Ministers link housing crisis to growth rates

Michael Noonan and Alan Kelly haveclaimed Ireland’s housing crisis shows the nation is a victim of its own success.

They say people are only struggling to find homes and are potentially facing homelessness because the economy is improving.

The finance and environment ministers made the claim yesterday as they confirmed plans to tackle the rental bubble that is causing havoc for families — causing a furious reaction from the opposition and homelessness charities.

Under the plans, which will go before cabinet next Tuesday and be introduced by the end of the month after almost a year of debate within Government, landlords will only be able to increase rents once every two years and will be blocked from rises above the market rate.

The policy, to exist until November 2019, is part of a bid to give the Coalition breathing space as it attempts to address Ireland’s housing supply crisis.

However, speaking on RTÉ Radio’s News at One, Mr Noonan said that the Government — and in particular his and Mr Kelly’s departments — are only facing the problem in the first place because of the economic recovery.

“The people in [the departments of] environment and finance are victims of their own success,” Mr Noonan said. There are a lot of younger people moving into bigger cities to take advantage of all the jobs now.”

Asked about the comments yesterday, a spokesperson for Mr Kelly said he “largely” agreed with the claim because the economy and not “housing was the biggest problem when we entered government”.

He said the “growth of the economy” has been a key factor in more people coming to larger cities such as Dublin, Cork, and Galway seeking work, thereby contributing to the housing supply crisis linked to the rental bubble, and said: “It’s much easier to be the housing minister in a recession than a recovery.”

Focus Ireland spokesman Roughan MacNamara last night said that “to try and paint it [the housing crisis] as some form of unwanted aftershock of rising employment is simply false”.

“Rent supplement has not been raised in three years, rents have risen by 30 to 40%, and there has been a lack of Government action,” said Mr McNamara.

“Focus Ireland’s pre-budget in 2012, when eight families were becoming homeless a month not 70 to 80 [families] now, warned hundreds if not thousands of families would be at a tipping point because of rising rents.

“This smacks of a deal to keep Fine Gael happy. When rent rises are linked to inflation [a plan now ruled out] tenants have a certainty that it’s a maximum of an X% rise, not a ‘market rate’ rise of 10 to 11% that is enough to force someone on the breadline out of their home.

“Government failed to grasp simple economics — you struggle, then go under.”

Fianna Fáil environment spokesman Barry Cowen was similarly critical, saying the Coalition ministers have been “a victim of their own failures”.