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ESRI Review of rent stabilization measures

Adam Duggan
19/04/2022

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Ireland

Section 36 of the Planning and Development (Housing) and Residential Tenancies Act 2016 introduced a mechanism by which specific areas could be considered for designation as a Rent Pressure Zone. A Rent Pressure Zone is a designated area where rents cannot exceed general inflation or 2% per year, whichever is lower.
 
Recently, the Economic and Social Research Institute (ESRI) examined the impact of these rent stabilization measures and published a report on their findings. The report entitled 'Rental Inflation and Stabilisation Policies: International Evidence and the Irish Experience' was published in April 2022. As well as reviewing international literature and experience on rent regulations and rent stabilisation measures in comparison with Irish measures, the report also reviewed the pricing in rent pressure zone areas in comparison with non-rent pressure zones to examine the effects of the regulations.

Speaking on RTE Morning Ireland recently, Dr. Conor O'Toole, Associate Research Professor at the ESRI noted the report had indeed identified that a degree of stabilization had occurred in the rent pressure zones areas following the introduction of the regulations in 2016. However, Dr. O'Toole also noted that the report found that internationally in certain circumstances, when landlords are faced with strict price controls they will often not maintain the buildings or stop investing in them. In extreme cases, properties will be taken off the market.

Dr. O'Toole further went on to note that a tight balance must be struck between having measures which protect tenants from excess inflation but also still allow the traditional investment and expenditure in terms of the quality of the building.

Since the introduction of the legislation, a large number of areas have been designated as a Rent Pressure Zone. For an area to become a Rent Pressure Zone the average rent in the previous quarter must be above the average national rent in the quarter and the annual rate of inflation in the area must have been 7% or more in four of the previous six quarters. The Residential Tenancies Board provide a list of the Local Authority areas and Local Electoral areas that have been designated as Rent Pressure Zones and the dates upon which they were designated.

Written by: Adam Duggan
 

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