Michael Noonan opposed rent cap plan, documents show

Proposals to cap rent increases for five years rather than the three -year period outlined in the Government's recent rental strategy were rejected by Minister for Finance Michael Noonan late last year.

Mr Noonan also questioned if Minister for Housing Simon Coveney was putting forward his so-called “rent predictability measures” because he was not confident that he could solve the housing crisis.

Documents released to The Irish Times under the Freedom of Information Act reveal the disagreements and tensions between the two Ministers.

Mr Coveney overcame significant resistance from across the Government for his proposals to cap annual rent increases at 4 per cent in so-called “rent pressure zones” for a period of three years.

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The Department of Finance was strongly opposed to the proposal, as was Mr Noonan.

In a letter to Mr Noonan on November 25th, Mr Coveney argued that while he and his department were aware that rent controls “generally do more harm than good over the short, medium and long term”, he insisted that was not what he was proposing.

He cited a Sinn Féin Dáil motion which called on the Government to link rent increases to the rate of inflation.

“We cannot credibly put forward a strategy that fails to address the rent predictability issues.”

Property tax

Mr Coveney initially wanted to annually cap rent increases at 1 or 2 per cent above the rate of inflation in certain areas for a five-year period.

The 4 per cent included in the final plan, based on figures from the Irish Strategy Investment Fund, was eventually suggested by the Department of Finance.

He also asked Mr Noonan to allow landlords to deduct their property tax against their rental income and speed up the restoration of full mortgage interest relief for landlord with properties in the new “rent pressure zones”.

In a reply on November 30th, Mr Noonan said he noted Mr Coveney’s “comments on the political context in which your proposals have been framed and the need, as you put it, to acknowledge the political reality”.

He said that while Mr Coveney’s proposals “would be politically expedient”, they would not be beneficial for more than a year.

“This is because it does not address the problem we face – a lack of supply – and will, in fact, exacerbate this problem through its negative effects on investment. Boosting the supply of housing – including of rental units – is more important than the politics of the situation.”

Shortage of accommodation

He also rejected a claim from Mr Coveney that rising rents are now the “greatest single cause of homelessness in Dublin”.

“Homelessness is explained by a shortage of accommodation and while an increase in rent might push an individual family into homelessness, the rental unit vacated will accommodate another family.”

He also said that the proposed five-year period for rent caps suggested Mr Coveney was not confident that his plans to increase the number of homes being built would be successful.

"The five year interval appears to be quite a long period and suggests a lack of confidence that the measures included in Rebuilding Ireland will be successful in addressing the housing supply problem."

In further notes provided to Mr Noonan, his officials argued that a 5 per cent annual cap would be preferable, and also suggested another alternative, the one that was included in the final plan.