Ireland introduces new rental law, with further rent increases on the horizon

The Irish rental market faces a regulatory turning point that could further heat up an already hot atmosphere. President Michael D. Higgins signed the Residential Tenancies Act, which will take effect from Sunday, March 1, 2026. The most important change enables property owners, so-called landlords, to raise the rent to the current market level when a previous tenant leaves and a new one arrives. The government's goal is to simplify the complex rules limiting rent levels in so-called Rent Pressure Zones.

However, the new law is causing serious controversy and concern. In a debate in the lower house of the Irish parliament, Dáil Éireann, opposition politicians warned that the change could lead to sharp increases. They claim that in some cases, owners will be able to raise rates by up to 25% under new rental contracts. Such a jump would be imposed on prices that are already at record highs. These forecasts were made during a heated debate on the impact of the new regulations, described as a "sharp exchange of words" between political parties. Meanwhile, the head of the Residential Tenancies Board (RTB), the body responsible for market oversight, publicly admitted that the new law will likely cause rent increases, "at least in the short term." This frank assessment by the official underscores the scale of the challenge facing authorities trying to balance landlord interests with tenant protection amid a chronic housing shortage. Ireland's housing crisis has its roots in the country's history. After the construction boom of the so-called "Celtic Tiger" period at the turn of the 21st century, a sudden crash in 2008 froze investments. The recovery of supply after the financial crisis was slow, and growing demand, driven in part by an influx of foreign workers into the dynamic economy, systematically outpaced the construction of new housing, leading to today's situation.The regulatory changes come into effect as the market reaches a critical point. The latest report from Ireland's largest real estate advertising platform, Daft.ie, published on February 24, leaves no doubt: the supply of rental properties is "the lowest in at least 20 years." According to the data, on February 1, 2026, fewer than 1,800 properties were available nationwide. This extremely low number means that for each property, there are dozens, if not hundreds, of potential tenants, creating ideal conditions for further price increases.Growth in market rental prices in Ireland (year-on-year): 2023: 12.3, 2024: 3.6, 2025: 4.4 In 2025, average market rents rose by 4.4%, continuing an upward trend, albeit slower than the peak of 12.3% in 2023. Current prices are on average 34% higher than before the COVID-19 pandemic, and over a decade, they have increased by about 79%. The average monthly rent for a two-bedroom property in the country reached 2,086 euros, with the highest increases recorded in large cities outside Dublin, such as Galway (+11.4%) and Cork (+7.5%). „The supply of homes to rent in February hits by far its lowest level in 20 years.” — Ronan Lyons, author of the Daft.ie report The new regulations thus constitute another element superimposed on this exceptionally tense picture. According to the government, by allowing landlords greater flexibility in setting prices, they will encourage them to remain in or return to the market, which in the longer term should increase supply. Opponents of the act, including opposition MPs, argue, however, that in the near future the effect will be the opposite. They claim that the prospect of higher profits in the future may paradoxically discourage owners from renting out properties now, in anticipation of the entry into force of regulations more favorable to them, which could further exacerbate the shortage. Average monthly rent for a two-bedroom property (as of February 2026): All of Ireland: Unknown (10 years ago) → 2086 EUR (+79% since 2016); Galway: Unknown (a year ago) → +11.4% year-on-year; Cork: Unknown (a year ago) → +7.5% year-on-year This debate takes place against a backdrop of warnings directed by the media to landlords themselves. Ahead of the new rules taking effect, they are reminded of the applicable transitional provisions and the need to follow appropriate procedures when potentially raising rents to avoid penalties. The ultimate effect of the amendment to the act on the stability of the Irish housing market, which has been struggling with an availability crisis for years, will be known in the coming months.