Rent control measures can lead to landlord apathy to maintenance

They are usually "in parts of the country where rents are highest and rising, and where households have the greatest difficulty finding affordable accommodation", according to the definition of the Residential Tenancies Board (RTB).

Rent stabilisation is generally defined by online financial website Investopedia as "a form of insurance for tenants against unreasonable rent increases", as well as protecting against wrongful evictions, and longevity for tenants.

ESRI researchers looked at international examples of similar zones to RPZs, while also examining how they have worked in Ireland since first being introduced in late 2016 up until just before the Covid-19 pandemic, when the maximum allowable rent increase was 4%.

There is a clear economic rationale for price stabilisation mechanisms under certain economic conditions, the researchers said.

However, internationally, the benefits of these schemes have been shown to accrue to existing tenants and these measures come with supply-side health warnings: they have been shown to lower investment and maintenance in buildings and lower overall rental supply in certain cases," they stated. 

"This often affects potential new tenants."

ESRI associate research professor Conor O’Toole told the Irish Examiner that the evidence gathered showed that some landlords in such cases would not invest as much in their properties, or would take them off the market, which in turn led to supply dropping.

"Often then, not necessarily existing tenants but those trying to enter the market lose out because there is no supply, or the rents they have to pay are a little bit higher," he said. 

"There is a complex interplay between supporting the existing tenants and ensuring the market keeps working." 

The rules in Ireland were set up with some specific exemptions, Mr O'Toole said.

"For example, if landlords make energy efficiency investments, then they are able to set the price outside the rent cap," he said. 

They are trying to use these exemptions to the specific cap to try and offset some of these known side-effects that happen internationally.

"The design of the policies is trying to be set up to lower the chances that these unwanted consequences happen."

Trying to balance the requirement for rent controls and ensuring the quality of rental properties is key, he said.

Meanwhile, data from the European Commission's data analysis wing shows that since 2010 until the fourth quarter of 2021, rents in Ireland were among the highest increase in the EU, rising by 74% in the last 11 years.

"When comparing the fourth quarter of 2021 with 2010 for rents, prices increased in 25 EU member states ... with the highest rises in Estonia (+171%), Lithuania (+113%) and Ireland (+74%)," said Eurostat.

Across the entire bloc in the same period, rents increased by 16% and house prices by 42%.