THE GOVERNMENT is proposing a radical reform of regulation of the rental sector to try to ensure landlords cannot escape paying tax on income earned from rent supplement paid by the State.
It also wants to introduce in legislation to be brought to Government next January tough fines for landlords who hold on to tenant’s deposits illegally. .
Minister of State for Housing Michael Finneran said yesterday he wants to change the law to force landlords to register dwellings rather than tenancies with the Private Residential Tenancies Board – the body set up to regulate the sector.
He said the move to focus of registration would make it easier for the authorities to check that only landlords in compliance with tax and registration laws could receive rent supplement money.
"If people are in receipt of taxpayers' money for rent, then the State is entitled to know where exactly the money is going," Mr Finneran told The Irish Times.
Mr Finneran recently met Minister for Social Protection Éamon Ó Cuív to discuss how to deal with the large number of landlords who are not complying with registration requirements and who are quite possibly not tax-compliant.
Government figures show that of 150,000 claims for rent supplement paid last year authorities had tax or personal public service (PPS) information for landlords for just 31,000.
The State is paying €500 million in rent supplement every year and officials are concerned landlords are not declaring income generated from these welfare payments.
The board’s current tenancy registration system provides that registration only occurs after a tenancy has started, which makes it difficult to check a landlord’s compliance with the law.
By shifting the focus of registrations to dwellings, rent supplement-assisted tenants could seek proof that a landlord is compliant at the time of seeking accommodation. A payment of rent supplement would only be made to tenants renting a dwelling properly registered by a landlord.
The proposed amendment to the Rental Tenancies Act 2004 would have to go hand-in-hand with a change to social welfare regulations to make payment of rent supplement contingent on proof of registration with the board.
Mr Finneran said the Bill would be brought to Cabinet in January and would also include fixed penalties for landlords who illegally hold on to tenants’ deposits. He said the fines would be fixed at a minimum of two or three times the value of the deposit to act as a strong deterrent to landlords.
The annual report of the Private Residential Tenancies Board published today shows 51 per cent of the 1,859 applications for dispute resolution sent to the board in 2009 were due to deposit retention by landlords. The second biggest category of disputes (29 per cent) related to failure of tenants to pay rent.
The board made 922 determination orders in relation to disputes last year, which was a 78 per cent increase on 2008. The number of enforcement requests received – when a determination order is not complied with – increased by 300 per cent to 307.
The board said this was probably, in part, due to the recession as there was an increase in rent arrears and deposit retention.
The board took 42 successful legal actions during 2009 and lost one case, which it is appealing.
In 2009, it issued 4,044 enforcement notices to landlords who had not registered their tenancies with the board. At the end of December 31st, 2009, a total of 234,582 tenancies and 116,577 landlords were registered.
The board said 19 per cent of registration forms were returned “incomplete” in 2009, which was an improvement on the year before. It said applications are still being returned as incomplete where the landlord’s or tenant’s PPS number is missing or invalid.