Alan Kelly’s plan to ‘cap’ rent rises will backfire, say landlords

Environment Minister Alan Kelly’s plan to cap surging rent rises will create a “black market” economy where would-be renters will be effectively forced to make “under the counter” payments to secure homes, landlords have warned.

The Residential Landlords Association claimed the “populist” move will backfire on Government after it emerged the long-awaited policy could be signed into law as early as next month.

Under the “rent certainty” measure, which Mr Kelly has repeatedly insisted is not a potentially unconstitutional rent “cap”, landlords will be prevented from increasing the cost of their units for four years unless there are clear reasons such as improvements to the home for doing so.

The scheme will see the cost of private sector units linked to the consumer price index to prevent unfair rises amid growing concerns over the fact average rents have risen 7% nationwide in a year and between 25% and 40% since the lowest point of the crash – contributing to the escalating homelessness crisis.

While Mr Kelly has raised the matter a number of times in recent months and Fine Gael figures continue to have concerns, the plan is likely to be included in the final stage of the separate Residential Tenancies Bill 2012 in the coming weeks.

The decision will be a welcome relief to people in rental accommodation and homelessness groups which have insisted the policy is needed to tackle rising costs.

However, responding to the news last night, the Residential Landlords Association warned the Government plan will cause more problems than it solves.

The group’s director Fintan McNamara said if Mr Kelly pushes through the plan it will create a “black market” economy situation that will see some landlords insist on “under the counter” additional payments from tenants.

He said this situation will leave vulnerable people open to further exploitation from some landlords and will cause “havoc” to the market as limitations on what money can be earned from renting out homes will mean “anyone looking to do that will soon need their head examined”.

“Obviously we’re against this because it is clearly rent control. Once it is in for the first four years it will be very difficult to get rid of,” Mr McNamara said.

“A lot of landlords have already raised rents because they knew this was coming down the line, but the bigger problem here is it will cause a black market economy with under the counter payments,” he said.

“Landlords want to get out of the market now, 30% want out according to surveys, so this plan is just going to cause more shortages.”

The Residential Landlords Association has previously called for “tax incentives” to convince landlords to reduce or stabilise rents.


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