Friday 19 July 2019

Two in five tenants in rent pressure zones faced increase above 4pc cap

Minister Eoghan Murphy says zones stopped rents spiralling. Photo: Frank McGrath
Minister Eoghan Murphy says zones stopped rents spiralling. Photo: Frank McGrath

Allison Bray

Two out of five tenants in rent pressure zones (RPZs) had rent increases above the ceiling of 4pc since the controls were introduced, a new study by the ESRI has found.

Despite the Government's introduction of RPZs in 2016 to curb rapidly rising rents in high-demand areas like the Greater Dublin Area, almost half of tenants (42.54pc) "still face rates of increase above 4pc", the ESRI revealed in its report 'Trends in Rental Price Inflation and the Introduction of Rent Pressure Zones in Ireland'.

The report was discussed at a seminar hosted by the State's Residential Tenancies Board (RTB) in Dublin yesterday.

While the bulk of tenants living in RPZs saw their rents increase by between 2.4pc and 3pc a year between the last quarter of 2016 and the third quarter of 2018, "the growth rates are still above 4pc" for many tenants, said ESRI economist Dr Conor O'Toole.

However, the reason for the anomaly is not clear-cut, the ESRI found.

"It is not possible to determine whether this is due to non-compliance with the scheme or valid exemptions such as substantial renovations," the ESRI noted.

Under RPZ rules, landlords who put a new property on the rental market or who do substantial renovations to the property may apply for exemptions to the law which prevents them from hiking rent by more than 4pc a year.

However, the ESRI said it was "striking that the ratio of above 4pc annualised growth rates remains at a high level across Ireland even after the introduction of the RPZs".

"Since the RTB database does not include information on renovations that may have been carried out, we cannot assess to what extent the rent increases comply with the regulation," the report stated.

"However, there is a concern that the effectiveness of RPZs in reducing rent inflation is undermined by a high share of tenancy agreements that are not in accordance with the 4pc cap, either due to non-compliance or for other reasons."

John-Mark McCafferty, CEO of the Threshold housing agency, said he believes it's a combination of issues.

"Surely the exemptions will have an impact. But some landlords are also using the exemptions inappropriately so they are not applying them to the letter of the law. Or perhaps they are choosing to deliberately make some kind of move which contravenes the measures.

"I also think it is and will continue to be a landlord's market," he said. As a result some tenants may be afraid to challenge them out of fear of eviction, he added.

"There is that stark reality that landlords know that tenants are afraid to raise their head above water about standards or rent increases or other issues because they know of the lack of supply out there and the competition among those demanding housing, so it is a very pressured market," he said.

RTB director Rosalind Carroll said she believes "there is a level of non-compliance out there". However, she said new powers recently given to the RTB to investigate landlord/tenant disputes and impose sanctions as well as now having access to a database of landlord exemptions will allow the RTB to go after those who are flouting the law and close loopholes.

Housing Minister Eoghan Murphy said the RPZs are "having an impact" on spiralling rents.

"It's not as much of an impact as we would have liked," he said, but added that they have helped to keep rents from spiralling out of control.

The new RTB powers and closing of landlord exemption loopholes will also give tenants "a new layer of protection", he said.

Irish Independent

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