All your questions on the new 'Rent Pressure Zones' answered
Housing Minister Simon Coveney has revealed his long-awaited plan to tackle the rental crisis.
The standout measure is the establishment of ‘Rent Pressure Zones’ in Dublin and Cork which will restrict rent hikes to 4pc per annum. Here are the key questions on the plan:
What is a Rent Pressure Zone?
These are areas where rents are high and rising quickly which will now be subject to price caps. Legislation is passing through the Dáil and Seanad that will designate Dublin and Cork city as RPZs before Christmas. As a result annual rent increases in these cities will be restricted to 4pc per annum for the next three years.
Why just Dublin and Cork?
For an area to be designated as a RPZ the average rent registered with the Residential Tenancies Board must be above the national average and rising at a year-on-year rate of 7pc for four out of the last six months. Dublin and Cork city have been deemed as qualifying immediately but the RTB will have to study the rest of the country.
Are all rental properties in Dublin and Cork covered?
No. Properties that are new to the market (not leased at any time in the previous two years) will be exempt as will properties that have been “substantially refurbished”.
What happens after three years?
A RPZ status ends automatically after three years meaning the rent review process will revert to normal.
There were calls to link rent increases to the rate of inflation. Why didn’t Simon Coveney take this approach?
The minister said a “blunt rent cap” would disincentive landlords entering the market and “literally shut off supply overnight”. Noting that inflation for this year is negative, Mr Coveney said: “We want landlords to make a reasonable return.”
How does this affect the ‘rent certainty’ measures introduced last year?
The last Government introduced measures that restricted rent reviews to every two years. This rule will still apply outside of RPZs. They will cease to apply in Dublin and Cork but not until rents fall due for review.
What supply measures are being proposed?
The minister has announced a series of measures aimed at kick-starting supply. These include:
- Examining the tax/fiscal treatment of accommodation providers
- Using publicly owned land for development
- Promoting a build to rent model
- Supporting credit availability for bringing vacant stock into the private rental market.
- Exploring the potential to bring into use, for rental purposes, vacant properties where owners move to a nursing home under the Fair Deal scheme.