Annual rent increases in RPZs to be capped at two per cent

Annual rent increases in RPZs to be capped at two per cent

Darragh O'Brien

Nearly three-quarters of all tenancies will see annual rent increases capped at two per cent under draft legislation published by the government yesterday.

The Residential Tenancies (Amendment) (No. 2) Bill 2021 will tighten the rent increase cap for tenancies in rent pressure zones (RPZs), though it will only operate when general inflation is higher than two per cent.

The bill also provides for tenancies of unlimited duration, another plank of the government’s Housing for All strategy.

A Part 4 tenancy will become of unlimited duration after a tenant has been in place for six months and not subject to expiry at the end of a six-year term (at the discretion of the landlord).

It is intended that this would apply to new tenancies commencing six months or more after enactment of the bill. Where any existing tenancy is renewed after this, it will become a tenancy of unlimited duration.

The Department of Housing, Local Government and Heritage said the bill “will be progressed to enactment as a matter of priority” and the rent increase cap will apply “immediately upon enactment”.

Rent increases in RPZs – which cover around 74 per cent of all tenancies – are currently prohibited from exceeding general inflation as recorded in the Harmonised Index of Consumer Prices (HICP).

Housing minister Darragh O’Brien said: “When introducing the legislation to link any rent increases to HICP inflation in July, I was very clear on the need to carefully monitor inflation.

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

“Given the unexpectedly fast rise in HICP inflation, I quickly moved to engage with the Office of the Attorney General and secured government approval to introduce a two per cent cap on rent increases in RPZs.”

He added: “This bill 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.”

Share icon
Share this article: