AFTER MONTHS OF a slow drip of information from the Government, tonight is the night that a decision is expected to be made on how Ireland’s rental system will be overhauled.

Back in February, Taoiseach Micheál Martin warned the Fianna Fáil parliamentary party to brace themselves for “unpopular decisions” on housing.

At the time, he signalled that the Government would be examining rent pressure zones (RPZs), but after a flurry of criticism from homeless charities and opposition TDs, he was quick to clarify that no decision had yet been made on whether to retain or scrap the rent caps.

Four months later, it is now crunch time for one of those “unpopular decisions”, with the Housing Minister James Browne set to meet with Government leaders tonight.

At this meeting, they will decide on changes in how rent prices are regulated in Ireland.

Although nothing is set in stone yet, we do have a good idea of the changes the Housing Minister wants to introduce.

But why does the Government want to move away from the current system? Have RPZs not worked and limited rent inflation?

What are RPZs?

RPZs were introduced in Cork and Dublin in 2016 in a bid to protect renters from the rising cost of accommodation.

At the time they were seen as a temporary measure and were put in place for a period of three years, but have since been extended to other parts of the country where rents are highest and rising, and where households have the greatest difficulty finding affordable accommodation.

Rents in an RPZ cannot be increased by more than the rate of inflation or by more than 2% per year, whichever is lower. Up until 2021, the cap was higher at 4%.

RPZs apply to both new and existing tenancies unless an exemption is in place.

They were to remain in place until 31 December 2024 but last May, the Government agreed to extend them until 31 December 2025.

At the end of last year, 83% of private rental sector tenancies in the State were located in RPZs.

What is the Government’s argument for overhauling them?

Taoiseach Micheál Martin has pointed to the recommendations in last year’s Housing Commission report, a landmark report on housing in Ireland, when asked about the plans to scrap the rent caps.

At the time, the Commission said that a “radical” reset of housing policy was needed, and among its recommendations was for the rental sector to be reformed for both tenants and landlords.

It recommended that RPZs should be reviewed as they might lead to “potential inequalities, inefficiencies or other outcomes that are contrary to policy objectives”.

It said that market rents should be regulated “fairly and effectively by reforming the current system of rent regulation and establishing a system of ‘Reference Rents’.

On top of this, the Taoiseach has argued that the RPZ system needs to be examined because there is not enough private investment in Ireland’s rental sector at the moment.

But have RPZs been effective?

The verdict on this is mixed.

In its report last year, the Housing Commission stated that landlords have been “constrained” by RPZs and noted that they have “reported a lack of policy certainty and diminished net rental returns as reasons for leaving the rental market”.

The report stated that the regulatory framework has become “more and more complicated for landlords” and referenced research that suggested that the regulatory requirements are not being complied with in full.

It also noted that renters are experiencing affordability challenges due to historically high rents, with a shortage of rental supply on top of this.

The Commission also pointed to a report from the IMF on Ireland, which drew negative conclusions about the impact of RPZs.

That report argued that RPZs have contributed to a ‘two-tier’ rental market, whereby existing tenants enjoy lower rents, while those seeking a new tenancy are faced with significantly higher rents.

It also linked this regulatory framework to a lower supply of rented accommodation.

Overall though, the Commission was of the view that rent regulation is an integral part of a well-functioning rental market, as both tenants and landlords need certainty.

It argued that a balance had to be struck between the affordability needs of tenants and the profitability needs of landlords to enable the sector to operate properly.

Similarly, the ESRI is of the view that RPZs have been effective at limiting rent increases, but that reform of the system is needed in order to encourage construction projects.

Research released by the think-tank in March found that on average, rents in Dublin increased by 1.3-1.5% in 2024 for ongoing tenants and 2.8% for new tenants.

For areas outside of RPZs, the increases were larger, reaching as high as 6.2% for ongoing tenants and 14% in tenancy changes.

Like the Housing Commission, the ESRI also proposed setting up a “reference rent” system which would peg rent increases “to a reference rent for local dwellings of similar quality”.

What has been the Opposition reaction to plans to change RPZs?

Firmly negative.

These proposed changes are coming at a time when the Government is under pressure from left-leaning parties, trade unions and homelessness charities to create policies that favour renters over landlords.

Sinn Féin’s housing spokesperson, TD Eoin Ó Broin is of the view that renters are being punished for the Government’s failures on housing.

In recent months, he has argued that scrapping rent pressure zones will lead to more homelessness.

Likewise, Social Democrats TD Rory Hearne, an academic who has written a book on the housing crisis, has said his party will “strenuously resist” any attempt by the Government to end RPZs.

Hearne has argued that the Government is prioritising the profits of international investors and developers over the needs of ordinary renters.

The Labour Party’s housing spokesperson Conor Sheehan has described RPZs as being “very ham-fisted” but said that, regardless, they are the “only bit of protection renters have in the private rented market at the moment”. 

Next week, the Raise the Roof campaign group will hold a demonstration outside Leinster House that is likely to heap further criticism on the government.

The protest is seen as a reboot of the campaign and will coincide with a cross-party private members’ bill calling for emergency action on the housing crisis.

People Before Profit TD Paul Murphy said the Government’s new plan could amount to it “unleashing the landlords on renters”.

Ethel Buckley, deputy general secretary of SIPTU, said she also fears the move will include “greater sweeteners for investors”.

Mike Allen, director of advocacy at Focus Ireland, said while there has been an increase in the amount of affordable housing built, it has not curbed homelessness and a dedicated homelessness plan is needed.

Allen says homelessness organisations don’t see protesting as an act of opposition to the Government, but rather as part of a democratic process where issues are raised.

So what exactly is the Government proposing?

As of right now, we don’t know for sure what will be in tomorrow’s announcement, given that late-night negotiating between government leaders may still happen.

What we do know is that the Housing Minister is planning to introduce a change that would allow landlords to reset rent between tenancies.

Existing renters would likely remain protected by the current 2% cap but according to a Government source, the plans being brought to Cabinet by James Browne this week will mean the that 2% rent cap will not apply to apartments built after a certain date.

It is also understood that tenancy protections will be brought in, which will see a six-year security of tenure for renters.

More detail is expected tomorrow after the plans are discussed by Cabinet.

With reporting from Mairead Maguire.