Rents may be fixed for period of three years under plans by Alan Kelly

FIACH KELLY

Political Correspondent

Tenants would have their rents fixed for three years and linked to the rate of inflation until housing supply catches up with demand under plans being drawn up by Minister for the Environment Alan Kelly.

Mr Kelly said "short, sharp action" is required in areas such as Dublin, Cork, Galway and Limerick to ensure tenants do not face steep rent increases while the construction industry gets back on its feet. However, any initiative will be implemented on a countrywide basis because difficulties would arise if certain areas are targeted, he said. The Tipperary deputy said his aim was to bring "rent certainty" until housing supply catches up with demand after a "lag period" of three years. Rents would be linked to the Consumer Price Index (CPI).

Under the plans, which Mr Kelly proposes to bring to the Cabinet soon, landlords would have to justify a rent increase by refurbishing the property – perhaps by improving insulation to achieve a better BER rating. “I am quite public in saying I don’t believe in long-term rent controls,” he said. “If you did that you’d hit supply, which would hit demand or which would hit the rental market in such a way that it would drive prices up potentially. So it’s not rent control. Rent controls tend to be medium-, long-term.

“Supply at the moment is in development mode so there is a lag time of a couple of years. It’s how do we fill those few years is what we are looking at.”

While it has yet to be decided whether the new “rent certainty” initiative will be voluntary or mandatory for landlords, Mr Kelly said they may be incentivised through measures such as tax breaks to convince them to take part. The new framework would “have to have teeth” so it could not be dismissed as a waste of time.

“We are looking at proposals whereby we can give some certainty as regards rent and what rent can be charged or is charged to tenants for that interim period. What we are talking about is a short-term mechanism with a defined period to ensure that we can deal with this issue while supply is being bumped up. There is a lag time, particularly on the private side,” he said.

“On the social side, we have made a jump start because we started the process before . . . Really, I think we’d need something that would be signed up to which would involve landlords and tenants coming together. I met with the landlord associations and they have put some interesting proposals to me. I hope to bring something to Government in the near future which would mean that tenants would know over a period of three years, maybe linking with the CPI, that their rent is fixed.”