Simon Coveney (Cork South Central, Fine Gael) | Oireachtas source

Even though it is not common to revert to Committee Stage from Report Stage, it does sometimes happen to tease through the detail of an issue and to make sure we are not making a mistake on a key issue such as the one we were discussing last night. Our team worked late into the night last night and we got advice from the Attorney General's office this morning to make sure that what we are proposing is constitutional and legally sound.

We have made a change to the proposal of last night. People asked us to consider what we were proposing in terms of trying to address some of the initial concerns raised by other parties. There were consequential other issues raised with the proposed amendment. The amendment that I think most people should have got this morning that I will be introducing when we come to my amendment No. 55 as an amendment to the amendment is now going to effectively revert to an equation very similar to the original equation. The effect of that will be that anybody who is a tenant whose area comes into a rent pressure zone by designation, which will be the case for Dublin and Cork immediately and other areas thereafter, will be sure that at the end of that two-year tenancy, the tenant will not face more than a 4% rent increase and thereafter there will be the possibility of no more than a 4% increase annually while the designation remains intact.

I think it was Deputy Pearse Doherty who said the consequence of last night's proposal may be that if there is a change in tenancy within a 12 month period, there may be the possibility of a rent increase up to 4%. That is no longer there because regardless of tenancies and when rent reviews happen, a property cannot have a rent increase of more than 4% in a 12 month period. It is on a pro ratabasis. If there is a change after six months, it is only half of 4% because it is half of one year, which would be 2%. The key issue raised was that we do not want to try to create any incentive to end tenancies early within rent pressure zones in order to avail of getting an earlier rent increase of up to 4%.

While there is a series of restrictions to prevent tenants having to leave their properties, we need to do all we can with this formula to ensure that the consistency of the political commitment is delivered in a way that is constitutional for landlords and tenants and legally sound and clear. Effectively, the formula is R x (1+0.04x10/m), whereby "m" will be defined as either (a) or 24 where section 24C1(a) applies, which is a tenancy carrying over into a rent pressure zone until the first review happens. Effectively, over a two-year period it will be a maximum of a 2% increase, which is no more than 4% over that two years and thereafter, after that review, 12 in any other case.

Effectively, that means that on a pro ratabasis, a property rental charge cannot be increased by more than 4% per annum, regardless of whether the landlord decides to have a rent review after 18 months or two years. It will be based on a pro ratabasis. If there is a review after six months, for whatever circumstances, only an increase of half of the yearly allowance of 4% will be allowed, which is 2%.

On balance, we have addressed the issues that were raised by Deputies and I hope that we will have the opportunity to get back into Report Stage, move on and try to progress the legislation.

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