Fianna Fáil has proposed halving the 4 per cent cap the Government is seeking to place on rent increases in Dublin and Cork city over the next three years.
The Opposition party has tabled amendments to the rental strategy proposed by Minister for Housing Simon Coveney on Tuesday.
The amendments include limiting the cap on rent rises to 2 per cent a year.
The party has also expressed concern that the plan only focuses on easing the problems for people renting in the “pressure zones” of Cork city and Dublin.
Fianna Fáil believes this focus should be extended to areas including Limerick, Galway and Waterford.
Mr Coveney has insisted he will not change the Government’s rental strategy despite resistance to the plan. He said the 4 per cent cap was “non-negotiable”.
In a letter to Fianna Fáil housing spokesman Barry Cowen, Mr Coveney defended the measures, which also received a mixed reception from interest groups.
In the letter, he outlines his response to the concerns raised by Mr Cowen, but stresses that he does not expect to alter the plans.
Mr Coveney said the 4 per cent cap was chosen on the basis of careful research and insisted it would be wrong to change it.
He also dismissed a suggestion that rent increases should be linked to the Consumer Price Index, claiming this could have “severe negative consequences for the entire [rental] sector.
“It might well control prices for some households in the short term, but the great risk is that it would trigger a withdrawal of existing supply now and would serve as a significant disincentive for people to provide additional accommodation into the sector,” he wrote.
“We need to achieve a balance - ultimately a secure investment environment is in the interests of all participants in the market.
“If we take away people’s ability to realise a moderate return on their investment, we would be killing the sector, rather than trying to ensure its sustainable future as a tenure choice.”
Fianna Fáil has also said the strategy should offer some sort of incentive for landlords so as to stimulate housing supply.
However, Mr Coveney insisted the package cannot be changed because it addresses the need to encourage supply as well as the need to build new accommodation.
“If we don’t do that then we are making the supply demand imbalance even worse and we will simply drive prices up further.
“Moreover, where rents controls are too strong, black market distortions and inefficiencies can emerge over time.”
Discussions
The two main parties held brief discussions on the proposals on Wednesday, as did Mr Cowen and Sinn Féin’s housing spokesman Eoin Ó Broin.
Political sources say they expect a compromise to be reached in order to allow the policy to pass through the Oireachtas and take effect in the new year, despite the disagreements between Fine Gael and Fianna Fáil.
However, Government sources said Mr Coveney is preparing to face down Fianna Fáil on the issue.
Mr Coveney’s “rent predictability” plan would apply over the next three years and would mean landlords could only increase rents by 4 per cent a year in that period.
Under the plan, a household paying a monthly rent of €1,300 in Dublin or Cork city now could only see it rise to some €1,470 by 2019.
