Exploring rent pressure zones: Ireland’s recent rent control regime

Abstract

Following a number of years of rapid rental inflation in the private market, in late 2016, Ireland introduced a regime of rent controls whereby areas are designated as ‘Rent Pressure Zones’ if they meet criteria for excessive inflation and elevated levels of rent. In these areas, rental inflation is capped, initially at 4% per annum, with targeted exemptions. In this article, we consider these regulations along a number of dimensions. First, the criteria, calibration and qualification of the rules are outlined and discussed. Second, we use local-electoral area data to document the areas classified and show the price moderation in these areas was between 2 and 5 percentage points using difference-in-difference techniques and error correction specifications to deal with differential housing market developments. We also highlight the use of exemptions to the policies for new supply, maintenance and energy efficiency. We show low exemption usage and more targeting for energy efficiency upgrades needed given the Irish private rental building stock.