This week saw the Irish Government introduce significant reforms to its Rent Pressure Zone (RPZ) regulations, aiming to balance tenant protections with incentives for increased housing supply.
Under the proposals the entire country could be made a Rent Pressure Zone before the Dáil rises for its summer break in mid-July.
Originally introduced in 2016 to cover Dublin and Cork, under the current rules around 83% of tenancies in Ireland are covered by RPZs. In these zones, landlords can only increase rent by 2% or the rate of inflation, whichever is lower, every year.
While the smaller increases can still apply, going forward landlords will only have the right to reset rents after tenancies of six years or if a tenant vacates the property and they are advertising it to a new tenant.
Under the proposed changes, yearly increases will still be capped at 2% or the rate of inflation, whichever is lower but that rate will now be linked to the Consumer Price Index (CPI) rather than the current system of linking to the Harmonised Index of Consumer Prices (HICP).
These changes aim to address Ireland's housing supply crisis while balancing tenant protections with the need to attract private investment in the rental market. The hope is that an increased level of development and new supply will eventually lead to more properties and falling rental costs.
So what are the key changes?
- Exemption for Existing Tenants
Current tenants will continue to benefit from the existing 2% annual rent increase cap, ensuring stability for those already in situ.
- New Tenancies and Market-Based Rents
For new tenancies commencing from when the changes are introduced, landlords will be permitted to set rents based on market rates, potentially allowing increases above the previous 2% cap.
- Inflation-Linked Rents for New Builds
Rents in newly constructed apartments may now increase in line with inflation, rather than being subject to the 2% cap, to attract investment in new housing developments.
- Enhanced Tenancy Security
The government plans for enhanced protection for renters in relation to security of tenure amounting to a minimum of six years. There will also be a ban on “no fault” evictions for landlords owning more than three properties. Small landlords can still end tenancies via a "no-fault eviction" in limited circumstances, such as economic hardship or to move a family member in, but if they do that, they cannot reset the rent
Amongst the potential concerns that have been expressed at the changes include:
- Risk of Increased Evictions: Critics warn that allowing rents to reset between tenancies could incentivise landlords to evict tenants, leading to higher turnover and potential homelessness.
- Impact on Renters: Opposition parties argue that these changes may disproportionately affect vulnerable renters, especially in areas with high demand and limited housing supply.
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