A major new report by the Organisation for Economic Cooperation and Development (OECD) has recommended allowing rents to be freely adjusted between tenancies, marking a significant shift from current restrictions.
The report comes as the Government reviews existing rent limits amid concerns that they are deterring institutional investors from funding new housing projects.
Currently, Rent Pressure Zones cap rent increases at 2 per cent per year, regardless of tenant turnover.
However, the OECD cautioned against policies that could incentivise landlords to evict tenants.
“Ireland should allow rents to be re-set between tenancies and adjusted for inflation during a residency, but care should be taken that it does not lead to unfair termination of contracts,” the report stated.
The study also warned that the current cap may have pushed landlords to sell properties, as rents have fallen below the cost of maintenance.
It further highlighted that strict rent controls can reduce housing supply by discouraging developers and lenders from investing in the market.