The regulation of the rental market in Ireland could change from the current rent pressure zone (RPZ) system to a new “reference rent” system as proposed by the Housing Commission last year.
A review of the current RPZ system is being carried out by the Housing Agency and is expected to be completed by the end of the first quarter of this year.
The policy options arising from this review “will be fully considered by the Government,” the Department of Housing told The Irish Times.
One of the options being considered is a recommendation in the report of the Housing Commission published in May 2024 which proposed replacing the RPZ system with ‘reference rents’.
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Under this new system rent increases would be determined by a reference rent for local homes of a similar quality, rather than the 2 per cent cap currently in place under the RPZ system.
RPZs were introduced in Ireland in late 2016 to cap rent increases in areas where there is high demand for housing and for rental homes.
Where an area has been designated a RPZ, rent increases cannot be greater than the rate of inflation or 2 per cent, whichever is lower.
In the proposed new system, the reference rent rate would be reviewed at regular intervals and rent would not rise more than a certain percentage above this reference rent over a specific period.
This rent regulation would continue to transfer between tenancies, so that if a tenancy ends the same regulations apply to the subsequent tenancy, discouraging the termination of tenancies purely to increase rental income.
This new form of rent control would apply across the country, not just in specific zones.
Speaking in Brussels on Monday, Taoiseach Micheál Martin said the rules governing the rental market needed to stop “chopping and changing from year to year”, in order to boost private investment.
He pushed back on suggestions he intended to abolish rent pressure zones, saying he could not “pre-empt” the outcome of a Government review of housing policy.
Housing lecturer at Technological University Dublin Lorcan Sirr criticised the suggested change to rental controls, saying that if stability was what the market needed, this in itself was “policy flip-flopping”.
Lifting rental controls would see “rents rocket, homelessness increase and home ownership plummet,” while there was a strong argument to be made instead for focusing on the reduction of noncompliance with the existing RPZ legislation.
“There are question marks over any new system – on what basis would rents be calculated and by whom? Would it take account of different property attributes? What would be the appeals mechanism and how would it be enforced? There are questions that need to be worked through,” Sirr said.
Michelle Norris, director of the Geary Institute for Public Policy at UCD and member of the Housing Commission, said the majority of members in the commission agreed Government should regulate rents but that the RPZ system needed to be reformed so that there was stability in regulation and a move away from constant change.
The enforcement of any regulation was a key concern of the commission, Prof Norris told The Irish Times, as well as a move away from a “flat” rate regulation of rent.
“Other European countries have rent regulations that are linked to a reference rent being charged for similar properties in that location that are of a similar quality and size.”
The majority of those on the commission believed the idea of a nationwide reference rent system of control was “a better way of balancing the rights of vulnerable tenants while also encouraging landlords to stay in the market,” Prof Norris said.
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