Government proposals to curb spiralling rents in Cork and Dublin have been left in doubt after Fianna Fáil warned that the new limits did not go far enough.
Under the plans, rent rises would be limited to 4% a year until 2019 in areas designated as ‘rent pressure zones’. Rents were “out of control”, said housing minister Simon Coveney.
However, Fianna Fáil, whose support the Government relies on to stay in power, said the proposed rent rises were in fact too high and that the rent curbs should be rolled out in other counties and areas.
At a meeting of the Fianna Fáil front bench last night, TDs agreed amendments were needed for the new rent legislation.
Mr Coveney warned earlier in the day that there could be no delay in the new rent restrictions as the rental market could react.
“We’re not going to be able to be flexible,” he said.
The plans will see rent rises limited to 4% per year over three years, but only initially in Dublin City and county and Cork City. Other local authorities will be eligible for ‘rent pressure zones’ next March.
In areas (Rent Pressure Zones) where rent is already high or rising fast, rent increases will be capped at 4% per year for the next 3 years. pic.twitter.com/oeoyq64L0a— Fine Gael (@FineGael) December 13, 2016
The restrictions will come into effect once tenants have their leases reviewed or when new agreements are made. The restrictions will also still apply up until 2019, after a current two-year freeze on rents, agreed by the last government, finishes.
New properties, vacant ones done up to rent or newer properties let out will be exempt from the new restrictions.
The residential tenancies board will monitor the new measures. Any rent rises applied above the new limits could be reported to the board, officials said. Rent hikes would also still have to be justified by landlords under existing rules.
The Government wants rent pressure zones in the four Dublin local authority areas and Cork City to come into effect immediately.
Despite criticism yesterday that rent rises should instead be tied to inflation or the consumer price index, Mr Coveney said such a move would “shut down supply overnight”.
The measures would help tenants but still keep landlords in the sector, he said.
“Really, we’re kind of putting a bridle on the horse that has been almost out of control for the last two years,” said Mr Coveney.
Some 12,000 landlords have joined the sector over the last 14 months, he said. This is out of an estimated 175,000 in the whole rental sector.
However, a Fianna Fáil meeting last night has now put the plan in doubt. The support of Micheál Martin’s party will be needed to pass the measures in the Dáil.
A statement from housing spokesman Barry Cowen said there were “genuine concerns” about the proposals with its “limited geographical scope”.
“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,” said Mr Cowen.
Fianna Fáil also said the proposed 4% rent rise limit was not appropriate and tax incentives for landlords should be part of the package.
Fine Gael sources said there may be some movement on the geographical concerns but not with the 4% rent limit.
Sinn Féin’s Eoin Ó Broin said the plan would let landlords slap a €4,500 increase on Dublin tenants over three years and a rise of €3,200 on Cork city residents.
Labour’s Alan Kelly said the plans was a “bureaucratic nightmare” and asked why Dublin and Cork were the only cities included.
Threshold’s Aideen Hayden welcomed the limits but warned that “skyrocketing rents” in Dublin had already worsened the homelessness crisis. The Simon Communities said other parts of the country should also be covered by the rent pressure zone mechanism.
The Irish Property Owners Association called the measures the “death knell of the rental sector.”
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