How to Use the RPZ Calculator
Most of us think using the RPZ Calculator is pretty straight-forward and oftentimes it is. However, there are a couple of scenarios that had us scratching our heads as to how to calculate when the next rent increase would be due and how much could it be increased by at that date. In this article, we run through a few examples that we hope landlords and tenants alike may find helpful.
The system for calculating allowable rent increases in areas of rent pressure zones has changed many times. Since December 2021, the ability to hike rent by 4% has been scrapped; any rent increase will now be decided by inflation. Under Minister Darragh O’Brien’s revised scheme, rent can only be increased in line with the Harmonised Index of Consumer Prices (HICP) or increased by 2% annually - whichever is lower. As of April 2022, the rate of inflation was 7% in Ireland. This means that presently (May 2022), a property in an RPZ can have an annual rent increase of 2%.
Existing Tenant in an Existing RPZ
This is the most straight-forward case. An existing tenant has had a rent review in April 2021 and his/her property is in an RPZ. The next rent review can take place in April 2022 and can be increased by 2%. Inflation in April was 7% and so the maximum rent increase in this instance can be 2%.
New Tenancy in an Existing RPZ
Let’s suppose John and Michelle are renting an apartment in Dundrum which was designated an RPZ on 24th December 2016. Their last rent review was March 2021 and was set at €2000/month. They move out in March 2022 and the landlord is now looking for new tenants in May 2022. What rate can (s)he set the rent at now? As per the HICP rates, the HICP index as of March 2021 was 102.2. The last published index (at the time of writing this post in May 2022) was 110.3 (Apr 2022). This represents a HICP % change of 7.9% (102.2 - 110.3). This is above the allowable maximum of 2% increase annually so the rent can be set for the new tenants at €2046/month. The landlord can implement the increase in rent for a new tenancy. These new tenants are then subject to a maximum of a 2% increase every 12 months thereafter.
Existing Tenants in an Existing RPZ (with unutilised rent increases in place)
Let’s suppose that a landlord has tenants paying €1500 since April 2017. The landlord decides that (s)he wants to raise the rent in April 2022 having forgotten to increase the rent in April 2018 as (s)he was entitled to do. What is the maximum new rent level that they can charge?
|HICP Index Value||Date|
|HICP % Change:||9.9%|
This period is five years since any increase so this equates to 1.98% per year [ 9.9% divided by five ] on the HICP index levels. The maximum a landlord can increase the rent is 2% per annum so the HICP is the lower level here which is the rate the landlord has to go with. Therefore the rent can be increased in this instance from €1500 per month to €1649 per month. [ 9% of 1500 = 149 / 1500 + 149 = 1649 ]
Existing Tenants in a Newly Established RPZ
Let’s suppose you were paying €800/month on a tenancy that commenced in a property in Midleton, Co. Cork in 2017. The most recent rent review was conducted in April 2019 where it was increased to €825/month. Midleton is then declared an RPZ in July 2019. Because the property became an RPZ area after the tenants moved in, they benefit from 24 months rent certainty i.e. the soonest a rent review would have been able to take place is April 2021. Rent increases aren’t mandatory for landlords so if the landlord chose to wait until April 2022 to increase the rent, then the new monthly rent since then would be:
102: Apr 2019
110.3: Apr 2022
Difference = 8.1%
3 years x 2% = 6%
Therefore the increase in rent here will be 6% maximum.
€825 *6.0% = €50
New Tenants in a Newly Established RPZ
But what happens, if tenants move out a year after an area is deemed in an RPZ and new tenants move in shortly afterwards. Do the new tenants benefit from the 24 month rent certainty previously mentioned?
If the 24 month rent certainty went with the property and not the tenancy, then you could conceive of a situation whereby the new tenants would inherit the 24 month rent certainty and as such no increase could be implemented until another 12 months. Another conceivable situation would be that the new tenants don’t benefit from 24 month certainty but instead get 12 months. As it happens, a rent increase can be implemented immediately for the new tenants and thereafter every 12 months at a maximum of 2% (or at the HICP rate for those years, whichever is lower).
So if you know when the tenants moved in, when the last rent was set and how much was it set at, you can calculate quickly when the next rent review can be done and how much it can be increased by on that date. By entering the Eircode, the RTB calculator also tells you if the property is in an RPZ so it’s very useful. For more, see: https://onestopshop.rtb.ie/calculator/rpz/