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Minister Coveney PMB on Rents & Tenancies

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Private Member’s Bill
Secure Rents and Tenancies Bill 2016
(Sinn Féin – Eoin Ó Broin)
Contribution by Minister Simon Coveney, T.D.,
Minister for Housing, Planning, Community
& Local Government – 30 November 2016

Opening
· Firstly, I wish to thank Deputy Ó Broin for bringing forward this Bill and providing us with another opportunity to discuss the development of the rental sector which is an absolute priority for this Government.

· As Deputies will be aware, I have tabled a proposed amendment to the motion.

· A strong and viable private rental sector can play an important role in the housing market and our wider economy. It can provide a housing option to those who either cannot or choose not to enter the owner-occupied market but still have sufficient means to meet their own accommodation needs. It can provide a housing option to meet rising demand and it can promote flexibility and better alignment to a more mobile labour market, making it easier for individuals and families to pursue job opportunities or adapt their accommodation to changing family circumstances.



· It can also reduce the macro-economic risks of an over reliance on home ownership. We have seen examples over the last decade where States with relatively large private rented sectors, such as Germany and Switzerland, have been better insulated against housing booms than States with small rented sectors, like Ireland and Spain.

· Indeed, the rental sector in Ireland has traditionally been regarded as a residual sector in which households who would prefer either to own their own home privately or access permanent social housing must serve time on their way to their true tenure of choice.

· The rental sector in Ireland has doubled in size over the course of the last 2 decades. Almost one fifth of the population now live in the rental sector. Growth in the sector has been driven by a range of factors including a reducing reliance on home-ownership as a tenure of choice, as well as demographic factors including inward migration from the EU and decreasing household size / increasing rates of new household formation.
· Notwithstanding this, the rental sector in Ireland still needs to develop and mature in order to provide a viable sustainable and attractive alternative to home ownership, rather than serving as a temporary refuge or a staging post on the route to home ownership.

· Severe supply pressures, rising rents, security of tenure issues, limited – but nonetheless unacceptable - examples of poor accommodation standards and a shortage of professional institutional landlords are impediments to delivering on a strong, stable and modern rental sector that offers real choice for individuals and households while contributing to economic growth.

· There have been some improvements. Important amendments to the Residential Tenancies Act introduced last year mean that the minimum period between rent reviews for tenancies has increased from 12 to 24 months. This will apply for a 4 year period, until 2019. In addition, the minimum period of notice of new rent is increased from 28 days to 90 days and longer notice periods for the termination of long-term tenancies have been introduced.


· However, acute pressures persist in the rental market. These pressures are driven by a number of factors - by rising demand, by a lack of supply and by the high costs that indebted landlords face in servicing their loans.

· And there is no doubt that the problems in the rental sector are part of a bigger problem; Ireland is in the midst of a housing crisis. And the problems caused by high rents reflect, and are reflected in, the other issues facing the housing market – not enough homes for first time buyers, increased demand for social housing and unacceptable levels of homelessness. While many factors contribute to these problems, the one factor common to all of them is the prolonged and chronic lack of supply of new houses.


Rebuilding Ireland
· The core issue behind almost all of the pressures throughout the housing market is a lack of supply.

· Ultimately, the most effective way to reduce and stabilise rents in the medium to long term, and benefit the entire sector, is to increase supply and accelerate delivery of housing for the private and social rented sectors. In publishing the Rebuilding Ireland Action Plan for Housing and Homelessness, the Government has set out a practical and readily implementable set of actions to create a functioning and sustainable housing system. However, I acknowledge that it will take some time for supply and demand to reach equilibrium. In the meantime, however, it is essential that any measures taken to address rental prices do not jeopardize supply and while I appreciate the motivation behind the Secure Rents and Tenancies Bill 2016, it does not contain any mitigating measures to protect supply and so it is likely that it would have a negative effect on both existing and future supply of rental accommodation.

· Without counterbalancing measures, there is a very real risk that the measures proposed in this Bill would force existing supply to exit the market and discourage future supply for the sector.

· That is why Rebuilding Ireland commits to developing a real and meaningful strategy for the rental sector, with a major focus on supply but also including new mechanisms for both setting and reviewing rents. Every political party, member of the public and stakeholder in the rental sector has had an opportunity to contribute in writing to the rental strategy; I know many of you here, including Deputy Ó Broin who also attended and contributed to the Consultation Day, have done so. I will be launching the rental strategy in less than a month and I believe it will set out a realistic targeted plan for dealing with the many serious issues that we are discussing today.

· The strategy will examine a suite of options, under the four headings of security, standards, services and supply, to ensure a balanced package of reforms for landlords and tenants.
· In advance of the publication of the strategy, which will take place before the end of this year, I am introducing other legislative changes for early introduction in the Planning and Development (Housing) and Residential Tenancies Bill 2016, which passed Report and Final stages in the Seanad yesterday and which I will be introducing in this House tomorrow afternoon.

· The Bill includes two significant provisions in relation to security of tenure. Section 30 of the Bill provides that a landlord may not terminate a tenancy on the ground that they wish to sell a dwelling in circumstances where they are selling more than 5 dwellings, at the same time, in the same development. This provision arises from a commitment in the Rebuilding Ireland Action Plan for Housing and Homelessness to deal with terminations in very specific circumstances, that is, where large numbers of tenants in a single development are served with termination notices at the same time. In addition section 31 of the Bill provides for the repeal of section 42 of the Act of 2004 thereby extinguishing the landlord’s right to terminate a further Part 4 tenancy in the first 6 months of that tenancy for no stated ground.

· In terms of increasing supply, the Bill will introduce temporary fast-track planning arrangements for large-scale housing developments, and will also streamline the existing process for local authority developments, and developments by approved housing bodies, and it will support a very significant increase in the supply of dedicated on-campus student accommodation, freeing up thousands of units in the wider rented sector currently occupied by students.

· I am very well aware that these provisions do not resolve all of the problems in the rented sector and it was not intended that they would do so. To legislate for the problems in the rented sector in advance of having a strategic plan for that sector risks exacerbating the very problems that the Government is trying to solve. That is why, although I appreciate the intention behind the security of tenure measures in this Bill, I believe it is premature to introduce them at this time, in advance of the strategy.



Scope of the Strategy
· I am determined that the strategy will provide a vision of the role that the rental sector will play in the short, medium and long term, in the context of the Government’s objectives for the housing sector overall, as set out in Rebuilding Ireland.

· It will contain a range of actions focused on the 4 key areas of security, supply, standards and services. In terms of security, we will look at bringing greater tenure and rent certainty to landlords and tenants, and in terms of supply we will examine how to maintain existing levels of stock while encouraging investment in additional supply, including through affordable rental.

· In addition, measures on standards will continue to improve the quality and management of rental accommodation while actions on services will broaden and strengthen the role and powers of the RTB to more effectively provide their services and empower tenants and landlords.



Conclusion
· Rent controls, as proposed by Sinn Fein, might deliver and easy and very short term gain, but they would be disastrous for landlords and tenants in the medium and longer term.

· However, I do believe that rent predictability – as part of a stable rental sector underpinned by a sustainable investment environment – is something that can be of benefit to both tenants AND landlords.

· That is why Rebuilding Ireland, commits to developing a real and meaningful strategy for the rental sector, with a major focus on supply but also including new mechanisms for both setting and reviewing rents. However, I am not going to pre-empt the strategy and support a populist but reckless approach that would only worsen the problems we face.

· The strategy will deal comprehensively with these challenges and we need to the approach to rent predictability balances the concerns and rights of tenants and landlords as part of a comprehensive package of measures.