NEW RESEARCH SUGGESTS that two-in-five tenants in Rent Pressure Zones (RPZs) still face rates of increases above 4% despite caps.

Under RPZ legislation, annual rent rises are capped at 4% in certain areas. 

New research published today, commissioned by the Residential Tenancies Board (RTB), provides insights into the impact RPZs are having on rental trends, including landlords and tenants in Ireland.

The research shows that there has been a moderation in price inflation of 2.5% to 3% per annum within the designated RPZ areas. 

Rent Pressure Zone (RPZ) laws were first introduced in December 2016 by then-Housing Minister Simon Coveney in order to tackle spiralling rents.

RPZs are located in areas of the country where rents are highest and where households have the greatest difficulty finding affordable accommodation. 

Increases above the cap

Today’s report has found that the share of properties whose annualised rental increase was greater than 4 per cent dropped from 73.2% in quarter 4 of 2016 to 42.5% in quarter 3 of 2018 in RPZ areas.

From the researchers’ assessment, the likelihood of a tenant receiving an increase above 4% fell by approximately 23 percentage points after the introduction of the legislation.

This suggests that two-in-five of those tenants who have re-registered a tenancy still face rates of increase above 4%, the report said.

The report noted that, with the data available, it isn’t possible to determine whether this is due to non-compliance with the RPZ scheme or whether it is due to valid exemptions from the scheme, such as substantial renovations taking place. 

Under the current laws, a landlord can evict a tenant and raise the rent above the limits if substantial refurbishment is carried out on the property.

Properties within RPZs are also exempt from the 4% restriction if they have not been let at any time in the previous two years.

However, the laws surrounding RPZs have come in for criticism over the past year. 

TheJournal.ie has previously reported that there have been multiple warnings and anecdotal reports that landlords are using the clauses to evict tenants, carry out minor refurbishments and then charging new tenants significantly higher rents.

The flouting of rental laws by landlords, as well as the fact that the market is weighted heavily for demand rather than supply, has led housing advocates and opposition politicians to state that Rent Pressure Zone legislation is not working as it should be in tackling rising rents.

Speaking to TheJournal.ie in March, Sinn Féin housing spokesperson Eoin Ó Broin TD said: “Rent pressure zones aren’t working in the areas they are currently being applied and, therefore, we need more than the extension of rent pressure zones. We urgently need a rent freeze across the State.” 

Echoing the words of Ó Broin, Labour’s housing spokesperson Jan O’Sullivan TD said that RPZs are “clearly not working”. 

Commenting on today’s report, RTB director Rosalind Carroll noted that there has been “significant debate” around the effectiveness of RPZs since their introduction. 

“There are now 65% of tenancies in Rent Pressure Zones and since their introduction in 2016, we’ve been monitoring the impact reports closely,” Carroll said.

“This is the first in-depth analysis of the impact of the RPZs which will help inform and strengthen future strategy and most importantly government policy going forward.”

Minister for Housing Eoghan Murphy said the research shows RPZs are having a “positive impact on rent inflation”, but noted that they are “not enough”. 

“It’s not enough but people would be paying even higher rents today were it not for these rent controls. I believe we can get inflation down further still with the new measures,” Murphy said.

“Some renters are still facing increases of greater than 4% within Rent Pressure Zones and that is why the new legal powers that I have recently given to the RTB are so important. Landlords breaching rent caps can now be more effectively investigated and sanctioned.”

With reporting by Cormac Fitzgerald