Client Briefing: Housing Department Review of Private Rental Sector – Key Proposals

Earlier this week the Department of Housing released its review of Ireland’s private rental sector, proposing a series of ambitious initiatives aimed at addressing the challenges facing both tenants and landlords. This ‘sweeping’ reform package touches on various aspects of the rental market, from rent regulation to investment incentives, and seeks to create a more stable, affordable, and high-quality rental sector.

Rent Pressure Zone Overhaul 

A key focus of the review is the existing Rent Pressure Zone (RPZ) system. The Department proposes a ‘Comprehensive RPZ Impact Assessment and Reform’ initiative, which includes commissioning an independent review of RPZ effectiveness. This could lead to the development of a new ‘Reference Rent’ system based on local market data and economic indicators, potentially replacing the current 2 percent cap by 2026.

Landlord Retention and Investment Incentives 

Recognising the exodus of small landlords from the market, the review suggests a ‘Rental Sector Tax Reform Package’. This includes introducing a new ‘Professional Landlord’ tax status with a 25 percent flat rate on rental income, amending the Tax Consolidation Act for broader expense deductions, and implementing a sliding scale Capital Gains Tax relief for long-term rental properties.

Boosting Affordable Rental Supply 

The Department aims to significantly expand the Cost Rental program, setting an ambitious target of 5,000 new units annually by 2026. This ‘Cost Rental Expansion Program’ includes establishing a dedicated delivery agency and creating a €1 billion development fund to provide low-cost financing for projects.

Enhanced Regulation and Enforcement 

A ‘Unified Rental Sector Regulatory Framework’ is proposed, which would see the creation of a new National Rental Housing Authority. This body would oversee a mandatory landlord licensing system and a centralised digital platform for tenancy management. The initiative also calls for increased funding for local authority inspections.

Improving Tenant Security 

The review outlines a ‘Long-Term Tenancy Promotion Scheme’, which would amend the Residential Tenancies Act to restrict no-fault evictions for larger landlords. It also proposes a new ‘Secure Lease’ option with longer terms and tax incentives, as well as facilitating ‘sale with tenant in situ’ transactions.

Addressing Construction Costs and Viability 

To boost supply, the Department suggests a ‘Rental Housing Viability Enhancement Program’, which is already attracting media criticism. This includes updating apartment design guidelines, introducing a temporary VAT reduction for affordable rental developments, and establishing fast-track planning procedures for qualifying projects.

Attracting Institutional Investment 

The review proposes an ‘Institutional Investment Attraction Strategy’, which would revise REIT legislation and develop new investment fund structures tailored for pension funds. Tax incentives for long-term institutional investment are also suggested.

Energy Efficiency and Quality Improvements 

A ‘Rental Property Upgrade Scheme’ is outlined, featuring grants for energy efficiency improvements, phased minimum BER rating requirements, and a new ‘Quality Rental Homes’ certification scheme.

Enhanced Data and Research 

The Department acknowledges the need for better market data, proposing a dedicated Rental Sector Research Unit within the Housing Agency and the development of a public-facing rental market dashboard.

Holistic Housing Strategy 

Finally, the review calls for an ‘Integrated Housing Strategy Framework’, including a 10-year National Housing Tenure Strategy and the establishment of a cross-departmental working group to coordinate policy initiatives.
There is a lot set out in the recommendations section of the review, which is symptomatic of an election year, and it remains to be see what is electioneering and what is genuinely considered a political goal for the sector. The Department specifies that each initiative will require further development, stakeholder consultation, and assessment of financial and legislative requirements before implementation so it is critical that the industry pays attention and mobilises a response.


The Private Sector Rental Review can be accessed in full at: 
https://www.gov.ie/en/publication/168d4-private-rental-sector-review/

Ian Lawlor
086 3625482

Managing Director 
Lotus Investment Group