Rent controls are partly to blame for the soaring cost of renting in Ireland, an economist has claimed. 

Rents for new tenants soared by 9% in the final quarter of 2021 and they are currently 100% bigger than they were in 2011. 

Rent control was introduced for certain ‘Rent Pressure Zones’ in 2016 by then Housing Minister Simon Coveney who said they were needed “to address unsustainable rental inflation”. 

Landlords in RPZs can only increase the rent by 4% annually and Minister Coveney said he hoped it would “provide for rent predictability in high pressure areas in a way that will not negatively impact either existing or new supply”. 

However six years on, economist John Fitzgerald believes that the policy has decreased supply in the rental market. 

“What you’ve seen has been a reduction in small landlords,” he told The Hard Shoulder. 

“They’ve got out [of the market] because existing rental accommodation [has] their rents controlled and they’re going to lose out as time goes on. 

“So they sell to somebody who will be a homeowner - so homeowners benefit." 

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He continued: 

“New investment by institutions, they can rent at the new higher rent. So what you’re seeing is, you’re driving out a load of people who were renting at a lower level and it’s not good for renting. 

“And that’s why going down the controlling route is the wrong route. The only way to deal with these problems is to build more and that’s where we need to look at all the obstacles to building and there are a lot of them.” 

“Rent controls are good for people who already have somewhere and have a stable tenancy because the rent doesn’t go up. 

“The people who get really messed up by this are people who are looking for somewhere to rent because you reduce the supply.” 

Row house roofs, apartments condo rooftops panorama and bright sunny summer clouds cloudscape

House prices

Mr Fitzgerald also warned that house prices are likely to continue to grow as many middle class people were able to save huge amounts of money during the acute phase of the pandemic. 

“Probably the better off half of the population saved a lot of money during the pandemic because they couldn’t go out and spend it,” he explained. 

“So they have the money to spend it on a housing deposit or to give it to their daughters or sons. 

“So that ups the pressure on the housing market [and] there’s a wall of money available to spend and housing supply is rising slowly and when you put the two together that gives you higher house prices.”

Main image: Row house roofs, apartments condo rooftops panorama and bright sunny summer clouds cloudscape