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The 4% rent hike rule is being scrapped - now any increase will be decided by inflation

The new rules are set to come in this month.

Image: Sam Boal via RollingNews.ie

HOUSING MINISTER DARRAGH O’Brien has announced the rent pressure zone (RPZ) scheme is to be totally reformed and any rent increase will now be made in line with the nation’s inflation rate.

Previously, landlords were only allowed increase rents for properties in Rent Pressure Zones (RPZs) by 4% annually. 

However, under the new scheme, rent can only be increased in line with the Harmonised Index of Consumer Prices (HICP).

Minister O’Brien claims that this will result in far lower rent increases for the estimated 74% of all tenancies which are in RPZs.

He said the HICP averaged 0.73% over the past three years.

The key provisions are set to be inserted into the Residential Tenancies (No. 2) Bill 2021, published on 17 June. These reforms will take effect upon the passage of the Bill, expected by 9 July.

Concerns had been raised after it emerged that landlords would have been able to impose rent increases of up to 8% on some tenants as the Covid-19 rent freeze came to an end.

Measures that provided for a temporary ban on evictions and a rent freeze for those in financial trouble were implemented during the pandemic in Ireland. Current measures are set to end in July.

However, the new laws expected to be passed by 9 July will not allow for an 8% rise.

Minister O’Brien said he always acknowledged that for some, “the 4% cap on rent increases in RPZs became a target rather than a limit”.

“We are now taking action to ensure that tenants will only pay rent increases if required to, which are in line with general inflation, which is currently below 2%,” he added.

O’Brien said the bill will also restrict the level of upfront payments required of tenants, to a total value that does not exceed two months’ rent to cover any deposit and one month’s rent in advance.

The Residential Tenancies Board (RTB) will establish and maintain a new RPZ calculator and publish a table of relevant HICP values to assist with the lawful setting of rents in these pressure areas.

The RTB will be empowered to sanction any contravention by a landlord of the new rent increase restriction in RPZs linked to the inflation calculator.

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Sinn Féin’s Housing spokesperson Eoin Ó Broin criticised the proposals comparing it to “closing the gate after the horse has bolted”.

ÓBroin said the minister’s plans to extend the ineffective rent pressure zone legislation out to 2024 and to change the 4% rent cap to cap rises in line with inflation is too little, too late.

“The minister’s plans to keep the RPZ legislation is place, while limiting increases to inflation will do little to help tenants already struggling with high rents.

“Furthermore, what about the 26% of tenants who live outside rent pressure zone areas, those tenants will still be subject to the current system, which is deeply unfair,” he added.

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