Rent plan has elements to allow both sides claim victory

Peace has broken out in the Coalition housing row, an ideological spat garnished with the extra spice of personality clashes and entrenched positions.

The compromise package agreed between Minister for the Environment Alan Kelly and Minister for Finance Michael Noonan offers something for both sides to claim a partial victory.

Kelly will hold up the new two-year period for rent reviews - which falls short of his initial plan of linking rent increases to the rate of inflation - as a significant measure to provide certainty and prevent homelessness.

Sources close to Kelly are claiming the outcome is better than the initial Consumer Price Index idea but Fine Gael, as well as some in Labour, will see the shelving of that proposal as a success in itself.

Given the strength of opposition within government to the CPI link proposal, it is surprising Kelly stuck to it as long as he did, causing frustration among his colleagues in the process.

Many feel he had to be given the time and space to realise he was fighting a losing battle, and chart an alternative way out for himself.

The two-year rent review proposal will help him do that but is also a more substantive measure than he looked like achieving even a week ago.

“His sheer brazenness has paid off,” said one Labour figure.

Securing Kelly’s commitment to issue planning guidelines to support new apartment development will be chalked up as another win by the senior Coalition party, with sources in Fine Gael saying the overall package will be more likely to stimulate market activity than the initial plans.

“It’s more a ‘rent stability’ package than ‘rent certainty’,” said one.

While both sides wanted measures to increase housing supply, changes to planning guidelines were promoted by Fine Gael to make it viable for private developers to start building Dublin apartments again.

The belief, shared in the Department of Finance, is that apartment building is simply not profitable at present and the new measures are estimated to reduce the construction cost per unit by around €20,000.

The abolition of development levies for starter homes in Dublin and Cork priced at €300,000 and below is also a key element of the plan to making house-building more profitable.

Despite the agreement, expected to be ratified by the Cabinet at its meeting this week, there are mutterings across government that the row should not have played out as long as it has or in the manner it did, with vicious briefings by both sides.

Housing measures were to be included in the budget but the failure to agree a package in time cast a small shadow on an otherwise successful day for Noonan.

Sources said the package in its entirety, aside from the two year rent review proposal and the commitment in planning guidelines, was offered to Kelly before the budget.

Kelly’s detractors will see the outcome as typical of his bullish and belligerent style, needlessly causing rows and escalating a disagreement into a bitter dispute at the top of Government.

The Minister for the Environment, never short of self-confidence, will see it as vindication of his hardball tactics.