Minister for Finance Paschal Donohoe has accused Sinn Féin of “demonising” landlords while suggesting the party’s call for a rent freeze would backfire and result in less homes being available to rent.
“On one hand you say you want more rental accommodation, on the other hand you don’t have a good word to say about anybody who is providing it,” he said in a debate with Sinn Féin finance spokesman Pearse Doherty during a committee stage hearing of the Finance Bill.
Mr Donohoe claimed Sinn Féin’s proposals for dealing with the current rent crisis would lead to less rental accommodation and rents going up.
With a shortage of homes pushing up rents, Sinn Féin has called for the introduction of a three-year rent freeze. However, Mr Donohoe claimed the number of classified ads for rentals in Berlin fell by more than half during the operation of that city’s rent cap “and according to analyses carried out by German economists, the number of rent-controlled units available for new tenants dropped sharply”, he said.
Defending the Government’s new tax credit for people who are renting, Mr Donohoe said the rental situation in Ireland had got worse because of the exodus of smaller landlords from the market and also “because of the general rise in inflation that has made things worse for everybody, particularly tenants”.
As part of Budget 2023, the Government announced a new tax credit for renters which will give people currently letting and not in receipt of state subsidies up to €500 a year.
Mr Doherty claimed the number of available rental properties was dropping every year while prices were “going through the roof”. He described the Government’s measure was half-cocked, claiming that only a complete ban on rent increases would address the affordability issues.
He also claimed that the rational response of landlords to the credit would be to raise rents. “It will worsen the official rate of rent inflation, it will reinforce the winners-and-losers phenomenon,” Mr Doherty said.
Mr Doherty also claimed the Government did not have a grasp on the number of likely beneficiaries. Mr Donohoe said that, on the basis of available data from the Residential Tenancies Board, about 380,000 people were expected to be eligible for the credit.
Separately the Minister said about 25,000 taxpayers were now availing of the bike-to-work scheme. He said the figures were an estimate by his department based on Revenue data.
The cost of the scheme in terms of tax forgone was €5.5 million, Mr Donohoe told the committee.
The scheme, introduced in 2009 to encourage more people to cycle, gives tax breaks of up to €1,250 to buy a bicycle and €1,500 for an e-bike and is administered through an employee’s workplace. It means commuters can buy a bicycle from their income before tax is deducted, an effective saving of 40 per cent for those on the higher rate of tax.
The Finance Bill extends the incentive, with a new €3,000 ceiling for cargo and e-cargo bikes, which are increasingly used by commuters as a replacement for a second car.
Mr Doherty said beneficiaries of the scheme should not lose out if they move into another form of employment. The Minister said his department was examining the possibility of the making the scheme a “portable benefit”.
