The Government is examining a recommendation in the Housing Commission’s report which backed the introduction of a system called “reference rents”.
This would mean limits regarding how much a landlord could charge would be related to factors such as location and size of property.
It is understood these reference rents could be one of a series of alternatives which will be brought to ministers in an options paper.
Government sources say that an extension of the rent pressure zones cannot be ruled out.
The Coalition is concerned about the housing completion figures published by the Central Statistics Office last month, showing a 24% drop in the completion of apartments in 2024.
Today, Irish Institutional Property, which represents many investors, said the existing system of rent controls has discouraged new finance from flowing into the industry.
Its CEO Pat Farrell said it has resulted in a “significant drop off” in apartment building.
Speaking in Brussels today, Taoiseach Micheál Martin denied that the Government would end rent pressure zones.
Mr Martin said: “We never used the phrase ‘end’ or ‘abolition’, by the way, or ‘scrap’ for that matter
“What we did say we would examine the Housing Commission report and the section on the rental market, which talks about examining an evidence-based approach to reforming the rental market.
“Particularly, it instanced a reference-pricing mechanism, but said that that must be informed by an evidence based approach and the degree to which there was a relationship between the rental market and supply.”
The Housing Commission report published in July showed that 42% of landlords left the market in the 26 months leading to December 2023.
Mr Martin said the Government would do the examination, but added: “We do need to bring more private sector investment into house building. We will protect renters.
“We brought in the rent credit specifically to do that, and the rent pressure zones have been effective in quite a number of areas.”
He said the key issue for investment was a stable environment which did not keep changing from year to year.
Those investing in the construction sector and rental market need a degree of certainty, he said.
This also applied to foreign direct investment into Ireland.
Refernce rents ‘much better’ than RPZs – Ó Broin
Sinn Féin’s Spokesperson on Housing Eoin Ó Broin said reference rents were “much better and more sophisticated” then rent pressure zones.
He told RTÉ’s Drivetime that reference rents “are part of Sinn Fein’s proposal”, adding the party “would have an element of reference rents for the setting of rents for new tenancies”.
However, Mr Ó Broin said: “It is not at all clear what the Government is proposing. I suspect Micheál Martin has no idea what he’s proposing.
“Obviously we’ll engage with them and we’ll set out what we think is correct.”
The Sinn Féin TD said reference rents are a form of rent regulation.
“I suspect the institutional investors who are lobbying intensively to scrap rent pressure zones will also be lobbying intensively for reference rents not to be introduced,” he added
He said rent pressure zones have “been problematic from the very start”, adding that any regulation that is introduced cannot allow rents to continue to “spiral upwards”.
“We need to stop them rising and we also need to, in many instances, bring rents down because renters simply can’t afford to pay for the mistakes of bad housing policy from Fianna Fáil and Fine Gael over the last of years,” he said.
Mixed reaction to rent pressure zone examination
The Irish Property Owners Association (IPOA) had welcomed that Mr Martin had signalled yesterday that the rent pressure zone system could be changed or removed by the end of this year.
IPOA chairperson Mary Conway said that she was “delighted to see that the Taoiseach recognised that rent pressure zones haven’t worked”.
“Rent pressure zones were supposed to protect tenants, but in fact it’s driven landlords out of the system and it’s given tenants less choice,” Ms Conway said.
Threshold CEO John-Mark McCafferty said that the charity is “very much alive” to the issues facing landlords.
Speaking on the same programme, he said that it is “really important” to find a middle ground.
“We’re very mindful that over the last 12 years that rents have increased without pause and the rent pressure zones, what they’ve done, is they’ve tried to protect the excesses of rental hikes but rents have still increased,” he said.
“The return of 2% is still a very favourable return compared to a lot of financial products, so we have to balance the need to protect renters with the other considerations around the market,” Mr McCafferty added.
The Director of Advocacy at Focus Ireland said possible changes to rent pressure zones “has only got investors in mind”.
Mike Allen said the Taoiseach’s comments “caught a lot of people by surprise”, adding that his first reaction was to think of the “tens of thousands of people who are absolutely struggling to pay their rent and keep a roof over their head under the current system”.
The reason, he said, that landlords and investors are leaving the housing market is “because nobody has the faintest idea what the Irish Government is going to do next”.
He said the Government “keep on reacting to whatever crisis there is” or “bad news piece” by announcing a new measure.
He added that the Government is reverting to a position in which it is making up a new headline as “a reaction to criticism they’re getting elsewhere”.
Mr Allen said long-term rather short-term housing measures should be considered to address uncertainty.
He added there is an “over concentration” on short-term measures coming from “advocates for the investors”.
“They’re wrong in that,” he said.
Mr Allen said: “You need to not only get investors to see at the time they’re making a decision that the return is viable, but that that policy that’s in place is going to last over the term of their investment.”
Additional reporting Tony Connelly
Article Source – Govt examines introduction of ‘reference rents’ system – RTE