Rent cap ‘moderating’ tenancy price inflation

Research indicates rises in rent pressure zones would be 3% higher in absence of restrictions

The Residential Tenancies Board  has found two in five tenants are still seeing increases above the 4 per cent annual rent rise cap. Photograph: Bryan O’Brien

The Residential Tenancies Board has found two in five tenants are still seeing increases above the 4 per cent annual rent rise cap. Photograph: Bryan O’Brien

 

Rent pressure zones have had a “moderating” effect on rent inflation, but two in five tenants are still seeing increases above the 4 per cent annual cap, new research has found.

The report by the Residential Tenancies Board (RTB) shows rates in rent pressure zones (RPZs) would be 3 per cent higher if the restrictions were not in place.

Landlords operating within RPZs cannot increase rents by more than 4 per cent each year.

Larger reductions in rental inflation within RPZs were seen in counties Louth and Galway, than was evident in Cork and Dublin.

RTB’s director, Rosalind Carroll, said the research is a sign that rent regulation is “starting to work”.

While she welcomed the slowed growth, Ms Carroll said there was still a “level of non-compliance within the RPZs”. Two out of five tenants living in restricted zones saw increases of more than 4 per cent.

The research, conducted by the Economic and Social Research Institute (ESRI), found the share of properties exceeding the 4 per cent cap dropped from 73 per cent in the fourth quarter of 2016 – before RPZs were introduced – to 43 per cent in the third quarter of 2018.

Sanctioning landlords

While it is expected that some of these were unfounded increases, the data could not discern between those and properties that were exempt due to being new to the market or significantly renovated.

Since the research was conducted, the RTB was given new powers to investigate and sanction landlords for breaches of the legislation. Landlords are now required to notify the RTB when seeking an exemption, and the organisation will be able to check that the immunity is appropriate.

The research also had a qualitative element. In a survey of 500 tenants living both inside and outside of RPZs, Coyne Research found that more than half of respondents had never heard of the term rent-pressure zone. Similarly, for those living within an RPZ, 52 per cent were unaware of any restrictions in place.

Ms Carroll highlighted this as an issue, saying, “We need to do more in the information and education space” to increase awareness of legislation and tenant rights.

“There is still quite a lot of people out there who don’t understand RPZs or even know about them,” she said. “We need to engage more and more with both landlords and tenants so that they get to know what they should be doing.”

Penalised feeling

She added that “unless people know the law and know the regulation, it doesn’t really matter”.

Furthermore, the report highlighted a level of frustration among landlords in RPZs who felt they were penalised for keeping rents low before the introduction of the cap and then trapped below market-rate once it was introduced. Of the 775 landlords, surveyed 55 per cent believed the restrictions were unfair.

Minister for Housing Eoghan Murphy said people renting in newly announced RPZs “can take some comfort” from the independent research, that the legislation will help to keep their payments under control. He said it proved rent controls are having an impact, although “not as much” as he would like.

While the Fine Gael TD noted that rates in pressure zones “haven’t risen as quickly as they might have”, he said,“Rents are still too high and they are still rising unsustainably.” Recent changes to legislation should work to have “a positive impact”.