A small step in the right direction - Rent controls

HOUSING Minister Simon Coveney’s plan to limit rent increases was bound to be an imperfect solution to a seemingly intractable problem. It has, predictably, attracted the wrath of Sinn Féin, who say it will put on a statutory footing the right of landlords to increase rents by 4% a year, operating as a target rather than a limit.

Yet, considering that rents have been rising in Dublin and Cork by up to 20% over the past 12 months, something had to be done and, at least, Mr Coveney’s plan is a start.

If Sinn Féin’s response was predictable, so was Fianna Fáil’s. According to Mr Coveney, Micheál Martin and his party have behaved in a very cynical manner by first indicating to him that they would not object to his plan and then, in the Dáil, getting all hot and bothered about it, demanding last-minute changes and a reduction in the cap from 4% to 2%.

Fine Gael has played into their hands, with both Taoiseach Enda Kenny and Simon Coveney insisting on sticking to the 4% level and on using the parliamentary guillotine to rush the measure through. That sets the Government on a collision course with the only opposition party that really matters in the motley make-up of the current Dáil.

Simon Coveney’s measure is not the solution to the rent crisis, let alone the shortage of housing, but it goes some way to addressing the needs of both tenants and landlords. The former cannot afford soaring rents, while among the latter, there are ‘accidental’ landlords who bought a family home during the boom, now find themselves in negative equity and are forced to rent it out in order to pay their mortgage.

We are not alone in facing a rent crisis. While western governments are instinctively reluctant to interfere with market forces, there are numerous examples of administrations that have brought in rent caps as a matter of social policy.

Last year, in an attempt to put the brakes on some of the fastest rising residential rents in Europe, Berlin became the first city in Germany to introduce rent controls for new contracts, prohibiting landlords from charging new tenants more than 10% above the local average. New York has a system of rent stabilisation. These are not caps on monthly rent but restrictions on rent increases and other lease conditions, such as the length of a tenancy.

Rent controls are not just about money or affordability. They can have an important social function, as well. Cities with inadequate or no rent controls risk civil unrest similar to that experienced in the ghettos of Paris, a city that the French government feared could soon become inhabited by the very rich and the very poor, with a dwindling middle-class who could no longer afford sky-high rents for tiny apartments. A little more than a year after rent controls were introduced in Paris and some other cities, 30% of residential leases have come down in price.

If Mr Coveney’s measure can achieve anything like that, it will be a very worthwhile exercise. It will not be the end of the housing crisis, but will mark a considered response to it and indicate his determination to tackle it once and for all.