Over the past ten years successive Irish governments have passed a significant body of residential tenancy legislation, primarily with the intention of providing greater protection to tenants in the face of rising residential rents.
These have included extending tenancy cycles, changes to the frequency of rent reviews and notice periods for termination of tenancies and the introduction of what was known as “rent pressure zones” – designated areas where rents were capped, most recently at the lower of 2% or HICP.
While advocates for rent pressure zones and rent caps will point to the need for their introduction and retention, the fact remains that rents have consistently grown in recent years and the supply/demand picture across Ireland’s rental market has if anything deteriorated since their establishment.
Our research indicates that Ireland has moved quickly from being a largely deregulated market a decade ago to now being the second most regulated rental market in the region.
This has had profound implications for institutional investment in Ireland’s living markets (from a peak of almost €3 Billion in 2019 to a total of just over €500 million only five years later) - best encapsulated in the finding in our 2025 Ireland Living Investor Survey that 58% of investors saw Ireland’s rent cap as a barrier to future investment.
At the same time, we have also seen an exodus of smaller landlords from Ireland’s rental market – the chart below for example shows the massive spike in landlord termination notices received since rent caps were tightened again most recently in 2021.
So given the unwanted mix of weak investment and supply into the private rented sector and consistently rising residential rents this week’s government review of the rental sector is an important step in trying to unlock pressures in the private rental market.
Overall, a number of changes were announced which will come into effect on March 1, 2026. We have included the main headlines below along with our initial thoughts but as always the devil will be in the forthcoming detail:
- The rent pressure zone system is to extended nationwide
- Rent increases are to be capped by inflation (Ireland’s Consumer Price Index) for new construction post March 2026. However, it is also appears that the existing cap of “lower of 2% or HICP” will remain in place for all other tenancies
- New tenancies after March 1 2026 will be of rolling six year durations
- All landlords who enter into a new tenancy after March 1 2026 will have the right to reset rents at the end of each six year tenancy unless a ‘no fault eviction’ occurs
- No confirmation yet whether these changes apply to the student accommodation sector
At first glance, our view is that the changes somewhat strengthen the potential for new investment in the private rented sector however on their own they are not transformative.
The change to allow rents to be reset to market value at the initiation of a new tenancy is a positive move and one which we argued for earlier this year in our 2025 Ireland Living Survey report. Similarly, linking rent increases for new construction to CPI changes (rather than the lower of 2% or HICP) provides a little more economic flexibility for new development.
However, from a simplicity point of view we do question the value of having ‘different’ caps depending on whether tenancies relate to new development or existing housing. In our view a better approach would have been for all rent increases to be linked to CPI changes.
Even taking into account these changes, our view is that viability will remain challenged and that targeted financial supports and/or tax incentives are still required to significantly boost private sector investment in the rental market.
On the whole this represents a small step forward, but more needs to be done to revitalise large scale investment into the private rented sector.