Minister for Housing Simon Coveney will be forced to make changes to his rental strategy in order to have it passed by the Oireachtas this week.
Fianna Fáil has objected to aspects of Mr Coveney's plan, which includes rent restrictions in Dublin and Cork city and is due to come into effect in the new year.
Mr Coveney has already had to overcome worries in his own Fine Gael party about the plan, with Taoiseach Enda Kenny, Minister for Finance Michael Noonan, Minister for Public Expenditure Paschal Donohoe and Minister for Social Protection Leo Varadkar among those concerned about its potential effect on the rental market and investment in the sector.
The “rent predictability” plan sets out proposals for so-called “rent pressure zones” and imposing limitations on the level of rent increases allowable on residential properties in these zones. The designation will apply for three years and would mean landlords can only increase rents by 4 per cent a year in that period.
Under the plan, a household paying a monthly rent of €1,300 in Dublin or Cork could see it rise to some €1,470 by 2019.
Mr Coveney said he arrived at the "straightforward" 4 per cent figure following discussions with the Irish Strategic Investment Fund (ISIF). He said a lower rate would fail to stimulate housing supply.
Rent cap
Fianna Fáil has objected to the 4 per cent rent cap, saying it favours a 2 per cent threshold, but it is open to compromise on the matter.
It is also concerned that the scheme will initially be confined to just Dublin and Cork city, although Mr Coveney has said other areas may be included from next March.
Fianna Fáil’s housing spokesman, Barry Cowen, will meet his Sinn Féin counterpart, Eoin Ó Broin, to consider joint amendments to the legislation.
Mr Varadkar raised concerns at Tuesday’s Cabinet meeting over the effect the plan will have on rents in commuter counties and how it will could dissuade investors from taking an interest in the Irish rental market.
He is also understood to have objected to the fact he was not consulted on the plan, since his department pays out €480 million annually in rent. Mr Coveney replied that secrecy was warranted to ensure the plan did not leak.
Mr Noonan said at a Cabinet sub-committee meeting on Monday evening that while he had reservations about rent restrictions, he understood why Mr Coveney had to act.
