Friday 9 December 2016

Kelly under fire as 'rent uncertainty' pushes up prices

Fionnán Sheahan, Daniel McConnell and Kevin Doyle

Published 26/10/2015 | 02:30

Abrasive style: Minister for Environment Alan Kelly
Abrasive style: Minister for Environment Alan Kelly

The rise in rents and growing accommodation crisis is now being linked directly by ministers to the botched attempts to bring in rent controls, which is dividing the Coalition.

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The rift is a symptom of Environment Minister Alan Kelly's abrasive style and is causing mounting tensions within the Government, including on the Labour Party side.

Experts believe landlords are seizing on the confusion to hike rents while at the same time investors are staying out of the market - a view supported by senior members of Government.

"The single biggest cause of rent hikes in the past six months is Alan Kelly. His half-arsed approach to so-called rent certainty has done nothing other than encourage landlords to increase rents in the meantime," a senior Government source said.

The Labour Party deputy leader's 'style' is causing increasing difficulties within Government.

Speaking to the Irish Independent, Mr Kelly indicated for the first time that he is now willing to settle for a short-term rent certainty scheme in an effort to reach a deal with the Department of Finance who oppose controls on the market.

"I don't believe in controlling rents but what I do believe in is that we have a huge problem and if we don't do something in the rental market soon that problem is going to escalate into a crisis that hasn't been seen before and dealing with rent is the only way short-term," Mr Kelly said.

"Now I put forward my idea, I'm open to other ideas, ultimately the scale and escalation of rents in the way in which certain landlords (not all, by the way, because there are some very good landlords) are behaving needs to be dealt with because you are now having a situation which hasn't been seen before, which is people are working and being turfed out of their homes."

The Tipperary TD is feeling the heat from within Cabinet, with colleagues criticising what they see as a flurry of botched projects. He is viewed as "over- promising to backbenchers on stopping wind farms", but this would mean breaking the country's climate change obligations and costing the State billions.

His stance on merging the Cork city and county councils is regarded as a "solo run that alienated everyone and he has now backed down on".

"The familiar routine now is to make a big song and dance about something, march up to the top of the hill and then once it has dawned on him that you need to work with people in Government and he has no support, to march all the way back down again," said a senior Government figure.

The rent control rules were supposed to be included in the Budget, but were dropped following a clash between Finance Minister Michael Noonan and Mr Kelly. Finance officials are loathe to introduce any measure that in their view would distort the market, but Mr Kelly insisted the issue would be resolved by Christmas.

"I've got so many other irons in the fire but it obviously has to be sorted for Christmas and we've other issues in relation to homelessness and they'll all have to be solved by Christmas too," he said.

Goodbody chief economist Dermot O'Leary last week said investors were avoiding putting money into new homes until the issue was resolved either way.

In a note to clients, Mr O'Leary warned that "confusion over rent certainty is already acting as a deterrent to new entrants in the market".

And Property Industry Ireland director Peter Stafford said: "The way in which this proposal has slowly emerged through the media has had the effect of encouraging many landlords to increase the rent to market rates ahead of the introduction of any controls.

"It is likely that there are fewer tenants paying below market rent in October 2015 than there were in January. In the meantime, and in the absence of any policy to promote new investment to take the place of lost housing, tenants should expect availability of housing to fall and rents to rise."

In an interview in yesterday's 'Sunday Independent', Mr Kelly spread the blame far and wide for the problems he is now facing. "It's everyone else's fault: senior civil servants, developers, the banks - even that hoary old canard of blaming Big Phil is thrown into the mix," a Government source said.

Irish Independent

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