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Dáil
‹ Ceisteanna ó Cheannairí - Leaders' Questions

Rent freeze and inflation

Summary

Deputy Ó Broin attacks the Government for opposing rent controls and asks whether emergency action will follow if inflation keeps rising. The Tánaiste defends the new real-terms rent freeze, then the exchange becomes increasingly heated before the Ceann Comhairle restores order and calls the next Deputy.

In June 2016, as a newly elected Deputy to this House, the first Bill that I brought forward sought to link rent reviews to inflation. In that year, rents across the State rose by an alarming 14% and in Dublin by 15%. Some families were being hit with rent increases in the order of 20%. Unable to pay, they were forced into homelessness and despite the growing crisis in the rental sector, the Tánaiste and his party colleagues voted down the legislation. Thanks to them, rents continued to spiral out of control. More families became homeless and working people were forced into real financial hardship. Those wanting to buy their own homes were unable to save for a deposit.

In response, the then Minister for Housing, Planning, Community and Local Government, Deputy Simon Coveney, introduced rent pressure zones. We told him on the floor of this Chamber that that policy would not work. There were too many loopholes and it was impossible to police. We urged him instead to link rents with inflation. He ignored our advice and, in fact, on five separate occasions the Tánaiste and his colleagues in the previous Government voted against rent certainty measures introduced by Sinn Féin and others on the Opposition benches. What happened? In 2018, rents rose by up to 10%, in many cases in areas where the cap was 4%. The same happened in 2019 and every year since then rents have continued to rise. Thanks to Fine Gael and the previous Government, supported by Fianna Fáil, the average renter today is paying more than €4,000 more a year in rent than he or she would have done if the then Government had accepted our legislation.

By the end of 2019, it was clear that emergency measures were needed and rent certainty was no longer the appropriate response. It was time to ban rent increases. Again, when Sinn Féin brought forward legislation to halt runaway rents, the then Government opposed that too. The Government’s response at the time was that it would deter supply. Rents, however, continued to rise, yet landlords left the market in their droves. We have lost by net figures 20,000 rental properties in the past four years.

At the same time, we urged the Government to invest in large-scale affordable cost-rental accommodation. We were not the only people to do that. The Housing Agency urged the Government to do it, as did the National Economic and Social Council, which was a function of the then Taoiseach's office. Remarkably, not a single affordable home to rent or buy was delivered through any central government scheme in the lifetime of the previous Government. That was when the Tánaiste was Taoiseach.

Rising rents and falling supply are the Fine Gael way. As it was then, so it is now under this coalition.

Micheál Martin may be Taoiseach, but Fine Gael still dictates housing policy. The targets for affordable housing delivery in the new housing plan are embarrassingly low. Worse still, large landowners have been given an exemption on providing any affordable homes up to 2026. Any developer applying for planning permission for the remainder of the lifetime of this Government will not have to provide a single affordable home on his or her land. Meanwhile, the decision to link rents to inflation is too little, too late. We warned the Minister for Housing, Local Government and Heritage about this some months ago. He ignored us. Inflation is running at 3% and economists are saying it will rise even further. Given the Government's abject failure in housing policy, my questions are very simple. Will it urgently introduce a ban on rent increases for three years? Will it support the Sinn Féin Bill being debated this evening to ensure that all private housing developments include a 10% affordable housing, as well as 10% social housing, for the remainder of its time in office?

Comment on this
Leo Varadkar The Tánaiste Fine Gael

Governments change policies as facts change. Sometimes policies change and in this case, we had a change of Government. It is a new, different Government, involving three parties, namely, my party, Fianna Fáil and the Green Party. Some of the policies of this Government are different to the ones of the past, as they should be. Among the reforms we made to help people who are renting is the introduction of a rent freeze in real terms. That means that rents can only increase by the rate of inflation or less, as measured by the harmonised index of consumer prices. The logic behind that is to protect renters to make sure that rents do not rise quicker than prices in general or incomes, which is important.

However, in doing so, we do have to strike a balance. The Deputy pointed out in his remarks that the number of rental properties in Ireland is falling. Landlords are leaving the rental markets. Bear in mind that 86% of those landlords, of whom I am not one, only own one or two properties. We need to balance that too . One person's rent is another person's income. It might be his or her pension or how he or she pays the mortgage. In a time of rising prices and interest rates - it has not come yet but it will - if you freeze rents to zero, that could mean an income or pension cut for another person or another person unable to pay the mortgage on that property, which is exactly the problem that the Deputy identified and could cause more landlords to leave and fewer rental properties on the market. The only solution to bring down rents, which should be the objective rather than just freezing them, is more supply. That is what we need and we need lots more of it.

I acknowledge it is the long-standing position of the Deputy and his party to link rents to inflation. They were for that before they were against it. Now they are against it. As is always the case, when something is done, it is never enough. The Deputy's party wants to do more; the consequences do not matter. We have done that now, however, rents are now frozen in real terms and that will make a real difference for people who have seen rent increases of 5%, 10% or 15% in the past, which they will not see any more. Everyone in this House should welcome that. It needs to be in place until we see a step change in supply, because that is what will allow rents to stabilise properly and, it is hoped, fall in the years ahead.

Cost rental is now a reality. The first homes are available under cost rental. Some were built on Enniskerry Road in Dún Laoghaire. There is a plan to do so on Emmet Road. There are also those that will be provided in north County Dublin. That came as a result of a decision taken by the former Minister, Eoghan Murphy, to pursue the cost-rental policy. The Deputy talked about it; we have done it. For the first time, those properties are available to people. We will need many more of them. It is new and is not something we have ever done in Ireland before, at least not by the Government, but we are very committed to it. Providing cost-rental properties can make a real difference and enable people to rent at rates much lower than commercial rates. It can also work well because, unlike social housing, the rent covers the cost of building the property. It can be done on a commercial basis and off balance sheet and in a way that does not affect the Exchequer or cause us to have to curtail spending in other areas.

As for Sinn Féin's Bill, the Government has decided today that it will not be opposing the Bill on Part V. That will allow it to go to pre-legislative scrutiny for further detailed legal and economic analysis. The reason we are not going to 20% right away is very sensible, in that the Housing Agency has advised us that if we go from 10% to 20% right away and with no transitional provision, the cost will be borne by the 80%.

It will put up the price of housing for people wanting to buy. That is the advice of the Housing Agency. As people who want to prioritise home ownership, we do not want to do anything that drives up house prices for people who want to buy their own homes. That is not the case for Sinn Féin.

Comment on this

The more I listen to the Taoiseach, or the Tánaiste - excuse me, it is so confusing trying to know who is who in this Government - the more I realise he actually does not understand it. He said the Government has introduced a rent freeze in real terms. When the legislation was introduced inflation was at 1.9%. It then rose to 2.2% and it is now at 3%. Today in the Irish Independent, economists are quoted as saying it is likely to pass 4%. If it goes past 4%, will the Government accept the error of its ways and introduce emergency legislation to protect renters? A rent freeze means no rent increases, not increases of 2%, 3%, 4% or 5%.

The Tánaiste also said that the Housing Agency advised the Government on the sweetheart land deal that is included in the housing plan. That is not true. I challenge the Tánaiste to publish the report the Housing Agency gave the Minister for Housing, Local Government and Heritage because, in fact, it did not recommend any course of action. It was asked to outline a series of options and it did so. One of the options it wanted to include, which it was dissuaded from doing, was to have the exact same transitional arrangement as when Part V was originally introduced in 2000, whereby it moved immediately to 20% but the builder was compensated for the full market value of the land. It worked when it was introduced before and the Government should have done it now but of course when it comes to a choice between standing by working families looking to buy their homes and developers, the Government always takes the wrong choice.

Comment on this
Leo Varadkar The Tánaiste Fine Gael

I am advised that the Government made the decision on changes to Part V based on a detailed report from the Housing Agency, which recommended-----

Comment on this

So publish the report. Let people judge for themselves.

Comment on this
Leo Varadkar The Tánaiste Fine Gael

-----that some transitional provisions should be included but only for lands purchased while the obligation was at 10%. Land purchases before 2015 or after July 2021 will be at 20%. The Deputy supported that Bill at the time. He was for it before he was against it. It is a little bit like linking rents to inflation.

Comment on this

Too little, too late.

Comment on this
Leo Varadkar The Tánaiste Fine Gael

He was for that before he was against it.

Comment on this

Rents are rising too dramatically.

Comment on this
Leo Varadkar The Tánaiste Fine Gael

What happens is any time-----

Comment on this

What happens is renters suffer under your Government.

Comment on this

The Tánaiste did not interrupt Deputy Ó Broin.

Comment on this
Leo Varadkar The Tánaiste Fine Gael

The Minister of State, Deputy Madigan, need not be concerned. This is the regular pattern of Sinn Féin. The truth hurts. It really hurts.

Comment on this

Dishonesty on your part has to be corrected on the floor of the Dáil.

Comment on this
Leo Varadkar The Tánaiste Fine Gael

Any time anyone speaks the truth to your party, you interrupt, you get aggressive, you get nasty and you get personal-----

Comment on this

I am probably the least aggressive Deputy in this House, with the greatest of respect.

Comment on this
Leo Varadkar The Tánaiste Fine Gael

-----and that is one of the many reasons people should be very afraid of Sinn Féin in government. If members of Sinn Féin behave like this in opposition, imagine how they would behave in government.

Comment on this

By standing up for renters, bringing rents down and delivering affordable housing.

Comment on this
Leo Varadkar The Tánaiste Fine Gael

If anyone stood up to them, whether workers, business people, pensioners, homeowners or property owners-----

Comment on this

Those people tell the truth, Tánaiste - not like you.

Comment on this
Leo Varadkar The Tánaiste Fine Gael

-----they would be subject to this.

Comment on this

Deputy, it is not in order to accuse the Taoiseach - the Tánaiste - of telling untruths.

Comment on this

Even the Ceann Comhairle is confused by this Government.

Comment on this

Tánaiste, Taoiseach, it is all the same.

Comment on this

I call Deputy Alan Kelly.

Comment on this