Dáil Éireann Debate, Thursday - 26 January 2012
1Deputy Barry Cowen asked the Minister for Social Protection if she will discuss correspondence sent out in a number of local authority areas over the past two weeks to rent supplement recipients informing them to re-negotiate their rents by a certain date rather than at the renewal of the lease as stated by her; and if she will clarify the issue. [4537/12]
View answer5Deputy Clare Daly asked the Minister for Social Protection the reasoning behind the rates of rent allowance cuts arising from Budget 2011; her views that these cuts will force persons to move and change their children’s school because they will be unable to afford to stay in the areas they currently live in; if a poverty impact assessment has been done to measure the effect of the rent allowance reductions on families already struggling to make ends meet and the effects in terms of increasing the risk of homelessness as a result of the cuts; and in view of the above problems with a reduction in rent allowance, if she will ensure that vacant residential properties held by the National Assets Management Agency would be taken over and used as social housing. [4464/12]
View answerI propose to take Questions Nos. 1 and 5 together.
Rent supplement provides short-term support for eligible persons living in private rented accommodation whose means are insufficient to meet their accommodation costs and who do not have accommodation available to them from any other source. Since 2005, rent supplement expenditure has increased from €369 million to a provisional outturn of €503 million in 2011. The number of persons claiming the allowance went from almost 60,200 in 2005 to more than 96,800 at the end of 2011, an increase of 61%.
As my Department funds approximately 40% of the private rented sector, it is essential that State supports for rents are kept under review, reflect current market conditions and do not distort the market in a way that could increase rent prices for others such as low-paid workers and students. New maximum rent limits came into force on 1 January 2012 which are in line with the most up-to-date market data available. The emphasis of the rent limit review was to ensure maximum value for money for tenants and the taxpayer, while also ensuring persons in receipt of rent supplement are not priced out of the market for private rented accommodation. It is expected that the new limits will achieve €22 million in savings this year.
All new rent supplement applications are subject to these limits. As existing claims come up for review, usually every six months, or when an existing lease expires, they will be reassessed using the new limits. These reviews are being carried out by former community welfare officers who joined my Department on 1 October 2011 and are now departmental officials. Where a claim is under review and the rent is above the new maximum limit, the customer is asked to contact the landlord to renegotiate the rent. Where a landlord does not agree to reduce the rent to the new rates, departmental officials will discuss the options open to the tenant up to and including seeking alternative accommodation. Departmental guidance to the officers administering rent supplement states that where negotiation with the landlord fails, the supplement may continue to be paid for a period of up to 13 weeks at the higher rate. However, once the lease has expired, the tenant will be expected to find suitable accommodation at below the new limits.
The provision of social housing is a matter for my colleague, the Minister for the Environment, Community and Local Government, Deputy Phil Hogan. I am advised that his Department has agreed a target of delivering 2,000 units that have been identified by the National Asset Management Agency as potentially suitable for social housing use. The provision of social housing is a matter for my colleague, the Minister for the Environment, Community and Local Government, Deputy Hogan. I am advised that Department has agreed to the delivery of 2,000 units which have been identified by NAMA as potentially suitable for social housing use.
It is important this scheme follows rather than leads the market. There is a danger that the word will go out that the Department in subsidising 40% of the private rental market is subsidising landlords rather than tenants. I accept that unlike in times past a small number of landlords, who are owners of a second home rather than part of large operations, are in financial distress. That said, one cannot artificially inflate the market.
As I understand it, the Minister is saying - which seems reasonable - that the new rates come into effect from the review date or date of expiry of a lease and that in the event of failure to reach agreement with a landlord a tenant can involve a community welfare officer, which officers were seconded to the Minister's Department on 1 January last year and became civil servants in October.
It was a joint operation between the two Departments.
When Minister for Social Protection - the Minister may have found traces of this in the Department - I was working with the Minister for the Environment, Community and Local Government on standards in rented accommodation, PRTB pre-registration rather than post-registration, BER ratings, building regulations and so on. Has the Minister progressed discussions on those issues? The Department is spending €500 million on rented accommodation, which according to statistics includes some of the coldest accommodation in the country. There is a need for joined up thinking in this regard.
A similar rent review took place in 2009 when Deputy Ó Cuív was Minister. The ultimate effect of that was an overall reduction in rents of approximately 4%, which effected significant savings. It is important to note that there are people at work on low wages who rent and there are students who rent. If the Department, as probably the single biggest individual player in this area, is a force in driving rents upwards landlords will gain and workers will suffer. The same applies in respect of students. It is important Deputies who are concerned note this point. Similar reviews have had the consequence of reducing rents somewhat. Also, reviews provide the Department with important information. My Department spends €500 million on rent supplement, which is a huge amount. It is important those who obtain maximum value from this are tenants whose rent is being assisted.
On Deputy Ó Cuív's question in regard to the PRTB and standards of accommodation, detailed discussions are ongoing between an in interdepartmental committee and the Department of the Environment, Community and Local Government in relation ultimately to the latter Department taking responsibility for the administration of rental accommodation. There are currently more than 36,000 people on the RAS scheme. Progress in this regard has been relatively slow. As regards the PRTB, that agency, in consultation with my Department, has created a software solution allowing it to isolate rent supplement tenancies which it considers should be registered with the PRTB but have not yet been registered by landlords. This is supported by information on rent supplement tenancies supplied by my Department on a quarterly basis.
Despite the Minister's statements, there is no evidence to suggest this measure will succeed in reducing rents. This decision is made against the backdrop of many people in receipt of rent allowance already paying in excess of the €30 minimum they are required to pay. They are forced into having to pay over the odds because many landlords will not accept people on rent allowance. Vulnerable people will be the fall guys of what the Minister is doing. I have received correspondence on this issue from many people, including from a heroic mother, Deirdre from Wicklow, who fought tooth and nail to have her disabled son educated in a local school and is now faced with having to move out of that area because her rent allowance limit has been reduced from €850 per month to €625 per month. She will not be able to maintain that unit and is faced with having to either move out of the area or move into substandard accommodation. Meanwhile nothing is being done to release the numerous empty units around the country, many of which are NAMA properties effectively owned by the State, thus ensuring people are not constantly forced to move to different geographic areas.
Deputy Daly stated that a particular woman in Wicklow is paying €850 per month in rent. I do not know where in Wicklow the person lives and cannot, therefore, inform the Deputy of the rent allowance for that area. The Deputy has stated that the woman's rent allowance has been capped at €625 per month. I suggest she take up this matter with the relevant departmental officer. Community welfare officers and staff in my Department are sympathetic and understanding.
It is all very fine for Deputy Daly to suggest I should not be trying to make savings in terms of rent but I want value for the taxpayer and the tenant. Also, I am entitled to take into account the person in work who lives in rented accommodation and is paying that rent out of a small wage and the student or family paying rent when a student goes to college. My Department, in terms of its responsibilities in the administration of a large budget, must ensure it does not distort the rental market by in effect permitting rents which are too high. As I stated earlier, following a similar review by the previous Minister the outcome was a modest but important reduction in rents. Lest the Deputy is not aware of it, rent levels in some areas are very high.
Deputy Daly referred to NAMA. As I stated earlier, the Minister for the Environment, Community and Local Government has agreed to take over 2,000 units deemed suitable for social housing. Obviously, the units will have to be in appropriate areas. Some of the surplus units may not be in areas where people in receipt of rent allowance wish to live. If the woman to whom the Deputy referred wishes to write to me or to make contact with her local community welfare officer, I am sure she will be attended to diligently.
There will always be unscrupulous landlords. The Minister will be aware that it is illegal for a landlord to seek a top-up.
Yes.
Has consideration been given to making the penalties for doing so much more stringent, thus strengthening the law in this regard? As for the interdepartmental committee, has the Minister discussed with her officials making a proposal to the Department of the Environment, Community and Local Government to the effect that registration of properties to let should be carried out before letting takes place? This would be in contrast to the current situation, in which one lets the property and then registers with the Private Residential Tenancies Board, PRTB, which is when the standards apply. In this way, the Minister could be absolutely sure that all properties that were eligible for rent supplement would be up to standard because of the obligation to pre-register such properties. I was driving that agenda when I was in the Department because it is a case of the horse being behind the cart at present and that should be reversed.
The Minister should reflect on the fact that the victims of this measure will be the tenants. I can state this because the situation has already arisen. I note the Minister quoted back the example of the plight of the lady in Wexford. Although she has been on all the housing websites and has contacted all the estate agents, landlords are not taking up the rental accommodation scheme, RAS, property arrangements because the limits that already exist are below the market rates at present. The Minister's measure will force that person out of the area in which she has fought so long. Were the Labour Party serious about making savings and taking landlords out of the net, a serious approach would be taken to the NAMA properties. The provision of 2,000 such properties in the context of 100,000 people on the waiting list is nothing but scratching the surface and is far too inadequate.
I refer to Deputy Ó Cuív's comments on top-ups, to which Deputy Clare Daly also referred earlier. Essentially, top-ups involve false declarations of what is the rent. Any top-ups such as those to which Deputy Daly referred should be reported to the Department because, in effect, they constitute an abuse of the tenant in which a social welfare income is being paid and a rent contribution then calculated that is proportionate to that income. Consequently, if Deputy Daly has evidence with regard to top-ups, I suggest she should act responsibly and report those top-ups in order that landlords are not being encouraged to exploit tenants.
On the issue of further co-operation between the PRTB and the Department, Deputy Ó Cuív in particular should note it entails furthering the involvement of the Department of the Environment, Community and Local Government. Ultimately, it would be preferable to have much more widespread leasing arrangements for a longer time and negotiated at good rates. This would offer a return to the landlord but more importantly would offer value to the taxpayer. While this is what the Department is moving towards, Deputy Ó Cuív is aware that progress in this regard is slow because the local authorities have approximately 88 different differential rent schemes. However, the interdepartmental committee is undertaking an amount of work on aligning different schemes throughout the country and I hope to be able to report further progress in this regard.
