Minister Noonan opposed rent caps but did he miss the main problem with the new rules?

[Sarenco]

The Irish Times has an interesting story on how Minister Noonan objected strongly to Minister Coveney's proposal to introduce rent caps -

http://www.irishtimes.com/news/irel...pposed-rent-cap-plan-documents-show-1.2957266

However, it seems to me that the Minister for Finance missed (or at least under-estimated) the most damaging and unfair aspect of the new rules - the fact that the rules will effectively prevent thousands of rental units from being let at their market rent for years.

Ultimately, in my opinion, this will cause a significant number of existing landlords to exit the market and will exacerbate the current shortage of rental accommodation.

Thoughts?

 

[Joe_90]

I think that these guys don't live in the real world.

They have no appreciation for people who made decisions based on a certain set of conditions.

Their stock answer seems to be if you don't like it then you are at liberty to sell your property.

No allowance for the disfunctional property market of the last few years

No allowance for the fact that lots of properties are in negative equity.

Have to agree the uncertainty they are creating will drive landlords out when they can afford to go.

 

[Sarenco]

What the correspondence suggests to me is that the Government introduced rent caps purely for reasons of political expediency - not because they thought it was a good idea or the right thing to do.

"Look, if we don't introduce some form of rent certainty those head bangers on the opposition benches will force through something far, far worse!".

Fair enough. That's the reality of politics I suppose.

The negotiations/discussions then seem to have focused on whether rent increases would be capped at a % above inflation, 4% or 5% and whether the restrictions would apply for 3 years or 5 years. No mention in the press reports of any consideration being given to properties rented below market rates - whether due to the 24-month freeze on rent increases or otherwise.

However, I wonder if the cabinet fully appreciated that Mr Coveney's proposal would have the effect of capping rents for thousands of units below prevailing market rates for years to come?

Given the chaotic passage of the legislation before Christmas (staffers drafting and re-drafting amendments late into the night), I actually wonder did Mr Coveney himself appreciate the full effect of his proposals?