I am pleased to be in the House to introduce the Residential Tenancies (Amendment) (No. 2) Bill 2012. 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Prior to 2004, the rental market operated in a crude and fragmented manner, governed by outdated Victorian legislation. There was little or no security of tenure for tenants and recovery of possession was a nightmare of long and expensive court proceedings for landlords. Even minor disputes arising during the course of a tenancy had no avenue for resolution other than the courts. Standards in rental accommodation were notoriously low and the minimum standards regulations which had been in place since 1993 were out of date and characterised by very low levels of enforcement. The combination of all of these factors resulted in the absence of a rental market that could offer an attractive long-term accommodation choice to people searching for a home. Rented housing at the time represented a last resort. The rental market was viewed as being for student housing or bedsits. Rented housing was regarded as a short-term solution or a solution for the most marginalised and vulnerable in our society who could not afford anything better.
Thankfully, this is not the private rented market of today. More people are renting than ever before. Figures from the 2011 census show a virtual doubling of the private rented sector since the 2006 census, from just under 10% to 18.5% of the total housing stock. The proportion of overall home ownership, having once peaked at 80%, declined from 75% in 2006 to 70% in 2011 and the rental market now accounts for 29% of the total housing market when local authority housing and stock in the not-for-profit approved housing bodies sector are taken into account. In the nine years since the passing of the Residential Tenancies Act significant strides have been evident in the development of the private rented market and it is largely unrecognisable from the market at the turn of the millennium.
The Residential Tenancies Act 2004 provided for the first time real security of tenure for tenants in the private rented residential sector. It set out minimum obligations for landlords and tenants and provided access for both tenants and landlords to an inexpensive, informal and independent dispute resolution service. The Act 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, with mandatory notice periods linked with the duration of a tenancy. The setting aside of a portion of the tenancy registration fees for the enforcement of rental standards resulted in an exponential increase in the number of rental standards inspections carried out by local authorities. Only 2,000 inspections of rented dwellings were carried out by local authorities in 2003, while in 2012 that figure was almost 20,000. This has contributed to a significant improvement in the standard of rental accommodation available to tenants today. The final implementation earlier this year of the 2008 rented standards regulations continues that work. However, the most significant achievement of the Residential Tenancies Act has been to create the conditions for the growth and development of a sustainable well regulated rental market with the result that rented housing today is no longer viewed as a tenure of last resort but as a very viable tenure option.
While recognising the achievements since the passage of the 2004 Act, it is also important to acknowledge that the rental market is far from perfect. For instance, below standard properties continue to be rented out. In addition, a small minority of landlords continue to fail to register tenancies and issues regarding the failure to return deposits and the non-payment of rent create very real problems for tenants and landlords alike.
The Residential Tenancies (Amendment) (No. 2) Bill 2012 builds on what has already been achieved by the Residential Tenancies Act and the Private Residential Tenancies Board. In providing for the further development and regulation of the rental sector the Bill is a key component in the delivery of the Government's housing policy. I refer to the Government's housing policy statement which was published in June 2011 and marked a profound change in the State's approach to housing policy. This short statement was based on a number of fundamental principles and goals which will form the basis for reform. It takes account of the dramatic cycle of growth and collapse in the residential property market and, in that context, charts the way forward for housing policy by placing explicit emphasis on choice, equity across all housing tenures and delivering quality outcomes for the resources invested. This policy is serving as the framework for a sequence of legislative and policy initiatives in the short to medium term. Key to these aims is the move from a focus on the promotion of home ownership to a more equitable treatment of tenures. This crisis has taught us that home ownership need not be the ultimate goal. This does not mean that the Government is turning its back on home ownership or that it is seeking to impede people from realising their valid home ownership aspirations; far from it. For the majority of households, home ownership will continue to be the tenure of choice.
This is recognised and welcomed by the Government. However, there are other households that may not want or be in a position to own a home. Our goal for such households is to provide choice based on household circumstances and needs rather than the expectation of house price growth. We now have 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 well-regulated rent sector, which is an integral part of future housing policy. The Bill before us today is an important step on that journey.
Foremost, we must ensure that we do not return to the unsustainable, unprecedented growth that represented the boom years. On the contrary, we must seek to provide a moderating structure that allows for sustainable and long-term growth. For my part, I am committed to the development of a genuinely sustainable approach to housing policy that will enable all households to access good quality housing appropriate to their circumstances and in their community of choice. Above all I am committed to a vision of housing where people once again view their house as a place for hearth and home and not as an asset for investment return.
The Residential Tenancies (Amendment) (No. 2) Bill 2012 is part of that vision and I hope that will become clear to colleagues in this House over the course of this debate. The Bill is set out in six parts, with 65 sections, and I will now refer in some detail to the main provisions. Perhaps the most significant achievement of the Bill as it stands would 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 and they operate on the basis of lease agreements, the various Landlord and Tenant Acts and common law. Formal regulation of the tenant-landlord relationship in the sector lags considerably behind the private rented sector; while recognising that the vast majority of tenancies in the sector work very well, there is an urgent need for a modern legislative basis for approved housing body tenancies. The Bill will afford the same rights and obligations afforded to landlords and tenants in the private rented sector to those in the approved housing body sector. This is a logical follow-on from the June 2011 housing policy statement, which set out the key role envisaged for the approved housing body sector in the delivery of social housing. In view of the ongoing development of the approved housing body sector and its greater role in social housing provision, the Government is committed to improving governance and formal accountability generally in the activities of the sector.
Approved housing bodies are at the heart of the Government's vision for housing provision. As part of this process, it is critical that assurance is given to stakeholders in respect of the stability, viability and capability of the sector. Governing bodies, tenants and potential investors must have reassurance that the sector is well managed and stable and is a good long-term investment. To this end, my Department is committed to the development of a regulatory framework for the sector that will support its long-term growth. The extension of a formalised structure for mediating the tenant-landlord relationship is a logical corollary to this project. A key landmark in this process was the publication in July 2013 of Building for the Future, a voluntary regulation code for the approved housing body sector.
Part 2 provides for the application of the Act to dwellings let by approved housing bodies. The result of the amendment will be to extend the rights under the Residential Tenancies Act to an estimated 20,000 tenancies in the approved housing bodies sector. On foot of the decision to bring the approved housing body sector within the remit of the Residential Tenancies Act and recognising that the legal framework is no longer applying solely to the private rented sector, the Private Residential Tenancies Board will be renamed as the residential tenancies board. 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 will assist 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. I am seeking to accommodate households on waiting lists in all tenures using excess private housing under leasing schemes and other such initiatives. Movement between tenures for such households is greatly facilitated through a common legislative base.
Of course, this progression towards a rights-based approach in rented tenures raises the inevitable question of how best to deal in the long term with local authority tenancies. While this Bill will not address that issue, it is clear that further specific action will be required in that area, in that a great deal of further thought, research and consultation will be required before proposals are produced in this regard.
The Private Residential Tenancies Board, PRTB, was established as an independent statutory body under the Residential Tenancies Act on 1 September 2004. The principal activities of the PRTB include the registration of private residential tenancies and the resolution of disputes between tenants and landlords. The PRTB has achieved much since it was established, but more remains to be done. It is recognised that PRTB resources are under considerable strain, and it is essential that we supply the board as far as possible with the tools necessary to reduce delays. However, it must also be acknowledged that the number of dispute cases referred to the PRTB has grown by 37% since 2008. At the same time, total staff numbers have decreased by 53% from their peak as a result of the downward pressure on public service numbers. Notwithstanding these challenges, the PRTB is actively pursuing a range of modernisation initiatives, such as the 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.
The PRTB's investment in ICT is a key element of its corporate plan and modernisation agenda. A new tenancy management system came on-stream in mid-2012 and it will considerably reduce processing times in 2013. This Bill will also contribute to reducing delays by streamlining procedures wherever possible. However, it must be recognised that there will be considerable challenges for the PRTB in the years ahead in dealing with an increased workload and the addition of some 20,000 AHB tenancies to its remit. These are challenges that the Government is committed to helping the PRTB to meet.
Part 3 provides for the separation of the quasi-judicial and administrative functions of the board and for the reduction in the maximum number of board members from 15 to 12. The purpose of this amendment is to allow the board to focus exclusively on the corporate governance, financial management and wider policy issues affecting it. The 2004 Act provides that the PRTB may offer a mediation service to landlords and tenants who wish to resolve a dispute. Part 3 includes amendments to sections 95 and 96 of the 2004 Act. The aim is to encourage the use of mediation. The amendments simplify and streamline the mediation process by removing unnecessary procedural steps. It is hoped that, as the rented sector continues to mature and landlords and tenants work together to sustain long-term tenancies, there will be an increasing interest in the less confrontational mediation stream of the board's dispute resolution processes.
Part 4 provides for the merger of the Rent Tribunal with the PRTB. The Rent Tribunal was established under the Housing (Private Rented Dwellings) (Amendment) Act 1983. The role of the rent tribunal is to determine the terms of the tenancies, including the rent of dwellings formally controlled under the rent restrictions Acts. The merger of the Rent Tribunal and the PRTB was announced in 2009 on foot of the Government decision on the rationalisation of State agencies. The merger of these two bodies has been operating on an administrative basis since 1 October 2009. Administrative support services to the Rent Tribunal are provided by the PRTB and the chairman of the latter is the chairman of the tribunal. This Bill gives legislative effect to that administrative arrangement and provides for the dissolution of the tribunal.
Part 5 provides for the introduction of the new procedure that will enable the PRTB to deal effectively with tenants who do not pay rent during the dispute process. A dispute between a landlord and a tenant may be referred by either party to the PRTB for a resolution under section 76 of the 2004 Act. Under section 86 of the Act, rent continues to be payable pending the determination of the dispute, and a termination of the tenancy may not be effected during the course of the dispute. However, the provision that a tenancy may not be terminated pending the determination of the dispute has led, in practice, to a small number of tenants withholding rent while their dispute is waiting to be dealt with by the PRTB. The landlord cannot evict the tenant during the dispute process and, as result, may not be paid any rent for a number of months. This can lead to considerable hardship for landlords, who in many cases rely on rental payments to pay the mortgage on the dwelling. These new provisions will allow the PRTB to deal effectively and quickly with tenants who do not comply with their statutory obligation to pay rent during the dispute process. Such applications will be fast-tracked and will deal only with the non-payment-of-rent issue. Any other aspect of the dispute will be dealt with in the usual way at a later date.
I am confident that this new procedure will give the PRTB the power to deal quickly and effectively with the small number of tenants who blatantly disregard their obligation to pay their rent.
I was very kindly invited before the House last February for a very worthwhile and interesting debate on the private rented sector. Senators may remember that one of the issues that we discussed during that debate was the establishment of a deposit protection scheme. I announced at the time that I would be introducing legislative provisions for such a scheme on Committee Stage of the Residential Tenancies (Amendment) (No.2) Bill in this House. We are finalising the drafting of these provisions and I am very much looking forward to delivering on this programme for Government commitment in the next few months. The issue of the illegal retention of deposits is one which concerns me greatly. It was a priority I identified when I was appointed as Minister of State with responsibility for housing and it remains so today. I think almost every Deputy who spoke on the Residential Tenancies (Amendment) (No. 2) Bill during the Second Stage debate in the Dáil expressed his or her support for the programme for Government commitment to establish a tenancy deposit protection scheme. I am looking forward to receiving the support of Senators for this very worthwhile initiative. At this point, I must mention Senator Aideen Hayden, in particular, who has worked tirelessly in support of this project for some considerable time. Her contribution has been of significant value. The unjustified withholding of tenants' deposits by a small number of rogue landlords is something we cannot tolerate. The establishment of the scheme will eliminate this practice and contribute to the ongoing regulation and development of rented housing as an attractive and long-term housing option.
I will also be introducing amendments on Committee Stage to strengthen provisions relating to anti-social behaviour in private tenancies. I am on record as stating there is no silver bullet for tackling this persistent and widespread problem. However, there are positive steps we can take to give greater protection and security to the vast majority of law-abiding households whose quality of life can be seriously affected by anti-social behaviour. Our legislative framework should favour families who want to improve their community and strengthen the bonds that make that community work, not the minority of selfish individuals who do not give tuppence about their neighbours or their locality.
The Residential Tenancies (Amendment) (No. 2) Bill 2012 represents a significant evolutionary step in the development of the residential tenant-landlord regulatory environment. The extension of the Residential Tenancies Act to approved housing bodies is an important step in the development of a wider regulatory framework for the voluntary and co-operative housing sector in the coming years. This will bring greater transparency and accountability to this important sector which is playing an increasingly active role in social housing provision.
Deposit retention and rent arrears cases, taken together, represent almost 70% of all disputes referred to the PRTB. The Bill will deal with both issues effectively and efficiently and provide a solution to the two most significant issues affecting landlords and tenants. This is a forward looking Bill that will help the PRTB to realise operational efficiencies in the delivery of its functions and the broadening of its remit in order to ensure the good working of the private rented sector. Most significantly, the Bill will contribute to the continued development of the rented sector as an attractive, long-term housing option and will be a crucial factor in the development of a sustainable housing policy as we continue on the road to economic recovery. I commend the Bill to the House and look forward to working closely with colleagues in the Seanad as we discuss the legislation.