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Out of pocket and out of mind – it seems Government would rather forget about renters

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While the Government did its best to appease both young and old in Budget 2022, it seemingly forgot the one cohort of people who arguably need help the most – renters.

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In fact, there was little mention of the biggest crisis facing the country at the moment in the Budget.

Ministers said the Zoned Land Tax would free up land for residential use. But with it not being brought in until 2024, renters will have to wait years to see a difference, if any.

Landlords got a tax break for pre-letting expenses, which will be extended for another three years to encourage them to return empty residential properties to the market.

Buyers got a further extension of Help-to-Buy for another year, despite warnings from critics that it would further push up house prices.

But where’s the tax break for the renters? In the lead-up to the Budget, government sources were already warning journalists how there was not going to be much from the housing point of view.

One government source admitted: “But sure, what can we do for them?”

The Government maintained that the bulk of the work had already been done for renters through its multi-billion euro plan Housing for All.

Ministers argued that the best way that renters can be helped was through the building of actual homes, as an increase in supply will reduce rents.

“We’ve had five separate pieces of rental legislation which have been very significant to protect renters right the way through the pandemic,” Minister Darragh O’Brien told journalists.

He admitted the rental market was “dysfunctional” in many parts of the country, with rents being “too expensive”.

Mr O’Brien added that 1,600 cost rental homes would be built next year, which would offer rents below market value.

He also promised of two “significant” changes to come for renters, including caps on rent increases and changes to tenancies of indefinite duration.

Backfired

The minister earlier this year moved to link rent increases to inflation. Rent Pressure Zones (RPZs), brought in several years before by his predecessor, Eoghan Murphy, had rent caps of 4pc.

This became a target for landlords and not a cap. The plan had backfired.

Despite an initial cautious welcome from critics, some of whom had been calling for rent increases to be linked to inflation for quite some time, Mr O’Brien’s plan also backfired.

Just like Tánaiste Leo Varadkar had predicted, the economy took off “like a rocket” as restrictions lifted and so did inflation, rising to 3pc and giving the green light for rents to soar.

Mr O’Brien is currently in talks with the Attorney General to put in place a further defined rent cap.

If he succeeds in his push for a 2pc rent cap, it could be implemented as soon as next month.

Despite opposition parties calling for a total rent freeze, this risks small landlords growing tired of increasing rent controls, throwing in the towel and selling up – further reducing the already constrained supply.

Indefinite tenancies

Mr O’Brien also spoke about a “significant piece of legislation” on tenancies of indefinite inflation, which he hopes to bring in before Christmas.

Currently, renters enter a ‘Part 4’ tenancy six months into their lease, which means they cannot be evicted, except for specific reasons.

After five-and-a-half years, the landlord can evict the tenants without providing one of the seven reasons stated by the Residential Tenancies Board.

It is understood Mr O’Brien is seeking to remove the time limit and to instead pave a path for indefinite tenures.

Opposition politicians have already argued that as long as landlords are allowed to evict tenants if they wish to sell their homes, they do not have indefinite tenancies.

Ten years

Confronted with questions about the housing crisis, or what is being done to help renters or students who have to resort to long commutes because they cannot source accommodation, ministers have referred to Housing for All as being the Government’s solution.

With €4bn being put into housing a year, the plan promises to deliver 300,000 homes by the end of 2030. However, many experts believe that the ESRI’s advice of 33,000 homes are a mere starting point, with some arguing that 50,000 homes are needed.

But it will be years and years before sufficient homes are built and rents finally begin to come down – and so the Government doesn’t have anything to offer renters right now, simply telling them: “Wait.”

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