Monday 21 October 2019

Editorial: 'Housing crisis overshadows economic feelgood factors'

Average rents have risen 8.3pc over the past year. Stock photo: Getty Images
Average rents have risen 8.3pc over the past year. Stock photo: Getty Images


There was good and bad news for the Government yesterday. So far it has collected €26.7bn in taxes, up more than €1.7bn on the same period last year.

Meanwhile, the Central Statistics Office reported that there are 30,500 fewer people out of work than at the same time last year.

But another arm of the State, the Residential Tenancies Board, showed a more worrying side of the booming economy with average rents rising 8.3pc over the same period.

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This is more than twice as fast as the modest pay hikes of around 3pc "enjoyed" by workers. Rising rents will add to the pressure on all employers - public and private - to increase pay levels even more.

Already the Public Services Committee of the Irish Congress of Trade Unions is gearing up to lodge big pay demands.

The Government's response to rising rents would have been unthinkable a few years back when the free marketeers in Fine Gael believed the market would solve all our housing problems.

It didn't and now the Government has extended rent controls to 19 new areas. These Rent Pressure Zones (RPZ) were first introduced two years ago.

The Government had little option but to extend them.

Otherwise it would be left with no choice but to allow local authorities increase the Housing Assistance Payment and the cycle of HAP payments regularly rising to catch up with big rent hikes would continue.

Once an area becomes an RPZ, rents cannot be increased by more than 4pc a year.

This applies to new and existing tenancies, unless an exemption is granted.

Under the Residential Tenancies Act 2019 it will now be a criminal offence for landlords to increase rents that contravene the law.

Berlin recently announced a rent freeze to combat spiralling rents there but Housing Minister Eoghan Murphy has ruled it out here.

It would, he said, also freeze the supply which is not helpful in terms of people who are looking for somewhere new to rent. He clearly does not want to drive more landlords out of the market or prevent others coming in.

Mr Murphy also announced that people renting out properties other than their principal private residences for short-term periods will have to get planning permission from their local authority.

The reasoning may be clear as increasing numbers of property owners in the cities are using agencies such as Airbnb or Home Away.

But now even people who are renting out holiday homes in rural areas will have to get planning permission.

The Government knows the housing crisis and rent hikes will feature large in the minds of the electorate in the next election, along with health issues and capital project overruns.

It will hope that voters instead look at the good news including the record numbers at work.

Irish Independent

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