A deal has been reached between Fianna Fáil and Fine Gael on rental measures.

The move paves the way for legislation underpinning the changes to be passed by the Oireachtas before Christmas.

As previously planned a 4% annual limit on rent increases will be introduced in Dublin and Cork city once the legislation is passed.

It has also been agreed that Meath, Kildare, Wicklow and Louth, as well as areas around Cork city will be immediately assessed to see if they qualify to have a limit on rent increases imposed.

The cities of Galway, Limerick and Waterford will also be included in this first phase of assessment.

The first results of these assessments are due to be completed in January.

There will also be a review of how areas are assessed as designated areas in June next year.

More resources will also be given to the Residential Tenancies Board.

Minister for Housing Simon Coveney told the Dáil during the debate on the matter that the rent limit would apply for a period of three years and would apply both at the start and at each rent review.

He also told the Dáil that he accepted amendments within the Planning Development and Residential Tenancies Bill calling for completion of the assessment by the Residential Tenancies Board to be done in a speedier manner.

Fianna Fáil housing spokesperson Barry Cowen said while the party has not achieved everything it sought, he was "pleased that for the first time in the history of the State, the Dáil is now in a position to introduce rent certainty measures that will protect tenants and help address some of the issues currently distorting our rental market".

Speaking on RTÉ's Six One Mr Cowen said he would have preferred a 2% increase associated with legislation for rent controls, but a compromise had to be reached.

Mr Cowen said his party had issues surrounding the rate and the areas it is to apply to, but "it's not about me winning, or Simon Coveney winning", adding, "it's about ensuring that the right measures and the right legislation is approved".

Mr Cowen said he would rather Mr Coveney had approached him, in confidence, last week to discuss the proposed legislation, and agreed on a unified approach.

He said, instead, there was a "public negotiation".

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Dáil debate on rent legislation under way

The controversial rent legislation is to being debated in the Dáil despite earlier assertions that it would not.

The debate will continue tomorrow if it has not concluded tonight.

After talks between the two sides broke up late last night without agreement, Mr Coveney said the Fianna Fáil party position had made it impossible for the Government to bring forward legislation on the issue.

Fianna Fáil accused the Government of intransigence.

Fianna Fáil leader Micheál Martin this morning criticised the Government's stance, but said his party wants to be constructive and engage.

He told the Dáil: "I don't believe the bill should have been pulled there was no need for that."

He said to bring in legislation on rent certainty in the last days of the Dáil was reckless.

However, he said there was a need to see if there was space to have the debate, adding that tomorrow’s sitting should not have been cancelled.

Mr Howlin criticised the bill, which he said was to have been debated and the legislation enacted before Christmas, affecting thousands of tenants.

PBP-AAA Deputy Richard Boyd Barrett said all of this would be scuppered because Fianna Fáil and Fine Gael are rowing over how much landlords will get.

Sinn Féin’s Eoin Ó Broin described the proposal as a very bad one which will hurt renters, and said Fianna Fáil recoiled from it when it heard negative media and tenant reaction. 

He said the debate should be held today.

Mr Coveney, however, insisted that he could proceed with legislation on rent certainty without knowing what the outcome would be. 

Responding to criticism of the delay, he said the Government had flagged for many weeks that it would announce key changes to the private rental sector and seek to enact legislation this week. 

Mr Coveney said putting forward a bill without knowing what the outcome would be would mean he would have to implement legislation that did not make sense and was not legally sound.

Fianna Fáil and minority Government at odds

The issue is the most significant disagreement to date between the Government and Fianna Fáil.

After talks yesterday both sides agreed that the working group to look at tax incentives for landlords should begin its work in the New Year, however differences remained on other key issues

Throughout the negotiations Mr Coveney said the proposed 4% limit on rent increases in the rent pressure zones of Dublin and Cork city was not negotiable.

The limits are being introduced in these cities because they meet two designated criteria: that annual rents have risen by at least 7% in four of the last six quarters; and that the average rent is above the national average in the past quarter.

However, it is understood the main issue in the dispute was the criteria for other areas to qualify for a rent limit to be imposed.

Fianna Fáil wanted Galway, Limerick, Waterford and large population centres surrounding Dublin and Cork city also included from the outset.

The party also believes the proposal to speed up the process to assess these areas from mid-January does not go far enough.

Last night he said it seemed political considerations were more important to Fianna Fáil.

This morning, Mr Coveney said the parties had moved beyond the issue of the 4% rent limit.

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Speaking on RTÉ's Morning Ireland, the minister said: "What Fianna Fáil focused on last night is that they said they could live with the 4% as long as we got more areas into rent pressure zones.

"What I have said is that we are going to bring more areas in but we have to do that on an independent assessment as opposed to the basis of politics. I am a minister here who has to implement this legislation and to make it work for the years ahead."

He said he would not make decisions for political convenience "knowing it is the wrong thing to do". 

Mr Coveney said he has offered a compromise; to look at cities like Galway and Limerick and other local areas to make decisions in the new year about having other rent pressure zones. He said it is not legally possible to do so before then.

The minister defended the 4% limit, saying: "It is based on what is happening internationally. If you look at other countries who have introduced rent limits, 4% is based on a modest rate of return so if people invest in the market they can have an increase."

He went on to say he has to take a holistic view of the whole market to make sure it functions and to make sure for both landlords and tenants it works effectively. 

"It is about protecting tenants in this report. If I do it in a way that undermines the business propositions of landlords then they will leave the market and we will make the situation worse."

Mr Cowen later said his party is prepared to do whatever is necessary to ensure the new rent legislation covers more areas than just Dublin and Cork.

Speaking on RTÉ's Today with Sean O’Rourke, Mr Cowen said he wants to ensure rent certainty for those who deserve it.

"I think there was an opportunity to debate in the Dáil today as our interest has always been to have good legislation."

Mr Cowen said they were prepared to compromise on some issues but added that had his party been consulted and had an opportunity to participate, they might be at a different stage to where they are now.

He said they now have to wait two to three months to see if other areas are going to be included in the rent pressure zones.