Matt Shanahan: Urges construction reopen, warns on rental crisis
Matt Shanahan addresses rental tenancies and house building policy, arguing that COVID tenancy protections are necessary but deeper reforms are required to restore supply and protect small landlords. He highlights long-term arrears in the buy-to-let sector, criticises rising house building costs, and calls for reopening construction with antigen testing.
Scale of rental arrears
A Central Bank Q4 2020 snapshot cited by the deputy notes 96,400 residential mortgage buy-to-let accounts. Of those accounts the arrears profile is stark—figures in the speech record 16% of the overall accounts in arrears, 19% overdue by 2 to 5 years, 30% in arrears 5 to 10 years and 13% over 10 years.
Impact on private landlords and supply
The deputy argues that prolonged arrears and legal protections available to tenants are removing small private landlords from the market. He says this dynamic is further constricting rental opportunity and supply, with professional landlords and financial institutions disproportionately benefiting from current conditions.
COVID tenancy measures and the bill
He welcomes the proposed bill’s extension of eviction protections during level five restrictions and the continued supports for landlords who register with the RTB as unable to pay mortgages due to tenant non-payment arising from COVID-19. He also stresses that the bill is a targeted COVID-era measure, not a substitute for wider reform.
House building costs and wider reform agenda
The deputy links national housing problems to construction capacity, land supply, planning and high state-related fees such as council levies, Irish Water connection charges, VAT and development fees. He warns these costs—which he says can amount to over 30% of a new build—are driving long mortgage horizons and indebtedness and calls for radical legislation to disrupt financial dysfunction in house building.
Construction reopening and testing proposal
He says regional representatives pressed for reopening the construction sector using a two-day antigen testing protocol, noting that the UK is subsidising antigen tests and keeping construction open. He asks the minister to consider resuming construction activity safely with screening and protective testing to restart economic activity.
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Minister, rental tenancies have become a very emotive subject over the past 20 years in Ireland with the fallout of the Celtic Tiger followed by an economic upswing which failed to deliver a commensurate rise in new house building and residential property supply. Even before Covid rents were on an upward trajectory requiring rent pressure zones in an effort to contain further price increases. Irish residential letting sector has largely two broad categories of rental investor. The first is the REIT or property hedge fund or vulture which has access to pools of investment capital and is based on large economies of scale. The second is the private investor who is often the accidental landlord who has inherited a property or the future retiree who diversify their pension into a buy to let property. A snapshot of buy to let properties from a quarter four central bank report 2020 demonstrates there are significant issues facing small private landlords in Ireland today. Of a total of 96,400 residential mortgage buy to let accounts, the arrears were shown as follows. For 16% of the overall account, 19% were overdue by 2 to 5 years, 30% were in arrears by 5 to 10 years and 13% were in arrears over 10 years. This scale and longevity of arrears demonstrate a failing to provide private landlords with the legal supports to terminate property letting quickly and successfully. This is particularly true where a tenant is using all of the protections afforded under the Rental Tenancies Board Protocols as well as other legal means to drag out the process. This reality is removing small private landlords from the property market and in so doing is further constricting rental opportunity and supply. Previous COVID legislation has seen government rightly provide additional protections to tenants who find themselves in arrears as a result of COVID, including providing emergency access to welfare supports. This bill proposes to extend to June that no tenant can be evicted during level five restrictions except where mortgage arrears have extended beyond five months. It also continues to allow support for landlords whether they register with the BRTB as being unable to pay their mortgages because of the non-payment performance of tenants due to COVID-19. There has been much public discourse in Ireland around private home ownership and the rights of tenants to long-term letting agreements and fixed rent periods. While I welcome the proposed introduction of this legislation, I would remind the House that our national housing issues are largely centred on our construction capacity, the available land supply, amenable planning and future controls on predatory pricing. By these I make specific reference to governmental fees in terms of council levies, Irish water connection charges, VAT and development fees, which are all contributing to the spiralling cost of ownership whether council are privately funded and presently amount to over 30% of a new house build. The cost base now prevailing in the Irish house building sector is creating indebtedness for future generations as a result of having consumers invest in home buyer mortgages sold principally on exceptionally low interest rates without any understanding of what a 30 year time horizon can do to family repayment commitments. This is also a reflected image that is proving an economic milestone in the private rented sector also where rising rents are serving no one except professional landlords and financial institutions who continue to feast wildly on the financial arbitrage opportunities that exist in the Irish home building sector. I, like many deputies, await legislation that will seek to disrupt the financial dysfunction that permeates house building costs in Ireland today. Legislation that I hope will remove the state's requirement to levy fees that will require 30 to 40 year mortgage paybacks and shared equity agreements from private sector payers. Although this proposed bill deals with tenancy rights in terms of COVID, the legislative conversation that will have to follow soon is the future direction of house build policy in this country. Such analysis will have to be an awful lot wider and deeper minister and more radical than what we have seen before, with a mission firstly to protect our citizens by protecting our economy. That will require the sustainability of our house build sector. On that point minister, can I also point out that the regional group yesterday brought out a press statement asking for construction sector to be opened on the basis of using antigen testing on a two day format protocol. In the UK at the moment, the UK government is subsidising antigen tests and construction is open there. And we feel at this stage, minister, we must get some economic activity going in the construction sector. It absolutely can be done safely with adequate screen and protective testing. And I ask you to have a look at that also. Thank you. Thank you.
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