New rent controls 'could take years' to work

A leading Mayo estate agent believes it “could take years” before the impact of new nationwide rent controls is felt in the county.

The Government announced last week that the existing rent controls for areas of high demand will be extended across the country. Rent pressure zones (RPZs) were introduced in 2016 to help control spiralling costs for tenants. 

Westport became the first RPZ in Mayo in 2023 followed by Castlebar which received the designation only in recent weeks.

The RPZ system, due to expire at the end of the year, has in effect been extended nationwide and sees all existing tenancies in Ireland come under a 2% cap or inflation, whichever is lower.

Gerard O’Toole. Director of Tuohy O’Toole estate agents, said the original version of the RPZ may have contributed to some landlords exiting the long-term rental market.

“I suspect that some people are navigating their way out of long-term tenancies, not least because of the rent pressure zones but also maybe because of some other issues one finds in terms of things like vacant possession and sometimes not getting paid or the property not being maintained.

“The industry has suggested that putting in some of those draconian rental measures ultimately drives investors out of the marketplace and I think there is evidence to suggest that is the case,” said Mr O’Toole.

He said the new measures being proposed are complex.

“It’s an attempt on the part of Government to try and incentivise private investment into the private rental sector which has totally dried up,” said Mr O’Toole.

“Based on my understanding of the measures it’s essentially going to create a two-tier market. There will be existing tenancies which are rent control protected and then there is going to be new provisions for new construction after a certain time,” he added.

He said the "true test" of the legislation will be how many new properties it will bring to the market. 

“Even if it is a success it’s probably going to take several years for it to really make any meaningful difference,” Mr O’Toole remarked.

He said aspects of the new legislation may alleviate some of the issues that have led to a RPZ designation causing landlords to flee the long-term market in favour of the likes of Airbnb. 

“The big benefit is between tenancies they can now review the rent up to market level. Even with an existing tenancy, the market rent will be achieved within six years.”