Approval of rental strategy hangs in balance, says Micheál Martin

Fianna Fáil TDs have been told there is a 50:50 chance the dispute over the new rental strategy unveiled by Minister for Housing Simon Coveney earlier this week will be resolved.

Party leader Micheál Martin informed his colleagues of the situation at a meeting of his parliamentary party on Wednesday night.

The party has strongly opposed the plans by Mr Coveney to introduce rent caps in Dublin and Cork.

Fianna Fáil believes the proposed 4 per cent cap would see rents automatically increase and should be extended beyond the two cities.

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Senior figures in the party insist they are willing to vote against Mr Coveney’s measures, insisting it is not contained in the confidence and supply arrangement between the two parties which sees Fianna Fáil support the minority Government.

“We agreed to facilitate this government on the basis of a number of key objectives. There are good things in this plan but there are also a number of things that may have unintended consequences,” one senior party source said.

“We never said we would support them without question. It took Coveney three weeks to get this over the line and we are being asked to make a decision on this in one day,” the source added.

The proposed rental strategy will be discussed in the Dáil today and will have to pass by close of business.

A scheduled sitting of the Dáil on Friday was cancelled by the business committee at a meeting on Wednesday.

Bill amendment

The rent strategy is an amendment to the Residential and Tenancies Bill which has been going through the Dáil. Votes will take place throughout the day in the Dáil on Thursday on the Bill despite no agreement having been reached by the two main parties on the rent strategy element of the Bill.

Fine Gael TDs have insisted there can be no compromise on the 4 per cent figure, claiming landlords will withdraw from the market if it is reduced.

Minister for Finance Michael Noonan, Minister for Social Protection Leo Varadkar and Minister for Public Expenditure and Reform Paschal Donohoe have expressed reservations about the strategy.

Mr Noonan and Mr Donohoe are concerned about interference in the market, while Mr Varadkar is said to be frustrated his department was not consulted as part of the measures announced on Tuesday.

At Fianna Fáil's parliamentary party meeting, Mr Martin insisted there had been no deal between the two parties. Mr Martin is said to be frustrated by the lack of consultation between the two parties before the strategy was agreed.

Fianna Fáil's housing spokesman Barry Cowen is insisting the 4 per cent rent cap must be reduced to 2 per cent and that Galway, Waterford and Limerick are included in the plans.

Careful research

Mr Cowen submitted a series of amendments to the rental aspect of the legislation, which has to pass through the Dáil if it is to be implemented at all.

However Mr Coveney has insisted there will be no changes, stressing the 4 per cent cap was chosen on the basis of careful research and it would be wrong to change it.

In a letter to Mr Cowen, on Wednesday, he also dismissed a suggestion that rent increases should be linked to the Consumer Price Index, claiming this could have “severe negative consequences for the entire [rental] sector.

“It might well control prices for some households in the short term, but the great risk is that it would trigger a withdrawal of existing supply now and would serve as a significant disincentive for people to provide additional accommodation into the sector,” he wrote.

“We need to achieve a balance – ultimately a secure investment environment is in the interests of all participants in the market.

“If we take away people’s ability to realise a moderate return on their investment, we would be killing the sector, rather than trying to ensure its sustainable future as a tenure choice.”

Fianna Fáil has also said the strategy should offer some sort of incentive for landlords so as to stimulate housing supply.

However, Mr Coveney insisted the package cannot be changed because it addresses the need to encourage supply as well as the need to build new accommodation. “If we don’t do that then we are making the supply/demand imbalance even worse and we will simply drive prices up further.”

The Seanad is due to consider the legislation on Tuesday to allow the policy to pass through the Oireachtas and take effect in the new year.