The Government is set to overhaul rent control rules for newly-built properties, with plans to tie annual rent increases to inflation instead of the current 2% cap. The proposed changes, aimed at boosting investor confidence and addressing viability concerns in the housing sector, will be presented to Cabinet by Housing Minister James Browne on Tuesday.
Under the new plan, the current 2% annual cap on rent increases in Rent Pressure Zones (RPZs) will no longer apply to newly built rental properties. Instead, rents in these developments will be permitted to rise in line with the inflation rate. Government officials say this will provide greater financial certainty for developers and landlords, particularly during periods of high inflation, when the existing cap could result in real-term losses.
The move is part of a broader strategy to address the so-called “yield gap” in the rental market, which the Government says has been a barrier to new housing supply. Further measures on viability and investment incentives are expected to follow in the coming weeks and months.
For existing renters, no changes will be made to the current rent rules so long as they remain in their tenancy. However, if a tenant vacates a property, the landlord will be allowed to reset the rent for a new tenant at the prevailing market rate. After that, annual increases would again be limited to 2% under current RPZ rules.
In a related step, new legislation will soon be introduced to provide enhanced protections for new tenants, including a guaranteed minimum tenure of six years. During each six-year lease cycle, landlords will have the right to reset rents to market levels, with 2% annual caps applied within each cycle.
Government sources have described the new measures as a landmark development in the rental market. Notably, the introduction of six-year tenure guarantees is being hailed as a key step toward ending “no-fault” evictions for the first time in the history of the State.
The proposed changes are likely to attract strong debate, with tenant advocacy groups expected to raise concerns about rent affordability, while the construction sector and institutional investors may welcome the shift as a means to support new housing supply.
