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Rising inflation prompts rent-cap tweak

The Government has published a bill that caps rent increases in certain areas at 2%, and provides for tenancies of unlimited duration.

The Department of Housing pledged that the bill would be progressed to enactment “as a matter of priority”.

The Residential Tenancies (Amendment) (No. 2) Bill 2021 will limit rent increases to 2% a year in rent pressure zones (RPZs).

Around three-quarters of all tenancies are in areas designated as RPZs, according to the Government.

Inflation rising

Darragh O’Brien (Minister for Housing, Local Government and Heritage, pictured) had announced plans earlier this year to replace a previous 4% cap with one linked to inflation.

As inflation has risen more quickly than expected in recent months, the minister said the new limit would apply only when the rate of HICP inflation – a figure used to harmonise the measurement of price rises across the EU – was higher than 2%.

The legislation also proposes to provide enhanced tenancy protection, by making a ‘Part 4’ tenancy one of unlimited duration after a tenant has been in place for six months, and not subject to expiry at the end of a six-year term.

This measure is intended to apply to new tenancies starting six months or more after enactment of the bill.

In addition, where any existing tenancy is renewed after this time, it will become a tenancy of unlimited duration.