Fianna Fáil 'concerned' over plan for 4% cap in rent increases

Rent increase limits are to be introduced in Dublin and Cork

Simon Coveney, Action Plan for Homelessness, crisis, property, house building,

Minister Simon Coveney launches the Government's new Housing Action Plan at the Government Press Centre | Image: RollingNews.ie

Fianna Fáil say they have "genuine concerns" over plans for a 4% cap in rent increases in major cities.

The limit on annual rental increases is being proposed under new measures published by the Government today.

Housing Minister Simon Coveney wants the measures put into law before Christmas but Fianna Fáil is reportedly looking for the cap to be lowered.

Minister Coveney unveiled new measures to limit rent increases, which he wants to turn into law before Christmas.

Both Dublin and Cork will be designated as rent ‘pressure zones’ - with landlords only permitted to increase payments by up to 4% a year over the next three years.

The zones are areas where annual rent increases have been at 7% or more in four of the last six quarters - and where rent levels are already above the national average. 

But Fianna Fáil says it has "genuine concerns" with elements of the current model and with its limited geographical scope.

Housing spokesman Barry Cowen said: "We are anxious that other cities be added immediately and will be asking that Galway, Limerick, Waterford and large population centres surrounding Dublin and Cork city are included from day one.

"We are not satisfied that the proposed 4% increase is appropriate and we also believe that tax incentives for landlords should be part of the package.

"I am open to further discussions with Minister Coveney to address these outstanding issues."

In introducing the plan earlier, Mr Coveney rejected calls from homeless charities - including Focus Ireland and the Simon Community - to link rents to the consumer price index.

He said linking rent to inflation would "cut off supply" and insisted a 4% increase is a fair balance.

"We are talking about steady, stable, predictable, potential rent increases," he said.

"Of course, that is a ceiling so if we manage to get supply up significantly it's possible that we won’t even reach 4%."

Other areas around the country could follow suit if prices continue to rise above the national average.

The new scheme will aim to bring about greater security of tenure and rent certainty for landlords and tenants - while also aiming to improve the quality of rental accommodation.

Housing charity Threshold released their annual report today warning that while the new measures could curb unexpected hikes by landlords – rental prices around the country are still far too high.

Rents have already increased dramatically this year by an average of 11.7% - according to the latest Daft.ie report - the biggest 12-month increase recorded since its series started in 2002.

The latest report from the Residential Tenancies Board (RTB) has alsoshown that rents grew by 2.3% in the third quarter of 2016. slightly slower than in the previous three months.

Under the new plan, the RTB will now be responsible for deciding which areas of the country qualify for caps.

Minister Coveney said the strategy aims to ensure landlords are able to make a reasonable rate of return - but not charge whatever they want.

"We have to take account of viability for landlords as well as viability for tenants," he said.

“The idea that you would simply introduce a blunt rent cap which essentially is what would be proposed if you were to link it to CPI (Consumer Price Index) cause CPI this year is actually a negative figure.

“I think that would be a significant disincentive to many people who want to enter the landlord market or the rental market on a permanent basis.”

"Major anti-climax"

Anti Austerity Alliance TD, Ruth Coppinger said the plans do not go far enough in controlling rents and will not solve the crisis faced by people in the rental sector.

"It has taken Minister Coveney six months to put this plan together but it is a major anti-climax for tenants," she said.

"It guarantees landlords the ability to increase rents by 4% - well above the rate of inflation or the Consumer Price Index which is actually at -0.1% so rents should actually be falling."

She said the new rules will only apply to current tenancies thus "leaving landlords with a huge incentive to end tenant leases or evict tenants to leave themselves free to jack up rents beyond this level."

The Social Democrats said the Government should be looking at measures that reduce rents rather than maintain current levels.

TD Catherine Murphy said: "It is telling that the language around this issue has changed from rent certainty to rent predictability but what we must be talking about is rent affordability."

"It is one thing being able to predict rent rises but it’s entirely different to be able to afford or sustain those raises. 4% per annum represents nearly 4 times the average salary increase," she said. 

The Social Democrats co-leader Roisin Shortall said the measures are a "Fine Gael-led response to a housing emergency that priorities landlords over tenants."

Minster Coveney is hoping the new strategy can be in place before the government breaks for the holidays - however he will need the support of Fianna Fáil to get the legislation through the House.