Rent zones in focus as costs rise by €100 in year

Housing Minister Darragh O'Brien has asked the Residential Tenancies Board (RTB) to introduce a targeted campaign to identify and penalise landlords that are not complying with limits on rent increases in areas designated as 'Rent Pressure Zones'.

The Minister issued a statement on the issue after the RTB's latest rent index report last week showed that, nationally, rents had risen by 7%, year-on-year, up to the end of June.

In Offaly, where the Tullamore Electoral Area is a designated Rent Pressure Zone (RPZ), average rents countywide climbed by a whopping 12.1% between June of 2020 and June of this year.

According to the RTB's report, the standardised average rent in Offaly stood at €883.53 at the end of the second quarter of 2021, which was €95.19 higher than it had been a year previously.

The report said the average rent in the Tullamore area was €984.38 at the end of June, which was higher than the average rent recorded in Athlone (€931.49).

Rent increases were initially capped at 4% per year in RPZs, but in July of this year the rules changed and now rents in these areas cannot be increased by more than general inflation, as recorded by the Harmonised Index of the Consumer Price (HICP).

While Minister O'Brien last week focused on landlords not complying with the limits on rent increases, the Institute of Professional Auctioneers & Valuers responded by querying the way the rent increase figures were presented by the RTB.

It said the figures "should carry a major health warning" because the RTB was not, as yet, able to differentiate between properties within Rent Pressure Zones which were subject to the RPZ rules and those within RPZs which were exempt from the rules.

Pat Davitt, Chief Executive of the Institute of Professional Auctioneers & Valuers, said properties new to the rental market were exempt from the RPZ rules on first letting, even though they may be within a designated RPZ.

"Landlords offering properties for rent for the first time are free to charge whatever rent they can achieve on the first rental, even though the property may be inside a designated Rent Pressure Zone area," he said.

He also stated that properties being let for the first time in two years were exempt from the rules, even though they may be within designated pressure zone areas.

"Until the RTB can differentiate between the two scenarios it cannot, with any authority, indicate the extent of who may be breaking the RPZ rules," said Mr Davitt.

"We have much hype about landlords breaking the rules when, in fact, policymakers or the RTB itself do not know the extent of the problem and it is likely to force changes in the law based on insufficient data."

Mr Davitt's statement, on Thursday last, came a few hours after one issued by the Housing Minister in which he said he had asked the RTB to "initiate a targeted campaign to aggressively identify and pursue non-compliance" with the rent pressure zone rules.

The Minister said that, where landlords circumvent the legislation in relation to the rent caps, the RTB had the power to investigate and apply sanctions, with fines of up to €15,000 and/or costs of up to €15,000.

"I am particularly concerned for any tenants who might be facing, or are already contending with, a rent increase because of their landlord's non-compliance," said the Minister.

"I would encourage anyone seeking more information on rent pressure zones to visit the RTB website where a new rent pressure zone calculator is available to help landlords, letting agents and tenants understand if a rent increase is permissible and, if so, the upper limit allowed."

The figures used in the RTB report are based on the actual rents paid in registered tenancies, as opposed to the asking prices advertised for properties when they become available.

Rents rose by more than the national average in each of the Midlands counties, with the highest increase in the region on a year-on-year basis seen in Longford, at 15.9%, followed by Offaly at 12.1% and Laois at 10.6%.