Brendan Howlin (Wexford, Labour) | Oireachtas source

The Government has extended its rent pressure zones to another 19 areas in 11 counties. However, the policy is not working because the Government's limit of a 4% annual rise in rent is far too high.

I said that when this was first introduced and it is still the case. The Government is engaged in Celtic tiger economics. It is totally removed from the reality facing most working people in this country. Rather than capping rents, the policy has given a signal to landlords to increase rents by 4% every year. They expect that every other landlord is increasing rents and so think that they should too. We now have rent inflation of 4% within the rent pressure zones and rents outside the zones are facing even greater increases because they take the 4% as the low benchmark. The European Central Bank has a target to ensure that inflation remains low within the euro area. The target is close to 2% over the medium term. This is not optional. It is set down as fixed European monetary policy and is binding for eurozone countries. If monetary policy has a 2% ceiling for inflation, how can the Government justify 4% annual inflation for controlled rents within its power which pushes non-controlled rent up even higher? This is clearly unsustainable.

The economy would have to see a year-on-year decline or marginal growth of most other costs to average out to the 2% that we are bound to have under the set eurozone monetary policy. Does the Government expect everybody else to help it to meet its binding target as it pushes up rents for renters across the country? There is no evidence that other inflation pressures are not also increasing. Wages are not growing at this 4% level. Affordability should surely be the benchmark of what is affordable for people and what is allowable for rent increases. We see thousands of people being pushed out of the rental sector and into homelessness because of this policy. Average annual earnings for full-time workers grew by 1.7% between 2016 and 2017. The national minimum wage, which the Government controls, has grown by less than 1.5% since July 2011. Will the Government undertake to raise wages to meet this notional 4% target or will it set rents properly at just 1% for three years to allow people to be able to catch up with rent increases and to be able to afford to stay in their own homes?

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