Financial Statements 1994-7: Rent Tribunal.

Thursday, 13 May 1999

Committee of Public Accounts Debate

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Mr. J. Farrelly (Secretary General, Department of the Environment and Local Government), and Mr. E. Sullivan (Secretary General of the Department of Social, Community and Family Affairs) called and examined. Chairman: The next item on the agenda is the Rent Tribunal annual financial savings of 1994 and 1997. In addition, we will be taking the value-for-money report of the Comptroller and Auditor General on the administration of supplementary welfare allowances which involves both the Department of Social, Community and Family Affairs and the Department of the Environment and Local Government.

Witnesses should be made aware that they do not enjoy absolute privilege and should be apprised as follows: attention is drawn to the fact that, as and from 2 August 1998, section 10 of the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act, 1997, grants certain rights to persons who are identified in the course of the proceedings. For the most part, these rights may be exercised only with the consent of the committee.

I welcome Mr. Jimmy Farrelly, Secretary General of the Department of the Environment and Local Government who is Accounting Officer for the rent tribunal. Perhaps he will introduce his accompanying officials.

Mr. Farrelly: Information on John V. Farrelly Zoom on John V. Farrelly I am accompanied by Tom Corcoran, principal officer in the housing division; Sheila McMahon, assistant principal on the Rent Tribunal work; Garry Byrne, secretary of the Rent Tribunal; John Murphy, who is here in connection with the next item on the agenda, value for money on supplementary welfare allowances and Denis Conlan who is also in that area of work.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell You are all welcome. I also welcome Mr. Eddie Sullivan, Secretary General of the Department of Social, Community and Family Affairs. Perhaps he will introduce his accompanying officials.

Mr. Sullivan: I am accompanied by Brian Ó Raghallaigh, principal officer in the Department; John Hynes, director general of social welfare services and Anne Tynan our accountant.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell I welcome Ms Melanie Pine from the Department of Health and Children and the chief executive officer of the Eastern Health Board, Mr. Patrick McLoughlin. Perhaps you will introduce your accompanying officials.

Mr. McLoughlin: I am accompanied by Mr. Michael Walsh, programme manager for community services and Martin Gallagher, finance officer and acting programme manager for mental health.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell You are both very welcome. Also present are Mr. Tony Gallagher and Mr. Gerry Kenny from the Department of Finance.

I ask Mr. Joe Meade, Secretary and Director of Audit, Office of the Comptroller and AuditorGeneral, to introduce the report on the Rent Tribunal.

Mr. Meade: The Rent Tribunal was established in 1983 by the Minister for the Environment primarily to arbitrate in the determination of tenancy terms for dwellings which were formerly rent controlled. I audit the accounts of the tribunal. As most of the operational costs of the tribunal are provided by the Department of the Environment and Local Government on a non-repayable basis, the bulk of the expenditure of the tribunal relates to fees and travelling expenses of the members who serve on the tribunal and contribute their legal and property valuation skills in its overall work. The overall cost of the tribunal, taking account of those two factors, in 1997 was of the order of £77,000. We have no comment to make.

Deputy Ardagh: Information on Seán Ardagh Zoom on Seán Ardagh This session leads on from a session we had not too long ago where all the witnesses present, plus representatives from Dublin Corporation, were in attendance. The main item that arises, and the main reason for the continuation of the discussion today, is the question of rent allowances and whether they should be administered by local authorities or by the health boards. Mr. Farrelly said at the time that his Department would not be found wanting in terms of distributing the allowances if that was the method agreed.

There was an implementation group at work whose report was to be completed and with the Government by November last in relation to the administration of rent and mortgage allowances. What is the current position?

Mr. Farrelly: Information on John V. Farrelly Zoom on John V. Farrelly I thought that was the next item on the agenda.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell I was just about to say that it is the next item on the agenda.

Deputy Ardagh: Information on Seán Ardagh Zoom on Seán Ardagh The rent tribunal has finances of £20,000 as far as I can see. The total information I was given as a member of this committee is a set of financial statements with nothing in them apart from the expenditure and the amount, and it is of no importance to this committee from a financial point of view.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell If you like we can dispose of the Rent Tribunal quickly. We took these other items because they are in the same area.

Deputy Ardagh: Information on Seán Ardagh Zoom on Seán Ardagh I have no questions on the Rent Tribunal.

Deputy Bell: Information on Michael Bell Zoom on Michael Bell There is not much that can be questioned because it has a very small allocation compared to what we normally deal with. Regarding the terms of reference of the Rent Tribunal, one of the problems has been the quality of accommodation, particularly in urban areas, and the substantial subsidies that are paid for mortgages and rent by community welfare officers. We very often find that the standard of accommodation is way below even the basic standards in terms of health, fire safety and so on. In many cases landlords are substantially breaking the law and getting away with it. Has the Rent Tribunal any say or function in relation to the quality of accommodation vis-à-vis the payment of public moneys without proper standards being set for such accommodation?

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell That is the next issue which obviously we will be dealing with very soon. Perhaps we could hold off on this for a moment.

Deputy Bell: Information on Michael Bell Zoom on Michael Bell They are interlinked.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell That would be more relevant to the Department of Social, Community and Family Affairs and the health boards.

On the Rent Tribunal, we are in a situation where rents are being driven up dramatically. People who have lived in the same dwelling for years now find their rents are being forced up in many areas. I know many people who, having lived in the same flat for many years, have been forced to leave. What rights do they have? Is any consideration being given in the Department to changing the law? Is there any scope to change the law to protect people?

Mr. Farrelly: Information on John V. Farrelly Zoom on John V. Farrelly Let me clarify the position of the Rent Tribunal and get it out of the way. The Rent Tribunal was set up as an arbitrating body in the determination of tenancy, both rent and responsibility for care and maintenance of dwellings which were formerly rent controlled. It dates back to 1983. Certain provisions of the rent restrictions Acts at that time were found to be unconstitutional and a new system was brought into place for such rents, the former rent-controlled dwellings. It was subsequently modified by a 1983 Act and the Rent Tribunal was assigned the role previously carried out by the District Court. This is a limited operation. It relates to people who have clear rights to continuing tenancy dating back in time. It relates to a very small number of dwellings. It is said to be of the order of 10,000, but we feel that is overstated, and we have asked local authorities to write to landlords to clarify to what extent they still have tenants with rights. Unfortunately, the landlords do not notify the local authorities when tenants cease to occupy these buildings. It is a limited area of operation.

In the absence of an agreement it is open to either party to apply to the Rent Tribunal to fix the terms including the rent. The tribunal’s determination of what is a just and proper rent in these cases must have regard to the nature or character and the location of the dwelling; the terms of the tenancy; the means of the landlord and tenant; the date of purchase of the dwelling by the landlord and the amount paid; the length of the tenant’s occupancy of the dwelling and the number and ages of the tenant’s family residing in the dwelling.

A decreasing number of people are involved and where the terms of the tenancy are fixed by the tribunal, an application may not be made for a review of such a tenancy until a period of four years and nine months has elapsed. The terms can be reviewed when substantial improvements are carried out to the dwelling by the landlord. The terms of tenancy are dealt with either by oral hearing or on the basis of written submissions. Landlords and tenants can have legal representation at an oral hearing.

It is a fairly small operation as indicated by the amount of money involved. The membership consists of a chairman, who is paid a fee according to the number of cases and the number of days involved, three vice-chairmen and two ordinary members. The operational costs are as small as £7,600 per annum. The level of activity has declined dramatically in recent years from over 100 applications per annum during 1994-96, to 60 in 1997 and about 83 in 1998. It is an area of legislation which is subject to a number of court cases so I cannot go into great detail but I get the impression that this is not really the area about which Deputies are raising questions.

Deputy Bell: Information on Michael Bell Zoom on Michael Bell Much of what Mr. Farrelly has said is news to me, although I have been a member of a local authority for nearly 30 years. Is there is any obligation on the local authorities to force landlords to issue tenants with the rules of tenancy? I was not aware that this information was circulated to members of local authorities and, therefore, it is difficult to understand how tenants would be aware of their legal rights when elected members do not even know them. Might it be appropriate to have the information circulated by local authorities or to make it compulsory for landlords to issue tenants in rented accommodation with a copy of their rights?

Mr. Farrelly: Information on John V. Farrelly Zoom on John V. Farrelly Three sets of regulations apply in general to the private rented sector. Under the Housing (Standards for Rented Houses) Regulations, 1993, landlords are obliged to ensure that rented houses, including flats and maisonettes, let by them comply with specified physical standards. They apply to most private rented accommodation and include former rent-controlled and local authority dwellings. They do not apply to temporary or holiday lettings or mountable dwellings let by the local authority or certain voluntary housing. The regulations require a landlord to keep a house in a proper state of physical repair, to provide sanitary, heating, lighting and ventilation facilities and to keep common areas such as passageways, stairways and basements in good order.

The Housing (Rent Book ) Regulations oblige landlords, including local authorities, to provide tenants with rent books at the commencement of tenancy. These regulations apply to all letting of houses, including flats and maisonettes, made by private landlords, local authorities, public and voluntary bodies. They do not apply to holiday or to former rent-controlled dwellings. The Housing (Registration of Rented Houses) Regulations, 1996, require private landlords to register houses, including flats and maisonettes, with the local authority.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell Are there any steps proposed to stop the exploitation of vulnerable tenants by landlords in the current market circumstances where rents are being raised in an unconscionable way? Some tenants are being pushed out of dwellings in which they have lived for ten or 12 years and many of them have no real means of defending themselves. Is there anything proposed or any consideration being given to try to protect people in those circumstances?

Mr. Farrelly: Information on John V. Farrelly Zoom on John V. Farrelly The reintroduction of rent control would have to overcome the kind of constitutional objections which brought down the previous legislation in 1982. There have been many calls in recent years for a temporary freeze or control of rents. This is almost a contradiction in terms. Rent control was introduced in 1916 and it lasted more than 70 years until struck down by the courts in the early 1980’s, which gave rise to rent tribunals. There are very serious constitutional implications for rent control but, if these are left aside, its introduction would have the unwelcome and inevitable effect of reducing the supply of private rented accommodation. Our departmental strategy statement specifies developing and maintaining a framework for an efficient private rented sector, which is an essential part of the housing system. The key to achieving stability in the private rented sector is the same as for the owner occupied sector, that is, to increase the supply of housing so that demand no longer outstrips supply. No legislation or control measures can achieve this. The fundamental objective of the Government housing strategy is to restore the balance between supply and demand.

There are two major objections to rent control - the constitutional one on which rent control was thrown out in the early 1980’s and one based on the effect of rent control on encouraging landlords and private developers to provide housing for rent. The effect of rent control would be that rented housing would almost disappear off the market.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell What is the legislation governing the Rent Tribunal?

Mr. Farrelly: Information on John V. Farrelly Zoom on John V. Farrelly The legislation governing the Rent Tribunal is the Housing (Private Rented Dwellings) (Amendment) Act, 1983.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell What is the scope of that Act?

Mr. Farrelly: Information on John V. Farrelly Zoom on John V. Farrelly The scope of it is to establish as the arbitrating body the correct tribunal so that it may determine the terms of tenancy of dwellings that were formerly rent-controlled. It relates only to former rent-controlled dwellings which, because of the constitutional decisions reducing rent control, gave rise to a crisis. The Rent Tribunal was set up in order to strike a balance and ensure continuity for those tenants on the terms specified in the legislation.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell Is anyone addressing protection for tenants who are vulnerable? I have encountered several instances of this in my constituency recently. Take the example of a woman working in Dublin for the past 30 years and living in the same flat for the past 15 years whose rent is doubled because of market forces. She has neither rights nor protection and has to vacate the premises because she cannot afford the rent. She is employed, therefore, she is not entitled to a rent subsidy. Is anyone protecting the constitutional rights of such tenants?

Mr. Farrelly: Information on John V. Farrelly Zoom on John V. Farrelly The second Bacon report recommended that landlord and tenant legislation for which the Minister for Justice, Equality and Law Reform is responsible, be reviewed in order to address barriers by means of investment in the private rental sector. It will also review the issue of an appropriate balance of rights between landlords and tenants. Responding to the report, the Government indicated that, on principle, we would establish a commission to examine issues relating to security of tenure. Are we looking at something broader than security of tenure? We are in touch with the Office of the Attorney General with whom we intend to arrange a meeting along with representatives from the Department of Justice, Equality and Law Reform with a view to drawing up the guidelines for this commission.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell “Fair rents” and “fixity of tenure” are terms that belong to the previous century and are again major issues.

Deputy McCormack: Information on Pádraic McCormack Zoom on Pádraic McCormack A number of landlords do not register their property with the local authority. This offence incurs a fine of £1,000. Have many been fined since that regulation was brought into force?

Mr. Farrelly: Information on John V. Farrelly Zoom on John V. Farrelly Landlords use court cases in landlord and tenant matters as a basis for non-compliance of payment of registration fees and similar issues. When the High Court judgment, on which one of these cases is pending, is known, we will examine what amendments are necessary. I agree that the performance of local authorities in relation to enforcing the issues of registration and rent books has been slow and difficult.

Deputy McCormack: Information on Pádraic McCormack Zoom on Pádraic McCormack Was any fine of £1,000 imposed since the regulation was introduced?

Mr. Farrelly: Information on John V. Farrelly Zoom on John V. Farrelly None of which I am aware.

Deputy McCormack: Information on Pádraic McCormack Zoom on Pádraic McCormack That defeats the whole purpose of it.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell : We will suspend until the vote in the House has been taken.

Sitting suspended at 10.45 a.m. and resumed at 10.55 a.m.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell Mr. Farrelly, you mentioned the recommendation in the Bacon submission. Have any steps been taken in this regard?

Mr. Farrelly: Information on John V. Farrelly Zoom on John V. Farrelly We are in discussion with the Department of Justice, Equality and Law Reform and the Attorney General’s office. The issue must be approached carefully as regards the terms of reference and so on. The Department of Justice, Equality and Law Reform has a major involvement because it has overall responsibility for landlord and tenant law.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell Was that always the case?

Mr. Farrelly: Information on John V. Farrelly Zoom on John V. Farrelly That was always the case.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell What rights does a person who has been a tenant for many years and who does not live in the small number of rent controlled dwellings have against a plundering landlord?

Mr. Farrelly: Information on John V. Farrelly Zoom on John V. Farrelly There was an amendment in the past few years which provided for four weeks’ notice to quit. It is a question of agreement between tenant and landlord and of what is in one’s agreement. At one stage, people were being evicted after one week’s notice. We made a provision requiring a minimum of four weeks’ notice to quit.

In fairness, this is a difficult and complex area because the question of rent control was struck down as unconstitutional in the early 1980s. The constitutional issues are significant, hence the need for a commission to go into this matter. Until now, the expertise in this regard has been in the Department of Justice, Equality and Law Reform.

There are two issues involved. First, the constitutional issues, which are very serious and real, and second, if we are seen as having a policy which is not attractive to developers and landlords, housing or units for letting will not be provided. It is very much a chicken and egg situation. Threshold ran a seminar and the general conclusion was that there is no good experience to draw on at European level. Our problem, by virtue of property rights and so on enshrined in the Constitution, is greater.

I feel very strongly that in the final analysis, the aim must be to maximise the provision of accommodation for renting. In recent years, we have introduced urban renewal schemes and schemes for students and others with a view to achieving that aim, but we must be clear that it is a different level of the market. At the same time, however, it provides units of accommodation. The provision of housing and accommodation for rent has not been attractive because we operated an absolute rent control system from 1916 until this provision was struck down as unconstitutional in the early 1980s. It is fraught with legalities and even the limited provision which we introduced through the Rent Tribunal to deal with the former rent controlled dwellings is being attacked in the courts.

Chairman: Information on Jim Mitchell Zoom on Jim Mitchell I very much understand the restrictions and the market forces at play. There are many good landlords providing good accommodation and being fair to their tenants. There are, however, some landlords who put the Kray brothers to shame in that innocent people who have nobody to turn to for help are being put out on the street. I have certainly encountered that in my constituency. Is there an awareness that this is a new problem which has arisen because of the market situation and which must be addressed urgently? Innocent people whose rents have been hiked up dramatically have been effectively ejected from their flats because they cannot afford the new rents.

Mr. Farrelly: Information on John V. Farrelly Zoom on John V. Farrelly There is an awareness of the problem. In dealing with it, one must look at the total housing situation. That is what we are attempting to do with a major emphasis at all times on the supply side. Equally, I accept what the Chairman said that there are provisions in relation to standards, requirements for rent books and so on. We are and will continue to push local authorities to ensure a greater level of enforcement on these issues.


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