Ireland to cap rents after inflation-linked limit backfires

Ireland's housing minister will propose capping residential rent increases at 2% a year, he was quoted as saying on Tuesday, after a new law introduced in July linking rents to inflation backfired when prices across the economy suddenly spiked.

Ireland's housing minister will propose capping residential rent increases at 2% a year, he was quoted as saying on Tuesday, after a new law introduced in July linking rents to inflation backfired when prices across the economy suddenly spiked. Rents and house prices in Dublin have roughly doubled over the past decade and are now rising at a faster rate outside the capital, pricing many workers out of buying or even renting a home while also limiting their ability to save a deposit.

Until July, landlords in designated "Rent Pressure Zones," which cover many of Ireland's urban areas under 2016 legislation, were limited to annual rent increases of 4%. In an attempt to reduce rental inflation, the government switched the rent peg to the Harmonised Index of Consumer Prices (HICP) inflation rate.

While inflation across the economy was running at just over 2% in July when the new measures were introduced, prices climbed by 5.1% year-on-year in October, according to preliminary eurostat data released last week. "Obviously, we've seen, over the last few months in particular, rents continuing to increase," Housing Minister Darragh O'Brien was quoting by the Irish Examiner newspaper as saying.

"At Cabinet this Thursday, I'll be bringing a further piece of legislation forward to bring an absolute cap on rents at either the CPI (consumer price index) or 2%, whichever is lower." The new legislation would be finalised before the end of the year, O'Brien added.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)