Restrictions on rent increases are to be eased for newly built homes but the current caps would remain in place for existing tenancies under plans to be considered by the Government this week.
Decisions on the major overhaul of the Rent Pressure Zone (RPZ) system are expected to be made by the Coalition over the next 48 hours.
Any easing of the RPZ system is likely to be politically contentious and will be closely scrutinised by Opposition parties.
The reforms are being considered following a review of RPZs which was introduced in 2016 to cap rent increases in areas where there is a high demand for housing and rental homes.
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Under the current system, rent increases in locations designated as RPZs cannot be greater than the rate of inflation or 2 per cent – whichever is lower.
There has been some concern that the RPZ system has negatively impacted on the level of private investment in new housing developments.
Under the proposals being considered by Government, the current RPZ annual caps would not apply to new buildings constructed after a certain date – a measure aimed at increasing private sector investment to deliver more housing.
The Irish Times understands that rents in the newbuilds would instead be tied to inflation.
The current rent increase cap of 2 per cent annually would remain in place for existing tenancies, though landlords would be able to change the rents between tenancies, something they currently are not allowed to do.
The changes to the RPZ system would be accompanied by enhanced protection for renters in relation to security of tenure amounting to a minimum of six years.
There would be a restriction on no-fault evictions during this six-year period – a measure that will require legislation.
The landlord would be allowed to reset the rent every six years to the market rate.
The Coalition leaders and senior Government ministers are expected to discuss the plans during a meeting on Monday evening.
Ultimately the proposals would then go to Cabinet on Tuesday morning for a final decision.
A Housing Commission report, published last July was critical of RPZs and proposed changing them to a “reference rent” system that pegs rent increases to nearly homes of a similar quality.
