Q&A - Rent pressure zones: What do these changes mean?

Juno McEnroe answers the questions arising from the Government’s new strategy for the rental sector.

How will these new rent restrictions help tenants and when will they take effect?

Tenants in all of Dublin and Cork City will now be living in “rent pressure zones”, where rates can only be increased by a maximum 4% per annum for three years up until 2019. The effective rent cap will, stop surging rates being applied in the two areas but keep landlords and investors in the market by giving them nominal increases, says the Government.

The cap will come into effect in the coming weeks. Other electoral areas could apply to become rent pressure zones next March through the Residential Tenancies Board (RTB), depending on rates in their areas. Ultimately, the housing minister of the day will have the final say on any other rent-pressure zones.

How are changes different from the two-year rent freeze, introduced by the last government?

The previous two-year rent freeze will still apply on properties where it came into effect. Once this elapses, whether next year or the year after, rents will be subject to annual reviews under the rent-pressure zones process whereby rates could increase by a maximum 4% a year up until 2019.

The Government suspects that the previous two-year rent freeze, introduced by Fine Gael-Labour, is one of the main reasons why rents have rocketed recently.

Are all rental properties in Dublin and Cork covered under the changes?

No. New properties and vacant properties fixed up to rent will be exempt. Also, properties newly rented out in the last two years will also be exempt. This is so there is still an incentive for people to stay in the sector.

How will these new rent predictability measures be monitored and what sanctions will apply if landlords ignore them?

It is an offence for landlords not to be registered with the RTB, which monitors rates, conditions and takes complaints. Landlords who try to raise rates more than 4% can be reported to the RTB. Landlords, under existing rules, must justify rent rises by highlighting three nearby properties asking similar rates.

Why are these changes only being applied in Dublin City and county and Cork City?

Dublin and Cork have seen rises of more than 7% recently. Other areas, such as commuter counties and those bordering the capital, have also had huge rises.

They could be subject to rent pressure zones applications — but not until March of next year. There is still a restriction on rents for areas outside of Dublin and Cork, as agreed under the rental freeze introduced by the last government. New funds are available to do up vacant properties and to use land banks for development in rural areas.

Why did the Government not agree that rent rises would be tied potentially to more modest rises by linking them to the consumer price index?

Such restrictions, where landlords potentially would only apply increases of just 1%, would be detrimental to the rental market, says Mr Coveney.

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