Question for the Minister of Environment, Community and Local Government (Phil Hogan TD)
For WRITTEN ANSWER on 1/05/2014
To ask the Minister for Environment, Community and Local Government if he is considering the introduction of a form of rent cap for residential tenancies; if an analysis has been carried out on the way such a measure might affect the rental market; if not, if such an analysis will be carried out prior to any changes being implemented; and if he will make a statement on the matter.
The private rented sector is an increasingly important element of the housing market, with the proportion of households in the sector almost doubling in the period 2006-2011.
Against this background, the growing evidence of increasing rents, particularly in Dublin, is a cause for concern. The recent publication of the Private Residential Tenancies Board (PRTB) rent index for the fourth quarter 2013 showed a year-on-year increase in rents of 3.3% nationally. However, this national average figure masks differences by property type and location.
Nationally, rents for houses in the fourth quarter of 2013 were 1.6% higher than the same period in 2012 while rents for apartments were 5.2% higher over the same period. In Dublin, rents for houses increased by 6.4% and for apartments the figure was 8%. It is worth noting however that, on average, rents in Dublin are still 15.5% lower than they were at their peak in the fourth quarter of 2007.
The Residential Tenancies Act 2004 prohibits the setting of a rent that is greater than the market rent for a particular tenancy. A difficulty arises when there is market failure and there is evidence of this in the form of a lack of supply of suitable properties, mainly in the bigger cities and especially so in Dublin.
The Government is taking steps to address these challenges in the property and construction sectors. These will include developing an overall strategic approach to housing supply, identifying and implementing relevant improvements in the planning process and seeking to improve financing options for development and mortgage provision.
Resolution of the housing supply situation is a key element in restoring stability to the market. In the meantime, I believe there is scope to explore measures that would protect tenants in the short term from the consequences of market failure. I have asked the PRTB to carry out a focused piece of research that will explore options to address the difficulties being experienced in segments of the private rented sector and to report back to me with policy recommendations in that regard before the end of June.
In doing this, I am conscious of the need to avoid introducing measures that would have adverse consequences on the private rented sector. My goal is to achieve stability and sustainability in the market for the benefit of tenants, landlords and society as a whole.