John Curran (Dublin Mid West, Fianna Fail) | Oireachtas source

Like my colleagues, on first reflection I thought the 4% figure was a big improvement on the rate of increases that we are seeing. However, 4% is still quite significant. A person in rented accommodation, where the rent was set a little over a year ago - in 2015 rather than in 2016 - could be due an increase in January 2017. There could be an increase in January 2017, January 2018 and January 2019. In 25 months time, the rent will have increased by 12.5%. That is the reality of what the Minister is doing. I acknowledge that it does not apply to everyone. It will only apply to certain people whose rents are due for renewal. For some people, however, it will be a 12.5% increase over a 25-month period. For those whose rent was set in 2015, the next renewal will be in January 2017 - with renewals then in January 2018 and January 2019. That is an important point to be reconciled. I do not know if that was what the Minister had intended but that will be the effect for those people.

My next point is the same as Deputy Ó Broin's, although I will make it slightly different. A person whose rent was last set in June 2015 will be due a rent review in January. It will have been 18 months since the last review. The formula in the legislation allows for a 6% increase in January 2017 and a maximum increase of 4% in subsequent years. When I first saw this, I did not realise that it would be more than 4%. It is important to note - and it is important that people realise - that the first increase is dependent on how long it has been since the previous rent review. It sounds a little technical and I would prefer to be dealing with this on Committee Stage. However, I do not think people readily understood those two things. While the headline figure is 4%, for some the first increase could be more than 4%. Further, those who may have a review in January, February or March of next year could potentially face a 12.5% increase over a 25-month period. I am not sure if that is what was intended. The Minister might reflect on that point.

I want to refer to what a 4% increase means, particularly as Deputies spoke about affordability and so forth. Let us consider the case of someone who is paying rent of €1,500 a month. An increase of 4% does not sound like much. It is only an increase of €60 a month, but that amounts to €720 a year. If a person is paying rent of €1,500 a month and is on the top rate of tax, he or she must earn an additional €1,500 to pay the monthly increase of €60. That is what this means. It is quite significant. For argument's sake, if I were the tenant and the Minister the landlord, I would have to earn an additional €1,500 for the landlord to get the €60 monthly increase. Further, some landlords, who might not have mortgages, will pay tax on the increase, so they might be €300 or €400 better off. The landlord might benefit in the amount of €300 or €400, but the tenant must earn €1,500. It is important, therefore, that the tax review the Minister has spoken about takes place as a matter of urgency. In fact, the tax review and the rent measure should have happened at the same time rather than one in before the other. That would have been important.

The Minister mentioned how the figure of 4% was arrived at. Like others, I also did not understand fully how the figure was derived. It is not a rate of return; it is an additional rent increase. The Minister might explain it in further detail. A small word that has been attributed to the Minister has alarmed me. The Minister commented that he did not want to see a spike when the three years are up and the 4% cap is removed. He is concerned about a spike.

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