Rent Pressure Zones to be replaced

The existing rent pressure zone (RPZ) system will remain in place until 31 December 2021. Beyond this point, Minister for Housing, Local Government and Heritage Darragh O’Brien TD has indicated that his department is devising a new replacement system set to be unveiled in late 2021.

A Rent Pressure Zone is a designated area within which rents cannot be increased by more than 4 per cent per annum on new and existing tenancies. An area is determined to be an RPZ if the average rent in the previous quarter exceeds the average national rent in the quarter; and if the annual rate of rent inflation in the area has been 7 per cent or more in four of the previous six quarters.

These designated areas are located in regions where affordable accommodation is most scarce and are intended to curtail the rise in rents, creating a more stable and sustainable rental market.

In addition, taking effect from 4 June 2019, the Residential Tenancies (Amendment) Act 2019 introduced three new criterion relating to standardised average rents for RPZ designation.

1. Dublin areas continue to be compared to the national standardised average rent.

2. The Greater Dublin Area is compared to the national standardised average rent excluding Dublin.

3. Areas beyond the Dublin and the Greater Dublin Area are compared to the national standardised average rent excluding Dublin and the Greater Dublin Area.

Rent increases

The Daft.ie Irish Rental Report for Q1 2021 outlines that the average rent nationally is €1,443. In the first quarter of 2021, average rent in Dublin increased by 1.2 per cent, the most significant quarterly gain there since Q3 2018. Elsewhere, in Connacht-Ulster, rents increased by 4.6 per cent in Q1 alone, marking the second ever largest quarterly gain there, with rents are almost 8 per cent higher than one year ago. In Munster, the increase over the last year is 8.8 per cent, while in Leinster (excluding Dublin), year-on-year inflation exceeded 6 per cent. Overall, rents increased by 1.7 per cent nationally, year-on-year, marking the 35th consecutive quarter whereby rents are greater than one year ago.

Reform

Speaking with the Housing Magazine, Minister O’Brien stated: “I believe the rent pressure zones, introduced in 2016, which had a cap of 4 per cent on rent increases, became a target for some instead, these RPZs expire at the end of 2021 and I am working with my department on options for their replacement as part of an overall rent reform Bill which will be brought forward in the autumn.” 

Calling for a three-year rent freeze, Sinn Féin’s housing spokesperson Eoin Ó Broin TD commented: “I welcome that the Minister for Housing has finally accepted that rent pressure zones were not the solution to tackle rising rents and that the 4 per cent annual increase permitted was seen as a target for many landlords, as opposed to a limit.”

Current rent pressure zones