Minister calls for cap on housing rents

The price of rented accommodation should be capped in line with the cost of living as part of a system to regulate the rental market, according to Housing Minister Jan O’Sullivan.

The Labour minister said there was a need for an organised private rental sector similar to ones which operate in France, Germany and other European states.

The junior minister said there was still a problem in Ireland with the buy-to-let sector where people just bought a property and rented it out without much consideration.

In an interview with the Irish Examiner, Ms O’Sullivan said: “There is a general problem on the cost of private renting. We should look at examples in other countries where rents are related to increases in consumer price indexes, where rents can’t be increased more than the cost of living increases.

“One of the problems in Ireland is that we’ve never had an organised private rented sector. We’ve a very small one compared to countries like Germany, the Netherlands, France and Canada, where a large percentage of the population live in rented accommodation all their lives.”

Average rents jumped by 4.8% year-on-year in the third quarter of 2013, with a supply shortage expected to push prices higher, according to The average rent nationwide was €824 at the end of November.

In Dublin, rents in the third quarter of 2013 were 7.6% higher than a year previously. This is related to very tight supply, with fewer than 1,500 properties available to rent on Nov 1, compared to over 6,700 on the same date four years previously.

Rents outside Dublin are rising but less rapidly, except in Waterford City, where rents continue to fall, at a rate of 1.6% year-on-year.

Average rents in include:

- Dublin: €1,152, up 7.6%;

- Cork: €831, up 3.1%;

- Galway: €816, up 3.6%;

- Limerick: €662, up 1.8%;

- Waterford: €601, down 1.6%.

Rent control regimes exist in European countries but some have been dismantled in other economies, particularly in Asia, in recent years.

Rents linked to a Consumer Price Index (CPI) exist in the US, Italy, Netherlands, Spain and Switzerland.

In Germany, the only indicator that can be used for annual rent increases is CPI. The law there also states that the system cannot exclude CPI decreases which means that where it falls, then the rent must also fall.

Ms O’Sullivan, who as a ‘super junior’ minister also sits at Cabinet, said she was keen on seeing greater stability in the Irish private rental market.

She said for middle-income people for whom renting is the standard way of living, there needs to be checks and balances in terms of rent increases

“We also need to look at the fact that it is a business and it should be treated as a business rather than the guard bought an extra house and is now renting it out which is a model in Ireland is causing an awful lot of problems at the moment.”


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