NEW STRATEGY FOR THE RENTAL SECTOR
This Strategy builds on work already underway across the five pillars of Rebuilding Ireland and focuses, in particular, on the four key areas which Rebuilding Ireland identified for action in the rented residential sector;
Security – bringing greater certainty to tenants and landlords;
Supply – maintaining existing levels of rental stock and promoting additional supply through encouraging new investment and bringing unused capacity to the market
Standards – improving the quality and management of rental accommodation;
Services – broadening broadening and strengthening the role and powers of the RTB to more effectively provide key services to tenants and landlords.
The most significant measure is the introduction of Rent Pressure Zones – a form of rent caps
RENT PRESSURE ZONES
Therefore, a time-bound system of rent predictability based on the concept of rent pressure zones is to be introduced. Under this system, those areas which have experienced the most significant increases in rent, would be designated as rent pressure zones, the effect of which would be to limit rental increases, both within existing tenancies and between tenancies, to 4% p.a. for a specified period.
This, combined with changes introduced in 2015 to extend the notice period for rent reviews to 90 days, will make rent more predictable for tenants and limit increases, while landlords will have a predictable return in respect of any rental property within a rent pressure zone according to the Minister.
The new system, which will apply in Dublin and in Cork City at the outset has the following features:
- New supply (new build and existing supply that is new to the rental market) will be exempt:
- Rent pressure zone designations will be for a limited duration (up to 3 years); and
- The designation will be based on objective, measurable criteria, i.e. where –
- the annualised rate of rent inflation in an area, as measured through data collected by the RTB , has been 7% or higher in 4 of the last 6 quarters, and
- the level of rent in the area is above the national average rent.
This system will be provided for in amendments to the Planning & Development (Housing) and Residential Tenancies Bill 2016, currently before the Oireachtas. The rent certainty measures introduced in 2015 providing for rent reviews every 2 years will cease to apply in rent pressure zones according as rents fall due for review, being replaced by the rent predictability measures outlined above, but will continue to have effect in other areas until they expire in 2019.
The plan also contains a large number of other measures including changes to rental standards and inspections
More to follow…..