Boosting supply the answer to bring down high rents, says Varadkar

Boosting supply the answer to bring down high rents, says Varadkar

Rents in the country are “very high” but rent freezes are not the answer, Leo Varadkar has said.

According to the latest quarterly Rental Report by property website Daft.ie, the average cost of renting is €1,403 per month.

This marks the lowest rate of rental inflation since the second quarter of 2013, but the average monthly rent during the third quarter of 2019 marks the 14th consecutive quarter of record rents.

Speaking during Leader’s Questions in the Dáil, the Taoiseach said rents are very high relative to people’s wages but the main solution is increasing supply of houses and not rent freezes.

Fianna Fáil leader Micheál Martin said the figures should serve as a wake-up call to the Government that their housing policies are not working.

Micheal Martin (Michelle Devane/PA)
Micheal Martin (Michelle Devane/PA)

He said: “Younger people of this country have been failed and failed very badly by current policies. A young person today is finding it is impossible to pay these rents and young couples in particular are finding it impossible to save deposits while paying exorbitant rents in tandem with credit constraints.

“Clearly the rent controls in existence are not working.

Thousands and thousands of people are trapped in this high rent and misery. Surely it is now time for the Government to consider a rent freeze given the exorbitant levels of rent that people are facing.

Mr Varadkar ruled out a rent freeze and said increasing supply and rent controls is the answer.

He said a rent freeze would be “counterproductive” and could lead to “less new supply”.

“I want to acknowledge that rents in Ireland are very high. Rents relative to incomes are very high in Ireland and that is a real problem, and they have become unaffordable for a lot of people in the country, particularly in our cities,” he said.

Leo Varadkar (Brian Lawless/PA)
Leo Varadkar (Brian Lawless/PA)

“Consideration was given to a rent freeze. Notwithstanding the constitutional issues that may make that impossible or even if it was possible.

“And there’s a real concern about the unintended consequences of a rent freeze. What we may see happening in the event of a rent freeze is that supply, ultimately, if you need to rent, you need to find somewhere to rent, and why the rent freeze might work for people who are renting already.

“Because they wouldn’t see their rent rise, it might cause less new supply.”

He said rent pressure zones introduced in December 2016 that prevent a landlord increasing rent by more than 4% per annum are working.

He said the Government is committed to building more social housing and the help-to-buy scheme is helping more young people buy homes.

He said the Daft rental report also showed rental inflation was starting to decrease in Dublin.

Mr Martin said that was “nothing to boast about” and high rents meant younger people cannot afford to save for deposits to buy a home.

You have had 14 quarters of rent increases. In 1987, a young couple would have had to pay 19% of their net annual earnings to afford a home. Go to 2014 and you’re looking at 30%.

“In terms of a deposit, a young couple back in 1987… 30% of their net annual earnings… that went to 50% by 2014.

“This is the big issue out there. Young people are very, very angry. Their parents are very, very angry.

“When we’re out knocking doors and people say to you ‘there are five to seven people in this house because our young kids can’t afford to rent’.”

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