Rent increases to be capped at 2% under new housing plan

Rent increases will be capped at 2 per cent or linked to inflation if it is lower than this under new housing reforms to be brought to Cabinet on Thursday.

Minister for Housing Darragh O’Brien will bring legislation to Cabinet which will link rent increases to either the harmonised index of consumer prices or cap any increases at 2 per cent if inflation rises above this level.

Mr O’Brien has consulted with the Attorney General to ensure the plans can withstand any potential legal challenge, and the Government is confident that the new system will be legally sound.

Under the plans the law would be reviewed by the Minister for Housing every 12 months, but the measures will be long-term and aimed at halting further rises in rental prices in the coming years. “It is not a temporary measure, this is a permanent change in rental legislation,” he said.

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Mr O’Brien is planning to ask that pre-legislative scrutiny on the Bill be waived so that the legislation can be enacted as quickly as possible, potentially by the end of this year. That would mean the legislation goes directly into the Dáil and Seanad as early as this month.

“I want this through the Oireachtas in November, and I will be looking for the co-operation of all Deputies and Senators to do that.”

He described the proposed legislation as a “significant change” and “a tangible change for renters”.

“It’s important that it’s there. I would remind people as well that when I brought forward the original rent caps in July I did say at the time that inflation was on an upward trajectory, which we’ve seen right across Europe, and indeed across the OECD.”

Tenancies

The new legislation will give certainty to both tenants and landlords alike, Mr O’Brien said. The Minister also intends to bring plans to Government to legislate for tenancies of indefinite duration.

Headline inflation has risen to a 13-year high of 3.7 per cent on foot of pent-up demand and supply chain bottlenecks related to Covid-19. It is expected to surpass 4 per cent in the coming months before moderating next year.

According to Residential Tenancies Board (RTB), rents rose at an average rate of 7 per cent in the second quarter of 2021 to stand at €1,323 per month nationally and €1,848 per month in Dublin. It comes after a Threshold survey of 500 renters, aged between 18-44, suggested that 43 per cent of them had experienced unfair rent increases.

Almost one in three said they had experienced discrimination when renting. Just under 50 per cent of renters said it is common to have problems with a landlord who refuses to fix problems in a rental property.