Rent trap: tenants face double hike in prices as freeze ends

Average national rents can go up €100 a month, and €140 in Dublin, as a loophole allows hikes for two years in one go.

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The controversial measure causes a major headache for embattled Housing Minister Darragh O’Brien as he struggles to show progress on the housing crisis.

The move also puts rent costs firmly on the agenda in the Dublin Bay South by-election to be held in July.

Landlords in rent pressure zone (RPZ) areas, where hikes are limited by law, will be able to apply a double increase from July.

A rent freeze during the pandemic meant landlords were not allowed to hike the rents in these areas by 4pc.

Supply was also plentiful in cities as workers from the country and foreign workers returned home and students were not on campus.

Demand is expected to spike again in autumn when offices reopen, workers return and colleges come back.

However, the rent freeze will be lifted in July. And it has now emerged that landlords will be able to apply a double hike by rolling over the increase they missed out on last year.

The vast majority of tenants in the country live in rent pressure zones. The average national rent of €1,256 would go up by €50 under the 4pc rule, but this could now be a €100 increase. In Dublin, a 4pc hike of €70 will now turn into a €140 hike.

The Department of Housing confirmed a total increase of greater than 4pc can apply where a rent increase cannot happen during emergency periods such as the pandemic.

“Where a landlord carries out a rent review for the first time in two years in an RPZ, a total increase of 8pc increase can apply,” the Department said.

The rents regulator, the Residential Tenancies Board, also confirmed if a landlord has not reviewed the rent in two years in a rent pressure zone, “a total increase of 8pc could apply once the landlord has followed the usual rules”.

Tenants are now facing a cliff-edge, according to People Before Profit TD Paul Murphy.

“It’s bad enough that the rent freeze is being lifted but why on earth are landlords being allowed to apply a rent increase from last year and effectively get around the 4pc rule,” he told the Dáil yesterday. "A woman who contacted me is facing almost a 7pc increase, which she simply can’t afford to pay.”

Tánaiste Leo Varadkar admitted to not being aware of the loophole: “I didn’t envisage that people would be able to apply it retrospectively here and an 8pc increase for anyone is a very big increase in any one year.”

The latest report from the Residential Tenancies Board says rental prices increased by 2.7pc nationally to an average of €1,256 a month by the end of last year. The increase the year before was 6.4pc.

The highest rents are in Dublin where the average price was €1,745 per month. Outside Dublin, the standardised average rent was €955. The counties with the lowest rents were Donegal and Leitrim at €626 a month.

The controversy will add to the pressure on the Housing Minister, who is already under fire over his divisive housing supply plans.

A spokesperson for Mr O’Brien said he will bring a bill for tenants before the Oireachtas in autumn with provisions such as long-term security of tenure and rent levels.

Fine Gael is pitching its by-election campaign at young people struggling with soaring rents and house prices.