Taoiseach Enda Kenny has strongly defended the Government’s proposed 4 per cent rent cap. He told the Dáil there were strong reasons why the Government had fixed it at that figure. “Obviously, those reasons stand up,” he added.
He said the 4 per cent was chosen for a number of specific reasons. There was a need to ensure there was a reasonable rate of return on investment so there was no spike effect at the end of the period of the designation where a lower limit would lead to a sudden upward correction for tenants after three years.
He said the Government had previously endorsed 4 per cent on a rolling five-year basis and the level chosen was 20 per cent lower than the long-run over seven decades of annual rental increase. Mr Kenny said the maximum allowed inflation in rental pressure zones would be less than half the current rate of annual rent inflation nationally. There was a great deal of discussions going on with the Fianna Fáil spokesman Barry Cowen, he added.
Mr Kenny said rent control would be assessed on the basis of a local electoral area by the Residential Tenancies Board. “The Minister is confident it can be extended,” he added. The plan was targeted, focused and had particular aims.
The Taoiseach was replying to Fianna Fáil leader Micheál Martin and Sinn Féin leader Gerry Adams. Mr Martin said the 4 per cent was excessive, adding the announcements made by Mr Coveney were too limited in scope and scale. The "geography issue" was far too restrictive and limited and, in many ways, the proposals seemed "too little too late". He said places like Galway, Limerick, Waterford, Meath, Kildare, Wicklow and the major urban areas should also be included.
Mr Martin said the annual rate of inflation was 11.7 per cent last year, the highest recorded since 2002. Up to 2013-14, Dublin was the major driver of national rental inflation, but other areas had caught up dramatically since.
Mr Adams said there was an absence of rent certainty and a failure to deal with the difficulties faced by families in rented accommodation outside Dublin and Cork cities. The housing problem was due to the Government's failure to invest public money in it. "Instead, it put taxpayers' money into the pockets of the big bankers and their cronies."
Mr Adams said four families were become homeless daily. “What about the people outside Dublin city and Cork city?” he asked. “They are doomed to expect even higher increases in rents, which is what this plan envisages.”
Mr Kenny said the housing allocation would increase from €800 million to €1.2 billion next year, which was a substantial increase. “The Government has intervened and intends to intervene in the market,” he added. “It intends to intervene for the very specific reason that the rental structure is not working and people are being forced by huge increases in rent in some areas to vacate their homes.”
