Why the government's upcoming Rent Pressure Zone reform will hurt everyone
Think the housing crisis is bad now? Wait til you see what's coming down the tracks.
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An Irish Times article:
There is a housing crisis in Ireland.
This simple truth is still not recognised by the Irish government. There is no official housing crisis, in law or in policy.
16,000 homeless, the highest figure in the recorded history of the state
… nearly 5,000 of these are children, also the highest recorded figure25%+ parents said they did not have enough to feed their kids in the last 12 months (2023)
… that’s up from 19% the previous yearthe average rent nationwide rose by 100%+ over the past 10 years, while the average full-time salary rose by only 34% (*1) (*2)
… that means the average rent has risen at x3 the pace of the average salary
… it now exceeds €2,000 per month, another record (*3)
As living conditions deteriorate, our coalition government continues to favour the ‘haves’, preventing the next generation from owning homes — unless they inherit.
Like the vast majority of people in Ireland, I live in a Rent Pressure Zone (and you probably do too, you can check here). I am lucky enough to be able to afford my rent. However, many are not — in fact, a third of renters are paying 50%+ of their income on rent (2022).
Rent Pressure Zones (or RPZs) were first introduced in 2016 to curb rent inflation. Today, 83% of all private tenancies are in a Rent Pressure Zone. They are meant to cap annual rent increases at 2%, although even RTB statistics show it’s likely this cap was ignored.
Now, the government wants to get rid of Rent Pressure Zones.
And yes, that’s as bad as it sounds.
The government has stated that RPZs will be extended to the whole of the country, but what they are actually doing is the opposite.
Here are the facts:
All new tenancies after March 2026 will be allowed to:
(1) tie rent increases to inflation, not a 2% cap
(2) reset rent to market rate‘Indefinite duration’ tenancies will be scrapped, replaced by 6 year rolling tenancies.
What does that mean?
It means Rent Pressure Zones are getting scrapped. By 2032 at the absolute latest, 6 years on from when the change takes effect, all tenancies in Ireland can reset to market rate.
And yet: There is no official number or formula for “market rate”. That means there is no actual limit to how high rent can be raised.
In the middle of a housing crisis, which the government still refuses to officially recognise, regulations are being gutted to encourage landlords to raise the rent.
So what’s going to happen after 2026?
The government are doing this because they want private investment to build the houses we need (by making our rent profitable to foreign investors). That’s the same strategy they’ve been using for over 10 years now.
However, it doesn’t work. There needs to be a minimum of 68,500 housing completions every year, for the next nine years, to meet demand. The reality is that last year, there were only 30,300 completions — missing the target of 40,000 by a wide margin. The math still doesn’t add up, after years of trying the same approach.
We have the money. Let’s spend it.
Our corporation tax is astronomical. We can easily use it to provide public housing for all. We need to solve the housing crisis instead of making it profitable — the only way to solve youth emigration and barriers to growth.