Plans to tie rents for new build apartments to inflation rate being brought to Cabinet
CABINET IS SET to consider plans that will see rents for newly built apartments tied to the rate of inflation rather than capped at 2%.
It comes after Taoiseach Micheál Martin said that a decision on whether the Government would scrap or retain Rent Pressure Zones (RPZs)
was expected this week
.
RPZs are in parts of the country where rents are highest and rising, and where households have the greatest difficulty finding affordable accommodation.
Rents in an RPZ cannot be increased by more than the general rate of inflation or 2% per year, whichever is lower.
According to a government source, the plans being brought to Cabinet by Housing Minister James Browne this week will mean the 2% rent cap will not apply to apartments built after a certain date.
It is understood that there will be no changes for existing renters if they remain in their current tenancy.
However, if a person leaves a property, the landlord will be able to reset the rent at the current market rate.
It is also understood that tenancy protections will also be brought in, which will see a six year security of tenure for renters.
The move is being hailed as a significant development within Government, and it is being viewed as the ending of no-fault evictions for the first time in the State.
A Dublin CATU branch presented their RPZ paper to Browne recently at a protest, and it is understood he considered it closely.
RPZs were first introduced in Dublin and Cork in 2016 for a period of three years, but RPZs have since been expanded across the country.
They were to remain in place until 31 December 2024 but last May,
the Government agreed to extend them until 31 December 2025
.
Browne
recently said
that the Government wants to 'strike a balance' in terms of driving supply while protecting renters.
'Utter madness'
A
landmark report by the Housing Commission last year
recommended that the use of RPZs be replaced with a system of 'reference rents', which would peg rent increases to a reference rent for local dwellings of similar quality.
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The Housing Commission said such a reference should be reviewed at regular intervals.
Sinn Féin's housing spokesperson Eoin Ó Broin has called the proposals 'utter madness'.
He said there will now be four different rent setting rules and eviction rules for tenants: in RPZs and in existing tenancies; in RPZs and in new tenancies in existing rental stock; in RPZs and in new tenancies in newly built rental stock; and renters in tenancies outside RPZs.
'Renters are being punished for the Governments own housing failures with even higher rip off rents and greater uncertainty,' he said.
He also raised concerns that the changes will incentivise landlords to evict tenants in existing rental stock to avail of the ability to reset rents to new market rents.
For all tenancies created after 11 June 2022, tenants have a right to remain in a property for an unlimited duration after they have lived there for six months.
However, for tenancies created before June 2022, tenants who have lived in a property for six months only have the right to remain there for six years. This is known as a Part 4 tenancy.
Ó Broin told
The Journal
: 'If the Government allows landlords to reset rents in between tenancies for existing rental stock to the full market rent, and if – this year, next year or the year after – those Part 4 tenancies come to an end, then there is a huge incentive for landlords to fully legally evict their sitting tenants to avail of the reset to market rents.'
He said it is 'a timebomb' that will affect tens of thousands of renters.
'This will put any renter in a pre-2022 tenancy in an incredibly risky position if [the Government] make this proposal as it currently stands.'
Can't 'pull the rug from under renters'
Fine Gael TD Micheál Carrigy, who is chair of the Oireachtas Housing Committee, has said that any decision the Government takes in relation to RPZs in the coming days 'cannot pull the rug from under renters'.
'There can't be just some sort of sort of cliff edge or some switch that just gets flicked in terms of supports and safeguards for renters,' Carrigy said.
'The level of rent people are paying in this country is extraordinarily high already and that is largely down to a lack of supply which must change.'
Carrigy said the Government's goal is to increase the supply of new homes, and measures to do this 'must mitigate against any negative impact on supply linked to RPZs'.
'There is an opportunity in the coming days to change the game for renters forever at the same time as making necessary changes to rent regulation policy.'
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