
Rent Pressure Zones: Pressure on Government as it proposes to link certain rents to inflation
There is intense pressure on the Government as it proposes to carry out an overhaul of Ireland's
Rent Pressure Zone
(RPZ) system which could see certain rents tied to inflation.
Opposition parties have already heaped criticism on the proposals – due to be discussed at the highest level of the Coalition this evening – and the plans have met a mixed response elsewhere.
Under the proposals, the
current RPZ annual caps would not apply to new buildings constructed after a certain date
and rents in the newbuilds would instead be linked to inflation.
It comes as The Irish Times has learned that cost-rental tenants may benefit from lower rents in future amid discussion within Government on whether the
Land Development Agency
(LDA) should remain subject to corporation tax.
READ MORE
The LDA has opened a number of cost-rental developments for people who do not qualify for social housing. With private sector rents now exceeding an average of €2,000 per month, the lower cost-rental rents are in high demand.
A potential tax exemption for the LDA is being considered by the Departments of Finance and Public Expenditure.
Coalition leaders are due to consider the separate proposals for reforming the RPZ system when they meet later today in advance of a final decision on the plans due to be brought to Cabinet by Minister for Housing
James Browne
tomorrow.
Currently rent increases in RPZ areas cannot be greater than the rate of inflation or 2 per cent – whichever is lower.
There is concern that RPZs have negatively impacted the level of private investment in new housing developments. The proposal to get rid of the RPZ cap for newbuilds and tie the rent level to inflation is aimed at increasing private sector investment to deliver more housing.
RPZs should be continued until a comprehensive step-down plan is put in place
—
John Mark McCafferty of Threshold
The current 2 per cent rent increase cap would remain in place for existing tenancies, though landlords would be able to change the rents between tenancies, which is currently not permitted.
The changes to the RPZ system would be accompanied by enhanced protection for renters in relation to security of tenure amounting to a minimum of six years.
There would be a restriction on no-fault evictions during this six-year period – a measure that will require legislation.
The landlord would be allowed to reset the rent every six years to the market rate.
Sinn Féin TD
Eoin Ó Broin
argued that the changes would create a 'four-tier rental market', with different rent-setting and eviction rules for four types of tenants depending on whether or not they live in RPZs, when their tenancies begin, and when their homes were built.
He claimed this was 'utter madness' and suggested the changes would 'incentivise landlords to evict tenants in existing rental stock to avail of the ability to reset rents', raising particular concern over the potential implications for tenancies that began under rules in place before 2022.
[
Will the new rental reforms work? Mixed views among industry figures
Opens in new window
]
Social Democrats TD
Rory Hearne
argued that without a no-fault eviction ban, lifting the 2 per cent rent cap would lead to increased evictions and homelessness.
John Mark McCafferty of housing charity
Threshold
said that without RPZs tenants would likely face substantial rent increases, pushing them into financial distress and 'even possible homelessness'. He said that regardless of the next rent regulation steps, 'RPZs should be continued until a comprehensive step-down plan is put in place'.
Trinity College professor of economics Ronan Lyons said that while the proposals were a 'qualified positive' step, there would still be some rent controls for newbuilds in the form of linking rent to inflation, which could still present some 'challenges' for investors.
Irish Property Owners' Association (IPOA) chairwoman Mary Conway expressed concern at the potential for a 'two-tier market' with 'old rents versus new rents coming in'.
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The plan – and it has yet to be agreed – would see the current RPZ annual caps not apply to new buildings constructed after a certain date, with the rents in qualifying properties instead to be tied to inflation. [ Rent controls to be eased for new builds in planned 'pressure zones' reform Opens in new window ] And why would the Government create what looks like a two-tiered rental system? In fairness, there is already a two-tiered system, with some properties in RPZs and some not, so what the Government is considering is a three-tiered system. READ MORE What is the market currently like for rents? Rents are climbing faster than at any point over the past 20 years, with the national monthly average between January and March surpassing €2,000 for the first time, according to a report from That compares to a low of just €765 in 2011. Why are rents climbing so fast? Much of that increase is down to a lack of supply. 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Opposition parties have questioned the adequacy of these planned protections. Will the changes work? That is the big, big question. It is undoubtedly in the Government's interests that it does work. Part of the Government's pitch to voters in the run-up to the last general election was that the State had turned a corner on housing and that the supply of new homes would hit 40,000 in 2024. Completions instead fell by 7 per cent to 30,000. Housing commencements, which indicate future supply, have also fallen off a cliff, with housing starts in the first quarter of 2025 eight times down on last year and at their at their lowest level since 2016. The rate of building when it comes to apartments is even worse. What are interested parties saying about the proposals? Many are unconvinced. The housing charity Threshold has welcomed the degree of security it will give to tenants if restrictions on no-fault evictions are imposed for a six-year period. 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