Rent control: how the system might work

European systems seek to balance the interests of tenants and landlords

Housing support group Threshold says rent control could play an important role in protecting tenants from rapid price increases, especially those on low incomes.

Housing support group Threshold says rent control could play an important role in protecting tenants from rapid price increases, especially those on low incomes.

Mon, Jan 20, 2014, 01:00

Rent control has been floated as a way of tackling the rising cost of rent by Minister of State for housing Jan O’Sullivan. Potentially, it would ban landlords from increasing rents significantly in excess of the consumer price index, which measures rises in the cost of living.

Whether the Government will be prepared to interfere with the market, however, is another matter.

The previous rent control system in Ireland was abolished in the mid-1980s following a legal challenge by a former Fianna Fáil councillor which found them to be unconstitutional.

Rent controls are common across much of Europe. For the most part, the blunt instruments of old – which froze the cost of rent – have been replaced with newer and more flexible limits which seek to balance the interests of both tenants and landlords.

Germany – which has more renters than anywhere else in Europe – has a complex rental index which is updated annually and takes into account factors such as the age of a building, the quality of facilities and demand for a neighbourhood. Tenants may take legal action if landlords request rents significantly in excess of the index.

Similarly, countries such as the Netherlands, Switzerland and Sweden have differing forms of control.

In the Netherlands, for example, the government introduced a maximum limit for rent per square metre, with limits varying depending on the location of a property.

The idea of introducing rent controls here has met with a mixed response.

The Irish Property Owners’ Association is opposed to such a move argues that the abolition of rent control paved the way for better quality accommodation in Ireland.

Ronan Lyons, an economist with Daft.ie isn’t convinced that think rent control is a solution either.

“I haven’t seen many examples of it working well. It might cap prices, but people tend to end up paying in other ways, like queuing for places in high demand or getting accommodation through lotteries which takes away free choice. Do we really want that?” Lyons says.

The housing support group Threshold, however, says rent control could play an important role in protecting tenants from rapid price increases, especially those on low incomes.