The Taoiseach has set the government on a collision course with Fianna Fail - by defending the proposed caps for rental increases.

Fianna Fáil says the 4% limit for rent increases in Dublin and Cork is too high and needs to be lowered.

But this lunchtime during Leaders' Questions, Enda Kenny is standing by the 4% level, for four reasons:

• The need to give a reasonable rate of return on investment for landlords, while also avoiding a 'spike' effect at the end of a three-year cap
• The fact that a 4% return was incorporated into its Irish Strategic Investment Fund policy
• The fact it was one-fifth lower than the standard annual rent increase experienced over the last seven decades, and around half of the current national rent inflation rate
• The fact it was lower than similar caps that currently exist in Germany, New York, Sweden and Switzerland

He urged Fianna Fail to relent and make sure the measures are passed by the Dáil before Christmas, for fear that landlords would otherwise take the time to force through further increases. 

But Fianna Fail is calling for the rate to be lowered to 2%, indicating that it is prepared to compromise at 3%.

Amendments to give effect to the new regime must be tabled by Wednesday lunchtime, meaning there is little time for an agreement to be reached.

Sinn Féin and other parties are calling for any future rent increases to be automatically linked to the rate of inflation, as was suggested by the all-party committee on housing and homelessness.

Our political correspondent Gavan Reilly reports: