LAST UPDATE | 21 Sep 2021
TAOISEACH MICHEÁL MARTIN has defended the government’s policy of linking rent increases to inflation.
Speaking to The Journal close to the United Nations Building in New York, the Taoiseach said such a change in rental policy was a “positive move”.
In response to questions from Sinn Féin’s Eoin O’Broin TD during Leaders’ Questions about renters facing increases in their rent due to spiralling inflation, Tánáiste Leo Varadkar said there needs to be “a balance” between the regulation of property rental costs and income for landlords.
Varadkar said that he himself is not a landlord but that there are others who rely on rental incomes.
In July, Housing Minister Darragh O’Brien announced a move to tie rent increases in rent-pressure zones (RPZs) to the rate of inflation. Before this was introduced, rents in designated RPZs could only rise by a maximum of 4% per annum.
At the time, O’Brien had said inflation had averaged 0.73% over the past three years but the Irish Independent reported this morning that the new policy had “backfired” as inflation reached nearly 3% in the year up to August.
The CSO has said this is the highest level of inflation in 10 years.
Asked whether the government’s plan had backfired, the Taoiseach said:
“We need to be fair here. The linking to the rent index was a positive move in the overall context of reducing the level of increases that we had been experiencing. Now we are in the middle of an inflationary spike that has an international dimension to it, largely because of Covid-19 and the interruption of supply chains, and the increased cost of commodities across the globe.
“Now the international jury is out as to how long this will last – it is a temporary spike? And the ECB has been saying to us, at EU leadership level, that they see it as a temporary spike in prices that will reduce in the next while,” he said.
He said some economists will have differing views on that, but that has been the general view of the economic advice the government has received.
Rents
Ó Broin asked Varadkar to support a three-year ban on rent increases but the Tánaiste said the new policy was “a rent freeze in real terms” because rents can only rise in line with inflation.
He added that there are people who rely on rental income and that almost 90% of landlords have either one or two properties.
“The number of rental properties available in Ireland is falling, landlords are leaving the rental market and bear in mind that most landlords, and I’m not one of them, only own one property or two, 86% only own one property or two,” he said.
So we need to balance that too, one person’s rent is another person’s income, it might be their pension, it might be how they pay their mortgage.
He added: “In a time of rising prices and in a time of rising interest rates, and that hasn’t come yet but it will come, if you freeze rents absolutely to zero, that could mean an income cut for another person, a pension cut for another person or another person unable to pay the mortgage on that property, exactly the problem that you identified, causing more landlords to leave.”
Ó Broin criticised Varadkar and his party for not previously supporting Sinn Féin’s policy from 2015 of linking rents to inflation, saying that in 2016 rents across the state “rose by an alarming 14% and in Dublin by 15%.”
Ó Broin said that the government’s recent adoption of the policy was “too little, too late”.
“Your decision to link rents to inflation is too little, too late. We warned the Minister for Housing of this two months ago, he ignored us, inflation is up running at 3%, and economists are saying it will rise even further,” he said.
In response to Ó Broin’s claim about inflation-linked rent, Varadkar said Sinn Féin “was for it before you were against it”.
“This is the regular pattern of Sinn Féin, the truth hurts.”
Varadkar also confirmed that the government would not be opposing a Sinn Féin bill that seeks to end exemptions to Part V housing rules which require developments to have 10% affordable and 10% affordable housing.
Ó Broin said that “all private housing developments” should be subject to such requirements.
The Tánaiste said the government was not opposing the bill to allow it “go to pre-legislative scrutiny for further detailed legal and economic analysis.”
Addressing the calls for a three-year rent freeze, the Taoiseach in New York said: “We have been very strongly advised that a rent freeze for three years is unconstitutional.”
Labour bill
Following a Cabinet meeting this morning, the government has also said it would not be opposing a Labour bill due for debate tomorrow that seeks to provide greater certainty for tenants.
Among the provisions of the bill, which is being tabled by Ivana Bacik TD, it is proposed to remove the ground which allows a landlord terminate a tenancy if they intend to sell the property within three months.
The bill would also stop landlords prohibiting their tenant from hanging clothes to dry in the garden or balcony and also removes any absolute prohibition on pet ownership.
The government has said it will not oppose the bill and will “consider any positive ideas contained in the Bill” ahead of its own planned legislation for renters later this year.
- With reporting by Christina Finn in New York
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