The Economic and Social Research Institute (ESRI) has established that rent cap increases have effectively kept a lid on increases, but essentially worked to lower the supply of accommodation. The ESRI’s report indicates that rent pressure zones primarily benefit existing tenants, compared to those seeking accommodation.
Eurostat, the European Union’s statistical agency, shows that home rentals in Ireland have increased by 66% since 2010, making it the third highest increase in the EU region.
Combined research conducted by the Department of Housing Research and ESRI found a clear economic rationale for price stabilisation mechanisms under certain economic conditions. But the ESRI’s Professor Conor O’Toole highlights the fact that evidence shows that the benefits of rent controls have proved to accrue to existing tenants. Plus, he points out that the controls “come with supply-side health warnings” because they tend to lower investment and maintenance in buildings, and lower overall rental supply in certain cases.
Rent pressure zones, which cover most of the country, were introduced in late 2016. Up until early 2020, the maximum allowable rent increase was 4% in these zones.
Runaway rental rises mean that Ireland is one of the most expensive in Europe in which to rent a home. But, “analysis of the research suggests that ongoing pressures in the general housing market, and the robust macroeconomic recovery, would mean that absent the rules, rental inflation would be notably higher,” he said.
The most recent report from the Residential Tenancies Board found that national rents shot up by 8.3% in the year to the end of last September compared with the previous year. This was the highest national growth rate seen since the end of 2017. But the ESRI comments that international evidence suggests that rent limits are justified in many contexts.
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