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04th Nov 2021

2% cap on rent increases in Rent Pressure Zones approved by Government

Stephen Porzio

Rent caps Ireland 2021

It is said the measure will result in “far lower” rent increases for tenants.

Housing Minister Darragh O’Brien has received Government approval to cap rent increases at 2% per annum in Rent Pressure Zones (RPZs).

Earlier in the week, the Minister confirmed he would be bringing a piece of legislation to Cabinet on Thursday to “cap rent increases at 2% or the rate of inflation – whichever is lower”.

RPZs are designated areas where rents cannot be increased by more than general inflation, as recorded by the Harmonised Index of the Consumer Price (HICP), and are located in parts of the country where rents are highest and rising.

Previously, RPZs could not see an increase in rent of more than 4% annually before a decision in July of this year by Government to link rent rises in these areas to inflation.

This change was made with the aim of bringing about “far lower rent increases” for tenancies located in RPZs, but with a recent “unexpected rise in inflation” the new cap has been approved.

It will only operate in RPZs when general inflation is higher than 2%.

“When introducing the legislation to link any rent increases to HCIP in July, I was very clear on the need to carefully monitor inflation,” Minister O’Brien said in a statement.

“At that time, HICP inflation averaged 0.73% p.a. over the previous three years but had risen to 1.6% p.a. in the year ending June 2021.

“Given the continuing rise in HICP inflation, I quickly moved to engage with the office of the Attorney General and to secure Government approval to introduce a 2% cap on rent increases in RPZs.

“This measure respects the constitutionally protected property rights of landlords and aims to safeguard continued investment in the sector by existing and new landlords to deliver the requisite supply of high-quality rental accommodation.”

According to Government, the key provisions are now being drafted as “a matter of priority” and are set to form part of the Residential Tenancies (No. 3) Bill 2021.

The Government is aiming to publish the bill “as soon as possible” for urgent enactment thereafter, with the cap applying immediately upon enactment.

“This Government is fully committed to improving the situation for renters in Ireland and we are making strides in this regard,” O’Brien added.

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