Residential Tenancies Bill, which caps rent increases at 2% is published

The Residential Tenancies Bill, which will cap rent increases at two percent annually in Rent Pressure Zones (RPZs) has been published today.

Minister for Housing Darragh O’Brien TD welcomed the publication saying that the bill “respects” the property rights of landlords while also aiming to “safeguard” the rental market.

The bill also provides for tenancies of unlimited duration, a reform committed to under Housing for All, the Government’s recently published plan to create a sustainable housing system in Ireland.

The bill will be progressed to enactment as a matter of priority. The rent increase cap will apply immediately upon enactment.

The previous cap of 4% on annual rent increases was replaced on 16 July 2021, with rent increases in RPZs currently prohibited from exceeding general inflation as recorded in the Harmonised Index of Consumer Prices (HICP).

The aim was to bring about lower rent increases for the estimated 74% of all tenancies which are in RPZs.

HICP averaged 0.73% over the three years to July 2021.

Given the unexpectedly fast rise in inflation, a rent increase cap of 2% per annum will apply under this Bill when the HICP inflation rate is higher.

Commenting Minister O’Brien said: “When introducing the legislation to link any rent increases to HICP inflation in July, I was very clear on the need to carefully monitor inflation.

“At that time, HICP inflation averaged 0.73% per annum over the previous three years but had risen to 1.6% per annum in the year ending June 2021.

“Given the unexpectedly fast rise in HICP inflation, I quickly moved to engage with the office of the Attorney General and secured Government approval to introduce a 2% cap on rent increases in RPZs.

“This bill 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 also addresses long-term security of tenure by introducing tenancies of unlimited duration.

“This is a key commitment in Housing for All, our new housing Plan for Ireland.

“The legislation proposes to provide enhanced tenancy protection by making a ‘Part 4’ tenancy one of unlimited duration after a tenant has been in place for six months and not subject to expiry at the end of a six-year term (at the discretion of the landlord).

“It is intended that this would apply to new tenancies commencing six months or more after enactment of this bill.

“In addition, where any existing tenancy is renewed after this time, it will become a tenancy of unlimited duration.”