The minister who went to war on ‘rent certainty’ had his doubts about regulating the rental sector at least 12 months before attempting to drive his own plans through Cabinet for the budget.
Environment Minister Alan Kelly instead admitted to Finance Minister Michael Noonan by letter that more tax reliefs for landlords would help stabilise the private rental sector.
Documents obtained by the Irish Examiner reveal the internal warnings that went on for months between officials at the Department of the Environment and Mr Kelly’s own advisers over rent regulation.
Mr Kelly wrote to Mr Noonan on September 30, 2014, prior to that year’s budget, saying he was not convinced rent control was “warranted or desirable”.
He said he had read the DKM Consultants report on the rental sector and taxation measures.
“Having considered the report, I am not convinced that a system of rent control is warranted or even desirable in view of the fragility and immaturity of the private rented sector,” said Mr Kelly.
“I believe that it would run the risk of encouraging a large number of so-called accidental landlords to leave the sector, thus exacerbating the supply problem and leading to yet higher rent levels.”
Mr Kelly advised that a series of tax reliefs should help landlords, including changes to interest relief on borrowings and capital gains tax relief, as well as rent relief for tenants.
Mr Noonan shot down the relief measures in a written reply.
Despite the hesitations, Mr Kelly and his officials persisted with plans for rent certainty — to tie increases to the price of inflation — in the run-up to this year’s budget.
Environment department officials warned Mr Kelly’s own advisers about the risks of “hard” rent regulation.
Department housing regulation principle officer Damian Allen told special adviser Liam Cahill in a February 17 email that the section had agreed with the DKM report that, while rent regulation is not necessarily a bad thing, the market is “volatile and immature” and “we need to be mindful of the adverse impacts that introducing rent regulation could have on supply”.
Foreign investment could be adversely hit, he said.
Rent regulation would also “hurt” thousands of buy-to-let landlords with outstanding mortgages and see an “exodus” of them from the sector, Mr Allen later told Mr Cahill.
Despite the warnings, Mr Kelly and his officials persisted in trying to get rent certainty approved by Cabinet in time for this year’s budget.
At one stage, a separate adviser to Mr Kelly even said rent certainty needed to be approved days before the budget in anticipation of landlords increasing rents or evicting tenants ahead of changes, the documents, released under the Freedom of Information Act, reveal.
Ultimately, rent certainty was dropped in favour of measures to freeze rents for two years.
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