FF to try block Rent Pressure Zones being limited to Dublin and Cork
Fianna Fáil will try to block the introduction of ‘Rent Pressure Zones’ in just Dublin and Cork.
The key element of the Government’s plan for the rental sector announced today it is to restrict rent increases in the two cities to 4pc per annum for the next three years.
However, sources said that a meeting of the Fianna Fáil frontbench tonight heard concerns that this may cause unreasonable price hikes in commuter belt towns.
Fianna Fáil’s housing spokesman Barry Cowen is to contest the 4pc figure, arguing that this is too high.
The Government will not be able to pass the necessarily legislation to introduce the changes before Christmas without Fianna Fáil’s acceptance.
Cowen said the party's had "intensive discussions" on the matter.
"We are pleased that Fine Gael have abandoned their long held view that there should be no interference in the rental sector and that the market alone should decide on rental levels," he said.
He said he also wanted "to acknowledge" that Fine Gael have included recommendations made by Fianna Fáil in its recent submission on rent reviews.
"However, we have genuine concerns with elements of the current model as outlined and with its limited geographical scope," he said.
"We are anxious that other cities be added immediately and will be asking that Galway, Limerick, Waterford and large population centres surrounding Dublin and Cork city are included from day one."
Mr Cowen added: "We are not satisfied that the proposed 4pc increase is appropriate and we also believe that tax incentives for landlords should be part of the package.
"I am open to further discussions with Minister Coveney to address these outstanding issues," he said.
The development will cause a major headache for Housing Minister Simon Coveney who has already said he would not be prepared to make “fundamental” changes to his proposals.
Speaking at the launch of the plan Mr Coveney said he would not be open to making significant changes as this would require to get Cabinet approval.
Mr Coveney has prosed that Dublin and Cork be designated ‘Rent Pressure Zones’ and thereby restrict annual rent increases to 4pc for the next three years.
Senior Fianna Fáil sources told Independent that they have “concerns” which need to be “thrashed out”, adding that they expect to find a resolution.
The party must facilitate the passing of legislation through the Dáil this week if the new measures are to be introduced before the Christmas break.
A source say they are “by and large support of the plan” announced today but “it’s clear that the 4pc isn’t going to fly”.
“When you accept these are pressure zones then you shouldn’t be saying it’s ok to have 4pc increases.”
The party are likely to demand that Mr Coveney revise the figure downward to 2pc, although they may settle on 3pc.
A second source said: “We can’t have a situation where the current prices are seen as the base level and we have upward only reviews.
“Fianna Fáil want to know what to do to resolve the price inflation in the long-term.”
The party’s frontbench are set to meet to discuss the issue further tonight before they decide a formal position.
Earlier Labour leader Brendan Howlin told the Dáil that the new proposals to control the rents spiral will not work.
Mr Howlin asked Taoiseach Enda Kenny if he accepted that key housing campaign groups - Threshold, Focus Ireland, the Simon Community, the Peter McVerry Trust and the NEC – did not believe in the Government proposals.
“Are they all wrong and only yourself and Fianna Fail are right on this issue ?’’ the Labour leader asked.
Mr Howlin said the Government was allowing rent increases which were “a multiple of any other index, eight times the consumer price index.’’ He said the Government thought the only pressure zones were Dublin and Cork.
“You know these rental pressures exist in Louth and Meath, Kildare, Wicklow, Wexford and probably Mayo,’’ he added.
Mr Kenny said if Mr Howlin had taken time to study the Government plans he would see that the Housing Agency, in consultation with local council, would designate an area for rent increases.
“It is a focused, targeted strategy to deal with the question of predictability and certainty for tenancies,’’ he added.
Sinn Fein leader Gerry Adams said statistics showed average rents were now averaging €1,000 per month around the country, and over €1,500 per month in Dublin and he said the Government plans lacked ambition.
All your questions on the new 'Rent Pressure Zones' answered
The standout measure is the establishment of ‘Rent Pressure Zones’ in Dublin and Cork which will restrict rent hikes to 4pc per annum. Here are the key questions on the plan:
What is a Rent Pressure Zone?
These are areas where rents are high and rising quickly which will now be subject to price caps. Legislation is passing through the Dáil and Seanad that will designate Dublin and Cork city as RPZs before Christmas. As a result annual rent increases in these cities will be restricted to 4pc per annum for the next three years.
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 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. These include:
- 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.