Residential Tenancies (Amendment)(No. 2) Bill 2012: Second Stage

Question proposed: "That the Bill be now read a Second Time."

Minister of State at the Department of the Environment, Community and Local Government (Deputy Jan O'Sullivan)

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Prior to 2004, the rental market operated in a crude and fragmented manner, governed by outdated Victorian legislation.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rental accommodation were notoriously low and the minimum standards regulations which had been in place since 1993 were out of date and characterised by very low levels of enforcement.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.

Senator Mary M. White

I welcome the Minister of State and commend her for the great work she is doing. The aims of the Bill are to speed up the dispute resolution service provided by the PRTB by encouraging mediation and to bring the voluntary and co-operative housing sector under the governance of the Residential Tenancies Act 2004. The Minister of State has indicated that she also intends to deal with tenants who are in situ but refusing to pay their rent, as well as setting up a deposit protection scheme. Fianna Fáil has considerable reservations about the capacity of the Bill to achieve these objectives. The main streamlining efforts are simply a renaming of sections of the structure, which will achieve little efficiency. Furthermore, bringing the voluntary sector within the PRTB's remit without sufficient resources will place additional pressure on the board and the sector.

The programme for Government 2011 contains a commitment to establish a tenancy deposit protection scheme to put an end to disputes over the return of deposits in the residential rental sector.

The lack of detail about the proposed scheme and the issue of tenants in situ refusing to pay rent means it cannot be discussed in detail at this stage, but it must form a vital part of an effective regulatory regime in a modern rental market. The Minister of State with responsibility for housing, Deputy Jan O’Sullivan, has promised to publish the significant amendments to the Bill in the Seanad. Adequate time should be given to ensure Senators have an opportunity to discuss the issues, particularly on the proposals for the deposit retention scheme.

Fianna Fáil introduced the Residential Tenancies Act 2004 with the aim of modernising and professionalising the private rented sector. It set out the rights and obligations of landlords and tenants in a comprehensive way and established the Private Residential Tenancies Board, PRTB, to replace the courts in most disputes in the private rented sector. The Residential Tenancies Act 2004 introduced a measure of security of tenure for tenants and minimum obligations applying to landlords and tenants, and provided for the establishment of the PRTB. In 2009 we initiated a review of the Act to test its effectiveness in operation and identify problems to be addressed. The recommendations of the review, which had an overall emphasis on streamlining the Act and reducing delays in the services of the PRTB, fed into the present Bill.

The review made recommendations on deposit retention, compliance, governance and the voluntary and co-operative sector. The introduction of a system whereby the landlord will face a mandatory fine if found to have illegally withheld a deposit will act as a deterrent to landlords who automatically refuse to return deposits. An amendment to the Act will allow the landlord to terminate a tenancy during the dispute process in circumstances where the tenant discontinues the payment of rent but remains in occupation of the property. The new legislation will remove the board’s direct role in the dispute resolution process and allow it to concentrate specifically on policy and governance. It is also proposed to extend the remit of the Residential Tenancies Act to the voluntary and co-operative sector.

The Bill now needs to be amended to adjust to the changed reality of the rental market in Ireland and the experience of the Bill in operation over the past eight years. The changes in this Bill come against a backdrop of a rapidly changing Irish rental market. The average Irish landlord has between 1.6 and 2.1 properties and less than 1.25% of landlords have ten or more properties, reflecting an undeveloped and amateur market in comparison with the European standard of large landlord companies operating multiple properties. The rental market is rapidly changing, particularly in the context of the collapse of the housing bubble, which is presenting a new set of challenges that the original Residential Tenancies Bill in 2004 did not accommodate. The number of households in rented accommodation increased by 47%, from 323,007 in 2006, to 474,788 in 2011. The overall percentage of households renting their accommodation rose to 29% over the same period, causing home ownership rates to fall sharply, from 74.7% in 2006 to 69.7% in 2011. Across Ireland, about 29% of people now rent, with 18.5% renting in the private sector. What is more interesting is the speed of change. Numbers renting in the private sector have increased 86%, up from 9.9%, since 2006.

The amateur nature of the rental market is highlighted in the 31.72% discrepancy in the number of tenancies registered with the PRTB in December 2010 and the number of tenancies recorded by the State census just four months later. This is symptomatic of a fear of regulation rather than recognition that regulation would strengthen the market, and indeed, rents. An effective regulatory regime will protect tenants and provide greater certainty to landlords investing in properties, generating a stronger overall market to the benefit of both.

Problems with the current legislation include the stunning complexity of the legislation, which means landlords and tenants struggle to identify and interpret relevant legal rules. The rules for termination of tenancies, for example, are a legal minefield. The PRTB dispute resolution procedures are multi-layered and, in many cases, do not facilitate fast outcomes. This is especially frustrating for landlords trying to enforce non-payment of rent or to repossess rented premises, and for tenants whose deposits have been unlawfully withheld by their landlords.

Landlords and tenants need a legislative scheme that is user friendly, together with an efficient mechanism for resolving disputes.

The disputes resolution service had a challenging year in 2010, with an unprecedented 2,230 dispute applications being received. This represents an increase of 20% on the 2009 figure. More recent figures from 6 February 2012 indicated that the number of complaints to the Private Residential Tenancies Board had risen by 25% overall. The most common complaints made by tenants concerned the refusal of landlords to refund deposits, which comprised 72% of all cases taken by tenants in 2010, while the most common complaints made by landlords concerned rent arrears and a breach of other tenancy obligations, which comprised 68% of all cases taken by landlords.

The addition of the voluntary and co-operative housing sector will further stretch the PRTB’s scarce resources and it remains to be seen whether the revised mediation rules, if enacted, will lead to a higher take-up of mediation. The voluntary sector will also be placed under pressure with additional logistical demands. Although viewed as tenancies for life, most approved housing bodies' tenancies are, in reality, weekly or monthly periodic tenancies that can be terminated with 28 days notice. There are 700 voluntary and co-operative bodies with approved housing body status. The inclusion of the voluntary and co-operative sector within the remit of the PRTB could result in approximately 185 additional dispute referrals, an additional 128 hearings and 73 determination orders per year. At current staffing ratios, this would require a minimum of 5.5 additional staff in the first year to provide the ongoing services of the PRTB. The main dispute areas are likely to centre on rent arrears, anti-social behaviour, neighbour disputes and maintenance, all of which have the potential to be time consuming for the PRTB to process.

The streamlining efforts of the Bill focus on changing names, the removal of a €25 mediation fee and tinkering around with the number of days given to the process. This does not constitute decisive action in reforming the work of the board and accelerating the process. There is nothing in the Bill to deal with tenants who are in rent arrears. However, it has been indicated that the issue will be addressed on Committee Stage. The Bill does not attempt to simplify the intricate rules governing the content of notices of termination, nor does it attempt to set any statutory timeframe within which a determination order should be issued following an application to the PRTB for dispute resolution. There is no provision in the Bill to clarify the long-standing ambiguity around the interaction between fixed-term tenancy agreements and the provisions governing tenancy terminations set down in the RTA. No changes are proposed to the controversial provisions on anti-social behaviour. Apart from the proposed amendments to the rules on mediation, there are no plans to streamline the dispute resolution process more generally or address the significant problems with practical enforcement of PRTB orders. Fundamental revision is needed, together with adequately resourced supporting measures, to promote awareness of rights and obligations among landlords and tenants in order to reduce the scope for disputes.

A deposit retention scheme on the basis of the model successfully used in the United Kingdom has been promised by the Minister and will be a vital component in a fully functioning, vibrant rental market. When will these changes be forwarded to Senators? Given the high volume of disputes brought by tenants owing to the withholding of a deposit, an effective scheme would have a far greater impact on speeding up the work of the PRTB than any name tinkering. A new system would further stabilise the rental market and bring greater certainty to both tenants and landlords, thereby creating a stronger overall market. The UK scheme is based on two options. The first is the custodial scheme, whereby the landlord pays the tenant's deposit into a central pot. At the end of the tenancy the money, plus a small amount of interest, will be paid back to the tenant from the central pot. The second option is an insurance based scheme, whereby the landlord keeps the deposit but pays a small premium to a dedicated insurance company. If there is a dispute, the insurer will pay the tenant the deposit and then recover it from the landlord. What type of scheme is the Minister of State considering?

Senator Cáit Keane

I welcome the Minister of State to the House. I also welcome the Bill. As the Minister of State said, it will streamline and simplify Acts and reduce delays in the dispute resolution services of the Private Residential Tenancies Board. The Bill makes provision for the inclusion within the remit of the Residential Tenancies Acts of tenancies in the voluntary and co-operative housing sector and I welcome this.

Amendments were made when the Bill was debated in the other House and I was delighted to hear the Minister of State mention these today. The Bill will amend certain provisions of the Residential Tenancies Acts 2004 to 2009 which govern the private rental sector as well as the Private Residential Tenancies Board. One of its most important functions is the provision of dispute resolution services to mediate, outside the court system, disagreements between landlords and tenants. This is important because we know how clogged up the court system is. The largest category of cases referred by landlords to the PRTB relate to rent arrears, as the previous speaker stated. In 2010 this figure was 31%. Most cases referred by tenants relate to deposit retention, and this accounted for 72% of cases in 2010. Any decision made through the dispute resolution service is legally binding.

The housing rental market, like the wider house market, experienced great change in recent years with the onset of the property crash. For many people, private renting is the only option. New regulations were introduced in February 2013 on the standard of houses and people will be able to obtain good quality private rented accommodation. In other European countries it is the norm for people to rent rather than own. As John B. Keane stated, the field is very important in Ireland, as is homeownership. The Minister of State has said it is still very important for the Government and nothing will change this.

Perception is nine tenths of the law and security is the other one tenth. Given the difficulty in obtaining mortgages, along with a fall in income, many people may never be in a position to purchase their own home. Traditionally such people opted for social housing of one type or another. For middle-income families this is not an option as they earn slightly too much to qualify. However, they have too little to obtain a mortgage under the strict criteria now being enforced by the banks, and which must be enforced because we saw what happened when the banks did not enforce such criteria. The increased demand in private rental housing will inevitably increase to meet this demand. This new market will become more vibrant, and for this reason it is essential the Government lays down guidelines. The Minister of State laid out loud and clear today very clear guidelines on the standard of private residential properties available for rent as I referred to earlier.

The market will provide some safeguard for tenants also. Professional landlords will see the advantage of providing good quality accommodation at a competitive rate along with security of tenure. This in turn will guarantee the landlords stable and long-term rental income. This approach will enable households to access good-quality housing appropriate to their circumstances in a community of their choice.

The Minister of State mentioned during a previous debate that she would bring forward amendments and she also referred to this today with regard to a deposit protection scheme. I await this and advocate it. We discussed it in the Seanad and the Minister of State has provided very positive information on it today.

There is a need for balance, as the Minister of State mentioned, between landlords and tenants. Landlords have an equal right to protection with regard to deposits and the Minister of State mentioned this equality in her statement. Any scheme which seeks to address deposit retention must fully balance the needs of tenants and landlords and as such language is important. The Bill states the name of the Private Residential Tenancies Board will change to the residential tenancies board. The language used with regard to the deposit retention scheme is also important. Will the Minister of State examine changing the title to a deposit and rent protection scheme, which would be more appropriate given the aims and objectives of the new scheme? This would open a new vista for all parties involved in the private rental contract and should relieve the workload of the PRTB. The purpose of tenants paying a deposit is to facilitate and compensate a landlord for damage caused to the property, fixtures or fittings.

The Irish Property Owners Association, IPOA, came up with the idea that a viable scheme could be considered with an increase of €5 on the current registration fee. I know some landlords do not register but, very often, it may not be the fee that is putting them off, and there will obviously be unscrupulous people in every field. I have considered this point and thought I would mention it today. In the event of a €5 increase on the current PRTB registration fee, the proceeds should be ring-fenced and placed in an appropriate interest-bearing account. Where a determination order is not complied with by a landlord within one month, the tenant should be compensated from this fund, subject to rent being paid up to the date of vacating the property and this being verified as such. If rent is paid up to date and the deposit is not refunded, immediate enforcement action should be taken by the PRTB against the landlord at the end of the action. Money recouped can be replaced in the compensation fund. Equally, if the amount of deposit paid by the tenant at the start of the tenancy does not cover any damage done to the property or any rent arrears, the fund should compensate the landlord. The PRTB should then initiate immediate legal action against the tenant on the same basis that it already initiates legal action against landlords on behalf of the tenants.

We need to achieve a balance and make people responsible when they are taking on a house to rent so that, if something happens, there are consequences that they cannot just run away from. This would lead to more properties being available and would also encourage people to take up that option.

As an alternative to the expenses of higher court actions, the remit of the Small Claims Court could be amended to facilitate PRTB eligibility to process cases in that court. The Small Claims Court currently has a limit of €2,000, which should be adequate for any deposit-related claims. If, in some cases, this is not sufficient to cover rent arrears, it could be dealt with by increasing the limits for the Small Claims Court.

The issue of non-payment of rent by tenants in situ during the resolution process was discussed in the other House on Report Stage, and amendments were made to that effect arising from amendments tabled on Committee Stage. These provided for the introduction of a new procedure to enable the PRTB to deal effectively with tenants who do not pay rent during the dispute process, to which the Minister of State referred. The purpose of these amendments, which now comprise the new Part 5 of the legislation, is to specifically provide for the application of that new process by a sub-tenancy. The duties and obligations of the tenancy and the sub-tenancy, of people taking over from tenants and in regard to secondary rent are well outlined in the Bill, which I welcome.

The PRTB was established in 2004 and its main function is to mediate disagreement between landlords and tenants. When the landlord takes on a new tenant, he or she must, by law, register the tenancy. Figures for non-registration were as high as 43,549 in the past, but when warning letters from solicitors were sent, this resulted in high levels of compliance. The new computer system will further facilitate the following up of all landlords and ensure that all of those with a property to rent register the tenancy with the PRTB.

I do not know if this issue currently arises in the benchmarking of local authorities, under which each one is graded on the amount of work it does in each sector. However, this is one of the benchmarks that should be added to that table so we can know, for example, that X number of landlords are registered, how many rented houses there are in each area, the percentage compliance and so on. This would make local authorities look at one another's data, because if this is possible in one area, it should be possible for all to do it.

The most common complaints by tenants concern the refusal of landlords to refund deposits, which, as another speaker noted, made up 72% of complaints. The main landlord complaints concerned arrears and other breaches of tenancy, with 68% of complaints by landlords on these matters.

Initially the PRTB was funded by the Exchequer, but it has been self-financing since 2010, which is welcome. I compliment the PRTB on the work it is doing. The properties for rent must meet new minimum standards, given that on 1 February 2013 the Housing (Standards for Rented Houses) Regulations came into effect for all residential rented accommodation. This means that all rented accommodation must have its own separate sanitary facilities.

In addition, updated requirements regarding heating, facilities for cooking, food storage and laundry will apply to all rented accommodation. This must be enforced. If the Minister of State is to do anything, she should ensure that local authorities have the staff to do this. When I was a member of a local authority, I used always say that it was all right to bring in regulations and impose duties on local authorities, but if staff do not have the wherewithal to go out and conduct inspections and do the work, we are on a hiding to nothing. We must lay down a strategy for inspection and enforcement and set out how that will be done so as to ensure all local authorities are playing their part.

I welcome the legislation, which will further improve our system of tenant-landlord regulation and promote mediation and resolution of disputes. The provisions in this regard are particularly welcome. I firmly believe that mediation can give people in dispute a speedy and effective way to resolve issues. The extension of the registration requirement to a large number of voluntary housing tenancies is a major development. People in those tenancies have exactly the same rights as people in private rented accommodation. The Bill is a first step in the process that will see statutory regulation of the voluntary and co-operative housing sector. This will bring greater transparency and accountability to this important sector. As the Minister of State mentioned, this sector is playing a huge role and I welcome its input in regard to the provision of social housing and other accommodation.

Senator Terry Leyden

I welcome the Minister of State to the House. This Bill has been worked on for some time. It goes back to the previous Fianna Fáil Government and some points in it were agreed at that time. The Bill is comprehensive and speaks for itself, but there are some areas about which I have concerns. One concern relates to the position of local authorities in regard to private rented accommodation. I am aware of two particular cases. One family in Lisacull in Castlerea, County Roscommon, was lobbying the county council to get some work done on their house, but as far as I am aware the county council is not covered under the PRTB and is exempt from it. I suggest the Minister of State should consider bringing local authorities under this legislation.

I have a letter here to a landlord outlining the details of requirements, such as fire blankets and so on, which had not been supplied. However, the council, which issues requirements and carries out inspections, does not get involved in this regard in its own council houses.

Senator Denis Landy

They could not. That is ridiculous.

Senator Terry Leyden

I do not think Senator Landy is the Minister yet.

Senator Denis Landy

It is ridiculous. Senator Leyden was a Minister and should have more sense than to make a statement like that.

Acting Chairman (Senator Michael Mullins)

Senator Leyden, without interruption.

Senator Terry Leyden

I will put it another way. What appeals system operates in regard to the conduct between a local authority landlord and a tenant? What controls operate in regard to the implementation of work on these houses? In this particular case, the tenants came to me and I went to the local authority to make the case, but there was nobody policing the policemen in this particular regard. However, it is these very local authorities who send out large demands to landlords. The landlords are being issued with requirements by an authority that does not itself comply with good standards. Demands are made on landlords for grass to be cut and sewerage work to be done, etc., but the Residential Tenancies (Amendment) (No. 2) Bill does not take any account of this.

As far as co-operative housing is concerned, I believe there should be some provision for a tenant to become an owner at some stage. Why are tenants excluded from ownership of any of the houses in these co-operative housing schemes? They can be tenants for years and years, but get no opportunity to have a home for life or to buy into their houses. If housing co-operatives could dispose of tenancies this would bring some funding into the system which could be reinvested in further development.

I welcome the fact that NAMA has dealt with some of the co-operative housing schemes and presume the Minister of State was involved in the approval of an application to refurbish approximately seven houses in one of these semi-ghost estates. This is a welcome development.

The longer these estates remain empty, the more the properties will deteriorate. Without regular heating, a house will degrade very quickly. If action is not taken now, many of these houses will become uninhabitable. In that context, the Minister of State's approval of the purchase of a certain number of properties by a co-operative organisation is very welcome. These units will now be refurbished and provide decent accommodation for people in need of housing.

There can be little doubt that the cost factor must have discouraged significant numbers from applying to register a tenancy. The Minister of State is aware of the statistics for the numbers of people renting houses and the fact that there is a lower collection rate than is the case with the television licence fee. The information is coming in very strongly to the Department on property tax registrations. The data will show exactly the number of rented properties and whether the tenancies were registered. If an individual was paying the non-principal private residence charge of €200, it is surely obvious that he or she is liable for registration with the Private Residential Tenancies Board.

I note the Minister of State's intention to introduce amendments on Committee Stage. I am sure she is aware that some years ago a Green Party councillor from County Monaghan was appointed to the Private Residential Tenancies Board by the former Minister, Mr. John Gormley. This individual was obliged to resign from the board and then resign from the council before being reappointed to the board. This practice of excluding local authority members from participation in boards of this type is an issue we have raised in the House many times. The former Minister of State, Mr. John Curran, was one of the few Ministers who provided, in the Charities Act 2009 he brought through the Houses, that local authority members should not be excluded per se from such membership. There was to be no right of appointment but neither was their appointment prohibited. As far as I can see, however, that prohibition stands in the Bill. Will the Minister of State comment on this?

I could talk at length about the provisions and benefits of the Bill, but my time is up. I fully support the legislation, the drafting of which began during my party's period in government. There is a clear need for the consolidation of services and the appeals system and these provisions are very welcome. I hope the Bill will proceed quickly through the Houses and that its provisions will be implemented without delay. I look forward to the Minister of State's response to my queries regarding local authority accommodation. In particular, will she indicate whether there is an appeals system within the Department to deal with disputes between tenants and the local authority or if that is a matter entirely for the housing offices of local authorities?

Senator Aideen Hayden

I welcome the Minister of State and congratulate her and her departmental staff on bringing forward this legislation. As she observed, the residential sector, particularly the private residential tenancies sector, is very different from what it was some years ago.

I first became interested in this issue when I worked as a census collector in the mid-1980s during my time in college. My assignment covered the Clarinda Park area of Dún Laoghaire where I encountered a number of properties comprising 13, 14 or 15 bedsits with one shared bathroom between four or five units. When one works as a census collector, it is often necessary to return to certain properties many times, as a result of which I became quite friendly with some of the residents in the area. I recall one particular woman who had retired from a very nice position, as it was at the time, as secretary to a senior partner in a law firm and was then living on a modest fixed pension. She was sharing a property with a number of returned immigrants who had been working on building sites in Britain.

They were lovely men but she was afraid to go to the bathroom after 6 p.m. and could not have a bath or a shower without bringing a tub of Domestos with her to clean out the bathroom after the men had used it. I remember thinking it was outrageous that someone could reach their 70s and be living like this. That was the private rented sector in the 1980s. We have come a long way in 20 years, from what was termed the forgotten sector to what is the Cinderella sector today. As the Minister of State pointed out, the sector has grown from just under 10% in the 2006 census to just under 20% today. It is a considerable growth in the rental sector. Part of the growth is due to the fact that successive Governments have taken seriously the regulation of the private rented sector. Much has been done and I will give credit to other Governments for what has been achieved in the area.

The Residential Tenancies Act was a key item of legislation in introducing security of tenure. Previously, irrespective of how long people had been living in rented homes, they could be given 28 days notice to vacate them unless they had leases. Many of the poorest people in Ireland did not live in properties where they had leases. The Act also allowed for out-of-court resolution of disputes, which was critical. Very few poor tenants can afford to access the courts. It also provided for a measure of rent certainty. Members may not remember but during the 1990s, rents increased by 60% in some parts of the country. The Act also clearly laid out the obligations of landlords and tenants in terms of what both parties are obliged to do. It is a two-sided coin.

At the time, many people said it would destroy the rented sector, with landlords exiting the sector like snow in front of the sun. That is not what happened. The feedback from many people is that legal clarity of regulation has helped to grow the rental sector in Ireland.

Progress has been slow in some areas, such as in the area of standards. Although we have had legislation that has significantly improved standards, in particular the 2008 and 2009 legislation, enforcement of those standards varies. Some local authorities, and I single out Dublin City Council, have been particularly robust in the administration of standards; others have been abysmally poor. As the Minister of State knows, I have called for a certification system, as opposed to the current system, like an NCT for rented housing so that no landlord is entitled to let housing without a certificate outlining the property is fit for purpose and complies with the standards. That would put the onus on the landlord to prove compliance rather than the current situation, which puts the onus on the local authority to prove non-compliance.

A number of points were made by Senator White about the PRTB and, as a former member of the board, I would like to address them. The PRTB has achieved a significant amount of improvement in its performance over the past number of years. When considering the number of cases dealt with by the PRTB in 2010 and the period of time in which it now rectifies disputes, its performance has improved substantially. It is also important to note that there are few disputes in the rented sector. That should be acknowledged. Out of 474,000 tenancies, only 2,230 cases came before the PRTB. This is a compliant sector, with a number of very serious areas where disputes occur. The Government is on track, in dealing with areas where disputes arise. I welcome the commitment in the programme for Government to the introduction of a deposit protection scheme. It remains the biggest single issue for tenants living in Ireland and it is a significant contributor to the increased levels of homelessness that we have seen in the past 12 to 18 months.

Although it is not the subject matter of this legislation I also welcome the housing assistance payment which will be introduced by the Minister, Deputy Burton, and the Minister of State, Deputy O'Sullivan. This will give rental payments directly to landlords and will help with the issue of rental arrears, which is one of the two biggest issues along with deposit protection for tenants. The other significant and emerging issue is in the area of accommodation standards and their enforcement. Credit must be given to the PRTB for its work to date and for its achievements, albeit with reduced numbers of staff, as the Minister of State has acknowledged.

I welcome the inclusion of approved housing bodies in the Bill. It is certainly true that there has been a variable standard in the operation of approved housing bodies and it is time for that sector to join with the private rented sector and adopt modernised regulation. The number of tenancies at 25,000 or fewer will not significantly undermine the PRTB. It is important to recognise that we have moved on as a country in this regard. I am not convinced that we will ever reach 80% home ownership again. Renting, whether social or private sector, is an important aspect of the choices available to people. There is widespread support, in my view, among the approved housing bodies for inclusion in this legislation which contains positive provisions for both landlords and tenants in that sector.

I refer to the more controversial elements such as the inclusion of provisions to facilitate the rapid resolution of cases of rent arrears. The payment of rent is the basic contract between landlord and tenant. I do not think anyone would argue that this is not the case. I have certain observations on the provisions in the legislation and I will make those observations on later Stages of this Bill. In a time of severe recession and with 30,000 buy-to-let landlords facing repossessions, there is a need for compliance with the requirement to pay rent. The housing assistance payment, HAP, when introduced, will help in that regard.

I welcome the introduction of the provision for deposit protection and that the Minister of State has introduced it in this House. It is a significant measure to which this House will give serious consideration. This Bill will contribute to the development of the private rented sector and also the social rented sector in so far as it is comprised of the voluntary housing associations. I favour its extension to social housing provided by local authorities and I await the Minister of State's comments on how she believes this could be achieved and the timescale for its inclusion. I congratulate the Minister of State for this piece of legislation and in particular for bringing forward measures which have been long awaited by Threshold and other voluntary organisations.

Senator Kathryn Reilly

I welcome the Minister of State to the House and I wish to indicate Sinn Féin's support for this legislation. As other speakers have noted, there is a significant variation in the rights and regulations governing tenancies in the rental sector. For example, three tenants living beside each other in identical houses could comprise a local authority tenant, a housing association tenant and a private rental tenant.

The private rental tenant would have, in some respects, greater protection under the law than the tenant in the social housing sector, for example. All three tenants would have different rules and procedures for the most basic aspects of the tenancies, which does not make sense. The law governing tenants and landlords should be the same irrespective of whether a tenancy is private, with a housing association or with a council. It is amazing that there are no regulations outlining the rights and responsibilities of landlords and tenants in social rented housing.

Since the passing of the Residential Tenancies Act 2004, Sinn Féin has been among many voices calling for the uniform application of landlord and tenant regulation right across the rental sector, including social and private aspects. It does not make sense for tenants to have one set of rights while living in the private sector but another while living in local authority or housing association properties. I welcome the fact that the Bill before us brings together thousands of housing association tenancies into the regulatory code, although as I mentioned, I am disappointed that logic has not been followed to include council tenancies as well. I am interested, as Senator Hayden mentioned, in how this could be introduced, and in the meantime we will continue with two different types of protection. That is without justification.

The Minister of State and my colleague in the Dáil, Deputy Ellis, mentioned the deposit retention scheme and I look forward to amendments on Committee Stage in this respect. We all know the arguments regarding the retention scheme are very strong, and although the majority of landlords and tenants have no problems when ending a tenancy and returning a deposit, a significant number of cases may see a dispute. A failure by some landlords to return deposits may, in this day and age, leave a family homeless because of an inability to secure new accommodation without a deposit. Deposits are not cheap and people can struggle, especially if they are looking for a family home because they have small children. Trying to get the money together can be quite difficult. The issue takes much of the Private Residential Tenancies Board's time and resources, and they could be used to better effect. The Bill has many positive developments, such as changing the operation of the dispute resolution process, which will enable speedier resolutions. It will free up the working of the tenancies board.

There is an issue with the resourcing of a reformed residential tenancies board. There is an increasing reliance on the private rental sector not only among renters but also through the different housing schemes of the State, including rental accommodation long-term leasing schemes. The workload of the Private Residential Tenancies Board is increasing but the self-financing regime may be hampering its ability to fulfil statutory obligations. Perhaps the issue should be examined and the board should find new ways to ensure landlords and tenants get the best protection from this Bill.

We welcome the legislation and support it but we look forward to seeing the amendments relating to the deposit retention scheme.

Senator Deirdre Clune

I apologise for not being here when the Minister of State delivered her speech as I was attending another meeting. I have read the speech and the Minister of State's comments on Second Stage of this Bill in the Dáil. As many people have indicated, this provides an opportunity to focus again on the 2004 Act, the value of the legislation and its provision of security, particularly regarding tenure for tenants. It also addressed standards, which have improved. The Minister of State has today indicated the number of people renting, which has increased considerably. From 2006 to 2011, the figure increased by approximately 29%, while on the other side of the equation private home ownership has reduced. That underlines further the need to ensure proper structures so that tenants and landlords can have a positive relationship, with a statutory support for that relationship.

The Bill's main purpose is to ensure that approved housing bodies come under the Residential Tenancies Act 2004, and I am in no doubt about the importance of doing that given the greater role they will play in housing policy. I have dealt with many of the housing bodies, which I know work closely with local authorities. My experience of working with them, which is limited, has been positive and they are supportive of tenants. The community units in which they are involved tend to be smaller, which works in their favour.

The PRTB, which is to be renamed the residential tenants board under the Bill, was established under the 2004 Act. It has played a strong and important role in ensuring that disputes between landlords and tenants are addressed. In many cases, a dispute can be drawn out. I want a timeframe included in the Bill in which the board should act. The Minister mentioned an increase in referrals at a time when staff numbers have reduced by 53% since 2008. That speaks for itself. Nonetheless, the Private Residential Tenancies Board is an important establishment. When cases of anti-social behaviour have been referred to the board it takes a long time to establish whether the board can deal with them, so there is room for streamlining the types of complaints that go to the board.

As has been said, not all landlords are registered with the Private Residential Tenancies Board. However, Government Departments hold much information, including in Revenue and the Department of Social Protection, about who is and is not a landlord and what properties are registered. That situation could be tidied up. There are moves afoot to do that, but the last time I was involved in studying the issue there was no tie up between the two areas. I do not take data protection issues lightly, but were we able to deal with those, there is much information available that could be used.

On rent reviews and rents in excess of the market value, I welcome the positive impact that the 2004 Act has had in addressing fair procedures for determining rents. However, there is anecdotal evidence of large rent increases, particularly in the Dublin area where there is a huge demand for properties. In the current climate it will be the landlords who benefit from increasing rents because they are the ones who call the shots in a provider's market. The housing market continues to fluctuate, but rent levels are a serious concern, particularly for young people who are moving into the rental market and trying to establish a home but find themselves in a difficult market in which properties or rooms in accommodation can be taken within five minutes of being advertised on a website.

Senator Denis Landy

I welcome the Minister of State to the House, and I commend her on bringing forward this legislation. The Bill, which we have looked for for a long time, is an important step.

I welcome the Minister of State's announcement to legislate for a deposit protection scheme. We have all had cases in our constituencies in which deposits have been withheld. In some cases, it has been denied that deposits have ever been paid, in others, the people who are relying on those deposits to move house for one reason or other have been denied the opportunity of getting the deposits returned to them. I, therefore, welcome that this issue will be dealt with in the legislation.

I have questions about the legislation. I know that we are in an era in which, for political or other reasons, reductions are called for, but why is the board to be reduced from 15 to 12 members? On the rights of individual residents, Senator Reilly referred to the fact that there could be three different types of tenants - private, voluntary housing and local authority - in one housing estate, all of whom have different entitlements. I am concerned about a situation in which a tenant is involved in anti-social behaviour. Who takes up the case for the neighbours of that tenant? One might argue that is a matter for the Garda - practising politicians often hear such a call made on the ground. However, the Garda can take action only when it is requested to. In many cases of anti-social behaviour, those affected are afraid to report the issues or go to the Garda. Will the legislation be strengthened to ensure that it is not down to the individual tenant to make a complaint?

As has been mentioned, the Bill includes a process for the inspection of private rented accommodation. I have been informed that Dublin City Council has carried out inspections but that inspections have not been carried out across rural areas. How will the legislation strengthen the inspection process? On the question of whether local authorities are doing their job, I was involved in a number of cases that went to the Ombudsman. Taking a case to the Ombudsman is the mechanism used by tenants in local authority houses and I imagine that process will continue. The Ombudsman was very effective in the cases that I was involved in. What is the Minister of State's position on that issue? While the number of cases have grown, the number of staff available to deal with them has not. What are the Minister of State's comments on that issue? Furthermore, although I welcome that the mediation system is to be streamlined and the process improved, how long will people have to wait for the mediation service to be provided?

Senator Michael Mullins

I welcome the Minister of State to the House and I congratulate her and her staff on introducing the legislation, which is a culmination of much work by successive Governments. The legislation is to be welcomed because it will lead to the inclusion of approved housing bodies under the Residential Tenancies Act 2004.

We can all associate with the grim picture of the 1980s painted by Senator Hayden because we knew of the existence of substandard and inappropriate accommodation in our towns. We have come a long way from those times, as she rightly said.

This strengthening of legislation is very much to the benefit of the landlord and the tenant, in particular. It is important, given the current economic circumstances in which many people find themselves that decent accommodation is available to all our citizens at a reasonable rent. It is a basic human right to have good and appropriate accommodation. It is particularly the right and entitlement of a tenant and while the landlord also has rights, he or she has responsibilities. He or she has the right to run a legitimate business and to get paid for it at the end of the day. The strengthening of the legislation, therefore, will be to everybody's benefit.

The Minister of State referred to anti-social behaviour and the need to strengthen provisions in private tenancies. We are all conscious of the problems on local authority estates. Anti-social behaviour is spreading and it is very much evident on private housing estates. As she correctly said, there is no silver bullet but we have a responsibility to give security and protection to the vast majority of our citizens who are law abiding on both local authority and private housing estates. I do not know how we should address this. As Senator Landy said, the Garda can only do so much but more resources, including staff, must be deployed on local authority estates to work towards the elimination of anti-social behaviour. Many elderly people on these estates are frightened and it is not fair that people who behave in an anti-social manner appear to be able to continually re-offend and get away without significant consequences. There are fine local authority housing estates in my part of the country but the local authority cannot secure people who need housing to occupy fine houses because of anti-social behaviour. It is a significant challenge to address.

I welcome the Minister of State's proposed deposit protection scheme because unscrupulous landlords treat tenants badly. In some cases, tenants are prevented from securing alternative accommodation because they cannot get their deposit back. However, we must also recognise the problems faced by landlords when their properties are damaged and rent is not paid.

I would like to raise another issue that is not provided for in the legislation but since the Minister of State is present, I would like to draw it to her attention. House ownership is the ambition of most people and there is discrimination against local authority tenants who wish to buy out their home but who are not in full-time employment. For example, I was approached by a woman whose main income, which is from social welfare, is significant and who would like to buy the house she lives in as she has invested a great deal of money in it over the years. She would like to pass it on to a family member who has a disability but she is prohibited under the scheme in place from acquiring the house. She is paying significant rent for it but she could pay a little more and buy the house outright over a number of years. I am running into a brick wall in trying to crack this issue for her. Will the Minister of State consider these cases? It is in a local authority's best interest to have a fantastic tenant who is prepared to invest her money to make the house comfortable as she enters the later years of her life. She would dearly love to own that house but she is prohibited from doing so because of the criteria related to the purchase of local authority housing.

I compliment the Minister of State on this legislation, which I am most happy to support. I hope it will be implemented as soon as possible.

Senator Rónán Mullen

Ba mhaith liom fáilte a chur roimh an Aire Stáit. She said: "A well balanced housing sector requires a strong, vibrant and well regulated rented sector and the rented sector is an integral part of our housing policy for the future." That is a laudable sentiment. The Bill builds on the work of the Residential Tenancies Act 2004. Perhaps the most important impact of that legislation was the provision of security of tenure under Part IV, which allows a tenancy to extend to four years. That should be longer, perhaps up to ten years, in order that we can arrive at a more stable model, similar to those on mainland Europe.

However, I perceive a lacuna in the law where there is a change of landlord after a tenant has signed a lease relating to a so-called investment property and a bank appoints a receiver over the property. As a general proposition, the appointment of a receiver is one of a number of means by which a bank can enforce a mortgage. A receiver under a mortgage granted by an individual is often referred to as a fixed charge receiver. I understand such appointments have been commonplace in the UK for many years. They are a recent development in Ireland in the context of residential properties. Where a receiver is appointed pursuant to a mortgage agreement, his or her status will depend on the terms of the mortgage agreement. The question of the appointment of a receiver over a property was considered in a recent High Court judgment in McEnery v. Sheahan. The court considered the right to appoint a receiver. The late Mr. Justice Feeney held that the power to do so was acquired by the bank immediately upon the creation of the mortgage and in circumstances where there is no specific power to appoint a receiver in the mortgage deed of property, there is a general right under the conveyancing Acts. Due to the unique relationship created by the appointment of a receiver under the provisions of the mortgage agreement, it is often the case that the receiver acts not as an agent of the mortgagee or lender but as an agent of the mortgager or borrower. Under the unique form of agency created in most standard form mortgage contracts, the lender issues instructions to the receiver notwithstanding the fact that the receiver is not an agent for the lender.

The most pertinent question in this regard is what duty is owed by the receiver towards the tenant whose lease agreement is with the mortgager. There are not express provisions relating to the duty owed by the receiver to the tenant in the 2004 Act. In the UK, the receiver has various duties to the mortgagee and tenants beyond a duty to simply act in good faith and these were established in Medforth v. Blake. These include a duty to manage the property under receivership with due diligence. This would be useful if it formed part of Irish law but the position is not clear. Mr. Justice Clarke in Mooreview Developments Limited v. First Active PLC in 2009 stated that "it is at least arguable that Medforth v. Blake does represent the law in this jurisdiction" but this, the Minister of State will agree, is far from resounding judicial support for a proposition that a receiver owes a duty of care beyond simply acting in good faith to the mortgager and to the tenant where he or she is in effective possession of the property. Who does a tenant go to fix the heating when the landlord with whom he or she has a contract is no longer in control of the property and does not have the keys? There should be a specific provision in the legislation relating to the duties of receivers and banks in these scenarios. I would be grateful for the Minister of State's view on that. Has the Government plans to address this problem? Does she agree there is a potential lacuna in this regard?

In consultation with the relevant housing associations the Minister of State decided it was possible to extend the remit of the Act to even more of the approved housing body sector than was originally envisaged, and to provide that there would be no additional exemptions for approved housing body tenancies expect for those provided for in the 2004 Act. The Minister of State correctly identified the next natural question that follows, which is how best to deal in the long term with local authority tenancies, of which there are tens of thousands across the country. Is there a reason the Bill does not address the issue? Is there a single principled reason one class of tenant should enjoy protection under legislation and that another class of tenant should not? The Minister of State referred to further thought, research and consultation. When does she envisage that it will be forthcoming and what is the outcome likely to be?

Minister of State at the Department of the Environment, Community and Local Government (Deputy Jan O'Sullivan)

I thank all Senators for their constructive contributions from all sides of the House. I will address the various issues raised, in so far as I can.

Senator White raised the capacity of the Private Residential Tenancies Board, PRTB, to deal with the demands on it. A number of Senators, including Senator Reilly, Senator Clune, Senator Landy and others, also raised the matter. In my initial contribution I recognised the extra workload that is being laid on the PRTB and the requirement that it would do the work with fewer staff. As we are introducing two major changes that will address the two areas where most of the cases that come before the PRTB arise, namely, deposit protection and non-payment of rent in cases of dispute with a landlord, those measures will help to address the workload of the PRTB. The board has been taking steps itself in terms of addressing the issue, in particular in the ICT area. An ICT system has been set up that is streamlining a lot of the work in the PRTB. Approximately 40% of landlords now register online and there are facilities to do much of the PRTB’s business online. The PRTB is addressing the delays. It is conscious of the problem, as we are. The measures in the Bill will help in that regard.

I will address deposit protection as practically every speaker raised the issue. I am committed to introducing deposit protection. It is in the programme for Government. I have said that from the start. I am also pleased that I am introducing it in this House as there has been strong engagement on the issue by Members. I look forward to introducing it on Committee Stage in the Seanad. We have been engaging with the Attorney General’s office on the drafting of the amendment. The officials tell me much progress has been made at this stage. We will introduce the amendment. I know Senators will be very interested in engaging on it. Everyone who has spoken on the Bill has referred to the issue.

One of the other main issues that has been raised is the extension of the remit to the voluntary sector and ultimately to local authorities. We are extending the remit to the voluntary sector and that is a substantial element of the Bill. One issue that arises in terms of the workload is that by and large it is a relatively stable sector in that people tend to stay in their tenancies perhaps more than is the case in the private sector. In that sense I hope that the additional workload might not be as much as the additional numbers might indicate. In response to Senator Mullen’s specific question, there is no principled objection to adding the local authority sector and we intend to do it in the future. However, one is talking about approximately 130,000 tenancies. It is a big sector and there will be need for time, consultation and capacity before we do that.

To reassure, Senator Leyden, who specifically raised the protection of the rights of local authority tenants, under the Housing Acts they are already required to have minimum standards. They are not without any protection but I agree that eventually we want to include them so that we have the one system for all tenants. It would be too much to do in the Bill before the House but the intention is to do it in the future.

A number of Senators echoed Senator Keane’s reference to standards and enforcement. There has been a great deal of improvement in that regard. Enforcement has trebled in recent years. A total of 20,000 inspections take place per annum by local authorities. Some Senators have said inspections are a bit uneven around the country. That is probably true. Dublin City Council is particularly good. It has carried out many inspections and has focused on particular areas where there were problems. That approach has been very successful. A small proportion of the income of the PRTB goes to local authorities for enforcement. If people feel that a local authority is not doing its duty in that regard they should speak up as funding is made available for enforcement. I have been encouraging local authorities to enforce the standards. We want local authorities to enforce if they have not been doing it already. Standards have greatly improved. I feel strongly that there is not much point in having regulations if they are not implemented and enforced.

In terms of the workload, I wish to emphasise that mediation is an option. People are now beginning to realise that is available rather than having to rely solely on enforcement.

Registration was raised by a number of speakers. The ICT system is helping that. Senator Mullins and others referred to the need to cross-reference information between bodies such as the Revenue Commissioners and the Department of Social Protection. That is happening now. The Department of Social Protection gives information to the PRTB on tenants who are receiving rent supplement. That is improving the registration. The Revenue Commissioners are also involved. A flow of data is beginning to take place and the rate of exchange of information is improving. We wish to ensure that landlords comply with their obligation to register and we will take every action we can in that regard.

Senator Hayden referred to a related issue, namely, the introduction of the housing assistance payment, HAP. Again, that will improve the situation. As I outlined, we have a connection now with the Department of Social Protection. The intention is that when we transfer to HAP there will be much more information flowing and the rent will be paid directly to the landlord so that the situation will not arise whereby a tenant is given rent supplement but does not pass it on to the landlord. That will greatly improve the situation of landlords not being paid. Senator Hayden also referred to the growth of the sector, as I did in my opening contribution. It is a growing sector and it is extremely important that people in the sector are properly protected. That is a central element of the Bill.

Senator Keane referred to sub-tenancies. That is being addressed. Senator Landy asked about the reduction in the number of board members. The intention is that the board will focus solely on governance and strategy and that it would not be involved in dealing with disputes so there is not the same need to have as big a board as we would have had in the past. I consider the number appropriate. Citizens are entitled to go to the Ombudsman if they feel that administration of one kind or another has failed them.

I will fully uphold people's right to do this.

With regard to anti-social behaviour, an issue raised by several Senators, it is primarily the responsibility of the Garda. We are seeking to facilitate easier access to the tenancies board for residents affected by anti-social behaviour. This would not necessarily include requiring the individual living next door to a tenant engaged in anti-social behaviour to take a case but a residents' association or a neighbourhood watch scheme instead. There was a successful case in Cork recently which indicates it is possible to raise cases of anti-social behaviour with the board.

Some issues were raised with regard to local authority tenants and anti-social behaviour which are obviously not covered in the Bill. With a housing Bill due to be introduced next year we hope to address a lacuna in this area.

Senator Michael Mullins referred to the incremental purchase scheme which is not part of this legislation. A new scheme is to be introduced soon.

Senator Rónán Mullen raised the issue of receivers and tenants. I have met the Irish Banking Federation which has issued clarification on the role of receivers. We are looking to see if there is a need for legislation on who is responsible when a receiver is in place. We have clarity with regard to whom one pays rent in such a case, but there are issues with maintenance and so forth.

Most of the points raised are addressed in the legislation. This is an area that covers a large number of our fellow citizens. Senator Aideen Hayden graphically described what the private rental sector was like in the past. Many of us have probably rented at some time in the past and seen the conditions she described. We want to ensure tenants have equality of consideration with regard to their various rights. The legislation aims to address this issue.

I look forward to the next Stages and ensuring this legislation will make a positive contribution for those living in private rental accommodation and voluntary housing. I thank Senators for their contributions.

Question put and agreed to.

An Cathaoirleach

When is it proposed to take Committee Stage?

Senator Cáit Keane

Next Tuesday.

Committee Stage ordered for Tuesday, 1 October 2013.

Sitting suspended at 5.35 p.m. and resumed at 5.45 p.m.

Seanad Éireann debate - Tuesday, 24 Sep 2013

Residential Tenancies (Amendment)(No. 2) Bill 2012: Second Stage

Seanad Éireann debate -
Tuesday, 24 Sep 2013