Taoiseach Enda Kenny has strongly defended the Government’s controversial rental strategy which has been deemed “far too limited in scope and scale”.
Mr Kenny came under fire in the Dáil from both Fianna Fáil and Sinn Féin after the Government announced it would still allow landlords increase rents by 4% per year in areas where rents have been spiralling out of control.
Mr Kenny said a decision to set the cap at 4% — one of the main elements Fianna Fáil have major difficulties with — was made for a number of “specific reasons”.
The Taoiseach claimed a lower limit could have resulted in a spike in rents when the controls are lifted.
He said that landlords needed a reasonable rate of return on investment to avoid “storing up a sudden upward correction for tenants after three years”.
He pointed out that the Government had previously backed a 4% per annum cap on a rolling five-year basis.
Mr Kenny added: “The level we have chosen is 20% lower than this country’s long-run annual rent increases over seven decades.”
He added that the maximum allowed inflation in rental pressure zones will be less than half of the current rate of annual rent inflation nationally.
“It is below the allowed rental inflation in a number of other countries where rents are indexed, including Germany, where rents may be increased by a maximum of 20% over a three-year period; New York, where increases of 7.5% per annum are allowed until maximum rent is reached; Sweden, where rents can go beyond an agreed price ceiling up a maximum of 5%; and Switzerland, where rents can be increased to ensure there is a return, with nominal rates of return of approximately 6%,” Mr Kenny said.
But Fianna Fáil leader Micheál Martin said the announcements around rent are “far too limited in scope and scale”.
Mr Martin said the proposal to only impose the caps in the “rent pressure zones” of Dublin and Cork was “too restrictive and too limited”.
“The boundaries of the cities do not take account of the suburban conurbations contiguous to the cities of Cork, Dublin, Limerick and Galway.”
Mr Kenny said that an assessment would be carried out by the Residential Tenancies Board before February and he was “confident” that these areas could be extended.
But Mr Martin said his party is “not satisfied with the capacity of the Residential Tenancies Board to deal with all of this”.
He added that “the more action we take in the legislation over these two days, the better in terms of bringing certainty, clarity and timeliness to the interventions that are being proposed.”
Sinn Féin president Gerry Adams described the rental measures as “ill-thought-out”.
“I appeal to the Taoiseach to do the right thing, the proper thing: introduce rent certainty, not rent punishment, and link rent increases to the consumer price index. That is the only solution that will adequately tackle this crisis,” he said.
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