Mick Wallace
Ceist:12. Deputy Mick Wallace asked the Minister for the Environment, Community and Local Government his plans to introduce a system of rent control; and if he will make a statement on the matter. [11907/14]
Amharc ar fhreagraWednesday, 12 March 2014
Ceisteanna (12, 38)
Dessie Ellis
Ceist:38. Deputy Dessie Ellis asked the Minister for the Environment, Community and Local Government his plans to introduce measures to deal with spiralling residential rents especially in Dublin city; and the way he will ensure these do not discourage the development of more rental properties. [11914/14]
Amharc ar fhreagraFreagraí ó Béal (10 píosaí cainte)
The Minister of State said in an interview recently that Ireland should look at examples in other countries where rents are related to increases in the consumer price index. What actions has she taken within her Department to look at this? As she is well aware, rents in Dublin went up by more than 11% in 2013. I am sure she agrees that, without some controls, this could become a very poor situation.
I propose to take Questions Nos. 12 and 38 together.
The Government’s housing policy statement recognises that a balanced housing sector needs a strong and well-regulated private rented sector. In recent years improvements have been made, for example, in regard to security of tenure and the resolution of disputes. The Government recently approved the drafting of amendments to the Residential Tenancies (Amendment) (No. 2) Bill, including provisions for the establishment of a deposit protection scheme and for improved management of rental arrears cases.
The private rented sector is an increasingly important element of the housing market, with the proportion of households in the sector almost doubling in the period 2006 to 2011. Approximately one in five households are now renting their home in the private sector. Against this background, the growing evidence of increasing rents, particularly in Dublin, is a cause for concern. The most recently published data from the Private Residential Tenancies Board, PRTB, showed a year-on-year increase of 6.4% in the Dublin region to the end of September 2013. PRTB figures for the year ending December 2013 will shortly be published and are expected to show a continuation in this trend.
Nationally, the situation is complex, with data indicating that rents outside the Dublin region and the bigger cities are broadly stable while rents in cities other than Dublin are showing increases in the region of 4%. Meanwhile, ESRI data show that the consumer price index grew by only 0.5% in 2013 and is forecast to grow by 0.8% in 2014.
It is clearly a cause for concern that affordability issues are emerging in the private rented sector, given its importance to the overall housing mix. Accordingly, I have sought to stimulate a debate on how to bring greater stability to the sector, in the interest of tenants, landlords and society as a whole. Fundamentally, the situation in Dublin is a function of housing supply. In 2006, housing completions in Dublin had risen to 19,470, or some 21% of the national total of 93,419. In 2013, of the 8,301 houses built nationally, only 1,360, or just over 16%, were in Dublin. The reasons for this are complex and include the current market viability of developing new housing projects, having regard to the land acquisition, development and construction costs of bringing new houses and apartments to the market, combined with the issue of the availability of credit, both development finance and mortgage credit, and certain other factors.
The Government is taking steps to address these challenges in the property and construction sectors. These will include developing an overall strategic approach to housing supply, identifying and implementing relevant improvements in the planning process, and seeking to improve financing options for development and mortgage provision. Resolution of the housing supply situation is a key element in restoring stability to the market. I am conscious of the need to avoid introducing measures that might have unintended consequences on supply and affordability. Nevertheless, I believe there is scope to explore measures that would alleviate short-term difficulties pending a return to equilibrium in the market. Accordingly, I have asked the PRTB to carry out a focused piece of research that will explore options to address the difficulties being experienced in segments of the private rented sector and to report back to me with policy recommendations in that regard before the end of June.
The problems in Dublin are not unique and are present in many other cities as well. It is interesting that France and Germany are introducing measures to target rents in large cities and high-demand areas such as Berlin, Munich and Paris.
In Germany, landlords in the three largest cities will be unable to charge more than 10% of the average rent for comparable housing in the area. In addition, rents must rise by no more than 15% in three years with no increase permitted in the first year. In France, no new rental contracts in high-demand areas will be allowed to charge more than 20% per square metre above the neighbourhood's median rent.
There is little doubt that if we had more controls here, we would not run into quite as many of the problems we did even in the housing boom. A lack of control is a big problem. If one just lets the markets dictate and work to their idea of supply and demand, the system inevitably runs into roadblocks after a while.
I agree that we need to learn from our neighbouring European countries. They have long-established stable private rental markets that make up a large percentage of their housing. We are not really at that stage yet but the amount of people living in rented accommodation is rising and I want to see that being stable for people. This is why I have opened the debate.
The supply issue is hugely important and we have an under supply at the moment. The Government will be publishing recommendations in the next few weeks regarding the construction industry, which will include the area of supply in the Dublin area. I have asked the PRTB to carry out a short piece of research that will give us the options and let us look at them. We have not reached conclusions yet. I want us to have that debate and to focus on that issue as well as the other elements that are contributing to the difficulties that arise, particularly in the Dublin area and other cities in Ireland.
There is a crisis in the rental market. For the sake of €100 or even €50, many people on rent supplement and RAS are being made homeless. We gave a guarantee that people on RAS would be housed but it is not happening. People are reporting that they are homeless. Rent controls will be of use if there is a proper social housing that involves building social housing on a large scale. This is what is required to keep control and level out the playing field in terms of rents. That is the area upon which we need to focus.
The Minister of State mentioned supply. If she comes up with a plan to build more social housing on a large scale and if the private market is addressed, jobs will flow because there is a huge opportunity out there and it is important that we get there.
I did announce a €58 million mainstream local authority housing programme yesterday. I agree with the Deputy that we need to ramp that up but I do not agree with him that this will solve the problem of rents in the private sector. We will always have a certain number of people who live in private rented accommodation and get support from the State but the problem is that other people who can pay fully for their private rented accommodation are in competition with the people who are subvented by the State and there is just an under supply. I do not think social housing alone will solve that problem. It is part of it but it will not solve the problem as a whole.
We must become much more involved in preventing people becoming homeless when their private rented accommodation is unaffordable for one reason or another. I have set up the oversight group with regard to homelessness and have spoken to Dublin City Council and other local authorities about whether we can establish some kind of preventative system whereby if a family is in danger of becoming homeless, we know that in time to intervene so we do not have to get into the emergency situation. I am working on that.
I agree with part of what Deputy Ellis is saying. The Minister of State talks about €58 million for social housing. She does not need me to tell her that it will need serious multiples of that number to address seriously the shortage of social housing. Even though going back to the State providing social housing does not seem to be on the neoliberal agenda, it is imperative that we do so.
With more controls in the private rental sector, the Government could actually have direct investment in the industry. We will run into a problem. It does seem to be getting worse and the country is becoming more and more centralised. The provinces will die on their feet bar some policy on the part of the Government to direct investment outside of the capital.
The Minister of State keeps referring to the €58 million. This is over a two-year period. However, we must also remember that nearly €60 million was cut from the housing budget for this year. Sometimes, we play with figures and it does not always add up. Since 2008, over €1 billion has been cut from the housing budget. That is one of the big problems we have. We cannot keep cutting and then adding on a bit later on and massaging the figures because that is what it is. The reality is that we need to build more social housing to address this issue. It will not solve all the problems but it will help level the playing field.
While one can readily sympathise with the Minister of State in respect of the situation she inherited, I agree with Deputy Ellis. Ultimately, it is inevitable that the local authority housing stock be increased dramatically at the earliest possible date because some rents in areas like the greater Dublin area have increased by up to 40% in the past 12 months alone.
I must agree with all the Deputies that I want to spend more money on social housing but we could not do it over the past five years. It was cut significantly during the lifetime of the previous Government and we had to cut it because of the deal with the troika which said that our capital budget was cut every year. There was nothing I could do about that. We have turned the corner. I announced €58 million yesterday. The figure given by Deputy Ellis did not take account of the roll-over of money from one year to the next and the stimulus money announced in the budget which was then included in the capital programme. We have money to bring 500 void properties back into use. We are turning things around and will ramp up as soon as we can. I agree with Deputy Wallace that we want to see more investment generally across the sector. This is why the Government has been doing work on the construction sector and will be putting forward policy proposals. Quite a lot of research is being done by a variety of bodies like the ESRI and the PRTB on the area of supply and we will use all that information to improve the situation because we have turned a corner.
Written Answers follow Adjournment.