Proposal to allow private accommodation providers to hike rents for students

Department of Higher Education wants RPZ rules changed to attract more developers into the student accommodation sector

A source said higher education minister James Lawless 'is trying to get student accommodation built in the most cost-effective way for the State, balancing affordability and viability'. Stock picture: Larry Cummins

The Department of Higher Education wants to allow private accommodation providers to hike rents for students more often to attract more developers into the sector.

The Department is at odds with the Department of Housing on how to address Rent Pressure Zones for student accommodation. 

The Department of Housing has proposed that private student accommodation providers would be able reset to market rents once every three years.

This would mean rents would not be reset until 2029 at the earliest.

However, the Department of Higher Education wants to allow for two resets to market rents during those three years.

Allowing rents to be reset was confirmed as part of changes to RPZ rules earlier this year, with landlords set to be permitted to return to market rents every six years, or when a tenant leaves a lease.

For most leases, rents hikes will be restricted to 2% per year. However, for new purpose-built student accommodation, it will be permitted to increase beyond 2%, but not beyond the rate of inflation.

Calls for a reset to market rents

The Purpose-Built Student Accommodation Council of Ireland has already called for a reset to market rents to come earlier than 2029.

A spokesperson for the council said only permitting resets every three years would “further discourage investment into the sector and deepen existing viability pressures at a time when Ireland faces acute undersupply of student housing”.

A source close to higher education minister James Lawless said he is supportive of the council’s proposal though the source denied such a change would hike rents for students. The source said: 

More beds will help students at all levels. Some can afford high-level private beds, some can afford mid-level, and some can afford digs. But at the moment there simply isn't enough beds. 

“Ultimately, he is trying to get student accommodation built in the most cost-effective way for the State, balancing affordability and viability. It's about activating private builders.”

It comes as Mr Lawless is expected to announce a new Student Accommodation Strategy in the coming weeks, which is aiming to deliver 42,000 beds by 2029. Of those, the target is 21,000 new-build private student beds.

While there is an overall target of 21,000 new builds, just as the Government has done with its revised housing plan, it will set out annual delivery targets in the strategy.

Scope for colleges to work with providers

The plan will also include a new system of ‘nomination agreements’, where universities can cooperate with privately-run student accommodation providers.

This will allow colleges and universities to agree with private accommodation providers to fill a certain number of rooms each year.

In other countries, this gives the university or college some level of control over the level of rent charged to students.