Jan O'Sullivan (Limerick City, Labour) | Oireachtas source

One issue is that the State will continue to have a substantial proportion of the rented properties, estimated at approximately 33%, whether through HAP or through long-term rent supplement. However, the main focus of any rental limit review process must be to ensure that pricing of maximum rental limits does not distort the market, while at the same time providing opportunities for tenants to acquire accommodation. Its purpose is to get that balance right. Due care must be taken that pricing be established by natural supply and demand conditions, as opposed to by reference to the State's intervention, in order to avoid setting maximum rental limits that could force families, especially those on low incomes, into competing with pricing floors they cannot afford. The current policy for maximum rental limits within the rent supplement scheme is an 18 month cycle. The timing of 18 months represents a balance between the rental arrangements of tenants, as tenancy agreements normally are for approximately one year, and the need to ensure sufficient reviews to keep apace of the market. A shorter period to review maximum rental limits, for example, quarterly, would place a significant degree of ongoing pressure to change rental agreements mid-agreement on tenants and landlords alike. The cycle of how long the agreement lasts is part of the consideration.

In addition, rents fall as well as rise - this might be a lovely dream at this point in time - but in declining markets, tenants would be forced to consider alternative accommodation as landlords continued to seek previous rents agreed. It must be remembered that rents can increase as well as decrease and reviewing maximum rental limits on a quarterly basis would not allow the market any time to adjust naturally to the imposition of new limits, therefore distorting the natural market rent level. I suppose this is a judgment call in terms of not intervening too often and not having what are now called caps affect or distort the market unduly - if there still are caps in respect of HAP - and to take account of the fact that were they to be reviewed regularly, this would happen in a time of declining rents, as well as a time of increasing rents.

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