Residential Tenancies (Amendment) (No. 2) Bill 2021: Second Stage

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

Minister for Housing, Local Government and Heritage (Deputy Darragh O'Brien)

I thank the Leas-Chathaoirleach for his kind welcome. It is like I never left.

I am grateful to Senators for facilitating the debate on this urgent rental legislation. I also wish to record my thanks to the Chief Whip and to the members of the Oireachtas Joint Committee on Housing, Local Government and Heritage for enabling this Bill to be read a Second Time here in Seanad Éireann.

I am asking Senators to pass the Residential Tenancies (Amendment) (No. 2) Bill 2021 and to enable its early enactment to facilitate the transition to providing residential tenancy protections on the basis that any new tenancy that commences six months or more from the passing of this Bill shall continue as a Part 4 tenancy for an unlimited duration unless terminated within the first six months of its commencement. It would amend the current prohibition on any rent increase in a rent pressure zone, RPZ, from exceeding general inflation, as recorded by the harmonised index of consumer prices, HICP, to insert a new condition that the rent last set cannot inflate by more than 2% per annum on a pro rata basis. That is the ceiling, so the rate will be set by the HICP or 2%, whichever is less. It would also introduce a temporary fee waiver in the immediate aftermath of the rolling out of the requirement for annual registration of tenancies with the Residential Tenancies Board, RTB, for certain tenancies registered.

I am particularly keen to enact and bring into operation the new rent increase cap in RPZs without delay. The most recent HICP inflation data for Ireland indicate an inflation rate of 5.1% for October 2021. The November data are due to be published in mid-December and the fast-rising inflationary trend requires fast counteraction by the Government with the Oireachtas. Once enacted, as I have said, the Bill will stop rent inflation beyond 2% per annum. The short-term inflation we are seeing is not just a phenomenon in Ireland. We only have to look to our colleagues in Europe and in the OECD to see a significant spike in inflation.

It is not lost on me that I am back in the Seanad for the sixth time as Minister asking the House to introduce further changes in tenancy legislation. Most recently, the Residential Tenancies (No. 2) Act 2021 introduced measures in July 2021 to better protect tenants with affordability challenges by extending the operation of rent pressure zones until the end of 2024 and prohibiting any increase to general inflation. The link with the HICP is correct and safeguards continued investment in the sector by existing and new landlords to deliver the much-needed supply of high-quality rental accommodation while, most important, protecting against a significant increase in rental inflation in the coming years.

When I introduced these measures in July, I was very clear about the need to monitor inflation. At that time, HICP inflation averaged 0.73% per annum over the previous three years. I needed to revise the RPZ rent control relatively quickly in July, as Senators remember the matter concerning 8% rollover increases, and the measure was accepted in both the Dáil and Seanad. I said at the time we were watching inflation and if we needed to introduce further protection, we would do so.

The quarterly economic commentary from the Economic and Social Research Institute, ESRI, for autumn 2021 outlines that despite the ongoing effects of the Covid-19 pandemic, both domestic and foreign sources of growth have contributed to the Irish economy's robust performance in 2021. As public health measures are eased considerably, the ESRI anticipates a return to more normal economic activity by the end of the year. The ESRI has cautioned that any sustained easing of inflation could be compromised by a continuation of global price pressures for energy products in particular, as well as a faster than expected recovery in the domestic economy. That is why these measures are so important.

Section 3 of the proposed Bill aims to address the rent affordability challenges building on foot of the inflation I mentioned by introducing a cap on rent increases in RPZs of 2% to operate in conjunction with the current restriction based on HICP inflation. As a responsible Minister and one who wants to see the supply of rental accommodation increase where appropriate, I intend to only implement legally and economically sound policy proposals to the Statute Book.

We have to be aware and very careful that any measures we bring into this market, from which we have seen an exodus of 23,000 or so tenancies, most of whom are "mom and pop" landlords, are proportionate and will not have an unintended or, indeed, obvious consequence of losing more supply. That is why the Government has also focused on bringing forward cost rental. As I mentioned during last night's debate, we now have a national scheme for cost rental and our first tenancies are in place. We need to ramp that up to improve rental affordability.

I will go very quickly through the sections. Sections 1 and 8 contain standard provisions dealing with definitions, the Title and the collective citation of the Bill.

Section 2 provides a consequential technical amendment to section 6 of the principal Act, which relates to the service of notices.

Section 3 amends section 19 of the principal Act in the context of setting rent subject to the maximum permissible rent increase. This section, if passed, will amend the current prohibition on any rent increase on an RPZ from exceeding general inflation to insert a new condition that the rent last set cannot increase by more than 2% per annum pro rata. This will mean that rents may only increase by HICP inflation, or 2%, whichever is lower. This new cap on rent increases in the RPZs is considered necessary; I have explained it is because of growing inflation. The operation of the new 2% cap will be subject to review every 12 months - it is appropriate this is done by any Minister - with a written report to be provided and laid before the Oireachtas after a further three months. This amendment also provides for the deletion of the Minister's power to prescribe an index other than HICP. It is 2% or HICP, whichever is lower.

Section 4 provides technical referencing amendments to sections 3 and 22 and Schedule 2 of the principal Act.

Section 5 proposes to amend Part 4 of the principal Act, which deals with security of tenure, to provide for enhanced tenancy protections on the basis that after six months a Part 4 tenancy is established for an unlimited duration, which is very important, and is not subject to expiry after a six-year term or at the discretion of the landlord. This was a commitment under Housing for All - a New Housing Plan for Ireland, and is being addressed in accordance with work we are doing with the Attorney General and taking into account the rights of the tenant and property owner. The provision will apply in respect of tenancies commencing six or more months after the passing of this Bill. The intention is to enhance security of tenure for tenants and simplify operation of the 2004 Act. In addition, where any existing six-year Part 4 tenancy is renewed, rather than commencing a further Part 4 tenancy, the tenancy will automatically become one of unlimited duration. That is very important for existing Part 4 tenancies.

Existing tenants may also seek the consent of their landlord to have their current tenancy treated as a tenancy of indefinite duration. However, the landlord cannot be compelled to grant her or his consent. Where consent is not granted, the existing protections of the Act will apply. The aim is just transition to tenancies of unlimited duration, while also respecting property rights, thereby reducing the potential for any legal challenge to this legislation.

Section 6 amends section 64B of the principal Act to provide that the duration of tenancy under any tenancy of unlimited duration, and under any preceding Part 4 tenancy or further Part 4 tenancy, would be treated as one tenancy in calculating any termination notice period given.

Section 7 amends section 134 of the principal Act to provide that, subject to conditions, where a landlord applies to register a further Part 4 tenancy before the commencement date for the requirement for annual registration and the tenancy still exists on that date, no annual registration fee shall apply in respect of that further Part 4 tenancy only. Any new tenancy of unlimited duration that commences after that will be liable to annual registration fees. The intention is to commence section 7 of this Bill at the same time as the commencement, in quarter 1 2022, of the requirement under sections 22 and 23 of the Residential Tenancies (Amendment) Act 2019 for annual registration. That potential waiver of registration fees would apply from quarter 1.

We have all shown how we can work together to quickly suppress the spread of Covid-19. In that spirit, and in providing further significant protections and certainty for renters, I again ask for Senators' co-operation on this Bill, which will make a real and significant difference in a very short space of time. I, therefore, commend the Bill to the House.

Senator John Cummins

I again welcome the Minister to the House and I acknowledge the commencement of this very important legislation in the Seanad. It is a commitment he made and I am sure all Senators will join me in thanking him for living up to his word in that respect. Everyone, across the parties, acknowledges the need for the speedy passage of this legislation. In fact, that is the reason the Joint Committee on Housing, Local Government and Heritage approved the pre-legislative scrutiny waiver. In that spirit, I am sure all of us will put our shoulders to the wheel to ensure this legislation gets safe passage through both Houses in speedy fashion.

This legislation seeks to place a cap of 2% on rent increases in rent pressure zones. I am sure the Minister will be the first to acknowledge that it is never good to continually change rules in this space as it brings uncertainty into play for tenants and landlords. However, when we introduced legislation prior to the summer recess to link rents to the harmonised index of consumer prices, it was stated that he would keep it under review and, if necessary, further action would be taken, which is exactly what we are doing this evening. As the Minister rightly pointed out, inflation was running at 0.75% over the past three years and is now running at 5.1%. The Bill before us will limit rent increases to the harmonised index of consumer prices, or 2%, whichever is less. As we know, the reason inflation is running considerably higher now is a result of rising energy costs, not only in Europe but worldwide. That is having a distorting effect on the HICP.

We will hear many calls from the Opposition on Committee and Report Stages today and next week for a rent freeze, which sounds great in theory but, as I said previously, every action has an equal and opposite reaction. We do not have to look too far away to see the impact of such a move. The left-wing Berlin state government introduced a five-year rent freeze to much fanfare in 2020, proclaiming it would resolve everything. However, 12 months later, supply had reduced by 50% on average and Germany's supreme court ruled the measure unconstitutional, meaning those who benefited from lower rents have potential back bills to pay to landlords. It is easy to propose measures that are undoubtedly popular when in opposition but in government everything has to be weighed up. From speaking to those involved in the rental sector, from estate agents to landlords and those seeking a rental property, it is clear that the very last thing we need in an already constrained market is a further reduction in the number of properties available for rent.

This Government wants lower rents. That is why we are rolling out a cost-rental model for the first time in the history of this State. Based on the Vienna model, it will compete with the private rental sector and individuals and families will have secure long-term tenancies of at least 25% below market rents. In our Housing for All plan, 18,000 units have been earmarked for delivery by 2030. I believe there is major potential to significantly increase that figure. As the model is proven over the course of the next 12 months, I expect that will be the case. Everyone acknowledges that supply is key for housing. We have to acknowledge where we have come from. Output has increased from 4,500 units a year in 2013 to 20,584 units in 2020, despite Covid-19 shutdowns. The rolling 12-month average of house commencements to the end of September now stands at more than 30,000, which is a very good indication that supply is ramping up and starting to come on stream for those who need social and affordable housing and private houses.

I know that everybody in the sector is committed to assisting us in meeting our targets of an average of 33,000 units per year up to 2030.

Sections 5 and 6 of the Bill provide for an amendment to Part 4 of the principal Act to allow for tendencies of unlimited duration. At present, as the Minister said, tenants enter a Part 4 tenancy after six months and this can be ended at the end of six years by the landlord without a valid reason such as the property being sold, it being required for use by a family member or that extensive refurbishment needs to be carried out, an anomaly in the system that this legislation is now closing. While the average private tendency only lasts for 3.79 years, it is no longer appropriate that a tenancy can be validly ended after six years without due reason to validly terminate. I welcome this change in the Bill.

Section 7 proposes to amend section 134 of the principal Act to provide that where a landlord applies to register a further Part 4 tenancy up until the day before the requirement for annual registration under sections 22 and 23 of the Residential Tendencies Act 2019, which we expect to come into play in quarter 1 of next year, no annual registration fee shall apply in respect of that further Part 4 tenancy. The annual charge will then come into play at the end of the further Part 4 tenancy when a new tenancy of indefinite duration commences.

When the Bill was first drafted, it was intended to apply this section only to the approved housing body, AHB, sector. However, following engagement by me and others, it was agreed to extend this to all landlords, which is appropriate. It would not be fair to allow just the AHB sector to benefit from this waiver while a small landlord with one, two or three properties or even an accidental landlord would be levied for six years and then have an annual charge commencing at the start of next year. I acknowledge the work of the Minister's officials in taking on board that change and in reducing the commencement period of the other section of the Bill to six months.

This is very important legislation. I thank the Minister for bringing it before the Seanad expeditiously. I wish the Minister every success in his role. We are here to support him in that at every turn.

Senator Róisín Garvey

Cuirim fáilte roimh an Aire go dtí an Teach. I do not envy him his job as Minister for Housing, Local Government and Heritage.

Deputy Darragh O'Brien

It is great.

Senator Róisín Garvey

He is still here anyway, which is good. I welcome the Bill, which makes good on the programme for Government promise. We committed to legislating for tenancies of indefinite tenure and giving tenants greater legal security. I was a tenant for many years and I did not realise the latent fear I lived with until I finally got my own home. I remember being afraid to put a screw in the wall and hang shelves because I thought I might need to move and I would get into trouble. That is something many renters need to live with. I managed to scrimp and save and build my own house using direct labour a few years ago. It made a big difference to me and I feel very lucky in that.

Looking at the Bill reminds me of the lack of fixity of tenure, which I know the Bill will address in some ways. There are a few things we may need to look at. A tenant of less than six months is only required to be given 28 days' notice to move out. Twenty-eight days goes by very quickly, especially for somebody trying to find somewhere to live today. It is very stressful and I remember a few times having to pack up all my belongings. As a single mother, it was my son and me. I remember I managed to break my foot. While on crutches I had to pack up all my belongings as well as packing up all my son's stuff. It was so traumatic. I did not realise how depressed I was at the time. I was deeply depressed about it. We had only been given four weeks which was not long enough. It is a big trauma whenever someone moves home. Even for someone in a tenancy less than six months, the 28 days is not long enough and we should push for it to be longer.

We have done some good stuff. It is good to see a 19% reduction in the number of individuals in emergency accommodation. I know it is very hard to find houses for individuals who really need one-bedroom flats and we do not have many of those. We mainly have houses of two or three bedrooms and it is hard to put a single individual in a two or three-bedroom house. It is good that that has been reduced. Of course, the recorded numbers do not include the hidden homeless or people who double up with friends or family. My son should be living in Galway, but he is commuting a couple of days a week and doing the rest online because he could not find anywhere to rent in Galway. Let us not pretend we do not have major issues there, but they were handed to the Minister on a broken plate I suppose.

The Peter McVerry Trust states that the recent increase is largely due to the slowdown in construction following the Covid restrictions. The sector expects the numbers to reduce in the coming months, which is positive. Last week, I called on tradespeople from Ireland who had emigrated to return as their country needs them now more than ever and I reiterate that call tonight. It is not all about building new homes. I know we are bringing in legislation on empty and derelict buildings which will help with this. We need a many-pronged attack to deal with this housing crisis.

Landlords should not be allowed to kick out a tenant just because they want to sell a house. If they are selling a house to rent it, could the current renter not stay in the house? Is that not less hassle for the landlord also? Often landlords when selling a house tell the tenant to leave and then they rent it to somebody else. That tenant could have been left alone and continued renting after the sale. Some work remains to be done on that aspect.

Airbnb faces some restrictions in Dublin. I live in a very popular spot in north Clare. I looked up the details online and found two places to rent but 79 different Airbnb properties. I do not mind people using Airbnb to let out a room or two in their home. However, it is wrong to have entire houses and apartments on Airbnb when people are crying out for somewhere to live. We will need to look at that on a national basis. Letting out entire properties on Airbnb is not just a Dublin issue. While it takes a long time to build a house, having existing housing stock tied up on Airbnb is not helping us deal with the housing crisis. It is brilliant for tourists to have a place to stay, but unfortunately homelessness is a bigger issue. I would like the Minister to look at the Airbnb aspect. Properties being tied up on Airbnb reduces the number of houses available for rent. The laws of supply and demand mean it increases the price of rent and we have all seen the rent increases this year.

An idea that has been used in other places is for a landlord, who needs to ask somebody to leave, to contact the Residential Tenancies Board so that the process of trying to get the tenant a new place starts well in advance of the date on which that person must move out. That has worked well in Senator Cummins's county, Waterford. A variation of this idea has been used to great effect where there are integrated homeless services on Parnell Street in the city. It is operated by Waterford City and County Council along with the HSE, South East Simon Community and Focus Ireland. Clare County Council also has two homeless service providers with offices in the county buildings. We need to see that kind of joined-up thinking rolled out across the country.

At 5 o'clock on Sunday, I saw a man in a sleeping bag on the street. I did not know what to do, where to go or who to call about it. If I did not know, there is no way the person in the sleeping bag knew what to do. We need this joined-up thinking on homeless services and intervention. We need a plan such that if a tenant is asked to leave, the RTB is informed with preventative measures in place.

I welcome the Bill overall. It is good that it was in the programme for Government. We want to improve the security of tenure for tenants through legislating for tenancies of indefinite duration, increasing RTB inspections and enforcements, and examining incentives for long-term leasing.

There are all kinds of landlords. In the last four places that my son rented in Galway the landlords insisted on cash only. He had to pay cash. In the case of one landlord, she was going to five houses in a row. She came into the house every week and collected cash. That is not fair either. Some things remain to be done here. Students do not want to lose a house and they are afraid to say anything. There is still an issue with landlords collecting cash and tenants being unable to get a receipt.

There are a few issues there and while the Minister will not solve them all in this Bill, it represents progress in the right direction and I thank him for his work on it.

An Leas-Chathaoirleach

I call Senator Moynihan.

Senator Rebecca Moynihan

I thank the Leas-Chathaoirleach. I thank the Minister for coming in-----

An Leas-Chathaoirleach

I am sorry, Senator, but in the interests of fairness and rotation, and if colleagues will co-operate, I will call Senator Murphy after Senator Moynihan has spoken.

Senator Rebecca Moynihan

Okay.

An Leas-Chathaoirleach

Colleagues are reasonable about these matters.

Senator Rebecca Moynihan

I thank the Minister for coming into the House again. As he said, he has probably been in here as often as most Senators while initiating this legislation. I broadly welcome the move by the Minister to cap rent increases at 2%. It is an especially welcome response in the context of the rate of inflation having hit 5.1% in October, which was the highest recorded since 2007. When he brought in the measure to link increases to the consumer price index, CPI, the Minister said he would come back into the House if inflation rose and became an issue. I am glad to see he kept his word in that regard.

In the context of the current rental crisis, however, I do not think this is enough. We need a rent freeze similar to the one we had for two years in 2015, which was constitutional and implemented by the then Minister, Deputy Kelly. The RTB and Daft.ie recently released reports showing that rent inflation has increased to more than 7% nationally, with particularly worrying trends outside of urban areas. According to the RTB report, rents were up 17.3% in Leitrim, 15.5% in Kilkenny and 16.1% in Clare. Meanwhile, the report from Daft.ie showed that rents were up 21.4% in Leitrim, 20.4% in Roscommon and 20.1% in Mayo. Different methodologies were used, but the trends are clear: we are in a period of high rental cost inflation. Nowhere in the country has rent not at least doubled since it bottomed out in 2013.

This brings me to my next point regarding the change being made by the Minister. While this move and linking it to the CPI is a good long-term intervention, we also need short-term action because rents are getting so out of control. We must declare the whole country an RPZ. We must also have a rent freeze, similar to what we had in 2015, for three years. While I accept what Senator Cummins said regarding the possibility of unintended consequences resulting from rent freezes, that is not necessarily true in respect of a short-term rent freeze. It is only the case over a longer time.

Equally, we must properly resource the RTB to take proactive enforcement measures in this regard. Indeed, sanctions were only imposed on 29 landlords last year for contravening rent pressure zones. It is clear from the figures being reported that there is non-compliance with the rent inflation caps. This is caused by the lack of balance between renters and landlords. The problem is partially with supply, but security of tenure is also a factor. The move in respect of tenancies of indefinite duration is again welcome, but it is not good enough.

Families are continuing to enter homelessness every month and primarily from the private rental sector. Last month, some 2,344 children were living in emergency accommodation. This week, we mark UN World Children's Day on 20 November and we must take action to address homeless children and families. Legislation introduced by former Deputy Jan O'Sullivan in the previous Dáil sought to ensure that the best interest of the child was among the issues to be considered by local authorities when responding to homeless families. At the time, all parties, including that of the Minister, agreed to do so. The legislation, however, has fallen off the agenda. The Labour Party intends to push this legislation again since the eviction ban has been ended. While we are still in the middle of a pandemic and restrictions are fluid and, potentially, may be reimposed, the sole cause of the increase in childhood and family homelessness is the ending of the eviction ban and the private rental sector and security of tenancies returning to normal.

The Minister and his Government colleagues talk about how they have introduced a cost rental scheme. Only 2,000 such units have been completed, however, of a proposed 18,000. I have heard worrying reports of signs that the progress that we were hoping for is not enough. On the site at the Oscar Traynor Road, there seems to be a desire to deliver cost-rental housing by buying it back at the market price from a private developer who built it on State land. Those units will be sold at market price to an AHB. Investors cannot deliver affordable rents in cost-rental developments. Only State intervention by organisations such as the Land Development Agency, LDA - the Labour Party constructively engaged with the relevant legislation regarding its establishment when it came through this House - can and will do that. That is what should be used to achieve the desired outcome in the context of this site. In a local context, concerning my area of Inchicore, I met with residents last week who are concerned about cost rental in the St. Michael's Estate project. The design team there is working away without any indication of what the cost and the rents will be, what the size of the European Investment Bank loan will be, who will own and operate the scheme and how long it will remain cost rental.

In the context of a market with unprecedented scarcity, I am also reiterating the Labour Party's call for the Government to increase renters' rights and put some power back in their hands. Specifically, I am referring to security of tenancy. As part of this, the Government should also ask that the build-to-rent standard be reviewed, including the provision of balconies and facilities for more long-term living within rental accommodation. Building poor-quality housing does not allow for people to live there in the long term and we must empower renters to make them feel like their house is a home.

We must tackle the affordability crisis and change how we think about renting in this country. We will be voting in favour of this Bill on Second Stage, but it does not go far enough. We will seek to amend it, including with proposals to insert provisions for a rent freeze and the declaring of the whole country as an RPZ in light of the reports from the RTB and Daft.ie. I hope the Minister will choose to take real action and that he will co-operate with the Opposition on measures to try to address this crisis of inflation in rental costs by accepting these amendments. I ask that because we have been working constructively with the Government on several Bills that have come through the House on this issue.

An Leas-Chathaoirleach

I thank Senator Moynihan. I also thank our colleagues, Senators Warfield and Black, for co-operating as I revert to the list. I call Senator Murphy now. My wife is from Roscommon, and she would be very upset if I did not call the Senator early on.

Senator Eugene Murphy

I knew the Leas-Chathaoirleach was a good decent, Cavan man as well. I express my appreciation to him and to my colleagues for allowing me to contribute now. I was due to be the second speaker on this issue, but, unfortunately, our lead contributor has been held up because something unavoidable happened. I was at another briefing over in Buswells Hotel, and I could not get away from it before now.

I welcome the Minister again. I really appreciate, as do all the Members, that the Minister is always here-----

Deputy Darragh O'Brien

I feel like I am always here.

Senator Eugene Murphy

-----to listen to the debates and that he wants to be part and parcel of this process.

Regarding the new situation concerning rents, the cap at 4% was replaced on 6 July 2021 when the rent increase in the RPZs was prohibited from exceeding general inflation as recorded in the HICP. The aim was to bring about far lower rent increases for the estimated 74% of all tenancies in the RPZs. The HICP average rate of increase was 0.73% over the three years to July 2021. Given the continuing rise in inflation, however, a rent increase cap of 2% per year will apply under the provisions of this Bill when the HICP inflation rate is higher. Going back to July, the Minister was very clear regarding the need to monitor inflation carefully. We now have a little difficulty with inflation and we must keep an eye on it. It is worth pointing out that while in July the rate of HICP inflation had averaged 0.73% per annum over the previous three years, it has now risen to 1.6% over the year ending in June 2021.

Given the continuing rise in the HICP inflation rate, the Minister has moved quickly to engage with the Attorney General and to secure the Government's approval to introduce a 2% cap on rent increases in RPZs. This measure respects constitutionality, protects the property rights of landlords and aims to safeguard continued investment in the sector by existing and new landlords to deliver the requisite supply of high-quality rental accommodation. We acknowledge that we have difficulties and problems. The Minister has been in his Department for just over a year and is working day and night with his officials to improve significantly the overall situation in housing. I know this from his engagement with us at parliamentary party meetings.

The Government investment of €4 billion is significant. I can safely say that in a fairly short space of time we will move to a situation where there will be some easing of the difficulties that people have. I admit that will not happen overnight or in the next couple of days, but we must all move to try to protect renters in the best way possible. This whole issue goes back to supply and demand. In this regard, I have no doubt that the new drive by the Government to commit to building more houses, as clearly laid out in the plan, will come to terms with this problem, even allowing for the difficulties caused by the impact of Covid-19 and everything else.

As I said, it would be great if it could be solved overnight but it cannot. However, I see in the shorter term many improvements.

We should also acknowledge in all of this that we have a world problem here. It is not only an Irish problem; it is a problem in Europe, the UK, Northern Ireland and the USA. It is sad to see people having difficulty with their housing and with their rent and we all get representations. Housing is not only an issue in Ireland. A housing crisis exists in many parts of the world.

I accept fully, and take the Minister's commitment as sincere, that he is trying to improve the situation for renters, and he is making strides in that regard. We have tenants in situ in our first cost-rental homes availing of rents that are up to 50% below the open market rate. Applications for other schemes have recently closed and given the volume of applications, we now know that we need to significantly scale-up cost rental in Ireland. Housing for All clearly sets us on a path to achieving 18,000 cost-rental homes between now and 2030. That is an ambitious target but I do not doubt the Government's commitment, the Minister's commitment and his officials' commitment.

Most private tenancies in Ireland are fixed-term or periodic tenancies. The Residential Tenancies Act 2004 gave tenants the right to stay in rented accommodation for up to four years following an initial six-month period. The right is known as the security of tenure or a Part 4 tenancy. The Planning and Development (Housing) and Residential Tenancies Act 2016 then extended the duration of a Part 4 tenancy from four to six years for all tenancies created from 24 December 2016.

Section 5, which somebody might have already referred to, proposes to amend the principal Act to provide for enhanced tenancy protections on the basis that after six months' duration a Part 4 tenancy is established for an unlimited duration and not subject to expiry at the end of a six-year term, should the landlord exercise his or her right to terminate the tenancy as currently provided under section 34(b) of the principal Act. The provision will apply prospectively in respect of new tenancies commencing six or more months after the passing of this Bill. As existing Part 4 and future Part 4 tenancies expire over time or are renewed, it will involve the creation of a new tenancy of unlimited duration in respect of any such dwelling, should it remain in the rental sector.

Under Housing for All, an average of 2,000 cost-rental units are planned every year to 2030. More than 1,500 cost-rental homes are to be delivered in 2022 and rents are aimed at a minimum of 25% below open market rate and providing long-term security of tenure. The first cost-rental tenancies are in place, I understand, in Balbriggan, County Dublin where some tenants are availing of the rents at 50% of market rate. There were recent developments in Leixlip, County Kildare in that regard as well. Rents for tenants in the scheme are expected to be at least 40% below the market rent. I specifically mention those two areas because that is proof that this is working and will work. That is why we have to go with this. That is why we have to ensure that renters do not feel threatened and know that they will not be looking over their shoulder from one six-month period to the next because that is no life for anybody or any family to live.

The Residential Tenancies Board will be allocated €11 million in 2022 - we should not forget that as well - and €10 million was allocated to local authorities to carry out rental inspections. All over this and Housing for All, there is a genuine commitment to tackle this whole area. Of course, renting is quite a big part of it. Moving ahead with this legislation, I am confident that it will further clear the pathways and make it more secure for the tenants. That is what I and most fair-minded people would welcome.

Senator Fintan Warfield

I welcome the Minister again.

Sobering statistics today from the CSO show that rent as a proportion of total disposable income is highest for tenants living in and around Dublin with 36% of tenants living in Dublin city spending more than 35% of their disposable income on rent in 2019. This is evidence, if we need it, that we must put one month's rent back in the pocket of every renter in the State through a refundable tax credit up to the value of €1,500. That would give renters a break. Then, to stop any future rent increases, we would ban rent increases for three years and maintain rents at the current level for existing tenants and at the RTB rent index level for any future tenancies that are determined by the size, the type and the location of the dwelling.

There is nothing to oppose in this Bill; there is nothing to write home about either. We certainly should not call anything it so-called "tenancies of indefinite duration". While it reads well in the programme for Government, as mentioned by Senator Garvey, it certainly does not provide for tenancies of indefinite duration and it is deeply disingenuous to call it that. Renters can still be evicted if the property is sold. That is not tenancies of indefinite duration. We treat commercial retail units better than we do workers and families who rent. I often read, "Tenancy not affected" on the sign above the commercial unit for sale at the end of the street over the shop.

Other section 34 grounds allow for eviction on the basis of a family member moving in. In the view of Sinn Féin, this is not a good enough reason to evict a person, a worker or a family. It is not a good enough reason to evict a tenant. This combined with the sale of property accounts for 70% of evictions. Renters will not be impressed when they realise that these so-called "tenancies of indefinite duration" give them zero protection. "But I thought your man introduced tenancies of indefinite duration", they will say. "Sorry, it does not cover you", they will be told, as the property is being sold or the landlord's son is moving in.

This Bill caps rent increases in RPZs as well. A 2% cap on rent increases will have limited impact on runaway rents. We think RPZs should be scrapped and a State-wide ban should be implemented on rent increases. The latest data from the RTB shows that in every county the 4% rental cap was breached. This is because legislation has way too many loopholes and the RTB lacks sufficient resources to chase and sanction landlords who breach the rent caps. The RPZ legislation also leaves tenants outside them at the mercy of the market and facing unsustainable rent hikes of up to 50%.

Ultimately, it is dishonest to say that this is tenancies of indefinite duration. The legislation is bland and it benefits nobody. We need to do better for the one-in-four people who rent in Dublin and the one-in-five people who rent across the State. This Bill gives the impression that the Government does not understand renters. Just like the 2% cap on rent increases, there are too many loopholes. It is too difficult to police. We need a total ban on rent increases across the State. That is the only way to stop rents rising further. We need genuine tenancies of indefinite duration that protect tenants even if the property is sold and even if a family member of the landlord needs to move in.

Senator Frances Black

Cuirim fáilte roimh an Aire. I broadly welcome the Bill and commend the Minister on the efforts that he and his Department are making to promote the development of a more sustainable housing system in Ireland. I am aware that much positive work has been done but we have a great deal more to do.

I look forward to engaging constructively with the Minister and his Department to ensure that we achieve a housing system that is more fair, equitable and sustainable. I eagerly await the day when the word "housing" will not be followed immediately by the word "crisis" in this Chamber, as has been the case. We have a significant challenge on our hands in responding to and resolving this crisis. This Bill will go only so far in doing so.

I welcome many of the provisions of the Bill but do so while maintaining that we should, and could, be doing more to alleviate the unprecedented pressures on renters and the rental market. Capping rent increases at 2% per annum in RPZs or at the rate of general inflation, depending on which is lower, is better than the existing alternative. I am concerned, however, that it will not result in any material reduction in the cost of rent around the country. It still permits landlords to increase rents year on year and will continue to see rents rise. Rents are too expensive to begin with, so our focus ought to be on what we can do to put an immediate end to spiralling rents while we implement strategies that will see the cost of rental accommodation reduced.

Many colleagues in this House have called for a rent freeze as a possible short-term or medium-term solution. I want to add my voice to the call. While the Government has advised of its concern regarding the constitutionality of implementing a rent freeze, a precedent exists in the form of the implementation of a 24-month rental review period by the Government in 2015, which amounted to a de facto rent freeze. What is preventing us from reintroducing longer rent review periods to stifle the exorbitant rents we are seeing across the country?

The establishment of RPZs in 2016 was a welcome development. In the years since, we have seen many local authority and local electoral areas across the country designated as RPZs, but I note that none has been designated since September of last year. This is surprising considering the impact the pandemic has had on the delivery of new rental accommodation and the strain it has placed on units in both urban and rural areas. If it is the case that local areas are not fulfilling the criteria to be designated as RPZs, it is worthwhile revisiting the criteria with a view to including more electoral areas as RPZs.

We must also pause to query the efficacy of RPZs themselves. A recent Daft.ie report advised that rents were 6.8% higher nationally in quarter 3 of 2021 than in the same quarter last year. Additionally, we are aware that landlords regularly avail of several loopholes to circumvent the RPZ designation, with many landlords terminating tenancies on section 34 grounds and then re-letting their properties for rents greater than the RPZ would permit. Despite the Minister having acknowledged this is an issue, only 29 sanctions were issued by the RTB to landlords who breached the RPZ regulations in 2020. The housing charity, Threshold, recently published the results of a study it undertook that found that fewer than half of tenancy terminations by landlords were valid under the regulations. Has the Minister considered, or can he commit to considering, directing more resources to the RTB to ensure greater oversight of properties within RPZs and landlords who disregard the regulations?

I welcome the Bill's provision for tenancies of unlimited duration, as committed to by the Government in Housing for All. I am aware that many housing bodies and charities have been calling for this provision for some time. I hope this part of the Bill will provide some security for renters. However, the reality is that in circumstances in which we continue to provide significant scope for landlords to end tenancies, security of tenure will continue to evade renters across the country. The provision, therefore, is a welcome development, but I am of the view that we should be doing more to provide much-needed security for renters.

I want to speak about the supply of rental accommodation nationally. Daft.ie recently reported that the number of available units to rent in Dublin was the lowest ever recorded in quarter 3 of 2021, while the number of rental units available outside Dublin and other Irish cities has halved over the past 12 months. While the provisions in this Bill are better than those they intend to replace, they are not going to affect the predominant contributor to sky-high rents and the rental accommodation crisis, which is the lack of supply of accommodation.

I am aware that the Minister and Department have set targets for the completion of housing units in Housing for All, but we really need to begin to see concrete action on the development of housing of all types and tenures. If we do not increase the supply of housing units, we will never have a housing system that is fair, of appropriate quality or affordable. There is an entire generation of young people in Ireland who do not know of anything other than a housing market in crisis. That is sad but we must retain our focus on what we can do to ensure this crisis is not replicated for future generations. We must not allow for the targets in Housing for All to be missed. However, we must also ensure that we continue to plan ambitiously in housing for the sake of our children, grandchildren and generations to follow. I look forward to working constructively with the Minister and his Department to ensure that we make much-needed progress in this area once and for all.

Senator Jerry Buttimer

I welcome the Minister to the House for the sixth time in his tenure as Minister. This is an important issue. There are two points on which I want to begin. As a Government and collectively, we are trying to create a model of housing that is sustainable, affordable and available to everybody. Senator Warfield, whom I admire and respect, says the Government does not get it, but we do understand. There is a need for all of us to understand that this is not a political issue; it is an issue on which we are all working to achieve an outcome that is positive for everybody. The fundamental point remains the same: it is about increasing supply and tackling affordability. That is what the Government is about. I welcomed the publication of Housing for All and the action points in it, which are matched with funding. In tandem, there is an obligation on local authorities to deliver.

The Land Development Agency has the potential to unlock a large amount of housing across our country, particularly in the city of Cork, where I live. There are several sites, including at St. Kevin's, Boherboy Road and the docklands, that can be used. These projects should be expedited as a matter of urgency. I hope we will see fast-tracking by all involved.

Thirty-three units per year, making rent more affordable and making rental accommodation more secure are the aspirations of the Bill. The cap of 2% is one that we all support. As the Minister said, we are developing a new rental model, called cost rental. We should support this but we never hear about that from some. There is a genuine need for us to ask who the people renting are and who the landlords and property owners are.

The Central Statistics Office did some important work that we should consider. Affordable housing is critical. It is important that we increase supply. It is also important that we support the Minister for Further and Higher Education, Research, Innovation and Science, Deputy Harris, in his apprenticeship plan to increase the number of apprentices so we can help in tackling the skilled workforce crisis in our construction sector. A startling figure in the CSO's report The Rental Sector in Ireland 2021 is that 50.5% of landlords receive an income of less than €10,000.

Housing for All gives new protections and makes affordable rental accommodation and other forms of accommodation more accessible. It is a model that we should support. I thank the Minister for being here. The Bill is important and we should support it. I thank the Minister for the work he is doing.

Minister for Housing, Local Government and Heritage (Deputy Darragh O'Brien)

I thank all the Senators — Senators Buttimer, Black, Warfield, Murphy, Moynihan, Garvey and Cummins — for their contributions. It is very much appreciated that they took the time to put their views across.

In case I forget, I inform the House now that I intend to introduce some technical amendments to section 5 on Committee Stage in the interests of clarity.

I greatly appreciate Senator Black's constructive contribution and those of Senator Moynihan and others. The Bill is not a silver bullet and, as they highlighted, there are other steps we need to take. This is the sixth item of tenancy legislation I have brought forward. We need to improve security of tenure for tenants, which the Bill will do, and reduce the cost of rent, which I fundamentally believe can be done properly only by increasing supply.

One important part of increasing supply relates to the cost-rental model. With Senator Buttimer, I had the pleasure of visiting Lancaster Gate in Cork, where there is a really impressive development that will result in significant volumes of cost-rental homes. Throughout the country, there is real potential to secure State-backed rents at well below the market rate. Rents have been too high for some time. The issue has been exacerbated by a shrinkage of supply post Covid, with large quantities of savings and competition for properties. It is not a phenomenon just in this country but throughout Europe, including in what were previously stable markets such as those in the Netherlands and Germany. In the North, year-on-year inflation in rents stands at 13.1%, and there are none of the kinds of protections I am introducing with regard to caps.

I welcome the support from across the House for what we are doing. The significant move towards tenancies of indefinite duration and the change in regard to Part 4 tenancies are really important. We might park the politics for a moment. Any measure we take in the rental market has to be calibrated and has to take into account the individual mom-and-pop landlords who own these properties. We cannot tread on their rights either. Any legislation is potentially open to challenge. Worse than that, we could continue to see a flight of decent landlords from the market, and there are decent landlords in the market.

I remind Senators - I am sure they know this - that 98% of tenancies are fine and only 2% of tenancies end up in dispute. Even so, they are an important 2%, and we need to ensure the Residential Tenancies Board, RTB, is resourced to deal with that and that local authorities are resourced to carry out inspections. We have doubled the funding into the RTB for 2022 and it has a great deal of important work to do. Senator Black mentioned Threshold. It is running the Own Your Rights campaign, funded by my Department working in conjunction with Threshold, John-Mark McCafferty and his team. People need to know their rights and we need to improve them. The legislation is important in the sense of setting a cap on rent increases but it is not a target. Landlords do not have to increase rents and many do not, which I welcome. We had to address in the summer, with everyone's support, the issue of 8% increases due to the roll-over of 4% plus 4%. That had, unfortunately, become a target.

To those who call for a blanket rent freeze, I say we need a little honesty in that space. I do not say this in any disrespectful way, but I ask those who seek a freeze whether they have carried out any research on the consequences of a blanket rent freeze or of a continuation of a blanket eviction ban, in the context both of that being challenged and of the flight of properties and reducing supply, making circumstances even worse. Senator Cummins gave the example of one city that is always held up as one of the exemplars of rental in Europe, namely, Berlin, and what has happened there. I am not accusing anyone who has contributed to this debate but there are some who will simply throw out proposals such as freezing rents and banning evictions and say they will sort the issue out, but they will not. We need to increase supply and have a sustainable rental market where people's rights are protected, which is what I want.

Fundamentally, we want to increase supply across the board with, as Senator Black referenced, mixed tenures. That is what Housing for All is about, with 300,000 new homes, public and private, that is, both social, affordable and cost rental as well as private homes. There are people who want to buy homes and there are some who want just to rent. We have an opportunity to provide cost rental at scale for working people who do not want to buy and who want to secure tenures, and they will get that. There will be thousands of them over the coming years and it has started already. That shows what is possible.

Furthermore, we need to utilise our own lands through the LDA, which was referenced by Senator Moynihan, and ensure we break ground on the land we own ourselves, which we are going to do next year. We have passed and amended the Land Development Agency Act. The agency is now funded to the tune of €3.5 billion and can get on and build, something I want to happen. Some parties do not, however, and that is fine as a political position some have, whereby they just want an agency that manages land and farms it out to the local authorities. I do not think the local authorities can resolve the housing crisis on their own. The public sector cannot resolve the housing crisis on its own. We need every part of both public and private working together, focused on a plan, which is now Housing for All.

I thank all Senators for their contributions. As I said during the debate last night, we will examine any amendments they wish to table. Nevertheless, this is urgent legislation, as they know, because we need to pass it to ensure we can provide that certainty of the cap of 2% or the HICP inflation rate, whichever is the lower. We need to make great strides on securing tenancies further through the changes we are making to Part 4. I thank the Leas-Chathaoirleach and all my colleagues in Seanad Éireann for the constructive way in which they have engaged in the debate on this important legislation, which needs to be passed as expeditiously as possible.

Seanad Éireann debate - Wednesday, 17 Nov 2021

Residential Tenancies (Amendment) (No. 2) Bill 2021: Second Stage

Seanad Éireann debate -
Wednesday, 17 Nov 2021