I am very pleased to be back in the Seanad to have an opportunity to speak on the subject of the private rented sector. The past five years have been turbulent and traumatic in the housing market. An obsession with residential property as an investment vehicle rather than as a home was driven by the failed pro-cyclical policies of the past decade. Home ownership, a noble aspiration, mutated into a speculative mania and an entire generation was cajoled or encouraged to chase an out of control housing bubble. When the music stopped, the damage to individual households and the wider economy was clear to see. Spuriously inflated property prices, lax lending policies and weak central oversight have bequeathed large-scale negative equity and the dream of owning a home has turned into a nightmare for some families. Many are struggling to pay their mortgages, with some at risk of losing their homes. What should be viewed as a place of comfort and shelter is now for too many a millstone and constant worry.
I am acutely aware of the real difficulties people are experiencing and there is no question but that we face a difficult path in finding a solution to the housing crisis. It will not be solved overnight. What is needed is sound and humane decision-making, imaginative policies that produce the greatest possible housing yield to the widest range of people at the best return to the taxpayer and, critically, an understanding of the mistakes of the past and an ability to learn from them. We must not return to the unsustainable and unprecedented growth that represented the boom years. The greater the boom, the worse the bust and we must seek to provide a moderating structure that will allow for sustainable and long-term growth. However, future housing policy cannot just be a reaction to the madness of the past. It must confidently set out a vision for the future based on values such as community, neighbourhood, security and safety. In doing so, we need to look at international best practice and learn from the innovation and initiatives that guide housing policy, specifically social housing policy, among our European neighbours.
For all these reasons, I am absolutely committed to the development of a genuinely sustainable approach to housing policy in Ireland. Such a policy has the interests of communities at its heart; is based on choice, fairness and equity across tenures; and will enable all householders to access good quality housing appropriate to their household circumstances and in their community of choice. I am committed to a vision of housing where people, once again, view their house as a home, not as a dubious investment.
We must do things differently. The Government's housing policy statement published in June 2011 marked a profound change in the State's approach to housing policy. This clear and concise statement was based on a number of fundamental principles and goals which form the basis for reform under way. It is a framework document that does not claim to contain all the answers to the issues it raises. It takes account of the dramatic cycle of growth and collapse in the residential property market. In that context, it charts a way forward for housing policy by placing explicit emphasis on choice, equity across all housing tenures and delivering quality outcomes for the resources invested. The housing policy statement provides a framework for legislative and policy initiatives in the short to medium term, many of which are in train.
Key to these aims is a move from a focus on the promotion of home ownership to a more equitable treatment of tenures. If there is one thing the crisis has taught us, it is that home ownership need not be the ultimate goal. I stress that this does not mean we are turning our backs on home ownership or that we are seeking to impede people from realising their valid home ownership aspirations. Far from it - the reality is that for the majority of households, home ownership will continue to be the tenure of choice and this is recognised and welcomed by the Government. However, there are other households that may not want or be in a position to own their home. We increasingly see households moving between both options at different stages of their lives. Our goal for such households is to provide a choice based on household circumstances and needs rather than on the expectation of house price growth. The current crisis has given us an opportunity to reassess our attitudes to housing and home ownership. The emergence of rented housing as a real, viable housing option is part of this reassessment. A well balanced housing sector requires a strong, vibrant and, I stress again, well regulated rental sector which is an integral part of the Government's housing policy for the future.
The Residential Tenancies Act was passed in 2004 and represented the most significant legislative reform in the private rented sector in over a century. Prior to 2004, the rental market operated in a crude and fragmented manner. There was little or no security of tenure for tenants and recovery of possession presented a nightmare scenario of long and expensive court proceedings for landlords. Even minor disputes arising during the course of a tenancy had no avenue of resolution other than the courts. Standards in rental accommodation were notoriously low and while minimum standard regulations had been in place since 1993, they were already out of date and characterised by very low levels of enforcement. The combination of these factors resulted in the absence of a secure, regulated rental market that could offer a real, attractive long-term housing solution to people searching for an appropriate home. Rented housing represented a tenure choice of last resort. For many, it was synonymous with student accommodation and grotty bedsits - a short-term or the only solution for the most marginalised and vulnerable in our society who could not afford anything better.
This, thankfully, is not the private rented market of today. More people are renting than ever before. Census figures from 2011 show an increase of almost 64% in the number renting from private or approved housing body landlords since the last census in 2006. The proportion of overall home ownership has declined by 5% and the rental market now accounts for 29% of the total housing market. In the eight years since the passing of the Residential Tenancies Act and the establishment of the Private Residential Tenancies Board, PRTB, we have seen significant strides in the development of the private rental market which is largely unrecognisable from where it was at the end of the millennium.
The Residential Tenancies Act introduced real security of tenure for tenants in the private rented residential sector for the first time. It set out minimum obligations for landlords and tenants and provided access for both tenants and landlords to a relatively cheap, informal and independent dispute resolution service. It laid out conditions for rent reviews and prohibited the charging of rents in excess of market levels. It set out fair procedures for the termination of tenancies and provided for notice periods linked with the duration of a tenancy.
The PRTB was established as an independent statutory body under the Residential Tenancies Act on 1 September 2004. Its principal activities include the registration of private residential tenancies and the resolution of disputes between tenants and landlords, as well as the provision of information, assistance and advice for the Minister on the private residential sector. It has achieved much since it was established. It can now offer clients a full suite of online services, including online tenancy registration and payment facilities. Since 2012, it has introduced online dispute applications, with electronic case management of files, which allows parties to register an adjudication, mediation and tribunal online. From the perspective of internal efficiencies, this takes 1.2 million items of post and paper out of the system through scanning, electronic case management and remote access via secure portals. In addition, new software rolled out by the PRTB allows effective interrogation of databases provided by sister public sector organisations, primarily the Department of Social Protection, and is proving to be a very effective tool both in identifying unregistered landlords and electronically managing their case files to secure registration compliance and bring prosecutions, where necessary. It has allowed the PRTB to lay the groundwork for a compliance programme for the prosecution of landlords who fail to apply for tenancy registration. However, more remains to be done.
It is recognised that it can be a considerable period before cases are heard by the PRTB and it is essential that, as much as possible, we supply the board with the necessary tools to reduce delays. I am aware that this issue is a concern for Senators. It must also be acknowledged, however, that the number of dispute cases referred to the PRTB has grown by 25% since 2008. During the same period, staff numbers decreased by 53% from their peak as a result of the employment control framework's relentless downward pressure on public sector numbers right across the board. Notwithstanding these challenges, the PRTB is actively pursuing a range of modernisation initiatives such as outsourcing of work and shared services.
It is hoped that in the longer term this will enable the PRTB to continue to do more with less and significantly reduce delays. Outsourcing of its paper registrations process and of its telephony services has allowed the PRTB to cope with a reduction in staffing numbers, while offering an expanded telephone contact service. It has worked closely with other public bodies and public service partners such as the Revenue and the NTMA on ICT developments. Its investment in ICT is a key element in its corporate plan and modernisation agenda under the Croke Park agreement. A new tenancy management system came on stream in mid-2012 and will considerably reduce processing times in 2013. It must be recognised, however, that there will be considerable challenges for the PRTB in the years ahead and the Government is committed to helping it to meet these.
My Department conducted a review of the Residential Tenancies Act in 2009, with a specific emphasis on whether it best supports the PRTB's key functions and on whether legislative amendments would support either the achievement of additional operational efficiencies by the PRTB in the delivery of those functions or the broader good working of the private rented sector. The outcomes of the review were announced in April 2010 and the drafting of the general scheme of a Bill to give effect to the recommendations of the review was approved by Government in July 2011. The Residential Tenancies (Amendment) (No. 2) Bill 2012 has just concluded Second Stage in the Dáil. I very much look forward to what I hope will be a constructive debate on the Bill when it comes before the Seanad later in the year. It builds on what has been achieved by the Residential Tenancies Act and the PRTB and provides for the further development of the rental sector into the future by introducing into law a number of programme for Government commitments. While it contains a number of quite significant policy developments, this is very much an evolutionary rather than revolutionary item of legislation.
Perhaps the most significant achievement of the Bill, if enacted, will be the extension of the remit of the Residential Tenancies Act to approved housing body dwellings. Approved housing bodies generally provide rental accommodation for families and persons with specific categories of need who are on the social housing list. However, the relationship between these tenants and their approved housing body landlords is not generally provided for in either the Housing Acts or the Residential Tenancies Acts. Instead, they operate on the basis of lease agreements, the various Landlord and Tenant Acts and common law. As such, formal regulation of the tenant-landlord relationship in the sector lags considerably behind the private rented sector and there is an urgent need for a modern legislative basis for approved housing body tenancies. The Bill will afford to those in the approved housing body sector the same rights and obligations as those afforded to landlords and tenants in the private rented sector. This is a logical follow-on from the June 2011 housing policy statement, which sets out the key role envisaged for the approved housing body sector in the delivery of social housing.
Extending the 2004 Act to approved housing body tenancies will create a unified legislative base for the private rented and approved housing body sectors, assisting movement between tenures and making more efficient use of rental stock across both the public and private sector. Creating a unified legislative basis assists in the objective of affording equal treatment to households in similar economic circumstances and is consistent with my belief that broadly similar rights and responsibilities should apply to all forms of rented accommodation. This raises the logical question as to whether the same framework of rights and responsibilities should be extended to the local authority sector. My view is that this is a natural next step but it will not be dealt with in the context of the Bill before the House. In that context, we are dealing here with a very broad area and an extremely large number of tenancies. I am of the view that the extension to which I refer will occur in the future.
An area still under development, which I will raise for consideration during the Bill's passage through the Oireachtas and about which Senators are very concerned, is that of deposit protection. This is a priority I identified when I was appointed as Minister of State last December and it remains so. As the House will be aware, the programme for Government 2011 contains a commitment to establish a tenancy deposit protection scheme to address this issue. On foot of this commitment, I asked the PRTB to commission research on such a scheme and, following a selection process, the research contract was awarded to Indecon economic consultants. I received the final report on the topic from Indecon in November and I have given a commitment to act on the establishment of a deposit protection scheme in the context of the passage of this Bill through the Oireachtas.
On an initial examination of the report, it seems that Indecon has prepared a comprehensive analysis of the range of options for delivery of the programme for Government commitment. I will need to weigh up those options and determine how best to offer the greatest protection to tenants in this area at the least cost to the Exchequer. Critical issues currently being addressed include whether a scheme should be custodial or insurance-based in nature, whether it should be operated by the PRTB or a third party and how it should interface with the current legal system and the PRTB. In order to inform wider debate and thinking on this topic, I published the report on my Department's website before Christmas. I very much look forward to hearing Senators' views on the report, particularly as there is a great deal of expertise in the House in respect of this issue.
Given the rapid growth in the size of the sector, it is imperative that an acceptable set of minimum accommodation standards be applied in the private rented sector. During the past 20 years, since the first minimum accommodation standards were set down, our expectations as to what constitutes acceptable housing have advanced a great deal. The new regulations reflect the requirements of a modern rental sector and wider quality-of-life expectations. Outdoor toilets, no hot water and open fires as the only heating source have been consigned to the past as today's minimum standards cover a broad range of requirements from structural repair to sanitary facilities and from heating and ventilation to the safety of gas, electrical supply and fire safety.
The first day of February 2013 was particularly significant in the ongoing drive to improve standards as the four-year phasing-in period that had been allowed for existing rented accommodation under the Housing (Standards for Rented Houses) Regulations 2008 expired. Since that date, all rented accommodation must have its own sanitary facilities in a separate room. This means that the days of multiple rented units sharing a single bathroom are over. The fact that this reform is being introduced in the centenary year of the 1913 Lockout - a struggle which brought to worldwide attention the plight of tenement dwellers in Dublin - will not be lost on Senators, who have taken a keen interest in the decade of centenaries that we have embarked upon. One can see, from the exhibitions relating to the housing which obtained at the time of the Lockout, that we have come a long way. I intend to ensure that the reform to which I refer is fully implemented.
Enforcement of these standards is a key challenge for the local authority sector but I am satisfied that the new standards regulations provide for a much strengthened sanctions and enforcement regime. The penalties for non-compliance with the regulations can amount to a fine of up to €5,000 and-or imprisonment for up to six months. Local authorities will also have the power to serve prohibition notices on properties which prevent the landlord from renting the property out until such time as it complies with the standards. I am very confident that local authorities have an active programme of targeted inspections in place to ensure compliance with standards. In 2011, for example, almost 20,000 inspections were carried out nationwide, more than 2,500 improvement notices were issued and, while most compliance issues were addressed, 60 prohibition notices were served. Dublin City Council is particularly active in this regard and initiated 36 prosecutions in 2012 under the standards regulations.
My Department placed advertisements in national newspapers in October outlining these new requirements and we will continue to work with key stakeholders such as the local authorities, Threshold and the Irish Property Owners Association, IPOA, in order to spread awareness of the standards and improve compliance. It is important to note that in 2008 each of the aforementioned entities played an important role in the consultative and drafting phase relating to the new regulations. It is for this reason I am somewhat puzzled by the IPOA's sudden public pronouncements of concern regarding the perceived negative impacts of the new regulations on tenants and landlords. I am of the view that a four-year lead-in period is more than adequate notice of these changes and I expect landlords to comply with their legal and moral obligations in this area. I also expect vigorous enforcement of these standards by local authorities. I understand that Dublin City Council, in particular, has a strong current focus on this area. I reiterate that there was a four-year lead-in period and that there is no excuse for landlords who have not yet brought their properties up to standard. In general, however, I am satisfied that significant progress has already been made with regard to minimum standards in recent years. The final implementation of the Housing (Standards for Rented Houses) Regulations 2008 represents a significant step forward.
We have minimum standards for rented accommodation to protect the most vulnerable in society. Strong standards and robust enforcement, allied to an ever more professional rental sector, will contribute to the creation of sustainable communities and healthy and happy homes.
Some comment in the media in recent days has attempted to introduce outlandish claims that this progressive move will increase the level of homelessness. The former Minister of State, Mr. Michael Finneran, was right to introduce these regulations in 2009 and they will not be rescinded or diluted under my watch. This is an issue of human dignity. It is about raising the standards of accommodation availed of by some of the poorest in society. Threshold, the voluntary organisation working with private rented sector tenants, fully concurs with this view and welcomes the introduction of the new standards, the only purpose of which is to provide citizens with decent and modern living conditions.
I look forward to tabling detailed amendments on Committee Stage relating to the issue of rent arrears. I am very aware of the concerns of landlords about unpaid rent and of the difficulty of repossessing a rental property in cases in which the rent remains unpaid. In these difficult times, when many are struggling to pay mortgages on buy-to-let properties, it is essential to take action on this issue. We have made significant progress in dealing with the complex legal and policy issues surrounding this topic, but it was not possible to finalise the necessary provisions in time for inclusion in the published Bill. It is a case of balance and ensuring both landlords and tenants are protected.
The Government is committed to a ten year neutral approach to housing. We will continue to support the development of a strong, vibrant and well regulated private rented sector. Strong standards and robust enforcement, allied to an ever more professional rental sector, will contribute to the creation of sustainable communities, equity of choice and decent living conditions. This must be our long-term goal.
I thank my colleagues in the Seanad for inviting me to attend today. I look forward to the debate. I know that all Members are willing to work with us in finding solutions to the problems we face. I welcome the views of Members, as we know significant challenges lie ahead. The state of the economy means we do not have the money we had in the past to spend on social housing. We want to ensure the private rented sector is properly regulated, treated equally and can be a real option in modern Ireland. We will provide the legislative base and the enforcement regulations required to make this happen.
