Measures introduced to manage rent increases, known as Rent Pressure Zones (RPZs) are “well-intentioned but ill-advised”, says local auctioneer, Tony Wallace.
RPZs allow for restrictions on rents in high pressure areas. In these areas, rents can only rise by a maximum of 4% annually. These provisions are intended, according to the Residential Tenancy Board (RTB), “to moderate the rise in rents in the parts of the country where rents are highest and rising and where households have greatest difficulties in finding accommodation they can afford”.
For an area to be designated an RPZ, the annual rent inflation must have been 7% or higher in four of the last six quarters. There are already fourteen existing RPZs listed on the RTB website. The Minister for Housing is seeking data on rents from the RTB and if Limerick meets the above-mentioned criteria, a cap could be placed on Limerick rents.
Wallace, of Rooney Auctioneers, says that the intervention “has had unintended consequences on the housing market”, which could have a serious effect on the availability of rental houses in the city and surrounding areas.
While the implementation of RPZs has provided a degree of financial protection to tenants in those zones, Wallace says that it may also deter new investors from the rental markets, and reduce the already low rental stock in areas of increasing housing demand.
The current rental crisis is mainly due to lack of supply and unsustainable rent increases could continue until that is addressed, Wallace indicated. Existing legislation stipulates that the rent set for a property must be in line with local market rents for similar properties. Not all rental properties would be covered by the 4% annual rental restriction. New and recently renovated properties will be exempt from it.
Tenants renting in Limerick have never been so diverse, Wallace notes. He says that many people who have experienced rental markets elsewhere – where ownership isn’t an expectation – are coming home with the same mindset. He believes there has also been a growth in family lets with families from outside Ireland looking for larger properties to rent, and of senior staff from multinationals operating in the region looking for quality rental accommodation.
Wallace highlights the fact that high overhead costs, property tax and high rates of tax on income are preventing new landlords coming to the market and it is reducing the amount of new accommodation being offered.