A new State subsidy that could see developers secure up to €144,000 in funding for each apartment they build outside the Dublin area has been described as "absolute madness" by Sinn Féin's deputy leader Pearse Doherty.
Mr Doherty said of all the “pro-developer schemes” the Government had come up with “this one takes the biscuit”.
The Donegal TD, who was speaking during Leader's Questions in the Dáil on Thursday, also pointed to the latest rental report published by Daft.ie, which shows the average asking rent is up by nearly 12 per cent across the State while 22 counties are seeing double-digit rent inflation.
Mr Doherty said the Government’s recently announced €450 million Croí Cónaithe cities fund was “a big payday for developers” with “zero, zilch, nada” for those who are desperate to purchase affordable homes.
The scheme will subvent the construction of up to 5,000 apartments in Dublin, Cork, Limerick, Galway and Waterford that have planning permission but remain unbuilt because costs outstrip market values.
To get the funding, developers must demonstrate there is a viability gap between what the apartment costs to build and the sales price they can achieve.
A national maximum of €120,000 per apartment has been set, but developers building in the regional cities will be able to argue for an increase of up to 20 per cent, bringing the State subvention to €144,000.
“What is clear in relation to this scheme is that at best, it’s going to lock in sky-high unaffordable prices and, at worst, it will drive up housing prices even further, as developers will simply price in the subsidy,” Mr Doherty added.
In response, Tánaiste Leo Varadkar said rents were "too high" in Ireland but that the Government had to be "very careful" about policy intervention in terms of housing affordability and availability.
“Sometimes when you try to improve one of those things, you can actually make the other one worse,” he said.
He said the Government had to look at ways to encourage small landlords to continue to rent out their properties.
The Fine Gael leader also said that there were "very good signs" around housing supply, with 25,000 new homes built this year.
Mr Varadkar also said the Government needed to do more to "fast-track the planning process" and reform the State's planning laws to "make sure that more developments don't end up stuck in judicial reviews".
“That’s a big problem at the moment,” he said.
The Tánaiste said 10,000 new social homes would be added to the housing stock this year and that there were two affordable housing schemes also coming in 2022.