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LAST UPDATE | 8 Jun
CABINET IS SET to consider plans that will see rents for newly built apartments tied to the rate of inflation rather than capped at 2%.
It comes after Taoiseach Micheál Martin said that a decision on whether the Government would scrap or retain Rent Pressure Zones (RPZs) was expected this week.
RPZs are in parts of the country where rents are highest and rising, and where households have the greatest difficulty finding affordable accommodation.
Rents in an RPZ cannot be increased by more than the general rate of inflation or 2% per year, whichever is lower.
According to a government source, the plans being brought to Cabinet by Housing Minister James Browne this week will mean the 2% rent cap will not apply to apartments built after a certain date.
It is understood that there will be no changes for existing renters if they remain in their current tenancy.
However, if a person leaves a property, the landlord will be able to reset the rent at the current market rate.
It is also understood that tenancy protections will also be brought in, which will see a six year security of tenure for renters.
The move is being hailed as a significant development within Government, and it is being viewed as the ending of no-fault evictions for the first time in the State.
A Dublin CATU branch presented their RPZ paper to Browne recently at a protest, and it is understood he considered it closely.
RPZs were first introduced in Dublin and Cork in 2016 for a period of three years, but RPZs have since been expanded across the country.
They were to remain in place until 31 December 2024 but last May, the Government agreed to extend them until 31 December 2025.
Browne recently said that the Government wants to “strike a balance” in terms of driving supply while protecting renters.
A landmark report by the Housing Commission last year recommended that the use of RPZs be replaced with a system of “reference rents”, which would peg rent increases to a reference rent for local dwellings of similar quality.
The Housing Commission said such a reference should be reviewed at regular intervals.
Sinn Féin’s housing spokesperson Eoin Ó Broin has called the proposals “utter madness”.
He said there will now be four different rent setting rules and eviction rules for tenants: in RPZs and in existing tenancies; in RPZs and in new tenancies in existing rental stock; in RPZs and in new tenancies in newly built rental stock; and renters in tenancies outside RPZs.
“Renters are being punished for the Governments own housing failures with even higher rip off rents and greater uncertainty,” he said.
He also raised concerns that the changes will incentivise landlords to evict tenants in existing rental stock to avail of the ability to reset rents to new market rents.
For all tenancies created after 11 June 2022, tenants have a right to remain in a property for an unlimited duration after they have lived there for six months.
However, for tenancies created before June 2022, tenants who have lived in a property for six months only have the right to remain there for six years. This is known as a Part 4 tenancy.
Ó Broin told The Journal: “If the Government allows landlords to reset rents in between tenancies for existing rental stock to the full market rent, and if – this year, next year or the year after – those Part 4 tenancies come to an end, then there is a huge incentive for landlords to fully legally evict their sitting tenants to avail of the reset to market rents.”
He said it is “a timebomb” that will affect tens of thousands of renters.
“This will put any renter in a pre-2022 tenancy in an incredibly risky position if [the Government] make this proposal as it currently stands.”
Social Democrats TD Rory Hearne said that lifting the 2% rent cap “is a cruel decision by a government captured by vulture fund landlords”.
“There is no guarantee removing these rent caps will lead to an increase in supply of rental properties,” the party’s housing spokesperson said.
In fact, it will encourage the investor purchase of new build homes as rental properties – further pushing up house prices and locking home buyers out of the housing market.
Hearne said that without a no-fault eviction ban in place, lifting the 2% rent cap will lead to increased evictions and homelessness “as landlords evict tenants to get a new tenancy and bring the rent up to market rents”.
Ian Lawlor, managing director of Roundtower Capital, told RTÉ’s This Week programme that the proposal shows uncertainty and that a longer term plan with all-party buy-in is needed.
“The Rent Pressure Zones need to be unwound to stimulate apartment builds and a partial measure, I don’t think, will do it. It will bring in unintended consequences,” Lawlor said.
“I think having this two tier rental property market, you’re going to have a continuing deterioration in the lower tier, and you’ve got this extremely expensive pricing on the other tier, and what’s happening is not enough apartments are going to be built.”
He said that new builds being exempt from the 2% rent cap “will say to anybody that’s already invested in the Irish property market that they’re not valued”.
“It’ll say that we’re welcoming the new investors in, but you need to also show appreciation for the investors that have been in the market all along,” he said, adding that small investors will continue to sell up and leave the market.
Lawlor also said that while RPZs are sold as a protection for tenants, “what we see out there in the market right now is people that are staying in properties long after the property is suitable for them”.
Ultimately, the best protection for tenants is a competitive, uninterrupted market where the supply meets the demand.
He added that the Government must address the supply issue, and that “real steps” need to be taken. “I’m not seeing real leadership at the moment.”
Labour’s housing spokesperson Conor Sheehan said that “radical changes” to rent laws were needed, but to protect “the thousands of renters who are struggling to make ends meet”.
Sheehan said that he was “deeply concerned” at the approach pursued by the Government.
“The Minister can’t claim to be on renters’ side, and yet allow landlords to increase rents in between tenancies without any protection for renters,” he said. He said the proposed creation of a two-tier rental system would only serve to increase rent prices.
Sheehan called for the Government to examine the current rental system in Northern Ireland, where rental prices are considerably cheaper, to see how it can deliver apartments at a lower cost.
“Renters are the most vulnerable people in the housing system in Ireland. They cannot be thrown under the bus in order to satiate investors.”
Fine Gael TD Micheál Carrigy, who is chair of the Oireachtas Housing Committee, has said that any decision the Government takes in relation to RPZs “cannot pull the rug from under renters”.
“There can’t be just some sort of sort of cliff edge or some switch that just gets flicked in terms of supports and safeguards for renters,” Carrigy said.
He said the new measures “must mitigate against any negative impact on supply linked to RPZs”.
“There is an opportunity in the coming days to change the game for renters forever at the same time as making necessary changes to rent regulation policy.”
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