Taoiseach Enda Kenny has strongly defended the Government’s proposed four per cent rent cap.

He said there were strong reasons why the Government had decided on the figure. “Obviously, those reasons stand up,’’ he added.

He told the Dáil on Wednesday the 4 per cent limit was chosen for a number of very specific reasons.

There was a need to ensure there was a reasonable rate of return on investment so there was no spike effect at the end of the period of the designation where a lower limit would lead to a sudden upward correction for tenants after three years, he said.

He said the Government had previously endorsed 4 per cent on a rolling five-year basis and the level chosen was 20 per cent lower than the long-run over seven decades of annual rental increase.

Mr Kenny said the maximum allowed inflation in rental pressure zones would be less than half the current rate of annual rent inflation nationally.

Discussions with Fianna Fáil housing spokesman Barry Cowen, were ongoing, he added.

Mr Kenny said rent control would be assessed on the basis of a local electoral area by the Residential Development Board.

“The Minister is confident it can be extended,” he added.

Mr Kenny said the plan was targeted, focused and had particular aims.

The Taoiseach was replying to questions from Fianna Fáil leader Micheál Martin and Sinn Féin leader Gerry Adams.

Mr Martin said the 4 per cent limit was excessive and the "geography issue" was far too restrictive and limited, he said, and in many ways the proposals seemed "too little too late''.

He said places like Galway, Limerick, Waterford, Meath, Kildare, Wicklow and other major urban areas should also be included.

Mr Adams said there was an absence of rent certainty and a failure to deal with the difficulties faced by families in rented accommodation outside Dublin and Cork cities.