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Dáil Éireann díospóireacht -
Tuesday, 6 Nov 2001

Vol. 543 No. 2

Other Questions. - Private Rented Accommodation.

Nora Owen

Ceist:

75 Mrs. Owen asked the Minister for the Environment and Local Government if he plans to deal with the undersupply of rental accommodation. [26126/01]

Dick Spring

Ceist:

135 Mr. Spring asked the Minister for the Environment and Local Government the reason he has not implemented the recommendations of the Commission on the Private Rented Residential Sector; the progress which has been made on the legislation recommended in the commission report; and if he will make a statement on the matter. [26701/01]

Ivor Callely

Ceist:

501 Mr. Callely asked the Minister for the Environment and Local Government if his attention has been drawn to concerns by the private rented residential sector; his views on the fundamental and important role of the private rented sector; and if he will make a statement on the matter. [26295/01]

I propose to take Questions Nos. 75, 135 and 501 together.

As two of the questions are oral questions, not more than 12 minutes is allowed.

The Government recognises the importance of, and need for, a diverse and well managed private rented sector. Government policy accordingly seeks to promote investment in the supply of accommodation on the basis of long-term commitment to the sector.

The Government's response to the proposals of the Commission on the Private Rented Residential Sector was announced in January 2001 and forms the basis for reform of the sector. It includes, inter alia, the establishment of a Private Residential Tenancies Board for facilitating speedy dispute resolution, the introduction of legislation to improve security of tenure and to increase the periods for a notice to quit and, in addition, certain limited taxation incentives to encourage increased supply. Some of the taxation proposals have been implemented in this year's Finance Act.

A wide range of measures has been implemented by the Government to maximise the supply of housing and these include measures aimed specifically at the private rented sector, such as changes to investor stamp duty rates and the rent a room scheme as announced in the budget. Section 50 of the Finance Act, 1999, is specifically aimed at promoting the supply of student accommodation.

In announcing the Government's response to the Commission on the Private Rented Residential Sector, I pointed out that complex legislation was required to give effect to many of the changes and that I expected this would involve a two-year timeframe. I indicated that I would, in the interim, establish the Private Residential Tenancies Board on an ad hoc basis and this was done in October. The board is in the process of setting up its operational procedures with a view to taking dispute referrals in the new year.

The drafting of the legislation required to set up the board on a statutory basis and implement other commission recommendations is progressing in collaboration with the Department of Justice, Equality and Law Reform, which is responsible for the landlord and tenant legislative code. I hope to be in a position to submit a general scheme of the Bill to the Government for approval by the end of this year.

Does the Minister of State realise the housing sector is in crisis and that the crisis was led by the collapse of the rented sector as a direct result of the removal of mortgage interest relief to providers of rental property? Rents instantly sky rocketed and this phenomenon is not a result of the events of 11 September. Is the Minister of State aware that an estimated £900 million in investment in overseas properties has been lost and that rents are running up to 30% higher than mortgages? Is he further aware that major misery is being caused throughout the market, particularly at the lower end? The Government pays out £100 million in rent supports and the accommodation required cannot be obtained, particularly given the level of demand. The Minister of State must reverse his policy.

We have experienced an extraordinary period, with a major economic boom leading to huge increases in the number of people in employment – 300,000 in recent years – and it is obvious that the demand for housing has mushroomed as a result. A price bubble developed on foot of this demand and one of the Government's objectives was to try to ensure that this would not be exploited to any great extent by seeking to dampen down prices. The action we took was aimed at ensuring that first time buyers would have access to affordable houses and that house prices would be moderated. We had to take a number of tough decisions and house prices have been dropping. There were enormous increases in house prices, which peaked at more than 40% in 1998. Past experience shows that rents track house prices and supply is the other major factor.

It is the only factor.

I am not denying that there is a need for additional houses.

Is the Government planning to introduce changes in the taxation and stamp duty regime that applies to the private rented sector in the forthcoming budget? Given that the private rented tenancies board has been established on an ad hoc basis, is it possible for landlords and tenants who are in dispute with each other to refer their disputes to the board? We were previously informed that the heads of the promised private rented sector Bill would be approved by the Government before Christmas. However, the Minister of State indicated that it is intended that only the general scheme of the Bill will be approved before the end of the year. Will the heads of the private rented tenancies Bill be approved by the Government before the end of the year?

We will have to wait for budget day to discover what the Minister for Finance intends to do in regard to taxation matters. It is not proper to refer to such matters prior to the budget.

The Tánaiste did not have a difficulty in informing us about what the budget might contain a couple of months in advance.

House building is the Government's first priority. We will take whatever measures we deem necessary to ensure a continuation of high levels of supply of houses.

So something will be done in the budget?

We have taken measures in the past for specific reasons. We achieved our objectives in regard to prices and the role of first-time buyers.

There is nothing for them to buy.

The Deputies have made a number of extraordinary statements. I have already informed the House that housing output was up 4% at the end of September compared to last year. The highest level of housing construction ever undertaken in the country was embarked upon last year and we will achieve very high levels this year. Like the Deputies, I am concerned that these levels will be maintained next year. That is where the difficulty lies.

It is already too late for next year.

Current housing output is reaching record levels and the demand for housing at the lower end of the market among first time buyers is extremely strong—

What about the questions I asked? The Minister of State is spoofing, he is not answering my questions.

—and they are gaining access to a much higher percentage of what is available in the market than heretofore. I already replied to the Deputy's question about the ad hoc committee and indicated that it will begin hearing cases after Christmas.

Question No. 75 deals with rental accommodation. The issue of non-registration by landlords with their local authorities is continually arising. People who have been approved for rent allowances by health boards are not being taken on by landlords who are not registered. Is the Minister of State in a position to use his influence with local authorities to ensure that all landlords should meet their legal obligations by registering?

The commission I established made recommendations in regard to the area of rental accommodation. One of the issues which will be dealt with in the legislation is making it mandatory for all landlords to register. Those who fail to do so will face severe penalties.

Does the Minister of State realise the extent of the current crisis? Is he aware that there is a lack of confidence among people which has happened on foot of the Government's inability to realise that its measures, rather than acting in a counter-cyclical manner, have reinforced the difficulties that exist? The Minister of State indicated that he would like to attract people with a long-term commitment to the rented accommodation sector. Would not a good way to achieve this be to place the sector on a professional basis, treating it like any other area of business and linking interest relief with registration with the new tenancy board? Does the Minister of State accept that landlords should not only have to register but that they should be obliged to use a standard contract form? This is the only way to recreate supply, which has virtually disappeared. It is not that the supply has dried up, people are actually ceasing to provide rented accommodation and this is having a huge impact on the market.

I welcome the Minister of State's comment to the effect that it will be mandatory for landlords to register. Would it be possible for him to give an assurance that landlords will be obliged to bring rented accommodation up to a certain standard?

Will the Minister of State reply to the second and third questions I put to him earlier. Are tenants and landlords in a position to submit disputes to the private rented tenancies board at present? If not, when will they be able to do so? Will he clarify the position regarding the Bill. Does he intend to have the general scheme of the Bill approved by the end of the year or, as the Taoiseach and the Tánaiste previously informed me, is it intended to approve the heads of the Bill by that date?

Perhaps the Deputy did not hear my reply during the earlier crossfire. The ad hoc appeals board expects to be in a position to take cases early in the new year. I stated that the general scheme would be approved by the end of the year, but it is also intended that the heads will also be ready. However, these will merely lay out guidelines regarding the form the legislation will take. It is hoped the general scheme will be before the Cabinet before the end of the year.

On that point—

We must move on Deputy, we have spent a long time on this question and we must deal with others.

I wish to ask one quick supplementary question.

We have run out of time and we allotted 12 minutes to these questions. We will now take Question No. 76 in the name of Deputy Shortall.

Has a memorandum been circulated?

Discussions are ongoing between my Department and the Department of Justice, Equality and Law Reform.

But no memorandum has yet issued?

No. The first memorandum will comprise the general scheme or the heads.

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