Taoiseach Enda Kenny has said the Government will withdraw its rental plan unless Fianna Fáil accepts a 4 per cent cap on rent increases.
Mr Kenny told the Fine Gael parliamentary party that the principle outlined by Minister for Housing Simon Coveney must remain in the plan.
Earlier on Wednesday, Fianna Fáil had proposed halving the 4 per cent cap the Government is seeking to place on rent increases in Dublin and Cork city over the next three years.
Minister for Housing Simon Coveney has said the 4 per cent cap is “not negotiable”.
Mr Coveney and Fianna Fáil housing spokesman Barry Cowen are meeting on Wednesday night in an attempt to reach agreement on the strategy.
Fianna Fáil has been demanding changes to the strategy, which was announced on Tuesday by the Minister, in order to secure their support for it.
The party is also adamant the relief should be offered in other areas of the country.
Mr Coveney's position is that the entire strategy would be undermined if the 4 per cent figure is changed and he would be unable to bring the plan through the Oireachtas.
However, he said he is willing to bring forward an assessment of areas outside of Dublin and Cork to ascertain if they qualify for rent caps.
Speaking on RTÉ’s Today with Sean O’Rourke, Mr Coveney said: “If Fianna Fáil want to take it on, then so be it.”
Political sources say they expect the parties to reach a compromise in order to allow the policy pass through the Oireachtas and take effect in the new year, despite disagreements between them.
Government sources, however, said Mr Coveney is preparing to face down Fianna Fáil on the issue.
Mr Coveney’s “rent predictability” plan will apply for three years and would mean landlords could only increase rents by 4 per cent a year in that period.
Under the plan, a household paying a monthly rent of €1,300 in Dublin or Cork city now could only see it rise to some €1,470 by 2019.
Not rushed
Speaking on Wednesday, Mr Coveney said the rent proposals had not been rushed as there was a three-month consultation process.
“We will now have to work with all responsible parties because there are many families under huge strain. We need to take proactive action,” he said.
The Minister said it would be politically popular for him to only focus on the plight of tenants in the strategy, but without landlords there would not be a functioning market.
“In order to have balance, the Government has to try to take into account the maintenance of both sides of the market.
“There were lots of things [Fianna Fáil] looked for that they’re getting in this legislation.”
The Minister said the time to look at incentives for landlords was at budget time.
Mr Coveney said he would work with the Minister for Finance to put in place a working group to examine the possibility of tax incentives for landlords.
He said he wanted to stabilise the rental market and pointed out that 88 per cent of landlords own only one property.
“If we cut off supply we will be having this same conversation next year, if I’m still in this job.”
He said among the issues of concern to Fianna Fáil was the inclusion of other parts of the country in the rent cap.
“We will work to make that happen,” he said.
‘Cumbersome’
Earlier, Mr Cowen said his party had “genuine concerns” about several aspects about the Government’s rental strategy.
He said the methodology of the Minister’s strategy was “cumbersome”.
"The current model is limited in where it applies to. We want Galway and Limerick and other large population centres around Dublin to be included," he said.
The Offaly TD also said he was not satisfied with the 4 per cent rent cap.
He said that the current rent levels were abnormal and an increase of 4 per cent was too much.
He told Newstalk Breakfast that Fianna Fáil had proposed a 1 to 2 per cent cap.
“There is no doubt that these proposals are a step in the right direction, when the opportunity presents itself, we will seek to make amendments,” he said.
Mr Cowen said tax incentives should have been included in the strategy.
