RENT PRESSURE ZONES have been successful in curbing rental inflation despite a “clear need” for reform, according to the Economic and Social Research Institute.

The think-tank published its Quarterly Economic Commentary today, documenting the progress made in the Irish economy across several key areas such as housing, the labour market and finances.

The Rent Pressure Zones (RPZs) are designated areas of housing where landlords are not permitted to increase rents by more than 2% each year, with the aim of making the local rental market more affordable for tenants.

At the end of last year, 83% of private rental sector tenancies in the State were located in RPZs.

The ESRI says a “clear impact” has been made by RPZs, particularly in the most pressurised regions like Dublin which experienced rent increases of 1.3-1.5% in 2024 for ongoing tenants and 2.8% for new tenants.

For areas outside of RPZs, the increases were larger, reaching as high as 6.2% for ongoing tenants and 14% in tenancy changes. 

However, the report also cites a “clear need” for change in a number of areas.

The ESRI proposes setting appropriately calculated rent caps nationally. It also suggests the introduction of a system of reference rents which peg rent increases “to a reference rent for local dwellings of similar quality”.

Policymakers must reform the RPZ system, the ESRI says, in order to protect investment and encourage construction projects.