Coveney Designates New Rent Pressure Zones

Published on Thursday, 26 Jan 2017
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Minister for Housing, Planning, Community and Local Government, Simon Coveney, T.D., signed Orders today (26 January, 2017) designating 23 towns and all of Galway city as *Rent Pressure Zones.

Dublin and Cork City were designated as Rent Pressure Zones before Christmas.

The Orders take effect tomorrow, 27 January 2017.

Speaking today Minister Coveney said “in making these designations today, I am delivering on the commitment I gave when I published the rental strategy on 13 December.

At that time the only areas that met the qualifying criteria were Dublin and Cork. I indicated though that I would work with the Residential Tenancies Board (RTB) to ensure that more refined data was available to allow for more specific targeting of the measure to other areas of the country where severe pressures were being experienced.

We have made very significant progress in a short space of time to have this new system in place and to ensure that we can properly target this intervention towards those areas facing the most severe pressures. Over the medium term though, additional supply is the right way to address rental pressures.

We need now to ensure that the supply side response is strong and swift by implementing the full range of complementary supply measures contained in the rental strategy”.

The following areas will now be RPZ’s; links to the maps are below:

Local Authority Areas Local Electoral Areas
Kildare Naas
   
  Celbridge - Leixlip
   
  Kildare - Newbridge
   
   
Meath Laytown - Bettystown
   
   
   
   
  Ashbourne
  Ratoath
   
   
Wicklow Bray
   
  Wicklow
Galway City Central
  East
  West
Cork Ballincollig - Carrigaline
   
   
   

Minister Coveney is signing the Orders today on foot of recommendations from the Residential Tenancies Board that found that the criteria for designation as RPZs had been met in 12 local electoral areas in Kildare, Meath, Wicklow, Galway City and Cork County.

The Minister had asked the RTB to assess a list of areas submitted to him by the Housing Agency for possible designation. In consultation with local authorities, the Housing Agency looked at rental markets around the country to identify whether – on a preliminary view – other electoral areas outside of Dublin and Cork City should be considered for designation as rent pressure zones. They used data from the RTB and from commercial residential property letting websites for this first analysis. On the basis of this analysis, the Housing Agency recommended that a number of local electoral areas should be formally considered for designation by the RTB.

The Housing Agency submitted its list of areas for consideration earlier this week to Minister Coveney. The Minister then formally requested a rent zone report from the Director of the RTB.

ENDS

Notes to Editor:
*Rent Pressure Zones are areas where rents are above average national rent level and have experienced rental inflation of in excess of 7% in 4 of the last 6 quarters.  Legislation introduced by Minister Coveney provides that annual rent increases in Rent Pressure Zones will be limited to 4%.  This limitation remains in place for a maximum period of three years (which cannot be extended) and will apply both when rents are set at the start of a tenancy and when rents are reviewed during an ongoing tenancy.

What is the Minister’s role in the RPZ designation process?
The Housing Agency has responsibility for the initial analysis of an area. In consultation with the relevant local authority, the Housing Agency may propose in writing to the Minister that an area should be prescribed as a rent pressure zone. On receipt of such a proposal, the Minister is obliged to refer the matter to the Director of the RTB and request a rent zone report.

In that report the Director is required by law to state whether the RPZ criteria have been met.

Where the Minister receives a report from the Director and that report confirms that the RPZ criteria have been met, he is obliged to prescribe the area or areas as Rent Pressure Zones.

How is an area designated as a Rent Pressure Zone?
For an area to be designated a Rent Pressure Zone rents in the area must be at a high level and they must be rising quickly.  The 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.

An area that meets these criteria can be designated as a Rent Pressure Zone

Why were Dublin and Cork already designated as Rent Pressure Zones?
The measure was implemented immediately in Dublin and Cork city because they meet the criteria already.

How often can the rent be reviewed?
In existing tenancies the first rent review under the Rent Predictability Measure may take place a minimum of 2 years after the previous time the rent was set.  Subsequent rent reviews may take place after a minimum period of one year.

Does the measure apply to new tenancies?
Yes.  The measure applies to properties.  This means that it will apply when rents are set at the start of a tenancy and when rents are set in a rent review during an ongoing tenancy.

Are all rental properties covered?
No. Properties that are new to the rental market – i.e. properties that have not been let at any time in the previous two years – and properties which have been substantially refurbished may be exempted from the measure.

How long will the measure apply for?
An area may be designated as a Rent Pressure Zone for a maximum of three years.  This means that the designation will lapse and the Rent Predictability Measure will cease to apply three years after area was designated.  The designation of an area may be lifted earlier than this if the pressures on rent are deemed to have eased.

Who decides to lift the measure?
The Housing Agency, in consultation with the Local Authority, will assess whether the rental market conditions in the area concerned have stabilised and whether the balance between supply and demand has improved.  Where the agency finds that these changes have occurred, it may recommend to the Minister that the designation of a particular area be lifted.  The Minister will then make an order lifting the designation of the area as a Rent Pressure Zone.

Can the designation as a Rent Pressure Zone be extended beyond three years?
No.  The designation lapses after three years.

What happens after the designation as a Rent Pressure Zone expires or is lifted?
Once the area ceases to be designated as a Rent Pressure Zone, the rent review process will revert to normal.  However, the minimum period of one year between rent reviews will continue apply.

What is the Minister’s role in the RPZ designation process?
The Housing Agency has responsibility for the initial analysis of an area. In consultation with the relevant local authority, the Housing Agency may propose in writing to the Minister that an area should be prescribed as a rent pressure zone. On receipt of such a proposal, the Minister is obliged to refer the matter to the Director of the RTB and request a rent zone report.

In that report the Director is required by law to state whether the RPZ criteria have been met.

Where the Minister receives a report from the Director and that report confirms that the RPZ criteria have been met, he is obliged to prescribe the area or areas as Rent Pressure Zones.