The realities of a rent freeze

The housing crisis and a proposed rent freeze dominated discourse in the lead up to the general election in February. eolas looks at the rental policy of the parties who sought to depose Fine Gael and the oft-cited example of the recent Berlin rent freeze and how it compares.

A private members’ bill tabled by Sinn Féin housing spokesperson, Eoin Ó Broin TD in December 2019 passed through the floor of the Dáil with the support of his own party, Fianna Fáil, Labour and more. The Rent Freeze (Fair Rent) Bill 2019 sought to “provide for a rent freeze for all existing and new tenancies” while also calling on the Minister of Finance to “commission a report to examine the structure and the costs of introducing a tax relief”.

The Bill, like all bills in the midst of the legislative process, lapsed when the Dáil was dissolved in order to allow for February’s general election. Its thrust, that of a rent freeze after a decade in which rents reached record levels year after year, became one of the key battlegrounds of the election campaign.

The deciding factor of the Bill passing the floor of the Dáil had been the decision of Fianna Fáil to back it, a surprise given their confidence and supply agreement with the Fine Gael minority government. They did so with a caveat however, stating that they were not “wedded” to the idea of a rent freeze and that the Bill in the form it had passed the floor would require extensive reworking at the committee stage.

A month before the vote was carried, party leader Micheál Martin had backed the initiative of a rent freeze. Fianna Fáil housing spokesperson Darragh O’Brien said after the vote that he was “not certain” that the Bill was “fully workable” in the shape it had been in and that the party were “open to looking at [it], to allowing the bill to go to committee, to carry out detailed pre-legislative scrutiny, particularly around the area of what are the risks of any unintended consequences”.

By the time they had unveiled their general election manifesto, Fianna Fáil had rowed back on any support for a rent freeze and instead began to advance the line that had also been used by Fine Gael and other opponents of the idea: that such a measure would be unconstitutional. Instead, the party’s manifesto outlined six strands central to their housing policy, the latter three being: build social housing and affordable homes; help “Generation Rent”; and end homelessness.

The term “rent freeze” was never used in the Fianna Fáil manifesto and the party instead proposes a New Deal for Renters, a €214.6 million per annum plan that involves: €600 tax credits for all private renters; strengthening the implementation of Rent Pressure Zones; doubling the resources of the Residential Tenancies Board; creating a National Rent Deposit Scheme with a lifetime deposit that moves with the tenant until they withdraw it; creating an Affordable Rent Scheme; improving the quality of accommodation with a Local Authority Quality Certificate; and a ban on co-living.

Sinn Féin, as would be expected from the party that tabled the Bill, made a prospective rent freeze one of their central selling points in the campaign. Echoing the plans of the Bill, Sinn Féin’s manifesto promised to “put a month’s rent back in every renter’s pocket” with a three-year refundable tax credit for all existing and new tenancies at a cost of €301 million, along with the three-year rent freeze promised in the Bill.

Sinn Féin also promised to legislate the Residential Tenancies (Amendment) Bill, which would create tenancies of indefinite duration and link rent reviews after the three-year freeze to the Consumer Price Index.

The Labour Party’s manifesto also contained with it a commitment to freeze rents, saying: “Labour froze rents in the past by forbidding landlords to raise rents for two years after a contract was signed. This can be done again.” There is no specific timeframe or cap in Labour’s commitment to a freeze, rather it is simply said that they would “freeze rents for a longer period” in order to allow for the building of more homes to alleviate housing supply pressure. They argue that, with rents at an all-time high, landlords can “afford accept a rent freeze”.

The Green Party’s manifesto made no mention of a rent freeze, instead promising “several legislative and regulatory amendments to make the rental sector fairer” including the removal of sale as a legal reason for eviction, the introduction of indefinite tenancies, and the possibility of the introduction of Germany’s “mirror rent”, where rents in local areas are determined by official guidelines.

Opponents of the rent freeze idea, typically represented in party politics by Fine Gael and eventually Fianna Fáil, have argued that a rent freeze would be unconstitutional. Arguments supporting this tend to focus on the restriction of the property rights of the owners and landlords, arguing that the effect of any prospective rent freeze law would disproportionately target them.

However, Assistant Professor of Law at Trinity and constitutional expert David Kenny wrote of the original Bill that he believed it would pass through the Irish courts if challenged, due to the fact that where proportionality is concerned, the Courts would have to consider the societal problems the Bill seeks to rectify against the supposed infringement upon personal property rights and decide which was the more pressing issue.

Berlin

Berlin is often noted as an international exemplar of what can be done to achieve a rent freeze due to recent measures taken by its House of Representatives to tackle the rental crisis ballooning in the city. Introduced in January, Berlin’s rent freeze is time capped, similar to the Sinn Féin proposal, and is estimated to affect about 1.5 million homes by putting a cap of €9.80 per square metre on rents. Two unique elements of the law are that landlords now cannot charge a rent higher than what the previous tenant paid and if rents charged exceed the limits in the “rent table”, a tenant can sue in order to have their rent lowered.

The Berlin rent freeze is not a complete freeze; in order to encourage continued construction, buildings built after 2014 were exempted from the measures and from 2022 onwards, landlords will be permitted to raise rents in line with inflation of 1.3 per cent per year. Berlin, despite being heralded as a unique example worldwide, does seem to have simply caught up with similar rent control initiatives already present in places like New York, Vienna and Barcelona.

After the rent freeze came into force in February, the Berlin district court ruled it to be unconstitutional in March, referring it to Germany’s supreme court. Despite the fact that landlords have already failed in challenging the law’s fine mechanisms at the federal level, the district court ruled that it does not believe the House of Representatives to have the power to institute such a law. The case is currently waiting to be examined, but as an example of what can achieved and the strength of opposition to such a measure, it remains one of particular interest in Ireland.