Government urged to apply 'rent brake' to protect tenants from large rent hikes under new law

Under the proposals, landlords will be able to reset rents at market rates every six years for new tenancies signed after March.

The Government has been urged to introduce a “rent brake” to protect tenants from sudden or extreme rent increases under new proposed laws.

The Oireachtas Housing Committee included this among 11 recommendations for the Government’s general scheme of the Residential Tenancies (Amendment) Bill on measures set to come into effect from March 1.

The changes due to take effect would represent a significant overhaul of existing rental legislation.

It will mean that, from March, when a tenant leaves a property, the landlord can set rent for new tenants at the market rate.

This is a departure from the existing system, where rent increase is limited to a maximum of 2%.

Renters will see the introduction of six-year tenancies running from March until 2032. Larger landlords will only be able to evict a tenant in limited circumstances.

But, under the proposals, landlords will be able to reset rents at market rates every six years for new tenancies signed after March.

The Government defended the measures as encouraging investment while strengthening the rights of new and existing tenants, but the opposition called the new measures an “omnishambles” and said renters would be “thrown under a bus”.

As part of its scrutiny of the proposals, the Oireachtas Housing Committee heard from multiple stakeholders, including the regulator Residential Tenancies Board (RTB), charity Threshold and the Irish Property Owners Association.

“[We] sought the opinions of stakeholders on whether the proposed legislation would lead to increases in rents,” its report said. 

No witnesses said that they believed rents will fall because of the legislation.

“Community Action Tenants Union expressed its fear there would be “massive” increases in rents when they were allowed to be reset to market rates.

“Threshold warned that if rents in the future were to rapidly increase, a future government may have to intervene, possibly having to remove the option for market rent resets, or through a rent freeze.” 

On foot of this contribution, the committee recommended a “rent brake” mechanism in the legislation to protect tenants against future surges.

It also recommended that the minister for housing should not proceed with any changes to the regulation of rent in student-specific accommodation without “meaningful” consultation with student representative bodies, and an assessment made by the Department of Housing on how the changes would affect students.

Concerns were also raised about how complex the legislation was and how aware landlords and renters were of the changes.

“[We are] also concerned about the amount of misinformation regarding the proposed legislation that seems to be circulating, and with the apparent lack of understanding of and fear of the new legislation among landlords and tenants alike,” it said.

It said the Department of Housing and the RTB should “significantly ramp up” their communications campaigns around the changes in the coming weeks.

Furthermore, it recommended “the distinction between large and small landlords should be reconsidered, to account for the number of properties owned, rather than the number of tenancies held”.