Inflation-linked rent increases may be capped once they hit a certain level

Minister for Housing Darragh O’Brien says he is ‘acutely aware’ inflation has begun to rise

Tánaiste Leo Varadkar argued in the Dáil that linking rents to inflation was a rent freeze in real terms. Photograph: Getty Images

Tánaiste Leo Varadkar argued in the Dáil that linking rents to inflation was a rent freeze in real terms. Photograph: Getty Images

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Rents will only be allowed to rise in line with inflation to a certain point before being capped under reforms being considered by the Department of Housing.

Reforms linking rent increases with the rate of inflation were introduced by the Government in July, but have been targeted as ineffective by the Opposition after inflation rose to 3 per cent in the latest figures, significantly in excess of recent averages.

The increase, were it to be sustained, could result in higher than anticipated rents.

Minister for Housing Darragh O’Brien has now asked his officials to examine whether the inflation-linked rent increases could be capped once they hit a certain level.

Mr O’Brien told the Dáil on Wednesday he was “absolutely acutely aware that as our economy recovers and people return to work after the pandemic, inflation has begun to rise”

When he introduced legislation linking increases to inflation rates he was aiming to do so “in an expeditious manner” to tackle an issue whereby landlords would have been able to impose rent increases of up to 8 per cent on tenants as Covid-era rent freezes expired, he said.

At the time he indicated he would keep an overall cap under review.

“I have already asked my officials to re-examine the rent control provisions with a view to introducing an overall cap so rents in rent pressure zones can only go up, if necessary, in line with general inflation to a maximum cap.”

Real terms

His comments came a day after Tánaiste Leo Varadkar argued in the Dáil that linking rents to inflation was a rent freeze in real terms, adding that freezing rents would mean some people could not afford to pay their mortgage.

“One person’s rent is another person’s income – it might be their pension, it might be how they pay their mortgage,” he said.

Sinn Féin housing spokesman Eoin Ó Broin said on Wednesday it was clear inflation was rising when the legislation was introduced earlier this year. “He was warned inflation was on an upward trajectory,” he told The Irish Times.

“The difficulty is there will be a lag. What is he going to do, wait until it hits 4 or 5 per cent? During all that period people can be hit with rent increases equivalent to or in excess of the original rent pressure zone legislation,” he said, calling for the introduction of an emergency period where any rent increases would be barred.