How Simon Coveney sold rent controls to the Cabinet

Acceptance but little enthusiasm in Fine Gael for Minister’s intervention plan

There was a sense of weariness in the room, according to those present, as Minister for Housing Simon Coveney outlined his plan to intervene in the rental sector. What he was proposing would usually stick in the craw of your normal, upstanding Fine Gaeler, but there was an acceptance at the Cabinet sub-committee on housing on Monday evening that something had to be done.

“Nobody was very enthusiastic,” said one source. “Nobody was dancing about it.”

It was just over a year ago, after all, that Fine Gael objected to moves by the then Labour minister Alan Kelly to link rent increases to the level of inflation.

What Coveney was proposing was similar in principal, if not in execution, but he went about his work in a much different fashion. While Kelly fought his battles in public, Coveney worked in private.

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The Cabinet sub-committee, where policies are usually thrashed out, was kept in the dark. His plan on the rental strategy was largely negotiated with the Department of Finance.

As late as last week, sources said the debate was over whether there should be interventions in the market at all, and not what shape those interventions should take.

Some suggested that Minister for Finance Michael Noonan eventually came around to the idea that, unless the Government did something on rent, the Dáil would foist an even worse plan upon the minority Coalition.

Reservations

Paschal Donohoe, the Minister for Public Expenditure, also had reservations, but his battle was largely won when the idea of rent subsidies for middle-income families was dropped earlier in negotiations.

His officials, as well as staff from the Department of the Taoiseach, were involved in drafting the scheme, but it was not until Monday that Coveney briefed the Cabinet sub-committee in detail, such was the fear of leaks.

At one stage, it was suggested that if any aspects of the plan were leaked, its release would be brought forward to prevent any pre-emptive market moves.

Noonan took the opportunity on Monday to outline his concerns again, but said he recognised why Coveney had to act.

“Finance was particularly concerned,” said one source. “They just felt rent controls send a bad signal out to there to the market.”

Taoiseach Enda Kenny asked how the proposal to limit the scheme initially to Dublin and Cork would affect the commuter counties, how it would impact on investors coming into the Irish rental market, and whether there would be a sharp effect on rents at the end of the three-year rent restriction process.

There was a shared concern that rent controls would be very hard to phase out once introduced. The proposed cap of 4 per cent increases each year, designed to keep ahead of inflation to assuage investors, was not a problem; the problem was the principle of caps themselves.

Temporary measure

Coveney argued that the three-year window for what he is calling “rent predictability” would allow housing supply to catch up with demand. It was to be a temporary measure only.

Sources said it had clearly already been the subject of long conversations, and the experience of battling with Kelly last year was still in the minds of some of those present.

The mood was one of acceptance rather than enthusiasm, although more concerns would follow.

Leo Varadkar, Coveney's rival to replace Kenny as Fine Gael leader, was also at Monday's sub-committee and raised his own objections at the full Cabinet meeting on Tuesday morning.

He too, had concerns about the effect of controls on commuter counties and about how builders and investors might react. He also objected, as Minister for Social Protection overseeing a department that pays €480 million in rent, that he was not consulted.

Coveney responded that a need to maintain secrecy meant the plan was largely kept within a tight circle.

As the exchange hung in the air for a second or two, some other Ministers caught each others’ eyes.

“It was brilliant,” said one. “The two leaders at each other.”