‘Government should consider if rent pressure zones should be abolished’

Under current legislation, rent pressure zones are areas where rent increases are capped at a maximum of 2% a year or the rate of inflation, whichever is lower.

The Government should consider if rent pressure zones should be abolished, a draft copy of the rent sector review has said.

The review, which is not yet complete, also calls for a “periodic critical review” of the Residential Tenancies Board (RTB) to ensure that it is operating efficiently for tenants and landlords.

The document was discussed at the Cabinet subcommittee on housing in recent days.

It has suggested that the RTB should carry out a campaign on rental standards, to ensure landlords are aware of those standards and existing compliance requirements.

The document recommends that the review of rent pressure zones should be taken ahead of their expiration at the end of 2025.

It is understood that the report recommends that any review should consider whether or not rent pressure zones should be either “continued, removed or modified”.

Under current legislation, rent pressure zones are areas where rent increases are capped at a maximum of 2% a year or the rate of inflation, whichever is lower.

The rules apply to both new and existing tenancies.

They are primarily located in areas of the country where rents are high and increasing, including in Cork City, Carrigaline, Cobh, and Fermoy.

In May, the Government agreed to further extend rules to the end of 2025.

The latest rent index from the RTB has shown that new tenants are paying significantly more than existing tenants to rent a property.

The recent report of the housing commission has also recommended that rent pressure zones be changed, by introducing a new system of so-called ‘reference rents’.

This system would peg rent increases to a ‘reference rent’ for local properties of a similar quality. 

This means rent could not increase a certain percentage above this ‘reference rent’ over a specific time period.

“When introduced, the rent pressure zones were envisaged as a temporary measure. Seven years later, the system of regulation needs to be made fit for purpose for the longer term,” the report said.

The latest rent index from the RTB has shown that new tenants are paying significantly more than existing tenants to rent a property.

The price for a new tenancy grew by 9.1% last year, while existing tenancies rose by 5.9%.

While this is above the 2% rent pressure zones rules, the RTB has insisted that this does not mean there are widespread breaches of the law.

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However, it did say that measures are required to tackle landlords illegally increasing rents.

The report also speaks to the need to increase the provision of cost-rental housing across the country.

Last year, there were 869 cost-rental properties delivered by local authorities, the Land Development Agency, and affordable housing bodies combined.

A further 97 properties were converted into cost-rental properties through the tenant in-situ scheme.

Under Housing for All, the Government has set a target of 18,000 cost-rental homes being delivered by 2030.