Wednesday 23 August 2017

Rent plan collapses, plunging government into crisis

Simon Coveney says Fianna Fail is 'messing with lives'

Housing Minister Simon Coveney. Photo: Gareth Chaney Collins
Housing Minister Simon Coveney. Photo: Gareth Chaney Collins
Kevin Doyle

Kevin Doyle

Fianna Fáil will not back Housing Minister Simon Coveney's rental strategy, plunging the minority Government into an unprecedented crisis.

A Dáil debate on the plan has been dramatically pulled from today's agenda, with Mr Coveney accusing Fianna Fáil of "messing with people's lives".

The dispute centres around the designation of towns and cities as 'Rent Pressure Zones' (RPZs).

Mr Coveney had proposed that Dublin and Cork City would immediately become RPZs, meaning that landlords would be restricted to hiking rents by a maximum of 4pc annually for the next three years.

Speaking to the Irish Independent after the talks collapsed Mr Coveney said: "I am not going to allow them to make a farce of the legislation."

It is understood that Fianna Fáil's housing spokesman Brian Cowen demanded that the cities of Galway, Limerick and Waterford added to the list of RPZs, along with some commuter belt towns.

Fianna Fáil's Barry Cowen. Photo: Tom Burke
Fianna Fáil's Barry Cowen. Photo: Tom Burke

Initially he also wanted the 4pc rent cap halved but ultimately said his party would live with the 4pc figure if Mr Coveney moved on the list of RPZs.

However, the Housing Minister took a substantial political risk and refused to budge, meaning the talks ended in deadlock. Mr Coveney said he has the full backing of Taoiseach Enda Kenny for the move.

"I think what has happened is just extraordinary. There is a lot of politics going on. They are messing with people's lives," he said.

A senior Fianna Fáil source claimed they were "backed into a corner". "We were prepared to reluctantly move on the rate but he wouldn't give on the other areas."

Mr Coveney argued that further study by the Residential Tenancies Board would be required on the areas listed by Fianna Fáil before they could be designated as RPZs.

He offered "assurances" that this would happen as quickly as possible in the new year and that decisions on Galway and Limerick could be fast-tracked in January, followed by Waterford, Meath, Kildare, Louth and Wicklow before the end of February.

But Fianna Fáil sources said: "That's a ridiculous scenario. You might as well put a big billboard in all those towns saying 'put rents up now because controls are coming in a few months'."

The breakdown came just hours after Mr Coveney was close to being feted for his work on the rental strategy at a Fine Gael parliamentary party meeting.

The minister gave a presentation to TDs and senators in Leinster House and received "unanimous" support for his uncompromising position with Fianna Fáil.

Taoiseach Enda Kenny told a private meeting of Fine Gael TDs and senators that renters will be left in a "perilous position" unless legislation passes through the Dáil today.

Fianna Fáil were said to be annoyed by what party sources described as reports of the "pumped up" atmosphere in Fine Gael.

Mr Cowen was last night consulting with the party hierarchy about their next move, while the Housing Minister said he is available for fresh talks if Fianna Fáil are willing to work with his proposals.

"I find it very frustrating. They support the vast majority of the measures. It's just this one issue around the qualification criteria for Rent Pressure Zones," the minister said.

A third issue raised by Fianna Fáil was the potential for tax incentives for landlords to encourage supply in the market.

Housing Crisis Q&A: What is a Rent Pressure Zone?

Why just Dublin and Cork?

For an area to be designated as a RPZ the average rent registered with the Residential Tenancies Board must be above the national average and rising at a year-on-year rate of 7pc for four out of the last six months. Dublin and Cork city have been deemed as qualifying for the changes immediately but the RTB will have to study the rest of the country.

Are all rental properties in Dublin and Cork covered?

No. Properties that are new to the market (not leased at any time in the previous two years) will be exempt as will properties that have been "substantially refurbished".

What happens after three years?

A RPZ status ends automatically after three years meaning the rent review process will revert to normal.

There were calls to link rent increases to the rate of inflation. Why didn't Simon Coveney take this approach?

The minister said a "blunt rent cap" would disincentive landlords entering the market and "literally shut off supply overnight". Noting that inflation for this year is negative, Mr Coveney said: "We want landlords to make a reasonable return."

How does this affect the 'rent certainty' measures introduced last year?

The last government introduced measures that restricted rent reviews to every two years. This rule will still apply outside of RPZs. They will cease to apply in Dublin and Cork but not until rents fall due for review.

What supply measures are being proposed?

The minister has announced a series of measures aimed at kick-starting supply, including:

- Examining the tax/fiscal treatment of accommodation providers

- Using publicly owned land for development

- Promoting a build to rent model

- Supporting credit availability for bringing vacant stock into the private rental market.

- Exploring the potential to bring into use, for rental purposes, vacant properties where owners move to a nursing home under the Fair Deal scheme.

Irish Independent

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