Putting a Cap on it - Update to Changes to Rent Pressure Zone Legislation

Not long after the Residential Tenancies (No. 2) Act 2021 (The "2021 Act") has been signed into law, the Minister for Housing, Local Government and Heritage, Darragh O'Brien has received government approval to adjust the cap on rent increases in Rent Pressure Zones ("RPZs") again.

Whereas the 2021 Act limited rent increases to 4%, the Residential Tenancies (No. 3) Bill 2021 (the "Bill") will link rent increases to either the harmonised index of consumer prices or cap any increases at 2% if inflation rises above this level. The Bill is set to be published this month with urgent enactment thereafter. The Bill allows the cap to be reviewed by the Minister for Housing every twelve months, with the measures aimed at halting further spikes in rental prices in the long-term.

This further adjustment to the rent increase cap has been brought about in light of the accelerated rise in inflation the Irish economy has been experiencing. At the time of the enactment of the 2021 Act in July 2021, the rate of interest was below 2%. This has since increased to 3.7% and is expected to reach 4% in the coming months.

This measure highlights a quick pivot by the government in addressing the rapid rise of the cost of renting in Ireland. The Residential Tenancies Board calculated that rents rose at an average rate of 7% in the second quarter of 2021.

In addition to addressing the rent increase caps, the Bill will also seek to introduce tenancies of indefinite duration as a means to address long-term security of tenure for residential tenants. This was a significant commitment made in the Housing for All plan introduced by the government this year.

We await seeing what further measures will be introduced once the Bill is published, which is expected to be in the coming weeks.

Written by Paddy Smyth and Matthew Skelly.