Would a freeze on rents be constitutional in Ireland?

The Government argues a rent freeze is not constitutionally possible but are they right?

Reading Dáil debates, the Government’s speaking lines are consistent: property rights are protected by the Constitution; a three-year freeze would face significant legal challenge, and, if it did not, it would fail to solve the rental crisis because it would drive landlords out of the market.

During often ill-tempered Dáil exchanges in January about the exit of small landlords from the market, Housing Minister Darragh O'Brien told Sinn Féin TD, Eoin Ó Broin: "The property rights of owners are protected under the Constitution."

They are, but up to a point. The Constitution gives major protections to property owners, but it also allows property rights to be curtailed for the common good and gives the Oireachtas considerable latitude "to regulate and organise a modern economy".

That is clear from an important 2014 judgment in Rafferty v Minister for Agriculture – a case taken by a Cooley Peninsula sheep farmer whose herd was culled during the 2001 foot and mouth crisis – delivered by the man who is now the Chief Justice, Donal O’Donnell.

That's according to the authors – four constitutional law experts, of whom one, Gerard Hogan, is now a Supreme Court judge – of the latest edition of the seminal work on fundamental law here, Kelly: The Irish Constitution.

“The popular conception to the contrary is a pure myth,” the authors say. If it were otherwise, they add, then the dramatic actions taken during the economic crisis a decade ago – such as cutting public service pay – “would instantly have been found to be unconstitutional”.

'Whenever housing rights advocates build up a head of steam, the Constitution is put up as an obstacle to the kind of radical measures necessary'

The housing crisis has intensified demands that the Government should take similar radical action now, such as freezing rents, given that average monthly rents in Dublin are now €1,916, and approximately €1,114 outside Dublin, according to the Residential Tenancies Board (RTB) figures.

One of those affected is Nikayla Tucker, a junior civil servant, who is staying with a family member in Portlaoise, the closest she could get to Dublin. Slowly returning to work in the office, she wants to live and work in the city.

“It’s just chaos out there. If I don’t get a place to live in Dublin soon, at a reasonable rent I can afford, I’ll be forced to emigrate like my older sister’s generation did in 2008,” she said. “All my friends are there, I want to join them.”

Nikayla and a friend together looked for a two-bedroom flat. Meeting no success, they looked separately: “Single bedrooms, boxrooms were anything from €500 to €800 a month.

“People my age, we can’t start our careers, our working lives and be contributing citizens because our basic needs are not been met. We are in limbo, I have friends in their thirties who are in the same position as they were ten years ago.”

Rent costs, along with rising inflation, especially energy, are hurting many. Last November's Central Statistics Office report showed that more than one in three tenants spent more than 35 per cent of disposable income on rent in 2019.

Ireland is one of 16 among 33 European countries to regulate rents, in some way. Six regulate the initial rents, and later increases. Ten do so for rental increases only. A bid to freeze rents in Berlin for five years in February 2020 was later struck down by Germany's constitutional court.

Can the Government freeze rents?

Whether those are desirable, or would work, are separate questions.

Mike Allen of Focus Ireland believes rent caps are at best a short term solution. More social and affordable housing is needed, along with "a properly functioning rental market". The 2 per cent rent cap is not working.

“Whenever housing rights advocates build up a head of steam, the Constitution is put up as an obstacle to the kind of radical measures necessary, such as taxing unused development land,” according to Allen. “Let the Supreme Court decide if it is constitutional or not”.

In light of the constitutional protection for property rights, several housing rights groups came together under the umbrella Home for Good to seek a referendum aimed at inserting a right to housing in the Constitution.

The Programme for Government promised a referendum “on housing” but does not set out exactly what that means. The housing commission this week announced a sub-committee will explore the wording for a referendum, which may be held next year.

The Government says it is doing all it can and points to its Housing for All programme and other measures, including last December’s 2 per cent rent cap in rent pressure zones, but says its legal advice is that rent freezes would not be constitutional.

Dr Rachael Walsh, Assistant Professor of Law at Trinity College Dublin, has, along with Gerard Hogan – now Mr Justice Hogan of the Supreme Court – and two other constitutional lawyers, Dr David Kenny and Professor Gerry Whyte, authored the latest edition of Kelly: The Irish Constitution. She is also author of Property Rights and Social Justice.

Walsh points out that, while property rights are protected by Article 43 of the Constitution against unjust attack, it also empowers the State to regulate their exercise to secure the common good and social justice.

Judges decide what is required by the common good and social justice in particular cases and, if rent freezing laws were challenged, would assess the purpose of the relevant legislation and decide whether it is fair and proportionate.

Three significant Supreme Court judgments in the 1980s and 1990s, including one which struck down rent controls on the basis of property rights, may be informing the Government’s advice against introducing rent freezes, she believes.

Those judgments, according to Walsh, cast some doubt over the constitutionality of freezes, suggesting it may be problematic for the State to put burdens on certain groups in society and raising issues about whether the State can look to landlords to subsidise housing equality.

While all three judgments remain the law, it is plausible that, in an appropriate case set against the background of the housing crisis, the Supreme Court may not follow “the harder public law line” and instead favour the public interest, says Walsh.

While she considers it is “very unlikely” the court will, of its own initiative, declare a constitutional right to housing, she is encouraged by some of its more recent decisions, particularly a significant judgment earlier this year.

In it, the judges overturned an injunction obtained by Clare County Council permitting it to evict a Traveller family for the unauthorised occupation of a council-owned site. While recognising the council's property rights, the judges said it was legitimate, too, to take the council's housing obligations into account.

If those obligations are not fulfilled, that could influence the availability of remedies, Walsh notes.

'Short-term measures would not necessarily be unjust, I don't see huge constitutional issues there'

The judgment suggests, for example, if some homeless people were squatting on derelict council land, it may be harder for the council to get orders to remove them in the absence of adequate proposals to house them.

It would be a big step, Walsh considers, to introduce emergency housing laws. There is nothing, however, to stop the State legislating now, in a proportionate manner, for time-limited rent caps, or a rent freeze, she believes.

Some measures to date, including the 2 per cent rent cap in rent pressure zones are welcome, but she believes more could be done within the current constitutional framework if a “more brave” attitude is adopted.

Such legislation might face legal challenge, but the courts have generally applied the property rights provisions in the Constitution in a manner that favours the public interest, according to Walsh. The courts would look at the purpose and impact of the law and relevant factors might include whether it is accepted there is an emergency or crisis situation regarding rent costs, she says.

It is unlikely, given the current situation, the court could find that such a law, particularly if it provided for time limits on any rent freeze/cap, and for review of the measure, is not aimed at the common good, she believes.

A constitutional right to housing

Walsh is not convinced that a constitutional right to housing is necessary, and wonders whether even if such a right was approved via a referendum, how robust and enforceable any such right would be.

Other options could be pursued, she says, including seeking to abolish constitutional protection for property rights, improve the State’s power to limit those rights and/or to have the Constitution explicitly affirm the State’s power to acquire land for less than market value.

Independent Senator Michael McDowell, a former Attorney General and former Minister for Justice, says the government can interfere in the property market when the common good requires “but not in a manner that amounts to unjust interference with property rights”.

Temporary rent caps, when there are surges in rental prices, can be regulated in a constitutional fashion, he believes. “Short-term measures would not necessarily be unjust, I don’t see huge constitutional issues there.”

Restricting the rights of landlords to cancel residential tenancies would be unconstitutional as it could amount to an unjustified attack on property rights, he considers. “A tenancy is not a contract of indefinite duration.” As the owner of a property where a family member is now living, he says: “I would never agree to a regime that would see me lose control over that, I would get out of the market.”

In a late 2020 research paper entitled The Housing Crisis and the Constitution, Hilary Hogan, a PhD researcher at the European University Institute, and barrister Finn Keyes analysed property rights case law.

The courts, they said, have largely deferred to the Oireachtas in restricting individual property rights in favour of the common good, provided that measures are designed to achieve a clear social objective and are not arbitrary, or discriminatory.

'Successive governments have continued to rely on a narrow understanding of property rights case law to justify a constrained role for the State in housing'

The duo examined a number of Bills put before the Oireachtas over the last several years to address the housing crisis and assessed, in light of the case law whether they would have been found constitutional if they had become law.

The bills included Sinn Féin TD, Eoin Ó Broin's Residential Tenancies (Prevention of Family Homelessness) Bill 2018 and People Before Profit/Solidarity's Richard Boyd Barrett Residential Tenancies (Housing Emergency Measures in the Public Interest (Amendment) Bill 2016.

Both were defeated early in the Dáil, apparently on foot of advice they amounted to an unconstitutional attack on property rights. Opposing them, the Government rarely argued that the housing crisis is not sufficiently grave to merit intervention, Hogan and Keyes said.

Instead, its argument instead appeared to be on the basis that penalizing one group in society, landlords, to benefit another social group, tenants, failed to properly balance the rights of those groups.

That failed to acknowledge that “a myriad of restrictions” on property owners were approved by the courts on the basis of the principle the Oireachtas can introduce proportionate restrictions for the common good, they said.

According to Hogan and Keyes, the Attorney General’s advice, which is almost never published, can “sink reforms” before they are ever given the opportunity to be scrutinised by the courts or made public.

Successive governments have continued to rely on a narrow understanding of property rights case law to justify a constrained role for the State in housing, they noted.

“While this is a perfectly valid political principle, we suggest that it is not a legal principle.”

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