Tenants starting new leases could lose out under the Government's new rent proposals, according to auctioneer Savills.
Reacting to reports that rents are to be fixed within tenancies for a two-year period, director of research John McCartney said landlords would respond and “simply frontload rents on day one”.
“Looking at the proposals, there will be winners and losers,” he said. “Sitting tenants who have just agreed rent reviews would benefit most as they would face no further increases for another two years.
“However, the longer it is since their last rent review, the shorter the period of immunity that tenants will have and the less they will benefit.
“But some tenants will actively lose out. Those who are starting new leases will face higher costs because landlords will simply frontload rents on day one to compensate for the fact that they won’t have any increases for another 24 months.”
From landlords’ perspective, Mr McCartney said the “major concern” has always been that if rent certainty was done badly it could “stifle investment and drive up rents by choking-off supply”.
“Thankfully, the reported measures would be unlikely to put off new investment,” he said. “New landlords coming to the market are not tied into an historic rent level – they can charge the open market rate on day one.
“This open market rate will simply adjust upwards as landlords price in the fact that they can’t increase the rent for two years.”
Focus Ireland spokesman Roughan Mac Namara said the homelessness charity was "highly concerned it will fail to stem the constant rising flow of 70 to 80 families becoming homeless in Dublin alone very month".
"While we acknowledge the efforts of Minister Alan Kelly, and that the new measures proposed will have some positive impact, they are far from a convincing response to the scale of the problems we are facing."
Pat Doyle, the chief executive of the Peter McVerry Trust, said the move was "good news for tenants" and would "help rein in rent price increases that have played a huge role in new cases of homelessness this year".
“The move to a two year fixed rental period offers additional security to tenants and certainty on the costs of rental accommodation,” he said.
“The fact that this type of two year fixed cost rental contract will apply for at least four years means that large quantities of new supply should have been delivered during the intervening period.”
He continued that in order to ensure the measures have the “maximum positive impact” the Government should take two immediate actions.
“Firstly, we need legislation within hours of formal Cabinet approval to bring into affect the two year fixed cost rental contract to avoid an immediate spike in rents and thus resulting in an accidental increase in homelessness,” he said.
“The legislation also needs to clearly outline the measures which will place a strict onus on landlords to prove the rent charged is not above market rents.
“Secondly, and an essential element in ensuring that the first measure is not undermined, is to make every necessary resource available for the Residential Tenancies Board to allow them to monitor compliance by landlords and intervene rapidly and robustly when landlords are deemed to be non compliant.”
