New cap on rent increases in Tullamore to be introduced

The cap on rent increases allowed in rent pressure zones such as Tullamore, Athlone and Mullingar is being changed to deliver "far lower rent increases" for tenants, according to the Government.

In July, the Government moved to change the rent pressure zone system, to ensure that rents were only allowed rise in line with inflation as recorded in the consumer price index, known now as the Harmonised Index of Consumer Prices (HICP).

Up until then, rent rises have been capped at 4% per year in rent pressure zone areas where demand is higher.

Now, however, with inflation rising, Minister for Housing, Local Government and Heritage, Darragh O’Brien has received Government approval to cap rent increases at 2% per annum in rent pressure zones.

This new cap will only operate when general inflation is higher than 2%. If the inflation rate is lower than 2%, so will the maximum permitted rent rise per annum.

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, to be published as soon as possible this month for urgent enactment thereafter. The cap will apply immediately upon enactment.

Commenting Minister O’Brien said, “When introducing the legislation to link any rent increases to HCIP in July, I was very clear on the need to carefully monitor inflation. At that time, HICP inflation averaged 0.73% p.a. over the previous 3 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.”

“In addition to significantly reducing the level of rent increases in RPZs, the Bill will also address long-term security of tenure by introducing tenancies of indefinite duration. This was a key commitment in Housing for All, our new housing Plan for Ireland.

“This Government is fully committed to improving the situation for renters in Ireland and we are making strides in this regard. We have tenants in situ in our first cost rental homes availing of rents which are up to 50% below the open market rate. Applications for other schemes have recently closed and from seeing the volume of applications we know that we need to significantly scale up cost rental in Ireland. Housing for All sets us on a path to achieving 18,000 cost rental homes between now and 2030 – an ambitious but achievable target,” he concluded.

Tullamore and Mullingar were added as rent pressure zones in April 2020. The Athlone local electoral area became a rent pressure zone the previous July.