Ireland’s housing crisis remains a critical issue, with government exploring new strategies to boost housing supply. In response to this, it appears that the Government is planning to scrap rent controls and introduce tax breaks to attract private investment back into the rental market. (The Irish Times)
Taoiseach Micheál Martin has hinted at significant changes, including a potential overhaul of Rent Pressure Zones (RPZs), which cap annual rent increases nationwide. This was on his appearance on RTE Radio’s This Week show on Sunday, February 09, 2025.
While landlords and developers argue that these controls discourage investment and limit housing supply, renters fear that removing them would drive rents even higher than they already are.
It is a tough situation for policymakers, and with private sector investment in apartment developments collapsing, the Government is under pressure to act smart and fast.
However, there is no guarantee that these proposed changes will harm or improve the rental market. It is a complicated one. This post breaks down:
- The key points from the recent Irish Times article by Eoin Burke-Kennedy
- The potential impact of policy shifts
- My personal opinion as to how the government can encourage large-scale apartment investment, without removing the rent caps that protect home renters.
Key Highlights from the Irish Times Article.
1. Housing Supply Slowdown and Government’s Response
- Housing completions dropped to 30,330 in 2024, down from 33,000 in 2023 – thereby missing the 40,000 target for 2024.
- Ireland needs 50,000 completed housing units per year up to 2030 to address the current housing crisis.
- A report from Mitchell McDermott suggests housing supply will stagnate below 33,000 per year for at least three more years.
- The lack of private investment in apartment construction is a huge reason for this stagnation.
2. Reviewing Rent Controls: Rent Pressure Zones (RPZs)
- The RPZ system, which caps annual rent increases at 2% or the level of inflation (whichever is lower), is set to expire this year.
- The Government is reviewing RPZs to determine whether they should be replaced or removed altogether.
- Industry groups argue RPZs deter investors (as they cannot increase rents however they want), and this suppresses housing supply. Opposition parties say they help to keep rents in check and protect renters.
- Possible changes include:
- Shifting to a “reference rent” system, where rent limits are based on location and property size.
- This will allow landlords to increase rents; this profitability attracts and keeps private pension investors in the Irish market and increases housing supply.
3. Tax Breaks for Private Investors
- Taoiseach Micheál Martin aims to attract more private investment into the housing market, particularly for apartment developments.
- Tax incentives for private residential sector investors are under discussion.
- Apartment completions fell from 12,000 in 2023 to 9,000 in 2024, with further declines expected in 2025.
- Higher interest rates have choked off private investment, with total private residential investment dropping significantly from €1.6 billion in 2022 to just €231 million in 2024.
- No privately funded apartment blocks have begun construction in the past 12 months.
4. Opposition and Concerns from Renters and Economists
- The Housing Agency is reviewing RPZs and will report its findings by the end of March.
- Bank of Ireland’s chief economist argues RPZs have created a two-tier rental market, where new tenants pay much higher rents than existing ones.
- The Organisation for Economic Co-operation and Development (OECD) suggests allowing landlords to reset rents between tenancies to encourage investment and increase rental stock.
- Sinn Féin’s housing spokesperson Eoin Ó Broin argues:
- The real issue is high development costs and rising interest rates, not RPZs.
- Removing RPZs would increase rents without significantly boosting supply.
- Instead, the Government should double public investment in social and affordable homes to at least €8 billion a year.
5. Policy Instability and Investor Uncertainty
- Investors cite frequent policy changes every 2–3 years as a key issue, creating uncertainty.
- Shares in Ires Reit (Ireland’s largest landlord) rose to their highest level in eight months after Martin hinted at changes to RPZs.
- Many believe the Government’s over-promising on supply and constant policy tweaks have worsened the housing crisis.
Possible Implications of Scrapping Rent Controls in Ireland in 2025.
1. Revival of Housing Market in the Short Term : Case Study – Argentina
Scrapping rent controls in Ireland could encourage landlords to re-enter the rental market, increasing supply and reducing the current scarcity. Many small landlords have exited due to strict regulations, contributing to the housing crisis.
In Ireland, private renters that took their homes out of the market might suddenly make them available again in an attempt to make profit. However, if the supply increases dramatically in the short term, this could have the unexpected effect of bringing down the average cost of rent in Rent pressure Zones
So to summarise, removing rent caps could:
- restore confidence
- provide tenants with more housing options.
While long-term affordability remains a concern, a short-term supply boost could ease immediate pressures.
2. Higher Rent Prices for New Tenants, if Short Term supply numbers do not change much.
- Without RPZs, landlords could reset rents to market rates between tenancies, significantly increasing costs for new renters.
- In cities like Dublin, where the average rent already exceeds €2,500 per month, this could push housing further out of reach for many people.
- Existing tenants might be less affected in the short term, but they could face steeper rent hikes when renewing leases.
3. Potential Return of Institutional and Private Investors
- One of the main reasons the private sector has reduced investment in rental housing is the cap on rent increases (currently at 2% per year or the rate of inflation, whichever is lower).
- By removing rent controls, the Government hopes to entice developers and investors back into the market, particularly in apartment construction, which has stalled in recent years.
- However, past experience suggests that investment decisions are not solely based on rent caps but also depend on factors like interest rates, construction costs, and policy stability.
4. Increased Supply of New Houses in the Long Term
- With higher potential returns, developers may resume large-scale rental apartment projects, particularly in Dublin and other urban centres.
- However, given high construction costs and how long it takes for planning permissions to be granted, any meaningful increase in housing supply could likely take years rather than months to materialise.
- The Land Development Agency and social housing projects would still need to fill gaps in affordable housing.
5. Greater Financial Pressure on Renters
- Many renters, already struggling with the cost of living crisis, could face eviction or forced relocation if their rents become unaffordable.
- A higher turnover of tenants could result, as renters move frequently to find more affordable options.
- Some renters may be forced into substandard housing or move further away from employment hubs.
6. Political Backlash and Social Unrest
- Scrapping rent controls would likely trigger strong opposition from renters and advocacy groups, who would see it as a move that benefits landlords at the expense of tenants.
- Protests and public pressure could escalate, particularly in Dublin, Cork, and Galway, where rent affordability is already a crisis.
- Sinn Féin and other opposition parties could use this as a key campaign issue, portraying the Government as prioritising landlords over struggling tenants.
7. Potential for a Two-Tier Rental Market
If rent controls are removed only for new tenants, a two-tier market could emerge:
- Long-term renters paying below-market rates due to past restrictions.
- New tenants paying significantly higher rents, making it difficult for younger renters and new arrivals.
- This could lead to rent hoarding, where existing tenants refuse to move to avoid price spikes, further limiting housing availability.
8. Uncertainty for Small-Scale Landlords
While corporate landlords and funds may benefit from scrapping RPZs, small landlords – who are usually more sympathetic to the needs of renters than large companies – could still face challenges.
- Many “accidental landlords” (those who own one or two rental properties) have already exited the market due to complex regulations, taxes, and rising costs.
- Without broader tax incentives and policy stability, the removal of RPZs alone may not reverse the decline in small landlord participation.
9. Potential for Policy Reversals and Market Instability
If scrapping rent controls leads to an increase in evictions and homelessness in urban areas, the Government could be forced to reintroduce some form of regulation, causing even more uncertainty.
- Frequent policy shifts—such as moving from 4% to 2% rent caps, and now possibly removing them—could make Ireland’s property market even less attractive to long-term investors.
How the Irish Government Can Increase Investment and Supply in the Apartment Sector Without Removing Rent Controls.
”PS. I am neither an economist nor an expert in housing policy. I am just an individual who is also trying to find a way to secure an affordable home in this economy. So, kindly understand that the below recommendations are just my humble opinions – based off research and an effort to try to piece things together. ”
With that said, I do believe that the Irish government can implement some measures to boost investment and supply in the apartment sector while keeping rent controls in place.
Here’s how:
1. Use Apple’s €13 Billion Tax Return to Establish a State-Owned Body to Build Apartments, Modular Homes & Renovate Vacant Properties.
Ireland holds in escrow €13 billion in tax revenues from Apple Inc., which resulted from a 2024 European Commission ruling. A significant portion of this fund could be allocated towards the creation of a state-owned construction agency tasked with developing apartments & modular units nationwide.
The agency could:
- Construct affordable and social housing without immediately relying on foreign investment firms.
- Bypass delays in planning permissions through fast-track approvals for public housing projects (which can take 3-5 years at this time).
- Reduce dependence on volatile private sector developers who may pause or cancel projects during economic downturns.
- Buy and Renovate some of Ireland’s 100,000+ vacant properties.
This approach would increase apartment supply, stabilise the market, and reduce the rental housing shortage while maintaining affordability.
Benefits of offsite modular construction include:
- 50% faster build times compared to traditional methods.
- Lower construction costs making rental prices more affordable.
- Better quality control, as units are built in a controlled environment.
- Reduced environmental impact, aligning with Ireland’s sustainability goals.
2. Reduce Interest Rates to Attract Private Investment
One of the main reasons institutional investors (foreign and domestic) have scaled back on apartment construction is high interest rates.
- The Irish government should work with Irish Central Bank or even the European Central Bank (ECB) to introduce targeted interest rate reductions for developers focused on apartment and modular construction.
By offering low-interest financing for Build-to-Rent (BTR) and Build-to-Sell (BTS) projects, I believe the government can attract investment without having to scrap rent controls that protect tenants.
- The focus should be on long-term rental housing projects rather than speculative developments.
3. Use Apple’s Tax Fund to Introduce Temporary Maintenance Grants for Small and Medium Landlords.
Small landlords account for a significant portion of Ireland’s rental market (about 40%), but many have been selling their properties due to high maintenance costs and inflation.
The government should introduce temporary grants to help small landlords cover:
- Maintenance and renovation costs, ensuring properties remain habitable.
- Energy-efficiency upgrades, which align with Ireland’s green housing initiatives.
- Landlords could submit maintenance receipts for example, and qualify for most or all of their money back.
I believe that by also stabilising the small and medium landlord sector, Ireland can retain existing rental stock and prevent a further decline in supply.
4. Introduce Temporary Tax Breaks for Private Developers.
Instead of removing rent controls, the government can offer tax breaks for developers who commit to long-term rental projects. Some potential tax incentives include:
- Reduced VAT on apartment construction to lower overall development costs.
- Tax relief for developers who commit to affordable and modular housing units within their projects.
- Capital Gains Tax (CGT) exemptions for developers who reinvest profits into new and innovative residential construction – such as modular and 3d home ‘printing‘.
These incentives would encourage private-sector investment while ensuring apartments remain affordable.
5. Temporarily Relax Planning Permission Requirements for Apartment & Modular Developments
Lengthy planning approval processes are one of the biggest roadblocks to increasing housing supply. Housing approvals can even take up to 5 years in Ireland, especially if appeals are involved.
The government should temporarily relax planning permission requirements for apartment construction, particularly for:
- High-density developments close to urban areas. Let’s face it, the number of people in urban areas is only going to increase.
- Modular and 3D housing projects
- Public-private partnership (PPP) projects that include social and affordable housing.
6. Develop More Public-Private Partnership (PPP) Housing Projects
The government should collaborate with private developers to build affordable apartments.
In a PPP model, the State could use Apple Inc’s tax income to provide funding or land, while private developers build and manage the properties under strict affordability requirements.
These partnerships could ensure that:
- Developers receive financial support and tax benefits.
- Renters have access to regulated, high-quality apartments.
- Housing stock is built faster (especially with modular & 3D construction) and with fewer planning delays.
7. Use Apple Tax Income to Improve Public Infrastructure.
Lack of efficient public transport, water supply, and roads sometimes limit large-scale housing developments.
- Government investment in better public transport and utility networks can make more areas viable for apartment construction.
- This would encourage developers to invest in high-density projects outside of major urban areas.
Conclusion
Scrapping rent controls is not the only way to increase investment in the apartment sector, as Ireland just happens to be sitting on a much needed €13 billion euro tax fund from Apple Inc.
By using this tax fund to establish a special state-owned housing agency, provide grants to small landlords, and reduce planning permission delays, the government can significantly boost housing supply.
Additionally, offering tax incentives and reducing interest rates for developers will encourage private-sector investment without forcing tenants into financial distress.
And by looking at innovative modular & 3D construction, Ireland can rapidly increase housing supply, lower building costs, and make rent controls sustainable—ensuring a fair and stable housing market for renters and investors alike.
