be many instances of what would be regarded as in the interests of good estate management, but they will not come to my mind. The court would determine, within reason, what was in the interests of good estate management. It was something that was considered as a safeguard.
It is a bad precedent carried over from previous legislation just because it was there. The Minister of State is four weeks in the Department.
We had other considerations.
I am agreeing with the section because this is a very good measure and it will apply to all dwellings let for rent, not just the dwellings covered in the main by this legislation in the form of rent controlled premises. It is long due to have a proper system of registration, which would be enforced and obligatory on all landlords. I very much welcome it. Perhaps the Minister has given some indication of the possible content of the regulations regarding the details which the landlord will have to supply on registration. The first issue on which I would like some clarification is the identity of the landlord. We have a problem of unidentifiable landlords, even if you can identify the name of some obscure company or properties. It would be important to try to ensure that the register will be related as closely as possible to the real identity of the real landlord and would try to penetrate any corporate veil or series of corporate veils that might be put up in that regard.
The question of the rent book has already been mentioned and the capacity that the Minister has here for making regulations should be used to ensure that there is much more knowledge of the properties that are rented in private rented accommodation and their rents — this would, obviously, have a bearing on the tax revenue of the State as well — and to ensure accessibility of that register to members of the public. I would be grateful if the Minister would comment generally on this section.
I agree with Senator Robinson that this is a very important section of the Bill. It is one of the most important sections because one of its aspects is that, before an increase in rent is obtained, the landlord would have to be registered. The name and address of the landlord and of the tenant and the rent agreed is necessary for registration. This is a fair control over the landlord and a fair effort to control the number of rented dwellings. Senator Robinson mentioned tax. There would be a proper record and a proper register of those landlords and of their incomes.
The Minister, in fact, has quite considerable discretion under this section in drafting the regulations. Section 13 (5) gives him carte blanche to decide the format of the register. I am assuming, first of all, that is the meaning of subsection (5):
Regulations under this section may contain such provisions as the Minister considers necessary or expedient for the purposes of this section.
I will give the Minister some specific experience that we have had in areas where this kind of property exists, so that he could consider it and, indeed, if I may take the liberty, I will be in contact with him in the New Year, when the regulations are being drawn up. It has been the frequent experience of tenants that they have not the slightest idea who their landlord is, particularly tenants of property covered by this section and that the property changes hands from time to time. The only person they deal with is the agent. The agents usually are extraordinarily efficient in collecting the rent, extraordinarily knowledgeable about how much is due and extremely diligent on being there punctually each Friday, immediately after pay day. They assume an extraordinary complementary vagueness, lack of knowledge and great lack of energy and diligence when it comes to things like having repairs done or providing the name of the landlord or offering information in relation to anything that might be to the tenants' benefit.
Great difficulties have been experienced by some tenants, not all, in trying to establish who their landlord is. That is a problem experienced by residents' Association who as a local comically to the Belgrave Residents' Association, the Leinster Road Residents' Association and the Beechwood Residents' Association who, as a local community are concerned with the environment in their neighbourhood. They have a problem where the external maintenance and upkeep of a landlord-owned property deteriorates considerably. There are regulations that Dublin Corporation have drafted which every landlord is supposed to observe and which regulate such things as provision of dustbins, the cutting of the grass in the front garden, the storage facility area in the front garden for dustbins. If these regulations are not observed, chaos reigns.
To add to a lot of people's problems, Dublin Corporation, in some parts of the city, collect refuse on a Friday and what happens is that people who live in flats put out their black plastic bags on a Friday morning on their way to work, go to work, head off down the country if that is where they come from, or go to see friends and the remains of the bags, if the cats have left anything, are left scattered around, or bins are left out on the footpath, if they have bins; they do not come back until Sunday night. That is the responsibility, in part, of the landlord. Any public representative in the Dublin area — certainly Senator Robinson would support this contention — will know that when those associations which have a concern for the overall appearance of the neighbourhood and who have done good community work have attempted to find out who the landlord of the property in question is and have approached the tenants they simply cannot establish who the landlord is. The obligations of the landlord are not enforced because they cannot get to the person who is responsible.
The Minister has exclusive discretion in relation to the drafting of these regulations. That kind of information for that purpose alone is essential. Finally, the Minister may be able to get legal advice on this point. If a company owns a property —I am using the planning laws as precedent — then the legal action will be the company v the tenant and the court will register that agreement and it will, in turn, be registered under this provision with the local authority. The tenant could be for example, Oireachtas Holdings Limited, owners of Leinster House, let out to 168 tenants in one house and 60 tenants in the other on a five year lease, or perhaps even a shorter lease.
The shorter one.
Is the Senator not happy with the accommodation?
I would like to make some objection to it in relation to working and living conditions but that is a separate matter.
I am sorry that I cannot assist the Senator.
The reason why the Minister cannot is that nobody knows who Oireachtas Holdings is and this is my point. The Oireachtas Holdings will be the registered landlords. Under the planning law, if Oireachtas Holdings looked for planning permission for an extension to provide such adequate accommodation and appointed the Board of Works architects and the chief architect was nominated, there would be a named agent. That named agent would be the person to whom information would be communicated and so on. But that named agent would not necessarily be the person responsible for fulfilling the obligations of the landlord. I would suggest that that loophole, which I foresee if this thing is not done very carefully and done with the clear knowledge of the problems that have existed in certain areas, is not closed. If I can presume to advise the Department of the Environment, they should seek an opinion from Dublin Corporation on this and from the larger local authorities in Cork, Limerick and Galway where this is a substantial problem, as to how one would identify some physical person, some named body who can be made responsible for the operations of Oireachtas Holdings or for the landlord or the company or the trust that owns the property in question.
Having been for many years a member of a local authority I welcome this section. I understood the frustrations of those who lived in rented accommodation in regard to the identity of those from whom they had rented property. They were dealing very often with estate agents on a day-to-day or week-to-week basis. I welcome the section also because the existence of the register will increase greatly the prospects of success of the Revenue Commissioners in pursuing those who are in receipt of incomes from rented accommodation to get them to pay their fair share of tax. For that reason this registration will have the further beneficial effect —the Government are to be commended on the way it is framed because showing the amount of the rent and to whom the rent is payable will make that a precondition for taking any action under the Act — of increasing substantially the revenue which will be made available to the Revenue Commissioners as a result of the discovery of rented accommodation which previously had not come to their notice. The increased rents which will arise as a result of the earlier provision will go some way towards reducing the increased burden on the public purse, will result from the subsidies which the Minister has indicated will, one way or the other, be made in due course. I particularly welcome this section.
I want to make two further comments. One of them arises from Senator Quinn's contribution. He referred to the transfer of property from one landlord to another. It would be important to ensure that the registration be kept very much up to date. This, presumably, would be something the Minister could deal with in his regulations, including a requirement that on the transfer of property the new landlord will be put on the register. This should be enforced so that it would not be possible for a subsequent landlord to use the fact that the premises had been registered in the past under a previous landlord to make an application where it was a tenancy which came under the other provisions of this Bill.
One of the important things about this section is that it extends to all private rented accommodation; it is a requirement on all landlords to register. Clearly the inducement to register is much stronger for landlords in formerly controlled premises because they cannot operate the system: they cannot apply for increased rent unless they have registered. I wonder whether the Minister has considered the possibility of extending some of that inducement to general tenancies, even under the terms of this Bill so that, for example, proceedings in relation to notices to quit or evicting tenants or recovery of rent could not be brought unless a landlord had registered. This could be incorporated in this provision pending the possibility of further and broader legislation covering private rented accommodation. I feel — and I think this is borne out by experience — that the sanctions, even though the maximum is a fine of £500, are not really as effective as the requirement that a landlord, before he can seek remedies under legislation, must be registered. That is the effective sanction. That is where one will get the registration. In regard to the possibility of a housing authority being able to enforce registration — we have seen the corporation's by-laws — it is very difficult unless there is an inducement, almost a compulsion, to register; it is very hard to get a high rate of registration. So I wonder if the Minister has considered the matter and, if not, if he would be open to considering the extension of it.
I will deal with the last point first. The power referred to in the section refers to all tenancies. Initially it will only apply to the controlled dwellings. The fact that there is registration covers the point made by Senator Quinn. While it gives the Minister great powers I would like to inform the House that it is the local authorities who will be responsible for administering the regulations. There is mention already of £500. I think the case made in relation to the problem of the tenants dealing with an agent, dealing with some kind of syndicate, or not knowing the landlord, cannot apply now because the register which is being compiled is under the control of the local authorities and is open to inspection by the public; it can be regarded as a public register. Therefore the tenant will have access to information in relation to the landlord that he did not have heretofore. That would meet the point made in relation to it.
I would like to clarify one or two points. I fully accept that the individual authority would be responsible for the administration of the register. Will they also be responsible for its design, for deciding what it should contain?
My comments were, in the context of framing the format of the register. I accept fully that it will be administered at local level. But in the nature of the sections that need to be completed by both tenant and landlord I think there is a careful input of design to be provided by the Department. That really was the point of the submission I was making.
I will have a look at that.
While I am on my feet, let me make a more general point. I am assuming from what the Minister just said that initially this obligatory register would only apply nationwide to those properties which were affected by this legislation but that eventually at a future date, the overall landlord and tenant legislation which is necessary and has been promised and on which the Law Reform Commission have been working in regard to some portions at least, will cover all properties.
I would just make one general economic point. The uncontrolled private rented dwelling sector of the housing market suffers little or no State interference of any kind. There is no price control mechanism whatsoever.
There has, for the last number of years, if not decades, been a real surplus of demand over supply leading at some stages to virtual scarity. The failure of that totally uncontrolled, totally unrestricted, open private market system to respond to that constant demand is a very worrying thing because if the normal laws of supply and demand, which many economists quote as being more or less a matter of faith than fact, do not operate and do not even lower the price but reduce the scarcity in a climate where there is little or no legal or administrative prohibitions on their administration, I would have some worries that if the Government were to proceed with this, which interferes on the demand side by discouraging some landlords to stay in the private market sector, unless there are very positive complementary actions taken by the Government on the supply side, there will be an exacerbated problem of supply in the short term.
Perhaps I have been somewhat long-winded and verbose in the way I have stated that and I hope that I have not been too unclear. But there is the experience of well-intentioned administrations. I refer specifically to the Labour controlled GLC in England which attempted to interfere on behalf of the tenants in the early sixties and interfered entirely on the demand side without intervening simultaneously on the supply side and had the effect, as had the original rent control legislation which we are responding to, of giving those people who were securely housed additional advantages but disrupting the process of the market and disadvantaging people who wished to come on to the market in the future. In all the technical journals, both on the housing side and on the economic side, this is very well documented. My fear, quite frankly, is that in a situation where the market has manifestly failed to respond to constant demand, this kind of well intentioned action might cause worse problems. Perhaps it is an unusual argument for me to make but it is socialists who understand the contradictions of capitalism and can therefore see ahead of the normal liberal well-intentioned but misguided actions of others who do not fully understand the same market system. For the best reasons in the world we could do the right thing today for those people who happen to be tenants, but the mid term and long term effects could be very disastrous.
The State, in fact, has a major role in this area. We have to recognise it because there is sufficient evidence in the whole of northern Europe and southern Europe as well that where, for political reasons, the market has been interfered with on behalf of the demand side and the state has refused to take up the logical consequences of that intervention, a bad situation has been aggravated. There is implicit in the seeds of this, unless the Government clearly respond positively in the supply side, the potential difficulties which would create a new generation of problems similar to the ones that we are mopping up in relation to the 1995 rent control legislation.
Arising out of the Minister's reply, this section extends to any private rented accommodation or potentially extends. But the Minister, in his reply, has indicated that it is only intended at the moment to make regulations in relation to the formerly rent-controlled premises. Is there any impediment to extending in the regulations the obligation to register on all landlords? As I have already said, the enforcement may not be as complete but is there any barrier to establishing immediately the system of registration? Why establish a register only for the landlords of rent-controlled premises? They are more likely to be the ones who will register because if they do not register they cannot avail of the remedies. Why not a general register from the very beginning?
I understand there are no impediments beyond administrative ones. It is a matter of setting up the regulations.
In relation to the point made by Senator Ruairi Quinn, I agree there are problems where demand exceeds the supply. I was rather amazed to hear that point coming from Senator Quinn. But here is a problem in relation to housing generally and it is not within the scope of this Bill in the strict sense. There were some inhibitions in relation to the provision of private accommodation of that sort prior to the introduction of this Bill. I hope that at least it will remove some of the barriers which have been referred to. Prior to the introduction of this Bill landlords were in a position where they could never repossess the houses they had let to tenants and consequently the houses deteriorated rapidly, some to the extent of going out of the market completely. I hope that the incentive that is provided in the Bill will at least give some new hope in that direction.
I move amendment No. 8:
In page 11, to delete subsection (5), lines 35 to 38.
This amendment is a tentative blow for local autonomy and local democracy. It is in line with the comments I made at the end of my speech on Second Stage. It really is simply saying to an overworked Customs House and an overburdened Minister of State and his officials that the regulations in relation to the standards of dwelling required as set out in the opening part of section 14 are best defined by local councillors and local officials in the main initially, with the proviso that those regulations would be approved by the Minister. I made the point in some substance yesterday in the House and I do not wish to repeat it, but subsection (5) is unnecessary and effectively removes another area of local autonomy in which, in fact, the local authority can be more efficient and more effective than the Department of the Environment at central level. By all means, retain for the Department, for the Oireachtas, the right of approval of any such scheme, but leave the initiative and, indeed, the responsibility of the drafting of such regulations to the local authority in question.
The reason why regulations are to replace by-laws is to ensure that proper standards apply in all local authority areas. Former by-laws which will continue to operate until the new regulations are made are based on model by-laws circulated by the Department rather than on standards devised by individual housing authorities. Notwithstanding that the model by-laws were circulated to local authorities more than eight years ago, at a recent date there still remain 34 out of 87 housing authorities who have not yet made by-laws which, I feel sure Senator Quinn will agree, is far from satisfactory. While under the Bill regulations will be made by the Minister, all aspects of their administration, enforcements, inspections and so on, will continue to rest with the local authorities as heretofore. If by-laws operated side by side with the regulations, two systems would prevail in individual local authority areas. I cannot accept a situation of that sort.
The Minister has put forward a convincing argument as to why this provision should stand. Of all of the local authorities who have not submitted by-laws within the eight year period, I wonder how many of the public members on those local authorities are actually aware that they are required to draft such by-laws. I wonder how many of them have been informed by their county manager or by their town clerk that they have the opportunity or the power to draft such by-laws. If there is a consensus at all in local politics, it centres around the question of housing. I am quite positive that the lack of response from local authorities may very well be — and I am speculating — as much related to the desire for a comfortable bureaucratic life as to lack of interest from local authority members. I am assuming that the making of such by-laws, subject to the approval of the Minister, is the reserved function of the councillors or related to such. This is nearly 1982; managers are very wary of informing local authority councillors what their reserve functions are. The Minister, as a member of a local authority, and indeed every other member of a local authority, will accept that. To inform anybody of what their full powers are is not the natural vein. That might be the reason in this case. I would be happy to circulate all the Labour councillors around the country in those councils who are not yet informed to ensure that particular lapse will be covered. Even so, the idea of a nationalised system, nationwide, centralised, applicable to all, is not something that I like. Stardardisation is not necessary. While model draft laws were circulated by the Department, I do recall that in Dublin Corporation we did modify them in some way. I would like to see even that kind of autonomy. It is an argument for local autonomy and, for me, local government is distinct from local administration which is what I believe is the system we have at present.
There are two major omissions which disappoint me.
The first is that there is no mention at all of fire safety or fire control. Second there are no standards laid down for electrical wiring in existing buildings despite the fact that most recent fires were the result of faulty wiring. I know that new buildings have to have a standard certification of wiring to ESB standards but existing dwellings are not covered under the Bill. I would like a comment from the Minister on this.
Subsection (2) specifies the areas that might be covered by such regulations. It will be noted that no specific reference is made to fire precautions. This is because such matters may be provided for under regulations made under the Fire Services Bill. It is regarded as best that enforcement of fire requirements would be done by the fire authorities rather than by the housing authority.
This section establishes that normally the landlord will be liable for the tenant's costs reasonably and necessarily incurred arising out of an application by the landlord to the court. That is quite fair, particularly as there is a proviso that the court may alter the incidence of costs on consideration of all the circumstances including the means of the landlord and the tenant. That is the only circumstance specifically mentioned. On Second Stage I suggested to the Minister that perhaps it would be a good thing in the public interest to put in specifically an obligation on the court to consider amongst these circumstances the reasonableness or otherwise of the approach of either party in the previous negotiations. If the onus of being reasonable were put on both parties it might help to clear the decks and avoid unnecessary recourse to the courts.
The section does not preclude the court from taking into account the circumstances of landlord or tenant. It can take both parties into account in assessing costs.
I understand that. My specific suggestion was that if, apart from the generality of saying "on consideration of all the circumstances" if one particular circumstance was mentioned in the section already, which is simply the means of the landlord and tenant, it might be no harm to put in a second, the reasonableness or otherwise of the approach of either party in previous negotiations.
The section provides for consideration of all the circumstances, including the means of the landlord and tenant. The position is that it is not restricted to financial considerations. This section gives the court power to take all the circumstances into account.
This is my first occasion in the Seanad on Committee Stage of a Bill. It was a great experience. It was rather unfortunate that it was such a difficult Bill for me. I am glad to put on the record here my appreciation and thanks to all the Members for their contributions. Even though I could not accept the amendments proposed that does not necessarily mean that I will not have an opportunity in the future to look at them. They are worthy of further consideration.
As the House knows there is an urgency attached to the Bill and this imposes certain restrictions on us. For that reason I am quite pleased that it has been passed. Let me again take the opportunity of thanking the Members and wishing them a happy Christmas.