Seán Haughey
Question:733 Mr. Haughey asked the Minister for the Environment and Local Government the measures he is taking to prevent rising rents in the private rented sector; and if he will make a statement on the matter. [1355/02]
Written Answers. - Private Rented Accommodation.
The Government recognises the importance of, and need for, a diverse and well managed private rented sector and the need to increase the supply of rental accommodation in order to stabilise rent levels.
The Government's response to the proposals of the commission on the private rented residential sector was announced in January 2001 and forms the basis for the reform of the sector. It includes inter alia the establishment of a private residential tenancies board for facilitating speedy dispute resolution, the introduction of legislation to improve security of tenure and to increase the periods for notice to quit, and, in addition, certain taxation incentives to encourage increased supply. In relation to rent levels, the commission recommended that rents should be the open market rate and that rent reviews should occur no more frequently than once yearly, unless there has been a substantial improvement in the property in the interim. These recommendations, along with other of the commission's recommendations approved by the Government will be given effect to in new legislation. The drafting of this legislation is progressing in collaboration with the Department of Justice, Equality and Law Reform, which is responsible for the landlord and tenant legislative code. The private residential tenancies board was established on an ad hoc basis in October last.
Some of the commission's taxation proposals approved by Government were implemented in last year's Finance Act including: the restoration of interest deductibility on borrowings to purchase or make improvements to certain rented property; allowance of capital expenditure on refurbishment or maintenance to be offset against rental income for tax purposes; the making available of rollover relief for capital gains tax purposes, subject to certain conditions.
Further measures were introduced in Budget 2002 aimed at increasing the supply of rental accommodation. From 1 January 2002, interest arising on borrowed moneys used to purchase rented residential properties is allowed as a deduction for tax purposes against rental income. In addition, investors in new and second-hand residential property who purchase second-hand property with effect from 6 December 2001 will pay the same stamp duty rates as apply to owner-occupiers, other than first time buyers.
The Government has also targeted in a specific way the accommodation needs of students through section 50 of the 1999 Finance Act, which provides tax incentives for the construction of purpose built student accommodation. Certain amendments to this scheme were announced in Budget 2002 including extending the deadline for the scheme by 2½ years to 30 September 2005.