Dáil Éireann debate -
Tuesday, 12 Dec 2000

Vol. 528 No. 1

Written Answers. - Private Rented Accommodation.

Alan Shatter

Question:

45 Mr. Shatter asked the Minister for the Environment and Local Government if he has any analysis on the level of construction and supply of private rented accommodation in view of the implementation in the third Bacon report proposals; and if his attention has been drawn to the prospective sharp increase in private house rents due to a lack of investment in this sector. [29219/00]

Minister of State at the Department of the Environment and Local Government (Mr. Molloy)

Since coming to office, I have commissioned three reports on the housing market from Dr. Peter Bacon and Associates, each of which contained evidence of strong investment demand for residential properties. The most recent report, The Housing Market in Ireland: an Economic Evaluation of Trends and Prospects, published in June 2000 identified continuing strong investment demand for residential properties and also referred to evidence that investor activity was pricing first-time purchasers out of the market, particularly at the lower price range.

In June last the Government introduced a wide range of measures in Action on Housing to address these and other housing issues. Government strategy is to increase housing supply to meet demand and to improve affordability, particularly for first-time purchasers. It is too early at this stage to assess the full impact of the measures taken in Action on Housing, but the indications to date are positive. House price increases are moderating, housing output has increased and first-time buyers are gaining an increasing share of the new housing market, which may be attributed to reduced investor activity in response to the measures introduced in Action on Housing and to increases in housing output at the lower end of the market.

In their recently issued annual property survey for 2000, the Irish Auctioneers and Valuers Institute indicated that average rent increases were 14% nationally in the year to November 2000, compared with a figure of 13% nationally in the year up to November 1999. This could not be regarded as a sharp increase in rents. They also referred to a significant projected increase in rents, to which the Deputy may be referring, but this relates to rental properties in premium locations in Dublin and not the wider private rented residential market.

The Government aims to develop a thriving, diverse and well managed private rented sector. In addition to measures designed to increase the overall supply of housing, actions taken in recent years include specific incentives for the provision of rented residential accommodation in urban renewal areas and for the provision of student accommodation. This Government has also improved the position of tenants in the private rented residential sector by increasing the ceilings for income tax relief, in the past two budgets. The ceiling for income tax relief in respect of rent paid by tenants under 55 has doubled. In the case of tenants over 55 a doubling of the ceiling, coupled with standard rating of the relief means that 80% of such tenants gain a doubling of relief. A rent-a- room scheme was announced in the recent budget which provides for an exemption from income tax in respect of gross rental income of up to £6,000 per annum, for accommodation provided in a person's principal private residence. This measure will facilitate the provision of accommodation thereby easing the pressure on the private rented sector and will improve the utilisation of the housing stock.

The report of the commission on the private rented residential sector, published in July of this year, identified a growing need for accommodation in the private rented sector and set out a number of recommendations to increase supply, including recommendations aimed at increasing long-term investment in private rented accommodation. The Government is considering its response to the report of the commission.