The Economic and Social Research Institute (ESRI) has revealed that Rent Pressure Zones (RPZs) have successfully limited rental increases across Ireland, while simultaneously calling for significant systemic reforms to improve housing affordability and investment incentives.
In its latest Quarterly Economic Commentary, the think-tank provided a nuanced analysis of the RPZ system, which currently covers 83% of private rental sector tenancies nationwide. The zones restrict landlords from increasing rents by more than 2% annually in designated high-pressure areas.
The data demonstrates a stark contrast in rent increases between RPZ and non-RPZ areas. Within RPZs, particularly in Dublin, rental increases averaged just 1.3-1.5% for existing tenants and 2.8% for new tenancies in 2024. In contrast, areas outside these zones experienced dramatically higher increases, with some regions seeing rises up to 6.2% for ongoing tenants and a staggering 14% during tenancy changes.
While acknowledging the RPZs’ positive impact, the ESRI emphasized the urgent need for comprehensive reforms. The institute proposed two key recommendations: establishing nationally calculated rent caps and introducing a “reference rent” system that would benchmark rental increases against local properties of similar quality.
The report underscores the delicate balance policymakers must strike between protecting tenants and maintaining an attractive environment for property investment and construction. By recommending systemic changes, the ESRI aims to ensure the long-term sustainability of Ireland’s rental market.
These findings come at a critical time when housing affordability remains a significant challenge for many Irish residents. The ESRI’s recommendations suggest a more nuanced approach to rent regulation that could potentially provide relief for tenants while preserving incentives for property development.
As Ireland continues to grapple with housing market complexities, the ESRI’s analysis provides valuable insights into potential strategies for creating a more balanced and accessible rental landscape.