BY JOHN ELLIS, FINANCIAL ADVISOR
Ireland’s housing crisis has reached a critical juncture as the Government rolls out reforms to Rent Pressure Zones (RPZs) sparking fierce debate over tenant protections and housing supply. Last week the Cabinet approved changes to the 2016 RPZ rules which has capped rent increases at 2% annually since 2021.
The decision driven by Minister for Housing James Browne aims to balance renter security with incentives for investors.
But critics warn it may deepen affordability woes.
The reformed RPZs to become effective soon will tie rent increases for new tenancies in newly built properties to inflation thereby scrapping the 2% cap to attract investment. Existing tenants will remain protected with the 2% limits continuing, but new tenants will face market-rate rents with subsequent hikes capped at 2%.
New legislation will also guarantee six-year tenancy security, acknowledged by Taoiseach Micheál Martin as ending no-fault evictions. Martin calls the package “well-balanced,” arguing it supports renters while boosting construction.
However, opposition figures like People Before Profit’s Paul Murphy slam the reforms as a “failed strategy” favouring corporate landlords.
Sinn Féin’s Louise O’Reilly argues they prioritise developers over renters, noting evictions are rising and protections like the tenant-in-situ scheme are underfunded. Rents already up 90% since the Celtic Tiger era risk becoming “completely unaffordable,” Murphy warns.
The housing industry, including the Irish Property Owners Association, cautiously welcomes the ability to reset rents which could stem small landlords’ exodus especially outside Dublin.
Yet a 24% drop in apartment construction last year partly blamed on the 2% cap underscores the challenge. The Housing Agency’s recent report to Browne flagged the cap’s limitations echoing OECD suggestions to allow market-rate resets when tenants leave though this risks incentivising evictions.
Broader supply issues is still a major problem. The Government’s 2025 target of 41,000 homes is “extremely challenging,” Browne admits with the Economic and Social Research Institute forecasting just 34,000 houses built well below the 50,000 to 60,000 required as per the Central Bank and Housing Commission. Last year’s overstatement claiming 40,000 homes when only 30,000 were built fuels scepticism.
Infrastructure bottlenecks compound the crisis. Uisce Éireann can connect only 35,000 properties annually without an additional €2 billion with CEO Niall Gleeson urging multi-annual funding and planning reforms to speed up projects. Fixing existing water system issues could cost €60 billion by 2050 highlighting the scale of investment needed.
Public frustration is palpable, with reports that young couples are considering emigration due to rising rents and lack of accommodation.
The Government insists housing is its top priority, but commentators warn it is “running out of time” to deliver.
As reforms take effect the Coalition faces a tough task of convincing a weary public that progress is possible while rents soar and homes remain out of reach.
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