Rent Pressure Zones

Do you know what a Rent Pressure Zone is? We’ve put together the eight important things you need to know if a tenancy is located in a Rent Pressure Zone.

1. WHAT IS A RENT PRESSURE ZONE?

A Rent Pressure Zone (RPZ) is a designated area where rents cannot be increased by more than 4% per annum. This applies to new and existing tenancies (unless an exemption is being applied).

Rent Pressure Zones are located in parts of the country where rents are highest and rising, and where households have the greatest difficulty finding affordable accommodation. They are intended to moderate the rise in rents in these areas and create a stable and sustainable rental market that allows landlord and tenants to plan financially for their future. 

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2. HOW DO I FIND OUT IF I LIVE IN A RENT PRESSURE ZONE?

The RPZ Rent Calculator can be used to find out if a property is located in a Rent Pressure Zone by inputting the address or Eircode. It can also be used to calculate the maximum rent amount for the tenancy.

The following Local Authority areas and Local Electoral Areas have been designated as Rent Pressure Zones:

  • 24th December 2016

    1. Dublin City Council 

    2. South Dublin County Council

    3. Dun Laoghaire/Rathdown County Council

    4. Fingal County Council

    5. Cork City Council

  • 27th January 2017

    1. Ballincollig – Carrigaline, Cork 

    2. Galway City Council

    3. Galway City East

    4. Galway City West

    5. Naas, Co. Kildare

    6. Newbridge, Co. Kildare

    7. Celbridge-Leixlip, Co. Kildare

    8. Ashbourne, Co. Meath

    9. Laytown-Bettystown, Co. Meath

    10. Ratoath, Co. Meath

    11. Bray, Co. Wicklow

    12. Wicklow, Co. Wicklow

  • 24th March 2017

    1. Cobh, Cork

    2. Maynooth, Co. Kildare

  • 22nd September 2017

    1. Greystones, Co Wicklow

    2. Drogheda, Co. Louth

  • 28 March 2019

    1. Navan LEA, Co. Meath

    2. Limerick City East, Co. Limerick

  • 02 July

  1. Fermoy LEA, Co Cork
  2. Midleton LEA, Co Cork
  3. Athenry-Oranmore LEA, Co Galway
  4. Gort-Kinvara LEA, Co Galway
  5. Kilkenny LEA, Co Kilkenny
  6. Portlaoise LEA, Co Laois
  7. Graiguecullen-Portarlington LEA, Co Laois
  8. Limerick City West LEA, Co Limerick
  9. Limerick City North LEA, Co Limerick
  10. Dundalk-Carlingford LEA, Co Louth
  11. Dundalk South LEA, Co Louth
  12. Ardee LEA, Co Louth
  13. Kells LEA, Co Meath
  14. Trim LEA, Co Meath
  15. Waterford City South LEA, Co Waterford
  16. Waterford City East LEA, Co Waterford
  17. Athlone LEA, Co Westmeath
  18. Gorey LEA, Co Wexford
  19. Arklow LEA, Co Wicklow
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3. HOW IS AN AREA DESIGNATED AS A RENT PRESSURE ZONE?

For an area to be designated a Rent Pressure Zone, the following measures used are:

  • The average rent in the previous quarter must be above the average national rent in the quarter; and
  • The annual rate of rent inflation in the area must have been 7% or more in four of the last six quarters.

In addition to the above criteria, from June 4th 2019, there are now three different standardized averages rents to be used when assessing an area:

  1. Dublin areas will remain compared to the national standardized average rent.
  2. The 'Greater Dublin Area' (Kildare, Meath, Wicklow) - excluding Dublin - will be compared to a new critera which is the national standardized average rent excluding Dublin.
  3. The rest of the country - areas outside the 'Greater Dublin Area' and Dublin - will be compared to an outside GDA standardised average rent. 

With the introduction of the changed criteria, there may be more areas that now meet the qualifying criteria and may be designated as Rent Pressure Zones. 

Landlords should note that if their tenancy was already in existence at the point of the area being designated, they remain under the current rent certainty measures (rent review once every 24 months) for the purpose of the next rent review. 


4. HOW TO SET THE RENT FOR A NEW TENANCY IN AN RPZ?

Where a new tenancy commences in an RPZ, a landlord is required to set the rent in accordance with the RPZ formula, unless the property is exempt from rental restrictions. It is important to remember that a beginning a new tenancy does not mean completing a rent review and setting a new rent. A rent review in an RPZ can only be undertaken every 12 months. 

In the case of a new tenancy in a Rent Pressure Zone, unless the property is exempt from the rental restrictions, a landlord is required to provide the tenant, in writing, with the following information at the beginning of the tenancy:

  • The amount of rent that was last set under a tenancy for the dwelling
  • The date the rent was last set under a tenancy for the dwelling 
  • A statement as to how the rent was set under the tenancy of the dwelling having regard to the Rent Pressure Zone formula. Landlords can use the print option from the RPZ calculator to present this information. 

Additionally, the rent cannot be set above the local market rents for similar properties and three examples for similar properties in the locality, or a comparable area, must be presented to demonstrate this. 

The RPZ Rent Calculator is a useful took to assist landlords in supplying this information to the tenant before the tenancy is agreed and can be useful in helping to prevent disputes. 

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5. RENT REVIEWS FOR EXISTING TENANCIES IN RENT PRESSURE ZONES

Landlords must ensure they familiarise themselves with Rent Pressure Zone designation dates as these will inform if the tenancy was in existence at the point of designation and the rent review rules that must be followed.

Following the designation of a Rent Pressure Zone, all existing tenants at the relevant date of designation are still covered by the 24 month rent certainty laws. Therefore, a landlord must wait 24 months from the tenancy commencing or 24 months from the service of the last rent review notice before serving a further rent review. 

A tenant must be informed of any review to the rent with at least 90 days’ notice in writing (an email or text is not considered appropriate notice of a rent review) of a change in rent. These sample notices of rent review can be used to create a rent review notice.The rent cannot be increased by more than 4%, and the rent being sought should not be more than local market rents for similar properties. After an initial rent review, the landlord will be entitled to review the rent every 12 months. 

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6. RENT REVIEWS FOR NEW TENANCIES IN RENT PRESSURE ZONES

For tenancies that begin after an area is designated as an RPZ, the rent can be reviewed each year but cannot be increased by more than 4%. The rent amount being set should not be more than that of local market rents for similar properties. 

If a tenancy was already in existence at the time an area was designated an RPZ, the rent can only be reviewed 24 months after the tenancy came into existence, or 24 months after the date the rent was last set. When the next rent review is due, the RPZ formula can be applied to determine the rent increase. After this, the rent can be reviewed every 12 months. 


7. EXEMPTIONS

It is important to remember that not all properties in Rent Pressure Zones are subject to the 4% restriction. Exempt properties include properties that have not been rented for a period of two years prior to the immediate tenancy commencement date, and those that have undergone a 'substantial change in the nature of the accommodation'. 

The RPZ exemption rules and criteria:

Exemption 1: the initial setting of the rent on a dwelling which has not been rented for a period of two years prior to the immediate tenancy commencement date. All rent reviews thereafter must adhere to the RPZ formula. 

Exemption 2: A 'substantial change' in the nature of the accommodation has been defined and will only be deemed to have taken place where the below criteria is met:

“the works carried out to the dwelling concerned - 

consist of a permanent extension to the dwelling that increases the floor area (within the meaning of Article 6 of the Building Regulations 1997 (S.I. No. 497 of 1997)) of the dwelling by the amount equal to not less than 25% of the floor area (within such meaning) of the dwelling as it stood immediately before the commencement of those works, 

or 

in the case of a dwelling to which the European Union (Energy Performance of Buildings) Regulations 2012 (S.I. No. 243 of 2012) apply, result in the BER (within the meaning of those Regulations) being improved by not less than 7 building energy ratings,

or

  1. the internal layout of the dwelling being permanently altered;
  2. the dwelling being adapted to provide for access and use by a person with a disability, within the meanig of the Disability Act 2005;
  3. a permanent increase in the number of rooms in the dwelling; 
  4. in the case of a dwelling to which the European Union (Energy Performance of Buildings) Regulations 2012 (S.I. No. 243 of 2012) apply and that has BER of D1 or lower; the BER (within the meaning of those Regulations) being improved by not less than 3 building energy ratings; or
  5. in the case of a dwelling to which the European Union (Energy Performance of Buildings) Regulations 2012 (S.I. No 243 of 2012) apply and that has a BER of C3 or higher, the BER (within the meaning of those Regulations) being improved by not less than 2 building energy ratings.
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8. THE RENT PRESSURE ZONE FORMULA

The RPZ Rent Calculator is a useful tool to calculate the maximum allowable rent in a Rent Pressure Zone. 

If a landlord is setting the rent in a Rent Pressure Zone, the amount cannot be a) greater than market rent, and b) greater than the amount determined by the formula below:

R x (1 + 0.04 x t/m)

  • R = The amount of rent last set under a tenancy for the dwelling (the current rent amount)
  • t = The number of months between the date the current rent came in to effect and the date the new rent amount will come in to effect.
  • m = you must enter 24 OR 12
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9. SECURITY OF TENURE

For tenancies that began before the 24 December 2016, after a six-month probationary period, the tenant secures the right to remain in the property for a further three and a half years. This is known as a ‘Part 4 Tenancy’.

For tenancies that began after the 24 December 2016, security of tenure has increased, and after a six-month probationary period, the tenant secures the right to remain in the property for a further five and a half years.

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10. DISPUTE RESOLUTION

A dispute in relation to rent setting or rent reviews can be submitted to the RTB. It is encouraged that disputes in relation to rent setting and rent reviews are made as soon as possible.

Where a notice of a rent review has been served by the landlord than either party can submit a dispute to the RTB before the new rent starts or within 28 days of the tenant receiving the notice.

Where an increase in the rent is found to be above 4% the landlord may be required to return the rent to the correct amount, and may also be required to pay damages to the tenant affected.

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