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

Amendment, No. 55 incorporates the changes that we made this morning. That is my understanding.

I will give an answer to the second half of Deputy Jonathan O'Brien's question that I had not an opportunity to provide earlier. A tenancy whereby a group of tenants jointly occupy a single residential unit will be protected under the rent predictability measure. Let me be clear on the issue of rent supplement and HAP. The budget for 2017 and the Estimates are now agreed. The matter is not being reopened. There will be an extra €60 million spent next year because of the agreement last July between the Minister for Social Protection, Deputy Varadkar, the Minister for Public Expenditure and Reform, Deputy Donohoe, and I to increase rent supplement and HAP in line with rent increases at different levels in different parts of the State. That has already been taken into account. Rents that would otherwise be increasing at a much higher rate next year will not, in areas where there are rent pressure zones, not now do so. This will assist in reducing a widening gap between the supports that are available under HAP and rent supplement. That is because we are trying to maintain some control over rent inflation in many areas,

Reference was made to the 4%. People have latched on to what I said about 4% per annum on a rolling five-year basis being a reasonable rate of return in the context of Ireland Strategic Investment Fund investment portfolios, etc. That is, however, only one reason why we looked at the 4%. There are many other reasons. The 4% means that the level chosen is 20% lower than the long-term annual rental increases in Ireland. It also means that the maximum allowed inflation in rent pressure zones will be less than half the current annual rent inflation, which is well over 8%. When we were finalising 4% as a landing point, we looked at other countries that had introduced intervention in the market to keep rents under some control in particular areas and cities. In Germany, rents may increase by a maximum of 20% over a three-year period. This is actually a lot more than we are allowing for here. In New York, 7.5% per annum can be allowed until maximum rent is reached. In Sweden, rent can go beyond an agreed price ceiling up to a maximum of 5% and in Switzerland it is 6%. There are no examples I can find, certainly in European countries, where there is simply a flat-rate rent freeze right across the market.

As the ESRI has pointed out, if the intervention is too aggressive, supply will be undermined. That is the core problem; we need to increase supply in social housing, increase the supply of affordable rental accommodation and increase the supply of vacant properties coming onto the market. We also need to build many more affordable starter homes for people who want to move out of the private rental market and who can afford to do so. We are supporting first-time buyers, as is the Central Bank, in terms of the changed policy adopted in recent months. All of those things are about trying to increase supply. While supply increases, which will provide relief in the context of the deficit that currently exists, we need to keep some rein - on a temporary basis - on potential increases on rents. This is why we are introducing this rent predictability measure, which I believe is balanced, in the context of the other issues on which we need to deliver in the context of supply.

I take Deputy Thomas Byrne's point, but I have only just seen the press release. The Deputy may believe that this is a pro-landlord strategy, as some people have described it, but it does not seem as if the landlords are too happy, particularly in the context of what they stated today. I am not saying that is a good or bad thing. We are trying to get the balance right in terms of ensuring that landlords stay in the market, invest in increasing the size of their property portfolios and increase supply. At the same time, we are also trying to protect tenants.

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