Rent plan will be in place by end of year, Noonan claims

A package of measures to address the issue of rent increases and a shortage of building in the property sector will be in place before the end of the year, Minister for Finance Michael Noonan said on Friday.

Mr Noonan said the details of the proposals would be announced on Tuesday after being discussed at Cabinet.

Among the key proposals is that rent reviews only take place every two years and that rent increases be at the market level, as well as changes to planning standards that would reduce the construction cost by €20,000 per unit.

The plan emerged on Thursday night after weeks of difficult negotiations that caused tension between Fine Gael and Labour Ministers.

Mr Noonan dismissed concerns raised by housing agencies on Friday that landlords would respond to the proposals by allowing current leases to expire before increasing rents.

He said the measures would “kick-in immediately” as a “November initiative” and would not be put on the long finger.

The Minister said he did not believe the measures would force some landlords to exit the sector.

Mr Noonan also highlighted the four-year “sunset clause”, which will see rent reviews return to the current 12-month norm by November 2019

He said the country needed a properly functioning rental market, particularly in the cities.

Speaking on the RTÉ News at One, Mr Noonan cautioned that the proposals were not a panacea for the problems in the housing market and that other measures would be required for the medium and longer term.

Mr Noonan also denied the issue had led to bitterness between his department and the Department of the Environment.

Minister for the Environment Alan Kelly on Friday expressed confidence that the proposals would deal with the difficulties people were experiencing in the housing market.

He said they were designed to help vulnerable families deal with the problem of escalating rents.

Plan welcomed

Those working with tenants and the homeless have broadly welcomed the plan, with the Peter McVerry Trust describing it as good news for tenants, saying that it would help rein in rent increases.

However, auctioneer Savills said that some tenants will lose out “because landlords will simply frontload rents on day one to compensate for the fact that they won’t have any increases for another 24 months”.

Savills said that, from a landlords’ perspective, a “major concern” has always been that if rent certainty was done badly it could “stifle investment and drive up rents by choking-off supply.

”Thankfully, the reported measures would be unlikely to put off new investment.”

A spokesperson for the Private Residential Tenancies Board (PRTB) said that it had received a number of enquiries from tenants about possible rent increases following the announcement of the plan.

The spokesman said that the current law in this area was that “a landlord (or receiver) can only increase the rent once in any 12-month period, and cannot increase within 12 months of the commencement of the tenancy.

“If a landlord intends increasing the rent, they must inform the tenant, in writing, of any increase in rent, 28 days before the increase is due to take effect.”

Minister for Transport Paschal Donohoe welcomed the measures and said that additional steps would be required to deal with the issues in the housing market.

Mr Donohoe also said the plan to limit rent reviews to two years, rather than trying to cap rents, was the correct approach.

“If there was a potential for any kind of cap to come in at some point in the future, it could lead to massive increases in rent levels in the period leading up to that rent, thereby making the situation even worse.”