Rent Controls

Dáil Éireann Debate, Thursday - 23 February 2017

Thursday, 23 February 2017

Ceisteanna (5)

Catherine Murphy

Ceist:

5. Deputy Catherine Murphy asked the Minister for Housing, Planning, Community and Local Government if he will include Maynooth as a designated rent pressure zone in view of the fact that Maynooth has the same average rents and the exact same percentage increase on the average national rent as Leixlip and Celbridge; his views on the fact that commuter towns in County Kildare face every bit as much pressure as Dublin city centre and the rents are comparable levels; and if he will make a statement on the matter. [9031/17]

Freagraí ó Béal (21 píosaí cainte)

Deputy Catherine Murphy

Maynooth is the focus of this question but it could apply equally to several locations in north Kildare, Kildare or other parts of the country. It is under the same pressure and has the same rent profile as Leixlip and Celbridge, for example, both of which are included. The fall-out from it has been almost immediate. It is as though landlords take it as almost a requirement to get their rents up to the average in the area if they are below that and there certainly are people under pressure to move out of their houses.

Deputy Simon Coveney

My immediate response is that it would be a very foolish landlord who started to put up rents significantly in a town like Maynooth because that will guarantee that it will come under the rent pressure zone designations. It would be very counterproductive if the landlords' concern is the ability to increase rent.

On 24 January 2017, in accordance with section 24A of the Residential Tenancies Act 2004, as amended, the Housing Agency proposed that 15 local electoral areas should be considered for designation as rent pressure zones. On foot of the proposal from the Housing Agency, again in accordance with the Act, I requested the Director of the Residential Tenancies Board, RTB, to make a report to me as to whether these areas met the criteria for designation as rent pressure zones. On 26 January 2017, I received a report from the RTB confirming that 12 out of the 15 local electoral areas examined met the criteria and I made orders designating those 12 areas as rent pressure zones on 26 January 2017. The areas designated included the local electoral areas of Naas, Celbridge-Leixlip and Kildare-Newbridge.

For an area to be designated a rent pressure zone, it must satisfy the criteria set out in section 24A(4) of the Residential Tenancies Act 2004 (as amended): (i) the annual rate of rent inflation in the area must have been 7% or more in four of the last six quarters; and (ii) the average rent in the area in the last quarter must be above the average national rent in the last quarter.

In terms of the local electoral area of Maynooth, the report received from the RTB indicated that while the average rent in the area was above the average national rent for the quarter, the annual rate of rent inflation in the area was greater than 7% in only three of the last six quarters. The requirement for designation is for the annual rate of rent inflation in the area to be 7% or more in four of the last six quarters. Therefore Maynooth did not qualify under the criteria set out but may well do if rents continue to increase. We will keep these areas under consideration. Of all Deputies in this House, Deputy Murphy will appreciate more than most that we must make decisions when intervening in the property market on the basis of independent analysis and data and not politics. There was an argument on that before Christmas.

I will rely on the independent data that is gathered by the RTB. We will make decisions accordingly.

Deputy Catherine Murphy

If the Minister asks his party colleague from the Kildare North constituency about his experience of people raising the issues in the rental sector in Maynooth - I assume they are not all coming to me - he will confirm that the reality in the town is as I have described. The new arrangements are having the effect I would have predicted. The process used to select specific areas is flawed. My party argued that rent increases should be linked to the consumer price index. Under section 139 of the Residential Tenancies Act 2004, landlords are supposed to give notification of rent increases. There is no evidence that this is being universally done. In fact, a reply I received from the RTB suggested that updates are not provided in many cases. As Maynooth is a university town, large cohorts of renters come on stream in particular cycles. The Maynooth electoral area is quite large and has a significant rural hinterland and this has an impact on the profile of the town for these purposes. I am sure this is also the case in other areas.

Acting Chairman (Deputy Eugene Murphy)

I thank the Deputy.

Deputy Catherine Murphy

The presence of people working for multinationals is also adding to the pressures in Maynooth. When people are paying rents that are not as high as the market rate in the area, the immediate reaction is to give people notice of significant rent increases to bring them up to the market level. I will pass the details of such cases to the Minister.

Deputy Simon Coveney

It would not have made any difference in this case if we had decided to link the limitations on rent increases in rent pressure zones to the consumer price index, rather than setting a 4% limit as we have done. When we were drawing up the criteria to be used to determine whether an area would qualify to be designated as a rent pressure zone, we moved away from the process of assessing on the basis of local authority areas because that was far too broad. We were aware that the use of local authority areas would have an unfair impact on towns, as it would lead to rural areas bringing down the averages. For that reason, we tried to find a much more granular, targeted and localised way of assessing rents in certain areas. We decided that the only way this could be done was by using local electoral areas. I do not doubt that people in Navan, Maynooth, Greystones and Drogheda feel that those towns should be rent pressure zones. They would like them to be designated as such. Tenants in certain areas like to know that their landlords cannot increase their rents by more than 4% per annum. I have to make decisions on the basis of the data and the criteria we set out in the legislation. We decided on those criteria for a reason.

Acting Chairman (Deputy Eugene Murphy)

I thank the Minister.

Deputy Simon Coveney

When we are designating an area as a rent pressure zone, we need to know that there has been a sustained and unaffordable level of rental inflation over a period and that the rents in the area are very high by comparison with the national average. If there is a sustained problem in Maynooth, it is likely to qualify at some stage in the not too distant future.

Deputy Catherine Murphy

The problem is that areas like Maynooth will qualify after people have been forced out by means of tenancy cessations or rent increases. There is plenty of immediate evidence that this is happening. We argued that this restriction should be nationally applied and should not be based on rent pressure zones. We disagreed with some aspects of the Minister's approach when it was introduced, but now we are talking about how it is actually playing out. I am mentioning an area I am very familiar with in that context. The problem is that people in towns like Maynooth, Navan and Greystones, which are currently missing out, will have to be put under levels of pressure that have very negative effects on them in order for those towns to qualify for these purposes in the future.

Acting Chairman (Deputy Eugene Murphy)

Buíochas leat, a Theachta.

Deputy Catherine Murphy

I will send the Minister evidence of the kind of pressure we are seeing.

Acting Chairman (Deputy Eugene Murphy)

Go raibh maith agat.

Deputy Catherine Murphy

I do not think Maynooth is the same as some of the other towns because it is a university town. As it is the only town with a university in it, a one-size-fits-all approach should not apply.

Deputy Simon Coveney

The application of these restrictions across the board nationally would have had extraordinary effects in some parts of the country where the provision of rental accommodation is not viable as a result of significant falls in property prices and rental values in recent years. One of those effects would essentially have been to put a ceiling on those very low values. This would have prevented investment in many towns across the country. I think that would have been massively counterproductive. Instead, we wanted to target areas where we knew there was a significant problem and where the level of demand was driving rents up to crazy and unaffordable levels. That is why we chose the rent pressure zone model. I understand that a similar approach is being taken in Scotland, which has a similar profile to Ireland in this respect. I remind the House that if there are incidents happening, there are pretty strong protections, enforced and monitored by the RTB, for tenants outside the rent pressure zone regulations or restrictions. A landlord cannot simply evict somebody.

Deputy Catherine Murphy

I know.

Deputy Simon Coveney

There must be legal grounds for eviction. There are now extended notice periods in these circumstances. The legislation we introduced recently strengthened the security of tenure provisions.

Acting Chairman (Deputy Eugene Murphy)

I thank the Minister.

Deputy Simon Coveney

It is now six years rather than four years. If landlords are abusing that, we need to hear about it and the RTB needs to hear about it. For the record-----

Acting Chairman (Deputy Eugene Murphy)

Very quickly.

Deputy Simon Coveney

-----there has been a significant increase in the number of complaints that have come to the RTB since the introduction of the rent pressure zones. As a result of the profile of that debate, I think both landlords and tenants have a better understanding of their own rights. I think that is a good thing.

Acting Chairman (Deputy Eugene Murphy)

I realise every time I sit in this Chair that many Deputies on both sides of the House need to have hearing tests. We are already running over time. I remind Deputies that when they fail to confine their contributions to the time slots that are laid down, some of their colleagues' questions are not answered. I think it is highly unfair. I ask everybody to try to adhere to their time slots and to conclude when I advise them that their time is up.