Loophole in rent caps leaving renters open to price gouging must be closed

26 July 2018

Jan O’Sullivan TD, Labour Party Spokesperson on Housing, is calling on the government to close the ‘new build’ loophole for rent pressure zones which is being used by landlords to increase rents at a higher annual rent than the 4% annual cap.

Commenting today Deputy O’Sullivan said;

“A report today of a landlord in Dublin using a loophole in the law to increase rents by 6%, in a rent pressure zone with a 4% limit on annual rent increases, highlights the need for government to update the legislation and close this loophole.

“The landlord in question was in receipt of state monies to the tune of €8 million, to help build the apartments in the first place. Now, he is using a loophole which gives landlords, who build new homes in a rent pressure zone, effectively a two-year amnesty on rent controls.

“This loophole means that every new build house or apartment built by a private developer, even those who are in receipt of public monies such as the ISIF grant used by the landlord in question today, can price gouge for the first two years they are renting in pressure zones.

“Given how much emphasis the government is putting on the need for new developments as a solution to the housing crises, and that private developers are being given the chance to develop on public lands, with the assistance of public monies, I think it rather ridiculous that these landlord don’t then have to play by the most basic of rules when it comes to rent controls.

“This speaks to the bigger problem with the Government’s entire strategy towards housing. While it recognises the important role of building on public land to provide affordable housing, it is reliant on private developers to play a lead role. No national affordable housing scheme will work if those who are seeking to profit from it are given the lead. The state has to take the wheel when it comes to building affordable housing.

“Labour’s proposal for a National Housing Development Bank would be a much more powerful agency than the current National Regeneration and Development Agency, as it would be given the necessary powers and resources to act as a State-owned developer and directly commission building work.

“We’ve repeatedly called for stronger regulation of the rental sector, but to date, the Government has failed to adequately resource the RTB and ensure our laws are fit for purpose.”

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