Residential Tenancies Bill 2003: Committee Stage.
This meeting has been convened to consider Committee Stage of the Residential Tenancies Bill 2003. I welcome the Minister of State at the Department of the Environment, Heritage and Local Government, Deputy Noel Ahern, and his officials to the meeting. The Bill is substantial and there are more than 200 amendments to be considered. With the agreement of members, I suggest that the select committee suspend for one hour at 1 p.m. and, on its resumption at 2 p.m., continue until 6 p.m. We may also take a brief sos in the afternoon. Is that agreed? Agreed.
It had been intended that the select committee would resume consideration of the Bill tomorrow. However, it is now proposed that the select committee will not sit tomorrow. Consideration will resume on Thursday, 5 February 2004.
Section 1 agreed to.
SECTION 2.
I move amendment No. 1:
In page 13, line 31, after "on" to insert the following:
"the day of its passing save insofar as it involves a charge on public funds, in which case it shall to that extent come into operation on".
Section 2 states: "This Act shall come into operation on such day or days as the Minister may appoint by order or orders either generally or with reference to any particular purpose or provision and different days may be so appointed for different purposes or different provisions." I am proposing that this should be amended to provide that the Bill would come into operation on the date of its passing, except where it involves charges on public funds, in which case it would come into operation on the dates appointed by order by the Minister. That is a saver I need to put into the amendment to have it in order.
We are quite a long time waiting for this Bill, as I mentioned on Second Stage. Even after this Bill is enacted it will not come into effect until the Minister signs an order, and we do not know when that will be. The Minister might delay signing it for a considerable period. However, it is more likely that the Minister will bring parts of the Bill into operation and leave other parts unimplemented. We have seen this happen with other Acts, including some legislation in the Department of the Environment, Heritage and Local Government. When the Oireachtas passes legislation with a provision that it will not come into effect until the Minister signs an order, various aspects of the legislation are sometimes left for years before they are brought into operation. Under section 2, the Minister could decide, for example, to delay the provision dealing with landlords' obligations to tenants or some of the provisions regarding the residential tenancies board. It is left to the discretion of the Minister as to when the different provisions of the legislation are brought into effect. This Bill emerged from the report of the commission on the private rented sector, which saw the introduction of legislation very much as a full package. I would like the entire Bill brought into operation on the day it is passed, or as soon as possible thereafter in respect of those provisions where there are requirements relating to public expenditure.
I am very uneasy that there is in section 2 a provision that the different provisions of the Bill can be commenced at different times by the Minister. This is unnecessary, undesirable and should be amended.
I am not in a position to accept the Deputy's amendment but I accept his motives. The wording in section 2 is standard commencement wording and allows for the practical reality that various matters need to be addressed before all the provisions of the Bill can be fully operational. I hear what the Deputy is saying but there is a sequence to the way things happen.
I accept the Bill has been a long time coming and I assure the Deputy that we want it implemented as quickly as possible. Given the standard wording, the Bill could not be brought into effect the day it is signed into law, even if we wanted to do so. Certain things will have to flow from it. I assure the Deputy that it is not our intention to drag our feet unnecessarily on this matter.
I do not accept the Minister of State's response. There is no reason whatsoever there should be a delay after the passage of the Bill with regard to the practical measures that need to be put in place. This Bill has been due for so long that there is no excuse for a delay, and the practical measures should have been put in place in anticipation of its enactment.
There is no reason whatsoever the rights and obligations this Bill confers on tenants and landlords, respectively, should not have immediate effect. The Bill provides for the possibility that the different rights and obligations being given legal effect may not take effect at the same time and will only take effect when they are signed into law by the Minister by way of a commencement order.
There is a precedent for the Minister of State's proposal. He is correct that this is the kind of standard provision we are, unfortunately, beginning to see more frequently in legislation brought forward by the Government. The House enacts legislation and then the Minister decides, at his own discretion, whether he will implement it. Once a provision such as the one under discussion is passed, the House has no power thereafter to oblige the Minister to bring certain provisions into effect. If there were a time limit within which they could be brought into effect, it could be triggered. However, it is perfectly possible that the Minister will sit on his hands forever after the passing of the Bill. We have encountered precedents, particularly regarding local government legislation, parts of which were being brought into effect two and three years after it was enacted.
The effect of my amendment would be that, at the very least, the rights and obligations enshrined in the Bill would have to come into effect immediately. I can understand why practical arrangements have to be made with regard to the tenancies board and why administrative arrangements have to be made, although the argument for this is less pronounced in this case than in others because there has been such a long lead-in period. There is absolutely no reason the rights and obligations cannot come into effect immediately. There has been plenty of advance signalling of what is in the legislation and it is not acceptable that it be passed and then not come into operation until such time that the Minister decides, at his choosing, to bring it into operation.
This is not a recent provision — I believe it has always been in use. There is a natural sequence to the way things flow when legislation is passed. It is correct that the board exists at present on a non-statutory basis but one of the first developments will be that it will be set up formally as a statutory board. The essential step then will be to get the registration system established. If this is not done, very little will flow. Although we have had a registration system for the past seven or eight years under the local authorities, it has not been effective.
After the board is set up, which will happen very quickly, it will be important to set up the registration system because it will be the scaffold on which everything else will rest. Different sections will probably come into effect at different stages but there has to be a natural sequence. I assure the Deputy we will be progressing matters as quickly as we can but everything could not come into effect the day the Bill is signed into law. That would not make sense. If everything was brought into effect immediately the framework would not be in place to deal with the data. One needs to put in place the registration system in order that the dispute resolution system will work effectively — one will flow from the other.
I wish to raise two related questions. The right to a Part 4 tenancy is time related as it is only after a person has had a six-month tenancy that he or she gets the right to it. The review of rents will take place on an annual basis. At what point does the clock start ticking for the six-month period and the rent reviews? Is it the date on which the legislation is passed or the date on which the Minister of State signs the order?
It is the date on which the order for the individual section is signed.
I understand from what the Minister of State said earlier that until the registration system is put in place the other parts of the legislation cannot be brought into effect.
I will not say that they cannot, but I cannot give an exact timeframe for the implementation of each part of the legislation. It makes sense that some parts would be ineffective and could not really be made operable without the proper data. The first thing we need to do is give time to get the registration system up and running.
I am sorry to be sticking so long on this, but it is critical as to whether this legislation will have an effect at all or whether we are wasting our time here. I understand from what the Minister of State is saying that the section on registration — the building bricks of the legislation — must commence first, and that until the provisions——
The appointment of the board will probably come first.
The board is already in place, albeit on a non-statutory basis. That will be a simple enough matter to effect but is the Minister of State saying the registration system has to be in place before the other principal provisions of the Bill can be brought into effect?
Yes. It does not have to be fully completed but it makes sense to have the vast amount of work done before one can effectively operate other sections of the Bill.
How long does the Minister of State think it will take for the registration system to be put into place?
I will not give the Deputy an exact timeframe. I cannot give commitments on that but I assure the Deputy it is not my intention to unduly delay it. However, it is not going to happen in a week or two.
This is the difficulty. It is almost four years since the commission on the private rented sector reported and recommended certain rights for tenants, obligations for landlords and regulation of the sector. We are finally down to the nuts and bolts of the legislation. We have established that we will spend whatever length of time is required on Committee Stage and the Bill will then go to the Seanad. It will be enacted, we all hope, early this year. Even after the legislation is enacted, however, it will not come into operation until the registration system is in place.
The Minister of State rightly says that the registration system being operated by the local authorities has not worked. The local authorities have not been very enthusiastic about making it work. This legislation provides for what is essentially a national registration system for tenancies. It has taken four years to get to this point and I wonder how long more it will be before we get to the point where the registration system is in place.
We have had a number of examples of delays in implementing legislation, the penalty points system being one. I do not know how long ago the legislation to introduce the penalty points system was enacted, but it could not be brought into operation until the computers were up and running. We have had examples before of the House legislating for something but nothing happening because the administrative arrangements were not put in place, computers were not bought, training was not carried out or the Minister had not signed the order.
We are teeing up exactly the same scenario here. Legislation to give rights to tenants, place obligations on landlords and create a private rented tenancies board will be passed but these things still will not happen. The Minister has acknowledged in our very first discussion on this that nothing will happen in terms of giving tenants rights, imposing obligations on landlords or creating the rights to Part 4 tenancies or rights to annual rent reviews until the registration system is in place. All of that will be left to the discretion of the Minister, which is not acceptable.
I am tabling an amendment providing that, at the very least, the rights and obligations enshrined in this legislation should come into effect immediately. If it takes a bit of time after that for the administrative arrangements to be made for registration and so on we can perhaps live with that until the Minister makes the order. At the very least, however, the legal rights and obligations that this legislation provides for should have immediate effect. That is the amendment I am putting to the Minister. It is critical to the credibility of this legislation.
I certainly will not be party to the enactment of legislation that will not be brought into effect until the registration system is up and running, which could be God knows when. At the very outset of our discussion on this legislation we have got to get this right. There is no point in pretending to tenants that they are getting legal rights when they are not going to come into effect for God knows how long, or putting obligations on landlords and tenants that will not have immediate effect. This legislation will have no benefit the day the President signs it. It will not benefit a single tenant unless we provide that it comes into operation on the passing of the Bill.
The vital part of the legislation is the registration system. There does not seem to be a great will on the part of the Government to implement it. The local authority registration system has been almost a farce. Old legislation provided for a £1,000 fine if a landlord did not have a property registered with the local authority. Has anybody been fined £1,000 anywhere since that legislation was introduced?
I saw the figures recently for the amount of rented properties registered in the various cities. In Galway city there were between 3,000 and 4,000 registered, less than half I would say of the properties rented in the city. Some other cities had mere hundreds of registered properties. Is there a will on the part of the Minister of State to ensure the legislation will lead to the correct and full registration of properties? Nobody is saying that anybody is committing any offence. An offence has been committed if one has not registered a rented property with a local authority. That is an offence punishable with a fine of £1,000, or the equivalent in euro. Has anybody been fined £1,000 since legislation provided that landlords had to register property with local authorities?
In some ways Deputy Gilmore is making my point. I understand where he is coming from but I think he understands too that everything cannot just happen when the Bill is signed into law. We have been trying to prepare for its implementation and that is why there has been an ad hoc board, but the formal statutory board will be set up very quickly. I am not saying the registration has to be complete but it makes sense that in the early days much energy will go into getting the registration system set up. If we do not have the registration system we cannot have the resolution of problems. One follows from the other and there is a certain sequence. The Bill is designed to give us a new system, but I cannot say it will take exactly three months to set up one aspect, two weeks for another and six weeks for yet another. Certainly the main aspects, the first couple of sections which establish rights, will come into force quite quickly but I am not giving a specific time. It makes sense to spend a great deal of time and energy on getting the basic framework, that is, the database of the registration system, up and running because everything hangs on it.
Deputy McCormack is correct. I remember being a member of a local authority some years ago when his colleague, Deputy Gilmore, introduced the legislation. I thought it would be a real money spinner for the local authority of which I was a member but some local authorities have been better than others in pursuing it. I recall looking at the figure for the number of rented dwellings in local authority areas some months ago, and it was a joke. One local authority, which I will not name but which was not in Galway or Dublin, had only one registered let building. Some local authorities, for whatever reason, would not grasp it as an opportunity to enforce the regulations or would not even grasp it as an opportunity to raise revenue for themselves. Landlords and other people were not co-operating fully with the system anyway, and that is why we are bringing in the new system and trying to bring people on board. This will have to be enforced and we fully believe it will be enforced, and it will be of benefit to both sides. I assure the Deputy that it is not the intention to delay implementation. This is a standard provision which is in practically all legislation. It allows for the natural sequence. It is a large and complex Bill with 200 sections. One cannot sensibly implement them all on day one, but I assure the Deputy it is not the intention to deprive anybody of his or her rights, entitlements or benefits under this legislation. It will be pushed forward as quickly as possible.
What are the penalties for not registering? Was anybody fined £2,000?
Yes, I think someone was but I do not know if the person has paid it.
I do not think anybody was fined.
I think the matter is still tied up in the courts and has been appealed.
Whenever the Minister of State decides to bring it in, what will be the incentive or penalty?
It is a carrot and stick approach. The penalty is €3,000 but this legislation will be seen to be of benefit to all sides whereas that was not so with the previous legislation. There is a far bigger penalty on this occasion. With an independent statutory board, it will be much more vigorously pursued.
I agree with Deputy Gilmore's amendment. Frankly, I thought it would have been accepted but now I see why it is not being accepted. Apparently there will be no major urgency associated with completing the registration process. The difficulty I have with that is it is usually rogue landlords who have the greatest resistance to the entire registration process.
Deputy McCormack is correct, that at local authority level there is no push to try to hunt these people down and bring them into the system. Without such a proactive stance on the part of local authorities, registration might not be completed for a period of anything between five and ten years despite the Bill and all the Minister's amendments.
Notwithstanding this, we are all anxious to get on with the business of dealing with these amendments and issues like market rent. I will be dealing with that later and moving an amendment to deal with fair rent based on a book of quantum or something more specific, and with the Part 4 issue, and moving amendments relating to tenancy longer than four years, shortening the six-month initial period and several other issues. However, I would like a timeframe to be stated. Can the Minister of State give us a ballpark timeframe for when this registration process is likely to be at a stage where he feels he could sign the order for this legislation to come into effect?
The Minister of State stated there is no intention to delay, but there has been a delay. Perhaps the Minister of State could tell us what preparations for getting the registration system in place have been made and when they are likely to be completed. The committee must have some sense of how long this will go on and when this will come into operation.
I again put it to him that there is a solution to this problem, namely, that he commences the rights and entitlements provisions of the legislation immediately and then implements the commencement procedure for registration and for the appointment of the board and all of the parts where there are practical financial implications. That would have the benefit that at least tenants and landlords would be covered by the legislation immediately. By the time the registration system is put in place and the apparatus set in motion, they would know the point at which the clock started ticking. It is unconscionable that there would be legislation on the Statute Book which states that tenants have rights but that they cannot avail of those rights until, at some point in the future, the registration system is put in place. There could be any number of obstacles to the putting of the registration system in place. At the very least if everybody had the rights and obligations which are conferred on them by the legislation they could, whenever the system would get around to dealing with complaints and referrals, refer back to that point and they would know the point concerned, for example, Part 4 tenancies. The logic of the Minister's position is that nobody, for example, not even people who are currently in tenancies, will have a right to a Part 4 tenancy until everything is up and running, and the right to be covered by the annual review of rent will not take effect. There are various rights and obligations. The obligations applying to tenants, for example, will not be enforceable until everything is up and running. The solution I am suggesting to the Minister of State is that the rights and obligations provisions would have immediate effect and that he should give us some clear indication of a timeframe for when the entire system will be operational.
I cannot accept the amendment but I understand from where the Deputy is coming. I appreciate the points he made about penalty points and so on, that we pass measures and then the structures are not ready.
The board has been in place on an informal basis and is doing a deal of preparatory work. It has its IT system and forms ready to roll. Much of that work will be done between the Department and the board. There will not be too many other agencies involved and we ourselves should have control of most of the issues.
I do not want to give the committee a timeframe as I cannot do so. If I did, it would only be a figure off the top of my head and that would not be fair to anyone, including myself.
Does the Minister of State not know the timeframe?
I can have hopes and plans but, as the Deputy stated, sometimes plans go astray.
Sections 2 to 4 on rights and obligations can come into effect quickly. It does not mean there will be a delay of three or six months in the registration system. Much of the attention in the early days will be on getting the registration system established. Many of the issues with which we will deal thereafter will be based on that system. The dispute resolution system will not click in until the registration system is in place. I guarantee that the inclusion of the rights and obligations together will be done. We will not start picking and choosing in this regard. After the board is formally put in place and we get moving on the registration system, the rights and obligations provision will be one of the early issues to be dealt with.
I understand the Deputy's concerns because these matters always take longer than anticipated. It is a standard proposal which must allow for the natural way in which one action flows from another. I note the Deputy's message and I do not anticipate a deliberate delay.
I am not giving a message, I am proposing an amendment to the Bill. This is the first amendment we are discussing. I will not sit here through several days proposing amendments to improve the legislation only to be patted on the head for my good intentions and to have the amendment ignored. The amendments I propose are serious amendments to which I want the Minister of State to accede or make some move to take on board in the legislation. If he is not disposed to making a serious move to either set down time limits within which the legislation will be commenced, give a positive response to the amendment I have proposed or, better still, accept the amendment, I will put it to a vote. It is probably as good a time as any to indicate that I will not go through several days of Committee Stage debate just to have the amendments nodded at, with no concession or progress onthem.
The amendment is critical. We have been waiting for four years for the legislation. We have been waiting until now for a Committee Stage debate, even though the Bill was published in May. Putting the registration arrangements in place should be done now. There has been plenty of time to put it in place. We should not be here on Committee Stage with the Minister of State not being in a position to tell the committee when the registration system will be in place and operational at a practical level. If he will not make some concession on the amendment, I will ask the committee to divide on it.
I am sorry if the Deputy feels I am not being helpful but I was trying to be very positive by assuring him there would be no delay. One cannot do anything either legally or formally until the legislation is in place. One can do preparatory work, which we have been doing. The registration system could not be put in place prior to today or prior to the passing of the Bill because it would not make sense. I thought I was giving a positive response. This is standard procedure. The board will be put in place quickly. In the early days, much time will be put into getting the registration system correct but sections 2 to 4 dealing with rights and obligations will come into effect quickly. As I cannot give the Deputy a timespan, this is the best I can do.
It is not unreasonable to have a timespan. I will consider it if the Minister of State says it will be done within a reasonable timespan.
What is the Deputy's definition of "reasonable"?
There is no reason the rights and obligations provision cannot come into effect immediately. What is the problem?
I do not know if anything will come into effect immediately.
I am talking about when the legislation is passed.
It will take a couple of months to get a good registration system up and running. This does not mean, however, that the rights and obligations provision will have to wait. I do not think it will take six, nine or 12 months. I am giving the Deputy an interpretation of what I regard as immediate and so on. I do not have a sequence. To get a registration system up and running will take a couple of months but putting the rights and obligations provision into effect could be done simultaneously. All I can do is try to assure the Deputy that this is a standard procedure. It is how normal business is carried out and it is not the intention to favour one side or another. Equally, we know that things do not happen overnight.
If the Minister of State is prepared to write into the Bill the sequence or the timescales, provided they are reasonable, I am open to considering them. However, if he proposes to leave section 2 as it stands, I will press the amendment.
I cannot change what is proposed but I assure the Deputy that matters will be pushed forward.
Amendment put.
The Committee divided: Tá, 4; Níl, 8.
Tá
- Cuffe, Ciarán.
- Gilmore, Eamon.
- McCormack, Pádraic.
- Murphy, Gerry.
Níl
- Ahern, Noel.
- Brady, Martin.
- Cregan, John.
- Fox, Mildred.
- Grealish, Noel.
- Haughey, Seán.
- Hoctor, Máire.
- Moloney, John
Amenement declared lost.
Question, "That section 2 stand part of the Bill," put and declared carried.
SECTION 3.
Amendments Nos. 2, 13 and 21 are related and may be discussed together by agreement.
I move amendment No. 2:
In page 14, subsection (2), line 4, to delete "This" and substitute "Subject to section 4(2), this”.
Amendments Nos. 2, 13 and 21 are technical amendments. They are the first of what might seem like a large number of amendments I am proposing. The majority of them are technical corrections, clarifications or restatements of provisions in a more comprehensible form. I am proposing a number of amendments in response to comments made by Deputies in the course of the debate on Second Stage and to requests by various interested groups, such as those related to student accommodation, employment lettings, tenancy obligations, registration fees and some anti-avoidance provisions. There are also a number of amendments to insert provisions that the parliamentary counsel left aside for inclusion on Committee Stage due to pressure of time and a few related to matters I indicated would be added at the time the Bill was published, for example, those associated with data exchange, privilege, apartment complexes, functions of the private residential tenancies board etc.
Amendments Nos. 2, 13 and 21 are technical amendments related to the definition of the term "dwelling", which has implications for the scope of the Bill. Although the definition of "dwelling" in section 4 reserves the word to mean rented accommodation only, there are some sections that use the word in its normal sense of any place of residence, whether rented or not. Section 25(4) addressed this point in the case of that section, but the difficulty also arose in the context of section 17 in particular.
Amendment No. 21 inserts two new subsections into section 4 to address the issue in all sections where there is a need to refer to residences that may or may not be rented. The new subsection (2) provides a definition of dwellings generally, whether rented or not, and the new subsection (3) applies the subsection (2) definition specifically to instances of usage of the word "dwelling" in sections 17 and 25.
The consequential deletion of subsection (4) from section 25 is contained within amendment No. 77. The use of the word "dwelling" in sections other than those listed in the new section 4(3) is covered by the phrase "unless the context otherwise requires", which is at the start of section 4(1) which is being inserted by amendment No. 10.
Amendment No. 2 inserts into section 3(2) a reference to the new section 4(2) containing the wider interpretation of "dwelling" that is being inserted by amendment No. 21, as the term "dwelling" is used in section 3(2) also. Amendment No. 13 inserts a similar reference to section 4(2) in the definition of "dwelling" in section 4(1).
I apologise that these are such technical amendments. They are to try to achieve legal correctness on the confusion which might arise over that word.
Why does the definition of "dwelling" omit places not actually affixed to the ground, for example, mobile homes, boats or barges? Is there a particular reason for that omission?
The issue of the specific omission of mobile homes goes back to the commission. The commission recommended that they should not be covered by the Bill. The policy we are adopting in that regard is to exclude temporary non-building structures from the scope of the Bill. The rationale for this, in the case of tents, caravans and mobile homes, is that to our knowledge these are either let for the purposes of a holiday or are owned by the occupant. If the owner and the occupier of the dwelling are one and the same person, then no relationship of landlord and tenant in respect of the occupation of accommodation exists. The Residential Tenancies Bill regulates the private rented residential sector and consequently the scope of the Bill does not extend to situations where land, as opposed to residential accommodation, is rented. Government policy generally is to maximise housing supply in the context of permanent structures built in accordance with building regulations.
The Deputy probably has a case where a person is renting a caravan for 12 months of the year. I will not say that this is a segment to which we are closing our eyes but the direction of Government policy is to concentrate on the areas outlined and we do not want to encourage such accommodation for that purpose.
I appreciate that. While it is an omission, it is not one over which I will strongly object at this stage. As I stated previously, my party is anxious for the Bill to be made law and for its provisions to be up and running. However, there is a segment of holiday home type dwellings to which I would like to return where, for example, a person owns a cottage by the sea which can be a holiday home for six months of the year and then a tenancy for the other six months. Who designates the term "holiday home" or from where does that designation come? Does it come from the owner or landlord of the dwelling and, if so, is there a requirement that the holiday home should be of a particular standard in order to prove that it is a holiday home, for example, that it has running water, proper toilet facilities etc? Does whoever designates it as a holiday home need to substantiate such designation?
That gets us into another large area. What we are dealing with here is rented dwellings. There is probably a large number of holiday homes. I accept there would be certain standards set for the ones registered as such by the relevant tourism organisation, but I admit there are some which might be operating casually which might not be registered and approved. The Bill deals with the renting of residential dwellings and its main emphasis is not on the short-term lettings to which the Deputy referred.
My concern is that somebody would try to avoid registering such a residence as a rental building. They might declare it a holiday home and rent it as a holiday home, perhaps to the same tenant, thus avoiding registering for the purposes of this Bill. That is the exception about which I am concerned. If people declare such properties as holiday homes, is there a system or criterion against which that declaration must stand?
We are not dealing with holiday homes in the Bill. If, as the Deputy's case suggested, a house was used as a holiday home for a few months of the summer and as a rented dwelling by somebody else for the rest of the year, then I suppose it would come under the Bill. This is why we are setting up the board, to resolve disputes between landlord and tenant. If, to date, there was an argument about that, one could go to the courts and it would cost a fortune. We are trying under the new set-up to have a dispute resolution system which is much easier to work. There probably are such cases of properties, which are rented dwellings for nine months of the year and holiday homes for a few months. If the property is used for nine months of the year as a rented dwelling, it probably comes under this Bill. If there was an argument between the landlord and tenant, they should go to the board.
It is one of the reasons the six-month run-in for the tenancy is too long because it would allow a person in the category concerned to fall victim of that, whereas if there was a shorter run-in to the tenancy — three months as opposed to six — the net would capture people in that category. Rather than go through a long-winded set of amendments on the matter, perhaps the amendment tabled on it is the best way to deal with it. Had I been a member of this committee, I would have tabled such an amendment. However, I will return to that matter on Report Stage.
As has been stated, that will arise later. That was one of the fundamental points debated at great length by the commission and one could debate it either way. There are other types of accommodation — student accommodation or accommodation which is linked to one's job, for example — where the tenant may not avail of the security of tenure provision but may still avail of other rights under the Bill.
I draw the committee's attention to the fact that section 4(3) will need to be amended on Report Stage as it also needs to refer to new provisions relating to apartment complexes that I propose to insert in the Bill by way of amendments Nos. 37, 184, 211 and 212. If these are accepted, I propose to bring forward a suitable amendment for this purpose on Report Stage.
Amendment agreed to.
Amendments Nos. 3, 4, 6, 8, 9, 14, 15 and 20 are related and may be discussed together by agreement.
I move amendment No. 3:
In page 14, subsection (2)(a), line 6, after “business” to insert “by the tenant”.
The purpose of amendment No. 3 is to cover the case of living over the shop whereby there might be a building in which there is a residence or tenancy but also a commercial business. I have read and re-read amendment No. 21 and would be interested in hearing the Minister of State's view on this. My understanding is that, if a business is carried out by the landlord in the same building in which there is a tenancy, that might create problems for the tenancy. I would welcome the Minister of State's response on this.
The purpose of amendment No. 6, submitted by Deputy Allen, is to ensure the Bill would apply to properties where the occupier is entitled to a fee simple, which means absolute ownership. That would need to be clarified. What is the situation in this regard?
Acting Chairman, I suggest we discuss the amendments in turn because there is another amendment in my name in this group.
The Deputy may discuss all the amendments but they must be decided upon individually subsequently.
If I may, I will come back on my amendment No. 15.
Which way do you wish to proceed, Acting Chairman?
It would be neater to concentrate on the amendments one at a time.
We have agreed to discuss them together.
It would make more sense to discuss them individually.
The proposed amendment to provide that dwellings used for business purposes would be excluded from the scope of the legislation only if the business is carried on by the tenant is not appropriate. It would mean, for example, that if an occupant other than a tenant, such as a family member or other person who is a licensee of the tenant, is carrying on a business in a dwelling, it would not be excluded from the scope of the Bill.
The provision in section 13(1)(a) of the Landlord and Tenant (Amendment) Act 1980, dealing with business equity, refers to the use of the premises wholly or partly for the carrying on of a business during the five year period of the qualifying occupation by the tenant. The intention behind the exclusion contained in section 3(2)(a) of this Bill is to exclude any dwelling that would be encompassed by that provision of the 1980 Act. The insertion of the words proposed by this amendment would create a doubt and defeat the intention of making a clear distinction in the legislation between residential and business tenancies and would create potential conflict as regards what statutory provisions apply in various aspects of the tenancy, including tenure rights.
Is a tenancy above a shop excluded from the terms of the Bill?
This group of amendments includes amendment No. 14 in my name. This concerns what is meant by a dwelling and what type of dwellings will not be included in the legislation. The purpose of my amendment is to make clear that a bedsit would be included as a dwelling for the purposes of this Bill. The Bill, as I read it, would mean that any dwelling which was not completely self-contained would not be included in the legislation, for example, a bedsit where kitchen or bathroom facilities or common circulation areas might be shared with other bedsits in the same building. It is my understanding that they are excluded in the Bill and obviously that would exclude a huge number of people who need protection under this legislation. It could be argued that some of the tenants most in need of the protection of this legislation are those in bedsits. I want to make it clear that bedsits are covered by the legislation. Do I understand correctly that the legislation will cover dwellings, that these are not necessarily the same as buildings and that, for example, a flat over a shop is regarded as a dwelling in its own right and is not disqualified?
The Acting Chairman has ruled an amendment of mine out of order but I feel that amendment No. 4 in the name of the Minister relates to the same matter, that is, the question of dwellings let by or to a public authority, which is later defined as a Minister of the Government, a body under the aegis of a Minister of the Government, a local authority, a health board, the regional health authority, a voluntary body approved by the Minister for Health and Children, educational institutions, or the Shannon Free Airport Development Company. They are all defined as public authorities.
None of the dwellings let by those public authorities is proposed to be included in this legislation. I can understand why dwellings let by local authorities under the Housing Acts, where there is obviously a separate arrangement, are not included in this legislation. They do not comprise private rented accommodation as we understand it and tenants have protection. It is regulated and so on. However, dwellings which are let by other public authorities are in the same situation as private rented dwellings. The relationship between the landlord and the tenant is the same and I see no reason for their inclusion in this exemption. For example, the Office of Public Works might let a dwelling to a tenant. Sometimes that may be related to employment but there may be other reasons. I know of a local authority which is letting a dwelling privately in an exceptional set of circumstances where a house was bought back as part of a compulsory purchase and is let on what is essentially a private letting arrangement.
The same rules should apply to public authorities. As I understand it, the Shannon Free Airport Development Company, SFADCo, has a substantial housing stock which it lets to tenants. Some educational institutions such as schools have buildings on their grounds which they let, perhaps incidentally. There are public and voluntary bodies which, for example, let dwellings to elderly people or people with disabilities and the tenants of all such dwellings will be excluded from this legislation. That is not right. They should be included in it. If they are excluded, local authority and private rented dwellings will be regulated but this sector will remain unregulated. State agencies have property which is let to tenants. In my constituency, the Dún Laoghaire Harbour Company lets property. Such dwellings should be included.
Does this Bill cover bedsits and, if not, why is that? Many people occupy bedsits and they ought to have the same level of protection as other tenants. Does the Bill apply to properties where the landlord also resides? Is it the Minister's intention that such properties would be excluded from the Bill?
Why does amendment No. 20 relate to page 16 but not page 14, line 47, which Deputy Gilmore seeks to amend? Is it not necessary to insert it where there is a definition of "dwelling"?
Amendments Nos. 4 and 20 cover this area. Amendment No. 4 amends section 3(2) to make it clear that the exclusion from the scope of the Bill of housing provided by voluntary housing bodies only applies to social housing provided by them. This condition was necessary in order that, if a voluntary housing body became involved in the provision of rental accommodation as an ordinary landlord rather than under the social housing schemes, such tenancies would be covered by the Bill. The application of this condition to public authorities generally is, however, inappropriate and hence the need for the amendment.
The question of schools, health boards or hospitals that might have accommodation was raised. We are targeting the commercial rented sector and many of the houses owned by health boards or such entities would be tied to employment. I accept, however, that tenancies might continue after a person's retirement, but they do not fall within the normal commercial rented sector in that the rent might be free or nominal. We have all seen cases of people who were accommodated as a result of their employment and who had no legal right to the accommodation upon retirement but were allowed to remain there. They are not in the commercial market and might pay a significantly reduced rent. We are aiming the Bill at the commercial sector.
Amendment No. 20 states that the Bill is intended to apply to bedsit accommodation that is normally let as self-contained accommodation. It is arguable that the existing definition is wide enough to encompass bedsits but, as the matter was questioned on Second Stage, the Department asked the parliamentary counsel to draft an amendment to put the matter beyond doubt. Amendment No. 20 will put their inclusion beyond question and I ask Deputies to withdraw their amendments on that matter.
Deputies Gilmore and McCormack asked what happens in the case of a person sharing a bathroom or kitchen. It depends on what is let and the deal between landlord and tenant. If the landlord's offer states that he or she is letting a bedsit, then regardless of whether the bathroom or kitchen is shared, it would be covered. If the landlord is smart and speaks only of letting a room, it might be excluded. The tenant must take care with the language used.
The Minister of State includes a clarification of the term "self-contained residential unit", including the form of accommodation commonly known as bedsit accommodation. We know what that means from practical experience; it is expressed as a "self contained residential unit". Are we certain this includes a bedsit where a person shares bathroom facilities with other bedsit tenants? Does the reference to self-containment mean that everything must be self-contained?
I will accept the Minister of State's amendment if he clarifies his reply to Deputy Gilmore. What if the landlord has two or three tenants? Will the Bill apply to such properties? They have common use of the kitchen and bathroom and a bedroom each.
We are dealing with two different things. We know what a bedsit is and refer to it by definition. It is covered. Bedsits are not as fashionable as they once were and people refer to house sharing or renting a room where four or five people live as a family. When changing a house into bedsits, a person must obtain planning permission, but if two people are invited to share the house, it is not needed. The Bill would not cover such an arrangement. If it is referred to as a "bedsit", whether facilities are shared, it is covered. Most people distinguish between a bedsit and a house share. The renting of a room in a house is not covered by this legislation. In a house share, a person has the run of the house except for other bedrooms and there is a difference between the two. We are covering bedsits.
Is that related to the rent a room scheme where resident landlords can get a tax exemption?
No, that is different. It is arguable whether such people would be called landlords. Deputy McCormack is talking about a family living near a third level institution and we are not targeting such people because that is a different relationship. There would not be a self-contained unit in such a property.
No. Digs relate to house sharing, although the concept seems to have gone out with the ark.
Amendment, by leave, withdrawn.
I move amendment No. 4:
In page 14, subsection (2), lines 12 to 16, to delete paragraph (c) and substitute the following:
"(c) a dwelling let by or to—
(i) a public authority, or
(ii) a body standing approved for the purposes of section 6 of the Housing (Miscellaneous Provisions) Act 1992 and which is occupied by the person referred to in section 9(2) of the Housing Act 1988,".
Amendment agreed to.
Amendment No. 5 not moved.
I move amendment No. 6:
In page 14, subsection (2)(d), line 19, after “it,” to insert “or is entitled to the fee simple interest in the property under the Landlord and Tenant (Ground Rents) Act 1978,”.
I undertake to consider this amendment to section 3 before Report Stage. It would exclude persons entitled to acquire the fee simple interest under the Landlord and Tenant (Ground Rents) (No. 2) Act 1978 from the scope of the legislation. Further legal advice on the matter is needed and there may be a category that, while not entitled to a reversionary lease, is entitled to acquire the fee simple interest under the Act of 1978. If so, we will seek legal advice on whether such tenants are akin to owner-occupiers and should be excluded.
Will the Minister of State have received advice before Report Stage?
Amendment, by leave, withdrawn.
Amendment No. 77 is related to amendment No. 7 and they will be discussed together by agreement.
I move amendment No. 7:
In page 14, subsection (2), lines 23 to 25, to delete paragraph (g).
This amendment deletes employment related lettings from the list of exclusions from the scope of the Bill. These were excluded in the Bill as published because of the linkage of the accommodation with the employment. The complete exclusion of employment related accommodation from the scope of the Bill was questioned on Second Stage in the Dáil and, having considered the matter, I am tabling amendments that will bring these lettings within the scope of the Bill other than Part 4.
The security of tenure provisions in Part 4 would not be appropriate to lettings linked to employment but they can enjoy the benefits of other clauses in the Bill. Amendment No. 77 to section 25 provides that the security of tenure measure in Part 4 will not apply to such lettings but the remainder of the provisions of the Bill will apply.
The amendment also excludes student accommodation provided under section 50 of the Finance Act 1999 from the provisions of Part 4, but the rest of the Bill will apply. The amendment is necessary in the case of student accommodation because entitlement to the tax concession is contingent on the accommodation being let under a tenancy agreement as opposed to a licensing agreement and on the occupants being bona fide students. The effect of applying the security of tenure measure to such accommodation could disqualify the landlord from eligibility for the relief and render him or her liable to repay any relief received. Providers of section 50 accommodation must be in a position to secure vacant possession if a tenant ceases to be a student because the vulnerability to forfeiting the relief, including any already received, would deter developers and investors from the provision of much needed student accommodation. Student accommodation is the same as employment related accommodation. It has the protection of the Bill other than the security of tenure provision which is related to other measures.
Cad faoi mná tí agus scolairí sna Gaeltachtaí? How will Irish language pupils in summer colleges stand if the amendment is accepted?
Such accommodation would be considered as lodgings and is of a different category.
Are they covered by the amendment?
No. The Deputy refers to people who would be staying for a short time. I refer to student apartments that attract tax incentives that cannot be linked because the tenants must be students and there is no flexibility. If a person ceases to be a student, he or she must leave the accommodation.
Amendment agreed to.
Amendment No. 8 not moved.
I move amendment No. 9:
In page 14, between lines 36 and 37, to insert the following subsection:
"(3) For the avoidance of doubt, a ‘bedsit' shall constitute a dwelling under this Act.".
The Minister of State clarified this, although not to the extent suggested by the amendment. Does it need to be tightened in drafting to give certainty to the intent?
This has been discussed already.
Amendment, by leave, withdrawn.
Section 3, as amended, agreed to.
SECTION 4.
Amendments Nos. 10 to 12, inclusive, 16 to 19, inclusive, and 23 are related and are to be discussed together by agreement.
I move amendment No. 10:
In page 14, subsection (1), line 37, after "Act" to insert ", unless the context otherwise requires".
These are technical amendments to sections 4 and 6. Amendment No. 10 inserts the phrase "unless the context otherwise requires" at the start of section 4(1), the definition section. The phrase does not then have to be repeated within some of the definitions. Accordingly, amendment No. 19 deletes this phrase from the definition of "prescribed", where it would be superfluous if the previous amendment were accepted.
Section 158 deals with the establishment of panels of mediators and adjudicators. As adjudicators are first referred to in section 54 and mediators in section 81, it is appropriate to include a provision in section 4 directing readers to section 158.
Amendments Nos. 11 and 17 insert the necessary definitions and the latter amendment also includes the necessary definition of "management company". It is proposed to insert provisions in the Bill by way of amendments to Parts 2, 7 and 9 to give tenants certain rights in respect of management companies of apartment complexes.
Amendment No. 12 inserts a definition of a "company" in section 4, the general interpretation section because, arising from other changes, the term is now used in different places in the Bill. Consequently, amendment No. 23 now deletes the definition of company from section 6 which deals with the service of notices because that is now redundant.
Amendment No. 16 makes a minor grammatical correction. Since the Bill was published, the Department of the Environment and Local Government has changed its name to the Department of the Environment, Heritage and Local Government. This technical amendment corrects that.
Amendment agreed to.
I move amendment No. 11:
In page 14, subsection (1), between lines 37 and 38, to insert the following:
"‘adjudicator' shall be construed in accordance with section 158(2);”.
Amendment agreed to.
I move amendment No. 12:
In page 14, subsection (1), between lines 40 and 41, to insert the following:
"‘company' means a company within the meaning of the Companies Acts 1963 to 2001;".
Amendment agreed to.
I move amendment No. 13:
In page 14, subsection (1), line 46, after"means" to insert ", subject to subsection (2),”.
Amendment agreed to.
Amendment No. 14 has already been discussed with amendment No 3.
I move amendment No. 14:
In page 14, subsection (1), line 47, after "includes" to insert the following:
"a bedsit (being a dwelling where a part of the residential unit is self-contained, but certain facilities are shared with other residential units, such as a bathroom or kitchen facilities) and".
I will withdraw this amendment because the Minister of State has tabled an amendment dealing with bedsit accommodation. However, he might examine my amendment because it could be tighter in wording to ensure legal people do not thwart the intention to include bedsits. My amendment makes clear that only part of the residential unit would need to be self-contained and this would make it more certain. I do not want a court to find in future that a bathroom located in the hallway means a unit is not self-contained. This should be examined before Report Stage to ensure we do not leave a gap.
Amendment, by leave, withdrawn.
Amendment No. 15 not moved.
I move amendment No. 16:
In page 15, subsection (1), line 8, to delete "includes" and substitute "include".
Amendment agreed to.
I move amendment No. 17:
In page 15, subsection (1), between lines 13 and 14, to insert the following:
"‘management company', in relation to an apartment complex, means the company in which functions are vested with respect to the management of the apartment complex;
‘mediator' shall be construed in accordance with section 158(1);”.
Amendment agreed to.
I move amendment No. 18:
In page 15, subsection (1), line 14, after"Environment" to insert
", Heritage".
Amendment agreed to.
I move amendment No. 19:
In page 15, subsection (1), line 21, to delete ", unless the context otherwise requires,".
Amendment agreed to.
I move amendment No. 20:
In page 16, between lines 3 and 4, to insert the following:
"‘self-contained residential unit' includes the form of accommodation commonly known as ‘bedsit' accommodation;".
Amendment agreed to.
I move amendment No. 21:
In page 16, between lines 9 and 10, to insert the following subsections:
"(2) The definition of ‘dwelling' in subsection (1) shall not apply in relation to the construction of references to ‘dwelling’ to which this subsection applies; each such reference shall be construed as a reference to any building or part of a building used as a dwelling (whether or not a dwelling let for rent or valuable consideration) and any out office, yard, garden or other land appurtenant to it or usually enjoyed with it.
(3) Subsection (2) applies to the following references to ‘dwelling’ in this Act, namely—
(a) the first and last of the references in paragraph (c)(ii) and paragraph (c)(iii) of the definition of ‘behave in a way that is anti-social’ in section 17(1),
(b) the reference in subsection (2)(a) of section 25 to whichever of the dwellings mentioned in that subsection is not the subject of the tenancy mentioned in subsection (1) of that section, and
(c) the references in subsection (2)(b) and (c) of section 25.”.
Amendment agreed to.
Question proposed, "That section 4, as amended, stand part of the Bill."
The Minister of State tabled a welcome amendment earlier relating to dwellings where there is an employment connection. Could the same formula be used to deal with the public authority issue? The definition of "public authority" on page 15 is very wide. For example, it would obviously include the Department of Defence where people are tenants in an employment-related situation, and it would be the same for the Office of Public Works. Could the formula used for the employment-related situation be used here as well? With that formula the employment connection means there is a distinction between tenant rights but not necessarily tenure provision rights which do not necessarily exist because the tenancy is related to employment.
I am also concerned about the exclusion of voluntary bodies standing approved by the Minister for Health and Children, a health board or an authority or board for the purpose of providing accommodation for persons who are elderly, have a mental handicap or suffer from a psychiatric disorder. While I appreciate that provision of such accommodation is more akin to social housing than commercial letting which this Bill addresses, the net effect will be to deprive elderly people and those with a mental handicap or psychiatric disorder housed by voluntary bodies with the approval of the health boards of any rights as tenants. The situation is similar regarding educational institutions. I understand the Shannon Free Airport Development Company has housing stock which is akin to social housing and operates like a local authority, but it is not covered by the housing Acts and will not be covered by this Bill either.
My amendment is out of order given the charge on the State, but this should be examined. It is not desirable that some of these public authorities are not covered by the housing Acts or this legislation.
I am informed that the housing in Shannon is to be handed over to the local authority but perhaps that is a long time coming.
I heard that years ago in a different capacity.
The Bill is supposed to deal with the commercial rented sector. I share some the Deputy's concerns about the cases to which he referred, but these would be much the same as local authorities and voluntary housing associations which are funded with taxpayer's money through the Department. They are not really in the commercial area although they pay rent and some may receive rent allowance as a top-up. The Deputy may have a point regarding the Department of Defence and the OPW, but they are not in the commercial sector. I do not know whether the issue has been fully examined. Perhaps we will consider some of the issues. It would be no harm to be clear about what is intended.
Question put and agreed to.
Section 5 agreed to.
SECTION 6.
Amendments Nos. 22 and 92 are related and will be discussed together.
I move amendment No. 22:
In page 17, subsection (1)(c), line 9, after “by” where it secondly occurs to insert “registered”.
This is similar to amendment No. 92. It is in the interest of all parties that important notices such as this are served by registered post. As the proposal is straightforward, I presume the Minister of State will accept the amendment.
I do not propose to accept the proposed amendments, the effect of which would be to require that all or some notices be served by way of registered post. This has been deliberately excluded in the Bill as well as in recent legislation, including the issuing of summonses, on the grounds that it is unsatisfactory. This was referred to on Second Stage. If the person receiving a registered letter does not want to receive it, it is easy to avoid doing so.
It is easy for them to say they did not receive the other letter.
If the addressee does not happen to be at home to accept the delivery, the postman will have to leave a note saying the item is available for collection within seven days or whatever, and leave it at the local post office. The Post office will generally be some distance away and only open during standard working hours. Collection is a difficult task and unlikely to occur.
Where a person wishes to avoid receipt of a notice, there is a greater possibility where registered post is used. This was referred to on Second Stage. While it might appear worthwhile to include the proposal, some people are very innovative in ensuring they do not receive registered letters. If one manages to serve people with a registered letter, there is evidence it has been delivered.
What happens if a person maintains he or she did not receive an unregistered letter?
We excluded the provision. On Second Stage Members expressed the same views as the Deputy while others were pleased it was not included. This is the beauty of the dispute resolution board. When people are brought before the board, they can answer to it and fight their battle. It would be great if we could all agree on what is perfect. In practical life, registered letters would be great if everyone was straight and honest and accepted them. However, if someone wishes to mess up the system he or she can do so easily.
On amendment No. 92, it makes sense to have a certain formality to the sending of notices. Therefore, registered post should be used.
It is a 50:50 scenario. If a person receiving a letter, whether by way of registered post or ordinary post, does not want to receive the letter, all he or she need do is ignore it. If he or she receives an ordinary letter, it can be put in the bin. This is a catch-22. Is the board the follow-up to a person ignoring a letter by ordinary post?
I am ambivalent about whether registered post should be used. Unfortunately, the postal service in this country is changing. Registered post was fine when one was sure there was a postal delivery to each house each day and there was a network of post offices within walking or easy distance of most people.
Perhaps I can give a practical example of this. I live in Shankill. Approximately two years ago, the delivery of registered post from the local post office was discontinued. We are in the Dublin 18 postal district. If one now receives a registered letter when not at home, one gets a note in the door from the postman saying there is a registered letter which can be collected at the sorting office on Ballyogan Road. That is almost six miles from where I live. This is fine for someone who has a car and can arrange to go there during working hours and before 5 p.m. Someone in a nine to five job would have to take a day off work to collect a registered letter. There is no public transport to the sorting office. Unfortunately, this experience is being repeated in many parts of the country.
While a registered letter is proof that the person sent it, it does not mean the person to whom it is sent will receive it. Perhaps we should consider other ways of dealing with the issue. The delivery of notices by a person in the landlord-tenant relationship, for example, is probably the best solution. We must consider other ways in which notices are communicated between landlord and tenant. Unfortunately, I do not think the registered post mechanism is reliable because of the state of our postal services.
A difficulty arises in Galway where the sorting office is on the Tuam Road, near the racecourse. I would be happy to withdraw the amendment if the tenant or landlord was able to serve a notice personally and not by post. Perhaps this is the solution to the problem. Is that possible under the legislation?
They are all listed on page 17. Section 6 states that a notice required or authorised to be served can be sent in a number of ways, including delivering it to the person. In the case to which we refer, if there is a time delay, we are trying to put the onus on the person receiving the notice to prove it arrived late. It is not a perfect science. As Deputy Gilmore said, and as other Members said on Second Stage, registered post is not the perfect answer either.
Amendment, by leave, withdrawn.
I move amendment No. 23:
In page 17, subsection (3), lines 22 and 23, to delete "within the meaning of the Companies Acts 1963 to 2001".
Amendment agreed to.
Section 6, as amended, agreed to.
Sections 7 and 8 agreed to.
SECTION 9.
Amendments Nos. 24 and 25 are related and will be discussed together.
I move amendment No. 24:
In page 18, subsection (2), line 16, to delete "€250" and substitute "€500".
The amendment proposes to delete "€250" and insert "€500". Having considered the penalties in the Bill and compared them with those in other Acts, a fine of €250 for a continuous breach is very light. For example, in the Licensing of Indoor Events Act 2003 there was a set penalty of €500. My amendment proposes a penalty of €500 to act as a real deterrent.
I do not consider that the proposed amendment to increase the fine per day for the continuation of offences is warranted. Legal advice is that there is no particular standard for daily fines. The amount in the Bill of up to €250 per day is in line with most legislation. I accept that it may be higher in some cases. Of more significance is the specific fine on summary conviction of up to €3,000 or up to six months imprisonment or both. That should provide a significant deterrent against offences under the Bill. In most cases the daily rate is not handed down by the courts. The specific fine is of more significance. While the fine is not the highest it is in line with that in the majority of similar legislation.
Amendment put and declared lost.
I move amendment No. 25:
In page 18, subsection (4), line 21, to delete "one year" and substitute "two years".
In many circumstances tenants in difficulty may take longer to initiate proceedings. Therefore, two years is more appropriate.
No. The normal period is one year. The Bill is not referring to a tenant taking action but to the board pursuing an offence that has been committed.
Under the Bill it can only be initiated by the board.
This section applies to prosecutions for criminal offences and the board would be pursuing them. A tenant may have made the original complaint to the board. However, when the criminal offence has been established it has one year to pursue it.
That would be after the date of the offence. It is a relatively short period given that the tenant might approach the board, it carries out an investigation and then it initiates proceedings.
That is not really the case. The offence would be the failure to comply with the board's ruling. The timespan refers to the date of the board's ruling. It does not refer to the date on which the action took place. I accept the concern expressed by the Deputy about a tenant being slow to initiate proceedings. The legislation refers to when they had been adjudicated on and a criminal offence existed. The board then has a year to prosecute. I expect the board to be very efficient. I hope there will never be a case where it takes more than a year to pursue an offence.
Amendment, by leave, withdrawn.
Section 9 agreed to.
Sections 10 and 11 agreed to.
SECTION 12.
Amendments Nos. 26 and 27 not moved.
Amendments Nos. 28 to 30, inclusive, are related and will be discussed together.
I move amendment No. 28:
In page 19, subsection (1)(b), line 1, before “carry” to insert “subject to subsection (2),”.
Subsection (2) qualifies the landlord's repairing obligations to exclude situations where the tenant causes damage beyond normal wear and tear. Amendments Nos. 29 and 30 insert provisions into subsections (1)(b)(i) and (ii) and state explicitly that landlords must carry out whatever works are necessary to ensure compliance with the standards regulation. That is the legal position whether the amendment is accepted. The amendment will give comfort to commentators who have sought such an explicit reference.
Amendment agreed to.
I move amendment No. 29:
In page 19, subsection (1)(b)(i), line 3, after “necessary” to insert “and ensure that the structure complies with any standards for houses for the time being prescribed under section 18 of the Housing (Miscellaneous Provisions) Act 1992”.
Amendment agreed to.
I move amendment No. 30:
In page 19, subsection (1)(b)(ii), line 8, after “tenancy” to insert “and in compliance with any such standards for the time being prescribed”.
Amendment agreed to.
Amendments Nos. 31 to 33 inclusive, 35, 37 and 38 are related. Amendments Nos. 34 and 36 are alternatives to amendment No. 35. Amendments Nos. 31 to 38, inclusive, will be discussed together.
I move amendment No. 31:
In page 19, subsection (1)(c), line 9, before “effect” to insert “subject to subsection (3)*,”.
Amendment No. 32 is a minor technical amendment and refers to damage to a dwelling in subsection (1)(c)(i).
Amendment No. 31 inserts into subsection (1)(c) a cross-reference to a new subsection (3) which amendment No. 38 proposes to add to the section to clarify that the requirement to effect and maintain an insurance policy at subsection (1)(c) does not apply if the landlord can show that insurance is unobtainable or only obtainable at a prohibitive cost. This amendment is being processed on foot of several representations to the effect that some landlords have a significant difficulty in sourcing affordable insurance in the current market, particularly in certain geographical areas. There is no compulsion on insurers to provide cover. While structural and liability insurance is undoubtedly in tenants’ interests, the absence of such insurance is much more detrimental to the landlord. There is very little likelihood of this exemption being abused.
Amendments Nos. 34 and 35 amend subsection (1)(d) and deal with the refund of deposits. Amendment No. 34 inserts a reference to the new subsection (4) proposed to be inserted by amendment No. 38 and requires the refund to be made promptly. Amendment No. 35 deletes the text from the subsection that deals with the withholding of deposits as this is now covered in the new subsection (4). The new subsection provides for the partial or full withholding of deposits where there are arrears of rent owing or damage caused by the tenant beyond normal wear and tear. This corrects a technical flaw in the published Bill that would have facilitated the retention of all of the deposit, even where the arrears of rent or cost of repairs beyond normal wear and tear amounted to a lesser sum. I ask Deputy Cuffe to withdraw his amendment as my amendments deal with the issue he raised.
Amendment No. 37 inserts a new paragraph (h) in subsection (1), requiring the landlord of a dwelling in an apartment complex to forward tenants’ complaints to the management company and to provide the tenant with the company’s response or statement, as referred to in section 180(2). This will be inserted by amendment No. 211 and will oblige companies to have regard to tenants’ complaints. They will also be obliged to provide particulars of charges to tenants and information regarding the management company must be included in the tenancy register.
Amendment agreed to.
I move amendment No. 32:
In page 19, subsection (1)(c)(i), lines 11 and 12, to delete “, loss and destruction of” and substitute “to, and loss and destruction of,”.
Amendment agreed to.
Amendment No. 33 not moved.
I move amendment No. 34:
In page 19, subsection (1)(d), line 17, to delete “return or repay” and substitute “subject to subsection (4), return or repay promptly”.
Amendment agreed to.
I move amendment No. 35:
In page 19, subsection (1)(d), lines 19 to 21, to delete all words from and including “(but” in line 19 down to and including “16(f))” in line 21.
Amendment agreed to.
Amendment No. 36 not moved.
I move amendment No. 37:
In page 19, subsection (1), between lines 46 and 47, to insert the following:
"(h) if the dwelling is one of a number of dwellings comprising an apartment complex—
(i) forward to the management company, if any, of the complex any complaint notified in writing by the tenant to him or her concerning the performance by the company of its functions in relation to the complex,
(ii) forward to the tenant any initial response by the management company to that complaint, and
(iii) forward to the tenant any statement in writing of the kind referred to in section 180(2) made by the management company in relation to that complaint.”.
Amendment agreed to.
I move amendment No. 38:
In page 19, after line 48, to insert the following subsections:
"(3) The obligation under subsection (1)(c) does not apply at any particular time during the term of the tenancy concerned if, at that time, a policy of insurance of the kind referred to in that provision is not obtainable, or is not obtainable at a reasonable cost, by the landlord in respect of the dwelling.
(4) Subsection (1)(d) applies and has effect subject to the following provisions:
(a) no amount of the deposit concerned shall be required to be returned or repaid if, at a date of the request for return or repayment, there is a default in—
(i) the payment of rent and the amount of rent that is in arrears is equal to or greater than the amount of the deposit, or
(ii) compliance with section 16(f) and the amount of the costs that would be incurred by the landlord, were he or she to take them, in taking such steps as are reasonable for the purposes of restoring the dwelling to the condition mentioned in section 16(f) is equal to or greater than the amount of the deposit,
(b) where, at the date of the request for return or repayment, there is a default in the payment of rent or compliance with section 16(f) and subparagraph (i) or (ii), as the case may be, of paragraph (a) does not apply, then there shall only be required to be returned or repaid under subsection (1)(d) the difference between the amount of rent that is in arrears or, as appropriate, the amount of the costs that would be incurred in taking steps of the kind referred to in paragraph (a)(ii).".
Amendment agreed to.
Amendment No. 39 not moved.
Section 12, as amended, agreed to.
NEW SECTIONS.
I move amendment No. 40:
In page 20, before section 13, to insert the following new section:
"(1) The landlord shall ensure that—
(a) the dwelling is in a state fit for human habitation, and
(b) the dwelling is in compliance with the Building Regulations, and
(c) the dwelling is in compliance with the Environmental Regulations.
(2) The landlord shall ensure that the dwelling is available for inspection at all reasonable times by authorised officers from the relevant local authority and health board.".
This amendment is to ensure that a landlord would ensure that a dwelling was fit for human habitation and compliant with building and environmental regulations and that a landlord would ensure that it was available for inspection at all reasonable times by authorised officers of the relevant local authority and health board. This is a logical amendment. Inferior accommodation is no longer acceptable and landlords cannot rent out just any type of property. Members of my family were in third level education in two cities outside Galway where some of the accommodation being offered to students left much to be desired. There should be some regulation. This amendment would cover regulations to ensure that the standard of accommodation being offered would not be inferior but would be habitable.
The proposal to insert a new section that would impose a duty on landlords to ensure compliance with various building and environmental requirements is unnecessary. The requirements in question are already provided for in separate legislation. I am advised that, apart from being unnecessary, it is not appropriate to attempt to enact what would, in effect, duplicate statutory provisions regarding these matters. These requirements are covered in other legislation. There may be a problem with enforcement but it is not necessary to put them into legislation again. They are already the law of the land and should be enforced.
I accept that, but Deputy Allen tabled this amendment because existing legislation is not adequate. If it were adequate, the amendment would not have been necessary. It is our experience that accommodation is inferior and is not of the required standard. How can we ensure that existing legislation is implemented?
Enforcement in this area has not been satisfactory but that is not the purpose of this Bill. This Bill will give extra rights to tenants and allow them to bring landlords to a disputes resolution board. Previously a tenant and landlord could discuss a matter but little could be done apart from going to court, which the parties would be unlikely to do.
Under the new system the board will work through local authorities, and perhaps by paying local authorities, to pursue matters actively and insist that standards and regulations are applied. Until now local authorities have been reluctant to get involved in these things. However, the law is there and the board will drive local authorities to enforce regulations. Standards are all important.
Does the legislation make it obligatory for local authorities to pursue the intention of the amendment or make it easier for them to do so?
Not specifically. It is not legislation that is needed. Legislation exists. What is needed is the will and, perhaps, the resources. When landlords pay their registration fees the Residential Tenancies Board will work with local authorities and give them resources.
If we are dealing with a Residential Tenancies Bill which does not give extra powers to the local authorities to deal with the inadequate and substandard accommodation, we must do something to ensure, even though it is catered for in other legislation and is the law as it stands, that it is easier for local authorities to ensure that inferior accommodation is not offered to tenants.
I understand what Deputy McCormack is saying and I agree with him. However, it is not necessary to put any more powers into legislation. The powers are already there. What is lacking is the enforcement of those powers and the will and drive to do that. The board will work with local authorities, giving them guidance and resources to carry out what they should have been carrying out for years. The board will not simply give the local authorities resources in the hope that they will enforce. The resources will be related to performance.
Will the board take on what was previously the responsibility of the Department of the Environment, Heritage and Local Government in ensuring that properties are registered and that sort of thing?
Amendment, by leave, withdrawn.
I move amendment No. 41:
In page 20, before section 13, to insert the following new section:
"No provision of any lease, tenancy, contract or other agreement (whether entered into before, on or after the relevant date) may operate to discharge or relieve the landlord from any of his or her duties or responsibilities under this Act or which would defeat the spirit of this Act.".
The amendment is fairly straightforward.
Section 18(1) prohibits lease and tenancy agreements from enabling landlords or tenants to contract out of their obligations under this Bill and so achieves what amendment No. 41 seeks to do. The combined effect of sections 18(1) and 18(3) adequately caters for the provision sought by amendment No. 70 and it, too, is superfluous.
The Minister said a landlord cannot avoid his or her responsibilities under the sections outlined. The purpose of the amendment was to provide protection for vulnerable tenants who would not have recourse to legal advice before signing a lease. How are such people protected under the sections mentioned?
Section 18(1) prohibits lease and tenancy agreements from enabling landlords off tenants to contract out of their obligations. One can improve on one's obligations but cannot contract out of them. The protections being sought are already provided.
Amendment, by leave, withdrawn.
SECTION 13.
I move amendment No. 42:
In page 20, subsection (2), lines 20 to 25, to delete paragraph (c).
This amendment seeks to delete paragraph (c) of section 13 which provides that the board in making regulations must ensure any obligations imposed on landlords are no less onerous than those imposed on them under section 18 of the Housing (Miscellaneous Provisions) Act 1992 or any other Act. If a board makes regulations for which it has no statutory or legal basis then it would be open to the landlord to challenge such regulations.
This section appears to put the onus on the board to ensure ab initio that it does not impose more onerous obligations on landlords. This will restrict what the board can do and will leave the way open for a great deal of litigation. It would be better if the Bill was silent on this matter rather than providing such a provision.
There may be some merit in amendment No. 42. There should be no question of the tenancy board seeking to impose lower standards of accommodation than that specified in regulations made under the 1992 Act. We will reconsider the matter to ensure there are no legal implications which would prevent our acceptance of the amendment.
I thank the Minister for his positive response.
We will come back to this matter on Report Stage.
Is my amendment being accepted today?
We agree in principle with the Deputy. Perhaps he will re-enter his amendment on Report Stage.
I will retable it for Report Stage.
Subject to there being no legal implications involved, we will accept the amendment on Report Stage.
Amendment, by leave, withdrawn.
Section 13 agreed to.
I suggest, before we move on to section 14, that we take our sos now. Is that agreed? Agreed.
Sitting suspended at 12.55 p.m. and resumed at 2 p.m.
SECTION 14.
Amendments Nos. 44 to 48, inclusive, and amendments Nos. 51 and 93 are related to amendment No. 43. Therefore, amendments Nos. 43 to 48, inclusive, and amendments Nos. 51 and 93 will be discussed together by agreement.
I move amendment No. 43:
In page 20, subsection (1), line 28, after "dwelling" to insert "or his or her agent".
This section prohibits a landlord from penalising tenants for asserting their rights and referring their disputes to the board. I propose a number of amendments, among them that the prohibition against penalising a tenant for asserting his or her rights should be applied not only to the landlord but also to the agent of a landlord. There are many situations where the landlord might not be in direct contact with the tenant and it is an agent of the landlord who makes threats or penalises the tenant in some way. It is not clear if a landlord abroad could claim that he or she had no knowledge of the tenant being penalised. It could also be the case that an agent acting for a landlord might penalise the tenant without the agreement or knowledge of the landlord and in circumstances where the landlord might be averse to that action.
It is in the interests of both tenants and landlords that it is made clear that where an agent acts for the landlord, collects rent, inspects the property and, to all intents and purposes, is the person in contact with the tenant, he or she should be covered by the legislation. It should be explicit that where tenants communicate with a public authority to protect their position as tenants, for instance, in making a report to the fire authorities, to a local authority or health board or a complaint under the Equal Status Act, the landlord should be prohibited from imposing any penalty.
Amendment No. 46 proposes that where a landlord or agent contravenes this section, they would be guilty of an offence. Amendment No. 47 makes it clear that penalising the tenant would include actions such as increasing the rent payable, serving a notice to quit or failure to carry out repairs. The evidence in many cases is that where a landlord seeks retribution against a tenant it usually takes one of these forms. In some cases the essential services to a dwelling can coincidentally go out of order, for example, the water may stop running or the electricity stops working, and the landlord refuses to reinstate the services. It should be explicitly stated that all those actions can be regarded as a form of penalisation being imposed by a landlord or his or her agent.
Amendment No. 48 in my name proposes that such actions include but are not limited to harassment, intimidation, abusive or threatening behaviour or retaliatory notice to quit. Given its importance, this section needs clarification. It should be clearly stated what is meant by action that adversely affects peaceful occupation. For that reason I propose a non-exhaustive definition, such as that proposed in the amendment.
I apologise for not being present earlier due to circumstances beyond my control. I wish to refer to an earlier amendment of mine but not speak about it. It dealt with the type of hovels that are still being offered for rent to unfortunate people by landlords. I am most familiar with the situation in Dublin and Cork where apartments and houses are being offered for rent which do not meet building regulations. I do not understand why local authorities are not more proactive in closing them down. People are effectively trapped in them because of threats of eviction. They complain to their local authority that they are living in substandard conditions, following which the property must be inspected. However, at the whiff of an inspection, the landlord steps in immediately.
Amendment No. 93 is designed to ensure that where the landlord vexatiously tries to end a tenancy because a tenant makes a complaint, the termination would itself be deemed to be invalid. This is vital to ensure that tenants who make legitimate complaints to the landlord or in pursuit of a planning application will not suffer the consequences of seeking their statutory rights. This approach has worked very well in New South Wales.
I will be very disappointed if the Minister of State does not share my sentiments. I saw him nodding his head in agreement when I spoke earlier about the non-enforcement of building regulations by local authorities. I ask him to accept my amendment because I do not want tenants to be under a threat if they try to use their appalling living conditions as an instrument to obtain their statutory rights and possibly suffer eviction when the landlord is aware that the local authority will inspect the premises.
Amendment No. 43 proposes to introduce the word "agent". I am against inserting any reference to agents in the Bill. I accept what the Deputy says but it must be asked if it would strengthen or weaken the legislation. The requirements of the Bill relate to landlords, which means that the responsibility in all cases rests with them. Regardless of whether the landlord is in the country or asks another person to do the work for him or her, it is the landlord who is responsible. There must be a clear, single, ultimate location for responsibility for all actions regarding the obligations of a landlord. While I accept that in many cases the agent may act on behalf of the landlord, the inclusion of the agent in these provisions may in many respects give the landlord an escape route. The amendment might result in weakening the Bill and a degree of buck-passing between the landlord and the agent. The Bill is drafted from the perspective of the landlord's responsibilities, the landlord being his or her agents, staff or whatever. We want to keep that emphasis of responsibility on the landlord and not allow him or her to fudge or pass it or to make excuses.
Amendment No. 44 is covered by my amendment No. 45, which widens the scope of subsection (1) to prohibit the penalising of tenants who make complaints or applications to the Garda Síochána or to other public authorities in connection with their occupation of a dwelling, in addition to availing of the disputes resolution procedure. It includes complaints about standards of accommodation or applications to the Revenue Commissioners for rent relief. The amendment takes on board the points that were made.
The legal advice on amendment No. 46 is that making penalisation of tenants an offence would not be appropriate and it would not prove useful in practice. Section 14 prohibits the penalising of tenants and if a complaint to the board is upheld, damages can be awarded. Non-compliance should not arise but if it does, the section should be invoked to put an end to the penalisation rather than to initiate proceedings in the courts. We are trying to avoid the courts as far as possible and to let the board deal with problems. We feel that this will provide the most effective and speedy remedy. If, however, a complaint to the board results in a determination by it, non-compliance with the determination will be an offence. This is the approach taken in the Bill. Where offences are provided for in the legislation, they are in circumstances where a referral to the board would not arise, such as after the board has exercised its functions where relevant, as in the case of failure to comply with a determination order, otherwise there would be parallel proceedings to the courts on offences and referrals to the board. This would be a recipe for confusion and would frustrate the objective, to remove issues related to residential tenancies from the courts.
Looking at amendments Nos. 47 and 48, it would not be appropriate or beneficial to insert examples of a few matters that might be deemed to involve penalisation. The Bill already covers any action. Therefore if we specify examples, the spotlight would fall on them and people would then say that the Bill does not specifically mention another action. The suggestion would detract from the effectiveness of the provision in section 14, which contains the most comprehensive definition of penalisation possible. It states: "any action that adversely affects his or her enjoying peaceful occupation of the dwelling", by specifying that such action may constitute penalisation, even if it involves action by the landlord that would otherwise be legal. There is no wording stronger than "any action". Mentioning examples will not strengthen the Bill, it could weaken it.
Amendment No. 51 is covered by amendment No. 45. It is similar to amendment No. 44 in Deputy Gilmore's name. We are already widening the Bill's scope and that takes on board Deputy Cuffe's point.
Deputy Allen proposes in amendment No. 93 to insert a new section to deem a termination void if it arises from an action by a tenant to secure rights. That is unnecessary because the Bill states that any action, even if it is legal in its own right, becomes illegal if it is done as a penalty. The provision exists already that any action by the landlord is illegal if it is carried out to teach the tenant a lesson. Disputes will arise from time to time but that is where the board comes into it. The Bill is specific when it states that any action, even a legal action, is out of order if it is done with the purpose or intent of the landlord to impose a penalty.
Asamendment No. 45, tabled by the Minister of State, addresses the main thrust of amendment No. 44 so I will withdraw it. If an agent of a landlord engages in bullying of a tenant, is the landlord responsible, even if he or she does not know about it? Can the tenant take such a case to the board? The behaviour is not being made an offence under this legislation, the only offence is non-compliance with the determination of the board. Once that procedure has been exhausted will that be the position?
Yes, but including the agent will not help.
What if a landlord turns up at the investigation and says that he or she gave no authority to the agent to issue a notice to quit to the tenant? If a notice to quit has been issued, will the landlord be able to use the defence that he or she did not know about it?
Responsibility rests with the landlord, that is the legal context. Anything done by the agent or anyone acting on behalf of the landlord is, in effect, an action done by the landlord. There may be cases where he or she will make excuses but the context of the Bill is that responsibility rests on his or her shoulders. The legal advice is that if we broaden this, it might seem logical but it could offer the landlord a way out. There will be landlords who will try to spread the blame but the message in the Bill should ensure legal acceptance of responsibility.
Amendment, by leave, withdrawn.
Amendment No. 44 not moved.
I move amendment No. 45:
In page 20, subsection (1), lines 33 and 34, to delete all words from and including "or" in line 33 down to and including "both" in line 34 and substitute the following:
"(c) making a complaint to a member of the Garda Síochána or to a public authority in relation to any matter arising out of, or in connection with, the occupation of the dwelling or making an application regarding such a matter to a public authority, or
(d) giving notice of his or her intention to do any or all”.
Amendment agreed to.
Amendment No. 46 not moved.
I move amendment No. 47:
In page 20, subsection (2), line 38, after "concerned" to insert the following:
"and reference to penalisation includes increasing rent, service of a notice to quit, or failure to carry out repairs".
Is the Minister of State inclined to accept this amendment? It is slightly different.
We are working on the legal advice we have been given in respect of instances or examples of what might constitute penalisation, or be deemed to involve penalisation. Deputy Gilmore's amendment would detract from the effectiveness of the current section 14, which provides for the most comprehensive possible definition of "effectiveness". The section refers to "any action that adversely affects his or her enjoying peaceful occupation of the dwelling". We feel that this is the most specific and definite wording. If one starts to give examples, one will not be able to cover everything. The phrase "any action" covers everything. That is the legal advice.
Amendment, by leave, withdrawn.
Amendment No. 48 not moved.
Section 14, as amended, agreed to.
SECTION 15.
I move amendment No. 49:
In page 21, subsection (2), line 13, after"occur" to insert "and includes any other tenant under the tenancy mentioned in that subsection".
This amendment extends the definition of a person adversely affected by a landlord's failure to enforce the obligations of a tenancy to include other tenants of the tenancy. The amendment will not provide general access to the disputes resolution process for tenants who are in dispute with each other. Such access will be provided only if there has been a breach of tenancy obligations. I refer, for example, to a breach which would entitle a landlord to terminate the tenancy regardless of its duration or any fixed-term agreement. This amendment is an attempt to provide for third party rights.
Amendment agreed to.
Section 15, as amended, agreed to.
NEW SECTION.
As amendment No. 86 is related to amendment No. 50, they may be discussed together by agreement.
I move amendment No. 50:
In page 21, before section 16, but in Chapter 1, to insert the following new section:
"16.—A scheme, licence, arrangement or contract put in place in order to purposefully defeat a tenant's rights shall be deemed void.".
One of the problems in the Bill is that a landlord may simply license a tenant. That would avoid the main thrust of the Bill. I am anxious to hear the Minister's view on whether an avoidance measure is possible in the absence of this amendment.
It is considered that this amendment is not necessary. Its purpose is more effectively achieved by other provisions of the Bill and other amendments which have been tabled. Deputy Gilmore proposes a prohibition, worded in rather broad terms, on any action for the purposes of avoiding the application of Part 4. Deputy Cuffe's proposal, which relates to any "scheme, licence, arrangement or contract", is almost as broad. It is believed that a more explicit approach to address possible attempts to avoid the application of the security of tenure measure is more likely to be effective. One such measure is provided by amendment No. 121, which I will propose later. The amendment will prohibit the use of very long notice periods, which would probably be one of the most likely devices to be used to avoid allowing the security of tenure measure to come into effect. On Second Stage it was mentioned that a landlord might give six months' notice for a six-month tenure. We intend to provide for a maximum period of notice.
The provision in section 178 makes void any provisions in leases or tenancy agreements that appear to have been inserted for the purpose of facilitating the depriving of a tenant of protection under Part 4. I propose an amendment to this section to strengthen the anti-avoidance measure, by providing that any subletting created for the purpose of facilitating the termination of a tenancy will also be void. I hope that my proposal will encourage Deputy Cuffe to withdraw his amendments.
My main concern revolves around the issue of licences. It has become commonplace in commercial tenancies to substitute the term "a licence" for "a tenancy". I am worried that this could spread into the private rented sector.
Mr. N. Ahern: The tenant is the tenant. A licence is not usually given by a landlord. I believe I am correct in saying that a licence is usually given by a tenant to a sub-tenant or somebody else, such as another party who may be brought in. When we are speaking about landlords and tenants we are referring to a tenancy, generally speaking. That is the arrangement. The term “licence” refers to an agreement between a tenant and some other party.
Can the Minister remind me how we define the word "tenancy"? Where can I find such a definition in the Bill?
I accept that different people will give different names to different things as time goes on. We referred to this issue this morning when we discussed bedsits. Many things are recognised by what they are. There may be disputes as time goes by. Section 5 states that tenancy "includes a periodic tenancy and a tenancy for a fixed term, whether oral or in writing or implied, and, where the context so admits, includes a sub-tenancy and a tenancy or sub-tenancy that has been terminated".
I accept that definition, but I remind the Minister of State that both of us are familiar with Dublin City Council's attempt to issue licences for commercial stalls on the street, for example. One does not receive tenancies in such circumstances. One receives a licence, which is a much weaker form of contractual arrangement than a tenancy.
In the case of the city council to which the Deputy referred, those who receive licences do not have exclusive occupation. A licence may be for the month of December, for a pitch, or for certain hours on a certain day. I accept that some people may try to use it in the commercial world, but we are trying to keep to the language as it has been used. The advice we have received is that a tenancy, unlike a licence, is agreed between a landlord and a tenant. A licence is agreed between a tenant and a third party. That is the basis on which we are working.
That would not be the definition——
We hope the board will work on that basis. We hope it will be unacceptable for landlords to try to refer to "licences" between them and tenants.
I suppose it comes down to the board's interpretation of the agreement. Although I will not press the amendment, I reiterate that I have concerns.
Amendment, by leave, withdrawn.
SECTION 16
Amendment No. 51 not moved.
Amendments Nos. 52 to 54, inclusive, and amendments Nos. 56, 57, 59, 63, 64 and 69 are related. Amendment No. 58 is an alternative to amendment No. 57. Amendments Nos. 52 to 54, inclusive, 56 to 59, inclusive, 63, 64 and 69 may be discussed together, by agreement.
I move amendment No. 52:
In page 21, paragraph (a)(ii), line 33, after “agreement” to insert “(unless provision to that effect in the lease or tenancy agreement is unlawful or contravenes any other enactment)”.
This amendment provides an exemption from the requirement in section 16(a)(ii) to pay charges or taxes in accordance with a lease or tenancy agreement where the imposition of the charge or tax would be unlawful or contravene another legislative provision. The amendment is being proposed on the basis of legal advice to the effect that some enactments prohibit the shifting of the burden of particular charges to tenants. The amendment has been specifically requested by the Office of the Attorney General.
Amendment No. 59 relates to section 16(k) and requires landlord consent where the tenant wishes to paint or decorate a dwelling and which a landlord may not unreasonably withhold. The amendment necessitates a consequential amendment, amendment No. 64, to section 17 which had previously exempted painting or decorating from the prohibition on alteration or improvement by the tenant. The effect of the amendments will be to require the consent of the landlord in respect of such work, though that consent may not be unreasonably withheld. The amendments are being proposed in response to representations by landlords to the effect that the existing provisions have enabled tenants to ruin properties by painting them. A tenant might paint the inside of a house or apartment with the wrong colour and thereby destroy it.
Amendment No. 64 corresponds to amendment No. 59. It requires a landlord to provide reasonable consent to painting or decorating by the tenant. This amendment will serve to delete the text relating to decorating from section 17(1).
I am not happy with amendment No. 56. I consider that the obligation on tenants not to act or to allow others to act in a way which would result in an increase in the insurance premium payable in respect of a dwelling is reasonable and consistent with other provisions of the Bill regarding the obligations of landlords and tenants. It is similarly the case with amendment No. 57. The absolute right to withhold consent to subletting provided for in the Bill was recommended by the private rented sector commission. It is appropriate in the context of the four year security of tenure measure that the provision is being made. It is accompanied by a provision in section 17(9) whereby tenants bound by a fixed-term agreement are given the absolute right to terminate the tenancy where consent to assignment or subletting is refused.
I will speak to my own amendments. Amendment No. 53 relates to the obligation on tenants to provide access to the dwelling for their landlord at reasonable intervals. There is a requirement in paragraph (c) that the obligation should be fulfilled at a date and time agreed in advance with the tenant. Agreement in advance may be somewhat restrictive as there may be circumstances in which a landlord may wish to have access to a dwelling at fairly short notice. It is important that measures are workable which is why I would like the Minister of State to re-examine this provision.
With regard to amendment No. 54, as currently drafted, paragraph (g) makes it clear that a landlord would be entitled to compensation. It is not clear that a landlord would be entitled to carry out repairs rather than avail of compensation. My amendment proposes that the paragraph should be amended to make it clear that the landlord would be permitted to carry out repairs.
Amendment No. 56 relates to the provision whereby tenants are not allowed to act in a way which will result in the invalidation of a policy of insurance in force regarding a dwelling or to an increase in the premium payable under such a policy. It is extremely vague to require that it should be a condition of a lease that visitors are not allowed to do anything which could increase the premium payable under an insurance policy. Apart from the impossibility of knowing what this means, it gives an undue role to insurance companies in determining the terms of leases. It would be very difficult to identify what had caused an increase in a premium. Some things one would consider a tenant could do legitimately and legally might be considered by an insurance company to require it to increase a premium. If the obligation required of tenants in this Bill were placed on people in every walk of life, none of us would be able to do anything. Insurance companies increase premiums for all kinds of reasons. To expose tenants unwittingly could be to introduce a means whereby landlords might seek the termination of a tenancy where a tenant did something most of us would regard as quite legitimate.
Through amendment No. 57, I propose that consent to subletting and assignment should not be unreasonably withheld. Amendment No. 63 relates to the changing of locks. Under the Bill, a tenant would not be permitted to alter a locking system on a door giving entry to a dwelling. There are many circumstances in which a tenant may want to change locks. A female tenant, for example, may simply feel uncomfortable that a landlord or his or her agent has access to her dwelling. Even where there may be no explicit reason for this, she should, in fairness, have the right to change the lock.
The sense of privacy and security changing a lock gives to people is important. For example, even in circumstances where the relationship between a tenant and landlord is not a bad one, a tenant may not necessarily have the level of trust to enable him or her to feel comfortable in giving the landlord or agent free access to the dwelling and may want to have his or her own lock. The right of a tenant to change the locks if he or she so wishes, while undertaking to restore the previous lock before leaving, would be an important provision.
Amendment No. 69 proposes to delete section 17(3), which states:
The landlord shall be entitled to be reimbursed by the tenant any costs or expenses reasonably incurred by him or her in deciding upon a request for consent in relation to the tenant's doing a thing referred to in paragraph (j), (k) or (l) of section 16 (whether the consent is granted or refused).
It is an excessive burden to require the tenant to compensate the landlord for deciding such matters.
With which amendments are we dealing?
We are discussing amendments Nos. 52 to 54, inclusive, 56 to 59, inclusive, 63, 64 and 69 together.
In amendment No. 53 Deputy Gilmore proposes to delete the words "to agree in advance", which is surprising as it appears to be in the tenant's favour to require inspections to be carried out in advance. My interpretation of the proposal is that it would water down this requirement. The aim of the provision is to ensure that while the landlord has a right to inspect the premises, he or she must do so in advance and that it must be reasonable. If one removes the words "in advance", one is more or less giving the landlord a right to demand instant inspection. Unless Deputy Gilmore has a different interpretation, the amendment would appear to weaken rather than strengthen the position of the tenant.
As regards amendment No. 54, if a tenant causes damage beyond normal wear and tear and does not repair it, the landlord has no option but to undertake the repairs and seek to recoup the costs from the tenant. Otherwise, the landlord could be in breach of his or her statutory obligations under the standards regulations. It would not be appropriate to make the landlord's right of repair in such circumstances subject to obtaining the tenant's permission. On these grounds, I ask the Deputy to withdraw the amendment. If a tenant causes damage beyond normal wear and tear, he or she is liable for that damage. He or she will first be given an opportunity to put right such damage, but should he or she not do so, the landlord will have the right to carry out the relevant repairs and bill the tenant accordingly. The landlord would, however, have to give first option to the tenant to put right the damage he or she has caused.
I do not propose to accept amendment No. 56. I consider that the obligation on tenants not to act or allow others to act in a way which would result in an increase in the insurance premium payable is reasonable and consistent with other provisions in the Bill regarding landlord and tenant obligations. Tenants also have responsibilities and are expected to behave in a reasonable manner. This would include, for example, closing doors and windows and securing the property when leaving it. If a tenant consistently or persistently went out and left doors and windows open, thus rendering the house open to damage or entry by other people, that would affect the insurance premium on the property. It is, therefore, reasonable and consistent with the tenant's obligations and responsibilities to require him or her to act in a proper manner which does not result in an increase in the insurance premium for the property in question.
The concern in regard to section 16(i) is that it is very broad and all encompassing. To take an extreme example, if a tenant were to have an additional child, it could well result in an increase in an insurance premium on the building. It is difficult to compel tenants not to have children. I believe Deputy Gilmore shares my concern that paragraph (i) is too broad.
I am not sure we will be able to allay Deputy Cuffe's concerns, which appear to be theoretical. This provision is specifically aimed at a tenant who might act in a manner which would leave the property open to damage, for example, by leaving the building without closing windows and doors. The provision is not intended to extend to circumstances such as those described by the Deputy. He has described an extreme example, which I am not certain would affect the level of an insurance premium. The provision comes under landlord and tenant obligations, commitments and behaviour. While I am prepared to re-examine the issue, I do not believe it can be tied down any further.
With regard to amendment No. 57, the absolute right to withhold consent to subletting provided for in the Bill was recommended by the commission on the private rented sector. It is appropriate in the context of the four year security of tenure measure provided for in the Bill. It is accompanied by a provision in section 179, whereby tenants bound by a fixed-term agreement are given the absolute right to terminate the tenancy where consent to assignment or subletting is refused. This arises from a specific recommendation of the commission.
In amendment No. 58, I wish to substitute the words "not unreasonably" for "may, in his or her discretion,". The purpose of this is that the Bill, as drafted, allows the landlord an absolute right to refuse to allow the property to be sublet. Deputy Allen's amendment proposes to change that in order the landlord could only refuse to allow the property to be sublet where there are reasonable grounds for such a refusal. What is the Minister of State's response?
Amendments Nos. 57 and 58 are being discussed together. I do not consider that the proposed change would be appropriate and, accordingly, I am reluctant to accept the amendment. If it transpires that a landlord has to incur costs in dealing with a request from the tenant, it is reasonable that the tenant reimburse him or her. I do not think the point is valid but agree to look at this again and come back to the Deputy. The only people who would be affected would be those with fixed-term leases.
As regards amendment No. 63, we are hoping for an arrangement which is reasonable. The landlord is entitled to the keys to his or her own house.
Could we not have a situation whereby the tenant, with the co-operation or knowledge of the landlord, could change the locks? I apologise for butting in, but this might help solve the problem. As Deputy Gilmore said, let us suppose that tenants have a falling out and one of them leaves but is still in possession of a key, the tenant who leaves, or somebody belonging to him or her, could come back at any time. Therefore it is not unreasonable to say that tenants could change the lock with the knowledge or consent of the landlord.
There is no problem there. The fundamental point is that a landlord is entitled to the key of his or her own house. The use of the key for the inspection of the house or other purposes should always be done in co-operation with the tenant.
I expressed surprise earlier at the Deputy's reference to the words "in advance", as the assumption is that the proper way to carry out an inspection is that it is done in agreement and in advance in order that both parties, landlord and tenant, could be present. It is also assumed that neither of them would be unreasonable in setting a time for inspection. Locks could certainly be changed by agreement but the landlord should be supplied with a copy of the new key as he or she is entitled to have a key to the property. In general, inspections should not be carried out without making an arrangement with the tenant.
A number of issues are bound up in these amendments. I will first deal with the question of locks and inspections. I agree that inspections should be carried out at a time mutually agreed between landlord and tenant. The issue is the amount of advance notice which needs to be given for an inspection to be carried out. The purpose of my amendment is to avoid a situation where a tenant who might be doing damage to a property could withhold agreement for an inspection for a prolonged period of time. I am open to suggestions if there is some other way of addressing that. Instances have been brought to my attention where the issue of the safety of other tenants in a building was compromised. In one case an open electric heater was being used in a dangerous fashion and the landlord needed to have access at short notice to carry out an inspection.
The intention of the first amendment is to avoid a situation where agreement to the inspection could be withheld. Of course the inspection has to be at a time that is mutually agreeable, but there is a need to avoid a prolonged delay in agreement being reached.
The second issue relates to the question of privacy. If somebody rents a house or flat, the inspection of the property is done by mutual agreement. Why does the landlord need to retain a key? There are circumstances where a tenant might feel insecure, even though the landlord might not have done anything wrong or unusual. This can be the case even where there is a perfectly good landlord-tenant relationship. A tenant might still feel nervous about a landlord having a key and therefore free access to the living space.
As Deputy McCormack said, there are also cases where tenants who are sharing may fall out and the person who remains may wish to change the lock. The legislation bans the tenant from changing the lock and this compromises the privacy and, possibly, the security of the tenant. I do not think such a ban should be put in place.
There are procedures and arrangements by which the landlord can gain access to the dwelling. The right to inspect the property is guaranteed. Some tenants might be perfectly happy with this arrangement but others might not. There should not be a total ban. I am not sure the best arrangement is for the landlord to agree. There can be nervousness on the part of the tenant. We are talking about the personal safety and security of people. While one might say something is perfectly safe, if the person living there does not feel secure, then he or she is entitled to take steps to deal with it.
I accept that this can be debated either way. I thought the reference to advance notice would benefit the tenant where in most cases inspections would be agreed in advance. There are two types of inspection: routine inspections should be agreed in advance and others may be necessary from time to time.
It is reasonable to require a tenant to obtain the landlord's consent before altering a door lock on a rented dwelling. The Bill imposes specific restrictions and obligations on the landlord's access to the dwelling, including the need to agree the date and time of visits with the tenant. This is designed to ensure there is no unreasonable intrusion by the landlord. Any breach of these provisions can be addressed by referring a complaint to the tenancies board. While certain measures may be necessary in an emergency, it is the landlord's obligation to repair or replace a lock. If one is concerned about one's personal safety owing to the actions of the landlord, one should bring this case to the board. While the landlord is entitled to a key to his or her house, this right should not be abused.
Amendment agreed to.
Amendments Nos. 53 and 54 not moved.
Amendments Nos. 65 and 68 are related to amendment No. 55 and amendments Nos. 66 and 67 are alternatives to No. 65. Amendments Nos. 55 and 65 to 68, inclusive, can be discussed together by agreement.
I move amendment No. 55:
In page 22, paragraph (h), lines 27 to 29, to delete all words from and including “allow” in line 27 down to and including “anti-social” in line 29 and substitute the following:
"in the vicinity of it, in a way that is anti-social or allow other occupiers of, or visitors to, the dwelling to behave within it, or in the vicinity of it, in such a way".
Amendment No. 55 tidies up the wording in paragraph (h) of section 16 making it consistent with references to anti-social behaviour in section 17.
Amendment No. 65 amends paragraph (a) of the definition of what constitutes anti-social behaviour in section 17 to confine the reference to an offence to one that affects the welfare of others. As it stood, the definition would have encompassed the non-possession of a television licence within anti-social behaviour. Sadly, the modified definition will not do this.
Amendments Nos. 55 and 65 address the issue I have raised in amendment No. 66.
Amendment agreed to.
I move amendment No. 56:
In page 22, paragraph (i), lines 33 and 34, to delete “or an increase in the premium payable under such a policy”.
We are dealing with a number of issues and hopping from one to the other. This amendment refers to the increase in the insurance premium and seems excessive. Insurance companies need no excuse to increase premia. It is acceptable to prohibit tenants from acting, or allowing other occupiers of the dwelling to act, in a way that might result in the invalidation of the insurance policy. However, it is excessive that this should be applied to behaviour that might result in an increase in the policy premium payable.
The example we gave was one of a tenant deliberately putting a property at risk, such as deliberately leaving on the wrong type of heating, or leaving the property having deliberately left the doors and windows open.
These are examples of what we are attempting to focus on. I understand what the Deputy means when he says it is easy for insurance companies to find a reason to increase a premium. However, the Bill refers to a deliberate act of omission carried out by the tenant that would endanger or expose the property in some way. We can examine this further to see if we can tie it down. Could it be misinterpreted or interpreted in another way? The answer is probably yes.
I have no problem with this being provided for in the Bill. However, effectively ceding this to the insurance company is wrong. Under this, the landlord can evict a tenant if the insurance company increases the premium. It is nonsense as neither the landlord nor the tenant have control over what the insurance company will do. This is too general, vague and open to abuse. It is reasonable that a tenant or other occupier should not be allowed to act in a way that causes damage or nuisance to neighbours. However, to expose tenants to the tender mercies of insurance company premia increases is going a step too far.
It would not be a general increase in premiums. Insurance companies may increase premiums due to floods or the events of 11 September 2001, but this would have to be a premium increase related to a specific action or inaction of the tenant. However, if this matter can be tied down, we will look at it.
This is a dangerous principle to enshrine in the legislation in so far as we are making the tenant responsible for the actions of a third party. However, there is a solution. The Minister of State came up with a rough wording for a much narrower definition of what the tenant might do, which might be appropriate. The phrasing is very broad as it stands and it would be more appropriate if it can be narrowed down to specific actions which a tenant might take which might endanger the safety of the building.
Amendment, by leave, withdrawn.
Amendments No. 57 and 58 not moved.
I move amendment No. 59:
In page 22, paragraph (k), lines 39 and 40, to delete all words from and including “(which” in line 39 down to and including “withhold)” in line 40 and substitute the following:
"which consent the landlord—
(i) in case the alteration or improvement consists only of repairing, painting and decorating, or any of those things, may not unreasonably withhold,
(ii) in any other case, may, in his or her discretion, withhold”.
Amendment put and agreed to.
Amendments Nos. 60 to 62 inclusive, are related and may be discussed together by agreement. Is that agreed? Agreed.
I move amendment No. 60:
In page 22, paragraph (m), line 45, after “landlord” to insert “in writing”.
This section requires the tenants to notify the landlord of all persons staying in the dwelling. In the interest of clarity I suggest this notice be given in writing, the purpose of which is to protect both the tenant and the landlord.
In regard to amendment No. 61, as it stands, section 16 requires the tenant to notify any person who stays in the house, whether he or she is staying for one night or six months. It is absurd to require tenants to notify the landlord if they are having visitors to stay for a weekend. I appreciate the intent behind the section but to impose an absolute requirement of notice is going too far. My amendment would require the tenant to notify the landlord when a person is staying for longer than one month or a reasonable period.
I will speak to amendment No. 61. Paragraph (m) requires the tenant to notify the landlord of the identity of each person, other than a multiple tenant, residing for the time being in the dwelling. There is no definition of what is meant by “residing”. Furthermore, “the time being” could be anything from a person staying overnight, someone brought home from a nightclub, a cousin up from the country for the weekend or someone who is staying for a week. Equally, it could be someone who is a de facto tenant and where, to be fair, the landlord should be notified. However, the idea that every tenant has to keep a list of who stays every night in his or her accommodation and hand it over to the landlord goes beyond even the regime imposed by the Taliban when it ruled Afghanistan.
I propose that this provision relate to people who are ordinarily resident. The term "ordinarily resident" is used in the Electoral Act for the purposes of people being on the register. It means someone who is making a place their home. However, it should not include visitors, whether they are in sleeping bags on the floor or in more comfortable conditions.
I acknowledge that the Deputy raised this issue on Second Stage. However, the word "residing" is intended to cover only those for whom the rented dwelling is their principal place of residence, not merely visitors or guests. Nonetheless, we asked that the wording of the provision be reviewed in case any clarification was necessary. However, so far we have not been advised of any revised legal form of wording. We will examine the issue again on Report Stage. We all know what this is meant to mean. It is not meant to cover a person who is there for a night or a weekend.
For a man who is known for strict views on these matters, I am worried about what they might mean.
I have mellowed over time.
This provision is not coming from that point of view. Equally, someone might be in a place for a week, a month or two months. There are many people whose ordinary residence for the purposes of voting may be their parents' home, even though the parents may not see them often. Nonetheless, this provision is not intended to cover any occasional visitors. However, it may need to specify that, after a month or two months, one regards a person as "ordinarily resident". When would the Deputy regard a person as being"ordinarily resident" in a place? Would it be after a month or two months? Perhaps we need to clarify this matter in case different people have different interpretations. I do not know at what stage a person has officially or formally moved in these days but it is not intended for the occasional visitor or guest. However, we have asked for some form of wording which would exactly facilitate or meet the points the Deputies have made.
Amendment, by leave, withdrawn.
Amendments Nos. 61 and 62 not moved.
Section 16, as amended, agreed to.
SECTION 17.
I move amendment No. 63:
In page 23, subsection (1), lines 3 and 4, to delete paragraph (a).
Amendment put and declared lost.
I move amendment No. 64:
In page 23, subsection (1), to delete lines 8 and 9.
Amendment put and agreed to.
I move amendment No. 65:
In page 23, subsection (1)(a), line 12, after “offence” to insert “, being an offence the commission of which is reasonably likely to affect directly the well-being or welfare of others”.
Amendment put and agreed to.
Amendment Nos. 66 to 69, inclusive, not moved.
Section 17, as amended, agreed to.
SECTION 18.
I move amendment No. 70:
In page 24, subsection (3), line 4, after "Act" to insert "and do not limit the landlord's statutory obligations under this Act".
In the interests of the tenant I am proposing this amendment to ensure that the conditions in the lease cannot be manipulated by the landlord to such a degree as to relieve the landlord of his or her duties under the Bill. A safeguard of this kind is necessary. We need to be explicit about a matter as central as this, even though the Minister of State may reply by saying it is already covered.
The effect of the amendment would be to insert into the section a reference to the obligations of landlords under tenancy agreements. The purpose of this section is to specify the statutory obligations of landlords; hence, the Bill refers to the fact that the provisions of section 12 apply in addition to any obligations arising under any other enactment. The fact that there is no specific reference to obligations under any tenancy agreement does not detract in any way from any such obligations which would apply separately from those specified in the Bill.
The Deputy is seeking to provide for something that is already covered. We are trying to ensure that in any agreement landlords and tenants add value to a lease. One cannot contract out of one's legal obligations. There are other rules and laws covering this. Therefore we do not need to specify everything in every Bill. The effect of the different subsections of section 18 adequately caters for the conditions dealt with in the Deputy's amendment. What the Deputy is trying to do would not do any harm, but it would not add anything extra to the legislation. We are trying not to put in anything superfluous or unnecessary. There are other laws and other sections within the Bill under which this is covered.
Legal agreements will be laid down. It is possible for a landlord and a tenant to have a lease agreement that is better than a legal provision, but even if a landlord and tenant come to an agreement they cannot have a lease which reduces the tenant's legal rights, even if they so wish. Certain legal rights, such as security of tenure, are enshrined. They can certainly have a private lease which is better than the legal requirement, but they cannot have a lease which reduces the tenant's legal rights. If we now enshrine the tenant's right to security of tenure for four years, it would be illegal for a tenant to say that he or she only wants two years' security of tenure. They cannot make that arrangement. They can have a lease for a year and for another year thereafter, but they cannot enter into an arrangement that does not give the tenant the option of having the legal minimum statutory rights.
I do not follow the rationale of the Minister of State's argument. We need to be explicit to protect tenants' rights and to ensure that the landlord will not use his or her obligations under the Bill to deny the tenant a more advantageous set of conditions. How does my amendment diminish the Bill or the importance of that section?
Section 18 states: "Subject to subsections (2) and (3), no provision of any lease, tenancy agreement, contract or other agreement (whether entered into before, on or after the commencement of this Part) may operate to vary, modify or restrict in any way section 12 or 16.” This means that no provision of an agreement may operate to restrict the legal entitlements of the tenant. If the landlord and the tenant enter into an agreement which strengthens the tenant’s entitlements, that is great, but they cannot enter into something which restricts the tenant’s legal entitlements, even if they so wish or if one is encouraging the other to do so.
Will the Minister of State consider the amendment again before Report Stage?
Certainly, but that is our understanding of it. If it would not provide any extra protection there would be no point in putting it in because we could muddy the waters by putting in everything and anything. I will consider it again, or perhaps we could talk privately about it.
Amendment, by leave, withdrawn.
Section 18 agreed to.
SECTION 19.
Amendments Nos. 71 to 74, inclusive, are related and may be discussed together by agreement.
I move amendment No. 71:
In page 24, between lines 10 and 11, to insert the following subsection:
"(2) In any proceedings under this Act, the burden shall lie on the landlord to show that any increased rent is not greater than the market rent for that tenancy at that time.".
Section 19 states that the rent to be set at any given time shall not be greater than the market rent at that time. The board will determine rent in that way when examining the issue. On whom will the burden of proof of the market rent fall? Opinions could vary on that point. This amendment would ensure that the burden of proof would rest with the landlord to show that the rent is not above the market level.
In practice, the landlord sets the rent. I cannot recall ever hearing of someone letting a property to tenants by asking what they are prepared to offer for it. The landlord tells tenants what the rent is on a take it or leave it basis, it is not an equal relationship. In a dispute over whether the rent is set at the market value or is above it, the onus should be on the landlord to demonstrate that it is at market level, otherwise the onus of proof is on the tenant when he or she goes to the board.
Will the board have to determine the market rent in every location in the country? The onus should be on the landlord to prove the rent is at market level. This would confirm the de facto relationship in setting rent and make matters easier for the board when dealing with complaints.
There are other similar amendments.
I have tabled amendment No. 72, another important amendment that has its roots in the discussion initiated by Michael Davitt over 100 years ago about fair rent. In the last few years, particularly in Dublin, there have been significant increases in rent and I am familiar with many people, particularly lone female parents, who have experienced ridiculous rent increases where the argument was made that these were the new market rents in the area. We should limit the amount of a rent increase in a given year to a maximum of 5% over the consumer price index. That would give the landlord a reasonable return and the tenant a reasonable certainty that he or she will not face a substantial rent increase. There was a period two years ago of enormous rent increases that forced many people out of their tenancies and into more difficult situations, returning home to a parent or moving into substandard accommodation. There is an onus on the State to ensure the rights of the more vulnerable in society are protected. A maximum rent increase of 5% above the consumer price increase should be included in the legislation.
Amendment No. 74 is a technical amendment that makes a minor correction to section 22(3)(a), deleting the text “(the “effective date”)”. I have received legal advice that it is not necessary or appropriate to include specific provisions in the Bill dealing with the onus of proof in disputes over rent or any other disputes that go before the private residential tenancies board. It will be for the board, in developing its dispute resolution procedures, to adopt an appropriate approach to the onus of proof it will apply in any dispute, subject to the requirements of natural justice and statute law. It is considered that the dispute resolution proceedings in Part 6 of the Bill are as explicit as would be appropriate. It would not be appropriate to assign the onus of proof to landlords on an across the board basis. It would be reasonable to expect that in the normal course of events a person bringing a complaint would establish his or her case in the first instance. In time, the board will have a great deal of information and will be expert on market rent, which might vary from place to place. It can seek professional evaluation if needs be. A tenant who feels he or she is being overcharged based on what his or her friends are paying would go the board and that is how the system will evolve.
Deputy Cuffe's amendment would lead to a form of rent regulation, an idea the commission on the private rented sector examined in detail but rejected because of the adverse effects it had in the past here and elsewhere. The rent provisions in the Bill are based on ensuring the rent charged does not exceed the going market rate for the type, standard and location of the property involved. I accept that there was a period recently when prices increased sharply but, equally, a guideline like this would have caught people in the last year when rent was coming down. I accept that rent increases more often than it decreases but the commission saw market rent as being most suitable. Deputy Cuffe's amendment would not be compatible with this approach and would allow the charging of rent above the market rate and, in the last year, would have allowed significant rent increases, whereas market rents have stabilised and, in some cases, have come down, particularly at the higher level.
Amendment No. 73 refers to the 28 days notice of rent review. Under section 22 a rent review does not have effect until the landlord gives the tenant 28 days notice in writing of the new rent. This legislation was drafted at a time when rents were rising but if they fall the tenant, rather than the landlord, may go to the board seeking the annual review of the rent. There is no reason a landlord should give a tenant 28 days notice in writing of a reduction in rent. Very few tenants would insist on it. The notice should apply only when the rent is being increased.
The other possibility covers situations where, for example, someone who had been in an apartment for two years contacts the board to advise that while market rents were dropping the landlord had not reviewed the rent and asks the board to perform the review. The board might direct the landlord to review the rent rather than deciding what the new rent should be. The landlord, however, is not obliged to do this and can delay the process indefinitely. This provision is not necessary when the rent is being reduced. That is the purpose of amendment No. 73.
Tenants pay by standing order or direct debit from their accounts and so on.
I am not sure about that. Besides, those matters can be adjusted quite quickly. Very few tenants pay by standing order.
Some people have pegged arrangements. Technically, rent is paid in advance and one might have to alter the arrangement. I accept many aspects of Deputy Gilmore's argument but if someone has been paying a rent of €1,600 for the past few years and this new system becomes available, the tenant could contact the board because rents are coming down but the landlord has not reduced her or his rent. There may have been 20 people in the queue for the apartment when the tenant took it two years previously and he or she was glad to get it at that rent then but now the rent should be reduced. The board might suggest the landlord review it, and the landlord, knowing that she or he is caught, may offer to take €50 off the rent at which the tenant is expected to be delighted.
Over the past two or three years it appears that rents of €2,000 have come down by €300 or €400 and rents of €1,600 by €200, whereas a €1,200 rent remains static. The tenant may get a reduction but maybe not the appropriate one and may need to tell the board that while the landlord has reduced the rent by €50, the reduction should be €200. In that case adjudication would still be necessary. I accept the Deputy's point that if there is a reduction one would like it to happen immediately but in this example adjudication might be valid. That is the danger. Some people are good at increasing prices but not at reducing them, or not by the appropriate amount. The 28 days may be necessary to allow the tenant be sure that he or she is getting the right deal and for the board to adjudicate and conclude that, for example, a reduction of €50 is not enough, it should be €150 or whatever. That is the point of the section.
Those are not the circumstances in which this will arise. In those cases presumably the tenant goes back to the board to say the rent has not been sufficiently reduced. It might happen that a tenant agrees to a reduction of €100 but the rent does not come down the following month, as the landlord indicates he or she must give 28 days notice of the reduction. That causes delay. While this would not permanently frustrate the process of rent reductions, it is an unnecessary provision in situations where the rent is coming down. If a landlord is increasing the rent it makes sense that he or she give notice of that to the tenant but when the rent is coming down it is absurd that the landlord must give the tenant 28 days notice in writing to this effect.
There is a logic in that argument. Would the Deputy not accept the argument that one pays in advance? If the rent comes down one does not get a refund or reduction, there is an in-built 28 day gap before it takes effect.
Take the situation where a landlord and tenant come before the board in a dispute over rent arrears and the rent is reviewed with a reduction, for example, of €100 in June 2003. If the tenant starts to pay the new rent the landlord might argue that the old rent is still due because by law the new rent does not take effect until the tenant receives 28 days notice and that has not been issued. What will the board find? Will it be caught in a situation where it would like to tell the tenant that he or she does not owe whatever arrears have accumulated but that it is legally bound to say that the arrears are due because the new rent does not take effect until the 28 days notice has expired and the tenant never received that notice? The Minister for Social and Family Affairs does not agree with the Minister of State.
We might need to look at this again to see what can be done. I hope there will be many cases of rents coming down but I fear there will not. We will look at the section again and see if it needs to be tightened. Some people feel that the levels for rent allowance prop it up. It might be an interesting experiment if there were no cap and rents were allowed to find their own level. Rent levels of €1,400 to €2,000, which are not affected by social welfare benefits, have been reduced considerably, while those propped up by rent allowance benefits have not. I do not know if there is a message in that but those rents are not always of the highest standard. It is important to follow up rent allowances when rents are increasing. However, that is a matter for the Minister for Social and Family Affairs.
We have dealt with amendment No. 73 and I will withdraw it because the Minister of State will examine it before Report Stage.
Amendment No. 71 concerns the burden of proof in rent disputes. What does the Minister of State anticipate in this? He claims that the board will work these out through its own intelligence and that, when someone complains to the board that his or her rent is not the market rate, it will have its own idea of what the market rate should be. However, what will happen in practice? Which side will the adjudicator ask whether the rent is the market price — the landlord or the tenant? Will it ask the tenant to explain his or her complaint and why what he or she pays is not the market rate or will it require the landlord to prove that the rent is the market rate?
There is an essential and critical difference in these two approaches. Unless the obligation is placed on the landlord to justify the rent initially, people will always take their chance to obtain the maximum price they can. If they perceive that a prospective tenant is gullible enough to pay €1,600 for a €1,200 house, they will ask for €1,600 in the hope that the tenant will not go to the board. Unless there is some obligation on landlords to discuss the applicable rents in an area with a local estate agent, they will be tempted to take their chances.
In reality, many tenants, even where they pay more than the market rent, will not go to the board. Even though a mechanism is available to tenants, it does not necessarily mean they will use it. Many tenants will opt for the quiet life and continue paying. Who will be asked first to state their case? Will the tenant be asked to show his or her evidence that the rent is more than the market rate? Will it be the landlord who must provide evidence that it is the market rent?
The legal advice is that it is not appropriate to include specific provisions on the onus of proof in disputes. It is for the board to decide how to do its business and operate. I presume the complainant, be it landlord or tenant, must make a case. Tenants must show how much more than the market rate their rent is. There is a certain onus on whoever makes a case to research it and have some basis to it. Then, the other side will be asked for their comments. The onus will usually be on the landlord if he or she makes the case and on the tenant if he or she does. We cannot adopt a "hope you are wrong" approach.
Obviously, some tenants will not bother and pay the rent instead. I hope tenants will use the provisions contained in this Bill properly and realise that this is a different regime where they do not accept willy-nilly what the landlord trots out. I hope tenants realise that this legislation is for their assistance and use it. If a landlord asks for much more than the market rate, I hope tenants contest it. Whoever makes the case is not required to produce a 50 page dossier but he or she must have some basis. On legal advice we are avoiding placing the onus on either party in the legislation.
I do not understand why a legal issue is involved in this. This has more to do with the way the board will operate. If there is a dispute over rent, there are three possibilities. One is that the tenant will present research to the board proving that his or her rent is not the market rate. That will be difficult for tenants as they do not necessarily have access to the type of information that will prove whether it is the market rate. The tenant will in all probability operate on hearsay, such as a friend on the same street paying €1,100 while he or she pays €1,200.
If tenants go to an estate agent, it will again be difficult as they are not known for giving out rental prices through a general inquiry. If a landlord asks an estate agent to manage the rental of his or her property, he or she will be told the going rents in the area. However, a person off the street, especially someone who looks like he or she is in receipt of rent allowance, will not obtain from estate agents the information to arm him or her in making a case to the board. Tenants, therefore, will not be in a position to assemble the intelligence and knowledge to deal with the board. In many cases, they will go to the board on the basis of hearsay or a hunch that their rents are over the odds.
What happens in such a scenario? If a tenant is not in a position to prove that his or her rent is more than the market rate, does the board then say the tenant has not made a case and it has no better knowledge than him or her? The landlord will shrug his or her shoulders, say that the figure was what he or she asked for and received in rent and does not have to do any more to argue his or her case. Even after this legislation is enacted, the rent will be set by landlords. There should be an obligation on landlords to carry out some initial research on market rents in the area and to keep the rent to the market rate. It is not unreasonable to place that primary onus on the landlord in order that, when the dispute comes before the board, the adjudicator can ask the landlord what inquiries he or she made, what estate agents were asked to confirm the market rent or from where the figure came. The landlord should be able to show that the figure was not an invention. Otherwise, a third scenario will arise where a tenant will appear before the board with a hunch based on meeting people who paid lower rent while the landlord will say that prospective tenants were prepared to pay the rent asked and assert that such is the legal definition of market rent. Is the board then expected to establish independently the market rent in a specific locality?
Perhaps this is not being expressed the same as in the amendment, but the issue must begin with the landlord. It must first be established on what basis a landlord decided on a specific rent as the market rate. In the event of a dispute, the onus should be on the landlord to produce that basis. The number of cases that will come before the board will represent only a tiny fraction of tenancies while, for the vast majority of tenancies, landlords will set the rent as they do at present. If the market rate is to be the basis for how rent is determined, those who set the rent must be responsible for doing their homework on what constitutes the market rate.
I could say I am surprised by what Deputy Gilmore proposes. His approach is from the tenant's point of view, which is reasonable, but if the onus is placed on the landlord, the fact is that one can justify any case to suit one's own argument if one so wishes. For comparison purposes, a landlord could choose the best rental situations, which might not necessarily be accurate.
One could find out quickly from the evening newspaper the rent for an apartment or three-bedroom house in Rathmines, Drumcondra or wherever. By looking at classified advertising sections for apartments and houses to let, something I have not done for a long time, one could quickly get a feel for rental values and where the negotiating area lies. Much of the information in the area would be anecdotal, with some people paying perhaps €850 or €1,200 for a one-bedroom or two-bedroom apartment while colleagues pay less.
Apart from such information being available in the newspapers or from letting agents, one of the functions of the new board will be to monitor, establish and publish data not merely for its internal purposes but also for the public to get a feel for how the board sees things. I accept that property, locations and standards can vary, but the board will publish data which will give people a broad indication of what they should pay. There is a responsibility on a person bringing a complaint to establish his or her case, even if it is only a matter of asserting that colleagues pay monthly rent of €875 while he or she pays €950. The board will not request a fully researched document or demand the hiring of a professional valuer.
The board will quickly build up its own stock of information which means that, if it deals with accommodation rented in the usual letting areas, it will quickly know if the case is well founded or not. If the property is of a different shape or size or in a different location, the board can have it professionally valued, if necessary. Part of the board's function will be to collect and monitor data and to publish them as guidelines for people making cases.
I understand what Deputy Gilmore says but, if the onus were placed on the landlord, I could well understand the Deputy suggesting that, for rent comparison purposes, landlords would choose the best houses and areas rather than the average. One could debate the case either way. There is an onus on whoever makes a complaint to conduct some research, even if it only involves checking the evening newspaper, consulting a letting agent to get a feel for rents or comparing current rents with those being asked for vacant properties.
I feel that the Minister of State is not prepared to accept the amendment.
The material I read says that, according to legal advice, it is not appropriate to insert the onus of proof. It depends on what happens and on how people play it. One could work it either way. We can only hope that, under the new arrangements, tenants do not simply accept what is offered to them by landlords, are aware of the legislation and make use of it. They might then reduce rents or control the rate at which they rise. The principle involves the board's concept of the market rate rather than anyone else's version of it or a hyped-up market rate.
I will withdraw the amendment and may approach the issue differently on Report Stage. I am anticipating how I might approach it then.
The relationship between this issue and rent allowance has been touched on. There is an anomalous situation in that, under the legislation, rent will be set with reference to the market rate while the Minister for Social and Family Affairs has set rent allowances on an arbitrary basis. Would it be possible, for example, for community welfare officers to refer cases to the board where they believe a rent exceeds the market rate?
The Minister for Social and Family Affairs has justified capping rent allowance on the grounds that landlords artificially increase rents to benefit from the allowance. If that is valid, should there not be a mechanism for such a case to be brought to the attention of the board? Where someone is in receipt of a rent allowance and the health board or the Minister for Social and Family Affairs believes the rent is excessive, will such a person be able to refer that to the board?
That is not a bad idea. It is necessary for everyone to keep an eye on rents. A formal complaint to the board should be in the name of the tenant, but there is nothing wrong with a community welfare officer assisting a tenant in making a complaint. There may even be a small charge when one refers one's query or complaint to the board.
There is more to this than simply capping rent allowances. That has been done. The Minister for Social and Family Affairs says that she is trying to deal with what she claims is a current practice, of which she has not yet given us examples, whereby landlords increase rents and the rent allowance is increased to allow for that. If there is evidence of that, might it not be fairer to give the Minister, her officials, or her community welfare service access to the board to make third party complaints rather than capping rent allowances? They will pay the largest share of the rent.
The new regime is supposed to reflect the market rate. We want the board to be the adjudicator of that. It goes back to Deputy Cuffe's point. We do not want to get into market regulation. The board's role is not to set or determine the market rent but to assess and observe the market. The Department of Social and Family Affairs would be foolish if it did not avail of the knowledge of the manner in which CWOs or health boards gather and assess information on rents and not use the machinery that will be in place. If we set up a residential tenancies board whose function is to collect data nationwide — I do not know how the Department does it now — it would be foolish to duplicate that. I hope that, in time, the Department will use the information and research data from the board in determining rent allowances every year.
The problem with capping is that, once a figure is mentioned, that suddenly becomes the rent allowance for an area, whether a nice house or apartment or accommodation at the opposite end of the spectrum is being rented. I wish that there were more variation between good and not-so-good apartments, with the difference related to standards rather than anything else. In future, since CWOs are a part of the system, we should be able to find some way for them to feed information into the system where they believe landlords are overcharging. That must be included in the Bill, but I do not believe it is happening. However, there certainly are sections in the Bill on data and information exchange and co-operation between different agencies. If there are clear cases where CWOs are convinced that landlords exceed the market rate — the Deputy's suggestion in this regard is good — we can find some way of including that information. However it need not be inserted in the Bill.
Amendment, by leave, withdrawn.
Section 19 agreed to.
SECTION 20.
Amendment No. 72 has already been discussed with amendment No. 71.
I move amendment No. 72:
In page 24, between lines 34 and 35, to insert the following subsection:
"(4) The landlord shall not be permitted an increase in rent that is more that 5 per cent greater than any increase in the consumer price index during the previous year.".
Perhaps I might discuss this briefly and respond to the Minister of State's remarks. The point was made that this would not allow for falling rents. It would. In the context of my amendment, we would be happy if rents were to fall and that is not precluded by the terms of the amendment. The Minister of State said that the commission did not consider this a good direction in which to go. Be that as it may, we consider it so. Historically, the problem of controlling the market was that rents fell behind the general maintenance costs of the building. That created a difficult situation for landlords. We are taking account of that by saying that rent increases would be allowed over and above the consumer price index. That would create a middle ground that would keep both sides happy and that would protect the more vulnerable in society. I wish to press the amendment.
I must stop the Deputy at this point. We had intended to take a break for coffee at 4 p.m. and we have gone well beyond that time. Perhaps we might resume on this amendment. It could take some time. Are members agreed? Agreed.
I do not intend to call a division on it.
That is beside the point. The Minister of State has been asked to respond and the Deputy may have to respond to him with further comments. I am anticipating a delay.
Sitting suspended at 4.25 p.m. and resumed at 4.50 p.m.
What the Deputy proposes in this amendment would be, in effect, a form of rent regulation. The commission considered the issue in great detail — I understand there is nearly a full chapter on it — and is of the view that any form of rent control or regulation, even the type to which the Deputy refers, may have and has had adverse effects on investment and supply in Ireland. That has been proved, not just in Ireland but abroad. The rent provisions in the Bill are based on ensuring the rent the tenant is charged does not exceed the going market rate for the type, standard and location of property. The Deputy's suggestion is not compatible with the approach suggested by the commission as it would allow rent to be charged above the market rate, which would seriously affect supply. Regulations like this often mean landlords try to get the retaliation in first because they are limited in the increases they can get. The only solution for them is to set rents for new tenants at a very high level, because they know they will be controlled thereafter. This suggestion might help some existing tenants but newcomers to the market would be penalised. If there is too much regulation it discourages investment when we are trying to increase supply and encourage investment in order to have more rental accommodation. That is how to control the market — by having a lot of supply.
I see where the Deputy is coming from. In a year where there is a big increase this would limit the increase but, as with rent allowance, sometimes if one comes out with a figure people can think that that is the guideline. It might be the CPI plus 5% every year and it is very hard to get away from a guideline once one lays it down. One may not mean it as a guideline but people jump on it. The commission spent a lot of time discussing this and other forms of regulation and it decided to go with market rents.
I disagree with the Minister and reiterate that this is not a stand-alone amendment. It would allow the rest of the Bill to come into force and one could not start as a landlord by setting rent at unduly high levels because the rent would have to reflect the market. This would dampen down the abrupt, massive increases that occur once a decade and which occurred in the late 1990s in our major towns, causing significant hardship to vulnerable people.
Would this stop people investing in the market? I doubt it. If one saw any investment which increased yield by 5% above the rate of inflation every year one would be attracted to it. This is an attempt to deal with specific problems from the tenant's point of view, where rent increased sharply in a short period. I know of people who found themselves without accommodation as a result of these massive increases. The State has an obligation to protect the most vulnerable in society and there is a happy medium between not allowing rent to go beyond the CPI and allowing a free market. The free market solution is not appropriate in every case and it is certainly not appropriate for residential tenancies. It is important to limit rent increases to levels which can be borne by the poor. I commend this amendment.
The idea that the legislation is silent on the amount by which rent is increased suggests that rent increases are limited to once a year, when landlords are free to raise rent to whatever they think can be borne by the tenant. The Minister of State should clarify the setting of rent at market levels. We know it is open to the tenant to go the board when the rent is not set at market levels but what happens when the rent drifts from market levels in the annual increase? The market rent may be €1,200 in year one and if, after 12 months, the landlord increases it by 10% to 15% over the lifetime of the tenancy, can the tenant seek to have the rent reduced to the market level?
The idea of rent increases being controlled in some way should not be anathema to the Minister of State. We have wage control, in effect, which is largely voluntary in that it is done by agreement with trade unions and Government in partnership agreements. One way to deal with rent increases might be to make them part of those partnership agreements. When the social partners sit down to agree pay movements over 18 months or three years, they discuss matters of taxation and social and general economic policy, and they might also include the rate at which it would be reasonable to increase rents. At some point the board will have to address what is a reasonable increase in rent and unless it is set down that rent cannot be increased by a certain amount, or is set through the negotiations of the partnership process, there will be no way to determine what that reasonable increase might be. Would that be a way to deal with the level at which rent should be increased? If the income the tenant is getting is, in effect, controlled by what is agreed in negotiated national pay agreements, then the rent the tenant has to pay should be subject to a similar process.
The purpose of the Bill is to assist people in maintaining tenancies and security of tenure over a period of perhaps several years. In that case there must be some arbitration mechanism, upwards or downwards, where market levels are fluctuating. I know what the amendment aims to do but if it were accepted it would remove the discretion of the board to increase rent beyond a certain level in a year. That could effectively result in landlords being penalised for owning property where in certain years they could be asked to accept a non-market rent. It must be asked if such an encroachment on private property would be constitutional, having regard to the property rights enshrined in the Constitution. If the amendment was accepted, would there be any form of compensation payable to landlords for the loss of rent they might suffer in such circumstances?
I agree with Deputy Cuffe that it is the business of the State to look after people with housing problems and so on, which is why there are extensive social housing programmes throughout the State. It is a different matter, however, to say to people who have privately invested in property that they must, in effect, subsidise tenants. I would be interested in the Minister of State's comments on my questions.
The first question was related to whether a landlord could increase the rent after year one or year two for someone in a four year tenancy. The increase must be in accordance with the market rent. If a landlord tries to increase the rent by 10% or 15% more than the market rent, the legislation gives the tenant the right to have the issue examined and adjudicated on by the board.
Deputy Gilmore spoke about social partnership and so on. It has dabbled in many things in recent years. However, the commission looked at the issue and decided it would not get into the area of rent regulation or rent control and for that reason, I doubt if social partnership will do so. The Government may take certain actions to try to increase supply but it is very difficult to control prices. The rent people pay is related to the price of the house.
Deputy Mulcahy referred to compensation. Rents have decreased in the past 18 months. Therefore, there is no question of compensating anyone for anything. Fundamentally, that would be deemed to amount to rent regulation or rent control. Deputy Cuffe said there could be parallel systems in that, on the one hand, we could accept the legislation while, on the other, we could control rents. I am not the best person to speak on behalf of the market. If the commission recommends that we operate on the basis of market rents, that is what we must do. The only way we can influence the market is to maximise supply, which we are doing. I do not wish to make a political speech on that issue. Supply has increased hugely and rents have decreased, particularly in certain areas.
There are two sides to the argument. Many people's hearts may be on the side of tenants but, equally, landlords are investors. As was said on Second Stage, if one invested a couple of hundred thousand euro in any other area, one would be welcomed with open arms as a great investor. Somehow we put a tag on landlords as if their business was only half respectable. Landlords are serious players. They invest their money and they are entitled to a profit. The commission took on board and heard representations from both sides. However, as legislators, our task is to pass Bills into law. I would hate to recommend a change in any of the fundamental principles, and this is one that came out of agreement at the commission. If we take either side of the argument too far, we could seriously upset and break down the working relationship that was built at the commission, including the trust which exists. We are trying to make it a fair world for both sides. It will not help anyone if landlords decide there is somewhere better to invest their money. Many people use rented accommodation and we are trying to professionalise the business. We are trying to make it a good market which encourages investment. At the same time we are seeking to provide good standard accommodation at a fair rent and exert some form of control on rents. In that respect, I hope rents will not increase by more than 5%. I am concerned at how people might react to the kind of language used in this debate. It might be good when rents are increasing by much more if we could limit the increase to the CPI figure, plus 5%, but the danger is that people would regard this as a given and set it as the standard. If that was the standard set this year and last year people would be paying extra rent.
We are entitled to discuss this issue but I find it difficult to deviate from the commission's findings. It considered the issue for months. It considered several different forms of regulation from its pure form to what might be regarded as a combination of market rent with some regulation.
I hold no brief for the commission. I was not represented on it and neither was my party. However, I applaud the general thrust of the legislation, which is to weed out the cowboys and produce a mature and regulated private rented sector.
Deputy Mulcahy spoke about compensation. I would prefer to speak about compassion. There are real examples where compassion is needed to reflect the reality that vulnerable people, such as lone parents, experience at the hands of landlords. Let us make no bones about it. The main aim of these landlords is to maximise the rents they can achieve. Every investment sector has different conditions imposed on it, as I am too well aware. The rental sector is a particular type of investment that has various duties and responsibilities. In a letter of 1846 to the absentee landlords of Tipperary, Thomas Drummond, whom Deputy Mulcahy should know from his statue in Dublin City Hall, said that property ownership conferred duties as well as rights. My party and I believe that property ownership has significant duties as well as rights and we wish to see these duties more firmly established in law. My amendment would strike a balance between protecting landlords while allowing them a fair rent and protecting tenants who are very often in a difficult situation.
May I return briefly to the question I asked the Minister of State? If a landlord sets the market rent at, say, €1,200 in year one and increases it annually by three or four times the rate of inflation, and the rent is €1,500 in year two and a half, when the market rent is €1,300, does the tenant have a right to go to the board on the basis that the increase in rent is excessive and that it exceeds the market rent?
The rent is not locked in for four years or anything like that. Just because a landlord gets a tenant does not mean that the tenant's rights are gone after year one. A landlord has a legal right to alter the rent once a year. Every year the tenant can inform the board about a rent increase.
Is the Minister of State sure about that? Does the setting of the rent include the subsequent setting after each review? That being the case, the board must have a yardstick to judge the situation. A landlord can only increase rent to match the new market rate. Is that the situation if the market improves? Where the market is stable and rents are static then a landlord would not be entitled to increase the rent.
If market rates decrease then rents should also be reduced.
Can a tenant go to the board seeking a reduction in rent?
On the basis that they sought a market rent. An opportunity to do that occurs once a year. First, this section refers to the initial setting of the rent under the tenancy. Second, any subsequent setting of the rent under the tenancy by way of a review of the rent does not have to change in the four years. However, either side can bring it into line with market rents.
Over the past three years market rents have increased by about 20% per year and the capital value of dwellings also increased. Tenants were caught in a no win situation. Rents increased rapidly and because house prices also increased tenants were unable to exercise their option to buy. Does the Minister of State consider that the State should regulate rents in those circumstances? At least it should prevent investors gaining twice.
Rent is probably related to the cost of a house. Landlords are not a static group. We have tried to encourage investment in the rental sector. The person who avails of the increased rent is not just the person who owned the house for, say, 20 years. We must remember first time landlords. When they invest I presume they calculate how much rent to charge in order to invest in the landlord business as opposed to another type of business. We are dealing with two types of people. If a builder has enough money in the bank he or she might build on land he or she bought 20 years ago while another might build on land he or she bought last week. We are trying to include everyone. Of course the State must bear some responsibility for the situation.
Deputy Cuffe mentioned vulnerable people a couple of times. The State looks after the most vulnerable people through the rent allowance.
It does. Perhaps in recent years those on low wages have become the most vulnerable because they cannot avail of it.
A person is no longer eligible to apply for rent assistance if the rent is over a particular limit.
At present rents are falling.
No, I do not think that is right.
The provision never existed before. It has been included because rents are falling and for no other reason.
I want to debate the section. I thank Deputy Cuffe for talking about what I did not need to be reminded about. I read that data about six years before he did.
I do not understand from where the Deputy is coming intellectually. Does he accept that the import of this proposal is that landlords might get below market rent for their property? Is that what he wants to achieve? Rents could increase far more than this formula suggests. Landlords would be penalised by receiving below market rental rates. Perhaps the Deputy could clarify whether he is in favour of that. I do not support that and neither do most people. Landlords are entitled to the market rent.
I wish to protect the less well off in society. Current checks and balances do not do enough to protect the least well off. As Deputy Mulcahy well knows from his 18 years on the city council, large groups in society do not receive local authority housing. There are several thousand people on the housing list of the local authority of which Deputy Mulcahy was a member. The list is getting longer. It is absurd to suggest that the local authority can take care of all of them. An increasing and increasingly vulnerable group fall between the two stools in terms of not being eligible for local authority housing. Even if they are eligible there are no houses for them. They are at the mercy of landlords who will, and do so periodically, increase the rent by double figures in a given year. It causes significant difficulties for this group. It is reasonable to put in place conditions to protect them. Landlords gain by uncontrolled increases in capital value. There should be a limit to the number of rent increases in a given year.
We need a sense of reality here. We are concerned with legislating for the market rent to be applied. There is no other way. At present the market rent for an average family sized dwelling in Dublin is around €1,200 per month or €300 per week. The rate can fluctuate depending on location and condition. Many working families in this city do not earn much more than that. I, and I am sure other members know families who pay more than half of their weekly income in rent.
The rent allowance has been much discussed but workers are not entitled to it. I met a woman last week, for example, who had family difficulties and ended up in rented accommodation and in receipt of rent allowance. She wants to go back to work but she cannot do so. If she goes back to work she will lose her rent allowance and will not be able to afford the rent she is being charged. The market rent is at a level which many working families cannot afford to pay. Something is going to have to be done for these people. There has been much focus on capping the rent allowance but there needs to be a form of housing benefit to enable people on low income to provide themselves with reasonable accommodation.
I acknowledge the fact that rents have stabilised recently. We are not seeing the mad rise of a couple of years ago. The Minister talked about rents at the higher end of the scale coming down, and there may be some evidence of that, but at the level where people who cannot afford to buy a home must rent they are not coming down. They are certainly not coming down by any large amount. The market has a tendency to look after itself. If rents start to stabilise the supply side will, in the course of time, work to keep them up. We are not going to see significant reductions in rent. Rent levels have reached a point where they are not affordable. There are people who cannot afford a place to live. This must be addressed.
When house price rises were at their peak rents were increasing correspondingly. Let us say I had bought an apartment, set a rent which would give me a return on my investment and 12 months later Deputy Mulcahy had bought an apartment in the same building and paid 25% more for it. Consequently, he would set a rent 25% higher than the rent I had set for similar accommodation. I would then go to my tenant and tell him that I was increasing the rent by 25% because that was now the market price, even though it was far in excess of what I needed to make a return on my investment. That was happening all the time. The only word to describe this practice is "greed". Legislation to control rents is difficult but we must address the double gain made by people who made massive gains on their capital investment while piggy-backing their rental income on the rise in the property market. This needs to be regulated. If it begins to happen again there should be provision in this legislation to enable the board to deal with it. Deputy Cuffe's proposal might be one way to deal with it, another might be an agreed formula by which rents would be adjusted by reasonable amounts. We must never allow that level of mad voracious greed in the private rented sector to take place again.
I am interested in DeputyGilmore's argument but a little confused by it. Is he suggesting that we take a look at the capital cost of a building when we are setting rents? The import of his argument is that rent would have to relate to the purchase price of the building.
Yes, it is because the price of houses is at a lunatic level. The housing strategies of the Dublin local authorities, for example, have concluded that approximately 50% of newly forming households cannot afford to buy a home in the city. The Minister of State will say some can and, of course, people are getting help from family and so on. Capital costs are excessive. One of the reasons for this is the cost of building land but that is another debate that is outside the scope of our discussion today.
We are discussing rent. The majority position of the commission was that rents should not be controlled, although there was a significant minority view that there should be some control of rents. For all our talk about the mobile workforce and increased support for the rental option, most people in the private rented sector cannot afford to buy their home. In many cases they are people who are waiting for some form of social housing to be provided by local authorities or by voluntary housing agencies. There is no getting around the fact that those people who are working and who do not qualify for a rent allowance are being crippled. The cost of housing for people who are renting is more than they can afford. It isunaffordable.
If the Minister of State is saying that the State, for all kinds of reasons, cannot legislate and control rents by law — I understand the argument — then it has to introduce some measure of support for those families who cannot afford to pay the market rent. If there is to be no control of rent increases there must be some kind of housing benefit to assist those people who do not qualify for rent allowance but who are caught in a trap of being unable to afford to buy, waiting years for social housing and facing unaffordable rents for private accommodation. A child could work out the sums. What does a family paying €300 per week in rent need to earn in order to live? Five single working adults may be able to afford to rent a property for €1,200 per week but when family accommodation must be paid for out of a single income or from the combined income of a couple who are working in relatively low paid jobs, the task is impossible. This is a hidden problem which has not been given the attention it deserves.
I have sympathy with much of what is being said. I cannot say Deputy Gilmore is wrong in everything he says. We have gone through a strange few years when the economy was booming. The housing market is a complex one, there are different aspects of it and angles to it and the rental market is one part of it.
Deputy Gilmore speaks about people deriving a double gain. A person who has a house for a long time will do so. A person who takes out a mortgage to purchase a house or apartment costing €300,000 would not receive a double gain because the rent, unless one starts with a capital sum, will not pay the mortgage. One would have to pay a portion of the rent for the capital gain to work out in the long term. The past couple of years have been extraordinary for Ireland. The population has increased by one million in the past 25 years, the vast bulk of the increase taking place in the past nine or ten years. That was a burst to the economy which does not come very often — it probably never happened before. There is no doubt but that pressure increases at certain times and it is difficult to cope and deal with it. However, we have provided assistance for the unemployed person and for those most vulnerable. I agree that those most at risk are low-wage families.
We issued a report before Christmas which illustrated that most people were in a position to spend up to 35% of their net disposable income on mortgage repayments. A sizeable number of people were paying 45% or 48% of their net disposable income on rent. In constituency offices one often comes across people who have been refused an affordable loan because their net repayments will require them to spend 36% of their disposable income repaying it, yet such people can prove they have paid 46% of their disposable income on rent for many years. We have experienced extraordinary times. I am not suggesting the system has been able to assist everybody but the Government has tried to act as a catalyst in increasing supply. The figures in that regard will be published next week or the week after. Some 65,000 units were built last year; that is an extraordinary level of supply.
I recently examined a table, based on last year's figures, which showed we had built 15 new dwellings per 1,000 of population. In European terms, that is an enormous achievement. The figures for the UK and Sweden, respectively, were three and one new dwelling per 1,000 of population. No other country has achieved double figures. Our level of production and output has been extraordinary. Hopefully, we will get on top of this problem in order that people will not be paying 48% of their net disposable income on rent. I accept that that is not sustainable in the long term. Government policy in that regard has changed many times during the past couple of years.
When introducing legislation we try to pitch it at what is normal. One could argue that we are not getting the full value from the drop in rents because rent allowances continue to increase. I might privately suggest to the Minister for Social and Family Affairs that there are other ways she could save €50 million. It is easy for me to suggest that because I do not have responsibility in that area. We have chased the issue of rent allowances for a number of years and perhaps it is now time to reduce them. That is a form of regulation which puts a floor on certain segments of the market. It is easy to suggest that the relevant Minister should do that when I do not have the responsibility for doing so. If rents at €1,600 have decreased by some €300 or €400 why then have rents at €1,000 and €1,200 not decreased? I would like to think we could force them down.
We have experienced extraordinary times. We are trying to legislate for normal times. We want to encourage investment and would like the maximum number of people to own their homes. A significant number of people are buying houses for investment but they are providing units of accommodation and are entitled to a reasonable return. We would like to control that. I do not think such people are receiving the double gain suggested. Such people would be happy if the rent they received paid the mortgage on the property. Many of them are aware they have to top up the income they obtain from renting such properties.
We are trying to legislate for life during less extraordinary times. We are all aware the need to supply might ease when the market meets equilibrium but that is another issue. The Government is trying to keep supply at the current level. People would have laughed ten years ago when we were building 22,000 or 24,000 new units if we spoke of building 57,000 or 65,000 units per year. Nobody forecasted or recommended building at that level. People spoke of how great it would be if we could increase production to 28,000 new units per year. The figure is now more than 60,000 units per year, some of which are holiday homes or investment properties but it will not remain at that level for eternity. Keeping supply at a sizeable level will result in the stabilisation of rents. The investor will then achieve what he or she wants.
I agree the current losers are the low waged who are paying more than 35% or 45% of their net disposable income on rented accommodation. They are the most hard hit group and the affordable housing schemes are designed to help them. We are trying to return to normality where people can find a place to live at reasonable cost and where the investor can be attracted into the business and obtain a reasonable return, not the exorbitant sums obtained in recent years. I do not want to go back to regulation. I would have liked to achieve all this in 1999 or 2000 when the situation was crazy. In normal circumstances one would not need that break. Market rent is a good and fair principle if it can be controlled and if supply and demand are equal. There may be 4% growth in this area this year. We will not return to 10.5% or 11% growth for some time. Perhaps the next time, if we are reaching that level, we will be aware of what is required. One cannot be happy with such growth rates because there will be a price to pay for it at some other end of the economy. This legislation should be of great benefit and market rent should work. It works in many other European countries that do not have the type of rents achieved here. Such countries have had a stable rental market for many years and that seems to work for them because both sides are happy.
Is the amendment being pressed?
Yes. The more I listen to what the Minister of State has to say, the more I feel like pressing the amendment. The Minister of State and others would be screaming from the roof tops if mortgage rates increased by more than 20% or 30% in a year.
That might result in rental rates coming down.
I would hope so. The Minister of State's party has provided significant assistance for investors. It is only fair that we assist those in the rental sector. The last budget continued significant amounts of tax incentives for those investing in residential property. Those without a voice in this area are being left out. There are 5,000 rental units in Dún Laoghaire; in Dublin city there are almost 30,000 units in the private rental sector. The voice of such people is rarely represented in such debates.
Amendment put and declared lost.
Question proposed: "That section 20 stand part of the Bill."
In section 12 provisions regarding landlords' obligations in paragraph (a) allow the tenant to enjoy peaceful and exclusive occupation of the dwelling. However, section 20(3)(b)(i), regarding the frequency of rent reviews, makes provision for where “a substantial change in the nature of the accommodation provided under the tenancy occurs”. What exactly is a substantial change? If, for example, a person agreed a tenancy and rent with a landlord on 1 January and on 6 January the next door site became a building site, or if a major intrusion occurred thereby upsetting the peaceful existence of the tenant, would that constitute a substantial change? Is there a provision whereby a person who has agreed a rent review has cause for complaint if a couple of weeks later there is a substantial change in an adjoining property which removes his or her enjoyment of the peaceful and exclusive occupation of the dwelling? This is not mentioned. The provision is quite vague. Should the obligations of the landlord not be taken into account in this section also?
I come at the issue from a different angle. A substantial change means that if the change in the property had taken place before the last review, the rent set would have been different.
The Deputy asked about a case where there was an adjacent building site. Would this seriously affect the going rent? I wish matters were different and would like to see greater variance in rents based on the standard of accommodation. Unfortunately, there tends to be a set rent value for accommodation according to location and prices do not vary much based on whether it is in good or bad order. If people rent accommodation and something serious happens next door which seriously affects their quality of life, they could take a case to the board, even if rent is set only once a year. They could argue, for example, that they had made a deal on the basis that it was a quiet residential area but that a bulldozer had come onto the site next door and that their quality of life was affected. However, the issue is related to market rent and they might have to get somebody to verify that not only their peace and enjoyment had been upset but that the property now warranted a lower rent.
If people were aware when they rented on 1 January that on 6 January they would be living next to a building site, the rent would be lower. It would be if people were aware of a change in the nature of the accommodation to be let, whether next door or in the environs. If there was free parking on the road and suddenly the position changed, it would affect the rent. These are selling points or added bonuses when letting a property. If they are removed, is there provision for a rent review on the assumption that there is a substantial change around the property which affects quality of life and the enjoyment of peaceful and exclusive occupation of the dwelling?
The change would have to be substantial. It could be in or around the property but must be something which affects the market rent value. If there were fewer parking spaces on the road, that would not seriously affect the market rent. If there was a building site next door, the data the board would have——
It could be an incinerator or something else which might temporarily upset the market rent in the area.
The board's data might set the rental value on a particular road but if it wanted to determine the effect of a change on the market rent for a particular property, it could get a valuer to evaluate the position. However, the fact that a person could only get one parking disc rather than two would not be a substantial change. A substantial change on the road, within the house, or in the vicinity of the house, occurs where it can be established that it affects market rent. It might be difficult to establish this or make a case if only one house is involved. An incinerator or something of that nature would affect an entire area and the data would be more readily available through the evening newspapers or from the board. The board will collect data, monitor what happens in the market and publish the data. Therefore, it will be more difficult to make a case regarding a substantial change in one house. A substantial change would not just concern annoyance but whether it affected market rent. The Deputy obviously has a particular case in mind.
We all encounter cases involving a material change in an adjacent dwelling from time to time.
Such cases often do not affect the rent to the extent they should. In an estate, or on a road, one house may sell for €10,000 more than another because one is like a doll's house and the other is a kip but there is often no great variance in prices. If a person can prove market rent is affected, he or she could make a case with regard to a substantial change.
Question put and agreed to.
Section 21 agreed to.
SECTION 22.
Amendment No. 73 not moved.
I move amendment No. 74:
In page 25, subsection (3)(a), lines 13 and 14, to delete “(the “effective date”)”.
Amendment agreed to.
Section 22, as amended, agreed to.
Sections 23 and 24 agreed to.
SECTION 25.
Amendment No. 76 is an alternative to amendment No. 75. They may be discussed together by agreement. Is that agreed? Agreed.
I move amendment No. 75:
In page 26, subsection (3), lines 24 and 25, to delete "at the commencement of the tenancy" and substitute the following:
"prior to entering into the tenancy agreement".
Section 25 brings us to Part 4 tenancies. A landlord can effectively opt out of Part 4 by declaring at the commencement of the tenancy that it does not apply if the dwelling concerned is one of two dwellings within a building; the building, as originally constructed, comprised a single dwelling, and the landlord resides in the other dwelling. I propose that the words "at the commencement of the tenancy" be deleted and substituted by the words "prior to entering into the tenancy agreement". This would make it clear to prospective tenants that before any tenancy agreement is entered into, the landlord proposes to opt out of Part 4. The phrase "at the commencement of the tenancy" could mean that the tenancy agreement would be entered into and only then would the landlord advise the tenant that he or she was opting out of the Part 4 arrangement. The opt-out should be advised to any prospective tenant before he or she commits himself or herself to the tenancy. That is the reason I argue that it should occur prior to entering into the tenancy agreement.
I agree with the Deputy. This matter needs to be examined. Effectively, amendment No. 76 proposes the same change. I, therefore, ask the Deputy to withdraw his amendment.
In that case I will withdraw it in favour of the Minister of State's amendment.
Amendment, by leave, withdrawn.
I move amendment No. 76:
In page 26, subsection (3), line 24, to delete "at" and substitute "before".
Amendment agreed to.
I move amendment No. 77:
In page 26, lines 26 to 32, to delete subsection (4) and substitute the following:
"(4) This Part does not apply to a tenancy of a dwelling—
(a) if the landlord of the dwelling is entitled, in relation to expenditure incurred on the construction of, conversion into, or, as the case may be, refurbishment of, the dwelling, to a deduction of the kind referred to in section 380B(2), 380C(4) or 380D(2) (inserted by the Finance Act 1999) of the Taxes Consolidation Act 1997, or
(b) if the entitlement of the tenant to occupy the dwelling is connected with his or her continuance in any office, appointment or employment.”.
The effect of this amendment is that a Part 4 tenancy will not apply to a dwelling if it benefited from a range of tax incentives under the Taxes Consolidation Act 1997. What does this cover?
Certain groups, be they those in accommodation related to their employment or students in tax driven section 50 accommodation, will have to be excluded. The provision of accommodation could be related to a person's employment or the accommodation could be owned by the employer. In the case of student accommodation, if a person ceases to be a student, it is a condition of section 50 accommodation provisions that he or she is required to vacate the accommodation. He or she could not claim that he or she should be allowed stay.
The amendment provides for an exclusion of accommodation provided with tax incentives under section 50 of the Finance Act 1999. The relevant guidelines published by the Minister for Education and Science with which student accommodation must comply in order to qualify for section 50 relief require the accommodation to be let under a tenancy agreement only to persons who are students at one of the specified educational institutions. If section 50 accommodation was not excluded, the effect of the security of tenure measures could be to disqualify, currently and retrospectively, section 50 accommodation owners from eligibility for relief.
The remaining provisions of the Bill, covering longer notice periods, registration and a dispute resolution process, are appropriate for application to such accommodation. There cannot be security of tenure as in the case of a person in employment living in accommodation provided by his or her employer because the two are linked. The employment is linked to his or her accommodation. If a person is no longer a student, he or she cannot stay in the accommodation because accommodation is provided for students only.
Amendment agreed to.
Section 25, as amended, agreed to.
Sections 26 to 28, inclusive, agreed to.
Progress reported; Committee to sit again.
The select committee adjourned at 5.55 p.m. until 11.30 a.m. on Thursday, 5 February 2004.
