Rent price surge in wake of new rules was ‘one-off’

Rent price surge after new tenancy rules was 'one-off reset', economist says

The surge in Irish rents that followed the introduction of new government tenancy rules was a "one-off" rather than the start of a trend, according to the author of a new report.

Daft.ie's latest rental report indicates that market rents rose by 1.4% between March and June, which the property website described as "a significant slowdown from the record 4.4% increase in the first quarter and slightly below the average quarterly increase seen over the last decade".

Ronan Lyons, a Trinity College Dublin economist and the report's author, said the second quarter "offers a clear read on the impact of the new rent-control system". He added: "It suggests that the surge in rents in early 2026 was a one-off reset rather than the start of a new trend."

The government's new system, introduced in the first quarter, allows landlords to reset rents to market rates between tenancies while restricting no-fault evictions. Critics had feared it would trigger a wave of evictions and price hikes.

Lyons explained the mechanics of the one-off effect: "Since March, where a tenancy ends a landlord may bring the rent to the market level; that is a one-time correction rather than a recurring increase. Once those tenancies have turned over, the effect fades."

Regional picture

The adjustment appears to be largely complete in major cities. In Dublin, rents rose 0.8% in the second quarter, while in other cities the rise was 1.1%. However, the effect is still working through elsewhere: rents rose 2.9% in Leinster and 2.8% in Munster.

Despite the slowdown, rental inflation remains high in cities outside Dublin. Market rents in the second quarter were 13% higher year-on-year in Galway city, 12% higher in Cork, and up 11% in Limerick. The rate in Waterford city, at 5.5%, was comparable to that seen in Dublin, where market rents in June were 6.5% higher than a year earlier.

Outside the cities, annual inflation in rents was between 9% and 10% across Leinster, Munster, and Connacht-Ulster.

The average open-market rent for a two-bedroom apartment nationwide is now €2,204 per month, according to the report. In Dublin, the average is €2,634. The national average is 42% above its pre-Covid level and 78% higher than a decade ago. The annual rate of rent inflation stands at 7.7%, up from 4.4% a year ago.

Supply and availability

On supply, the report found just under 2,400 homes available to rent nationwide at the beginning of August, up 5% on the same date last year. However, Daft.ie said this "masks a sharp divide": availability in Dublin fell by 18% over the year to below 1,150 homes, while across the rest of the country availability rose by 40%.

Despite the increase outside the capital, the report notes that availability remains "well below pre-pandemic norms, when there were typically over 4,300 homes to rent at any one time".

Lyons said the rebound in listings since March has persisted but "is in effect merely offsetting the earlier delay rather than adding new supply". Over the past 12 months, the number of homes listed to rent was "effectively unchanged on the previous year".

There is a regional dimension to the supply picture. In Leinster outside Dublin, there were 734 rooms for rent on August 1st, down 7% on the same date a year previously. Availability in the region nonetheless remains 20% above the 2015-2019 average, and the number of rooms listed to rent in the year to July was just under 7,450, up 11% year-on-year and 11% above that benchmark.

National problem

Lyons highlighted what he called "an important shift in the market": the additional cost of renting in Dublin relative to the rest of the country has fallen to its lowest level on record. This has happened even as Dublin rents have continued to rise, with rents in the city one quarter above their pre-Covid level.

Rents elsewhere have risen far faster, however. In Connacht-Ulster, rents are up 90% in six years, while in Munster they are 75% higher. By contrast, Dublin rents are about one-quarter above their pre-Covid level.

"Rental scarcity is a national problem," Lyons said, "and measures to bring forward new market rental supply need to be capable of working outside Dublin."

Speaking to LMFM, Lyons said the rent controls have had an impact. "So a slight cooling off. Really, what we're suffering from, if you look at the rental market, there was a big increase, a reset in rents in the first quarter of the year as those new rules around rent controls came in. There was a 4.4% increase just in those first three months of the year alone. And we're living with the consequences of that. It'll fall out when we start doing the reports early next year."

Locally, the Daft.ie report shows rent for a three-bed house in Louth was 7.3% higher year-on-year, while in Meath it was 14.7% higher, compared to 7.3% in Dublin.