Coveney’s rental strategy faces resistance from within Fine Gael

Differing views are emerging in the Government over a planned strategy on the rental sector, with senior figures understood to be against making major interventions in the market.

The contrasting opinions come against a backdrop of data and indicators which Government figures say point to potential significant movement in the construction sector over the coming years.

This includes a higher number of planning permission applications and a higher than anticipated take-up of a Government scheme designed to fund small infrastructure projects in an effort to speed up development.

The €200 million local government infrastructure fund will be directed towards building access roads and other local infrastructure that may be lacking in certain areas, thus holding back the development of lands. It is understood that demand for the scheme is four times higher than can be accommodated.

Minster for Housing Simon Coveney is expected to launch his strategy on the rental sector within the next fortnight, possibly as early as the end of this week.

Market

It is understood, however, that senior figures within Government, including Minister for Finance Michael Noonan and Minister for Public Expenditure Paschal Donohoe, do not favour moves that will dramatically affect the rental market.

A number of Government sources said that, given the level of State interventions in the housing sector over the past two years or so, it may not be desirable to make further dramatic, market-altering moves.

It is claimed that the emerging indicators point to increased supply from 2017 and that this would help solve the housing and rental crisis.

The changes already announced to increase housing supply should be allowed do their work, some sources said.

One proposal already tabled by Mr Coveney’s department has been rejected for inclusion in the plan. As previously reported in The Irish Times, the scheme would see a payment for middle-income families to subsidise the cost of high rents.

It was proposed that payments would be aimed at households with a combined income of up to €55,000 as a temporary measure but it is understood to have met with objections from the Department of Public Expenditure and has been dropped.

Tenants’ rights

There will be proposals around strengthening the rights of tenants and landlords, and Mr Coveney has already announced that he plans to proceed with a so-called “affordable rental” model.

This would see purpose-built housing units which are typically let at 70 per cent of market rents. He also favours build-to-rent projects where long-term investors, such as pension funds, are encouraged to provide large-scale developments specifically for rental.

Another concern is that tenants who came under a previous plan whereby rents can only be increased every two years could face steep rent rises next year.

The previous scheme, announced by the Labour Party's then minister for the environment Alan Kelly, took effect from 2015 and is due to last four years. It means, however, that tenants who benefited from a rent freeze from 2015 could face steep rises next year.

Government figures are also wary that any pre-emptive flagging of the measures in Mr Coveney’s new strategy could affect the market and could tempt landowners to make changes before the policies kick in.