Cost of renting hits record levels during introduction of new government rules

THE COST OF renting soared amid the government’s major reforms to the sector earlier this year, seeing its largest increase in almost a quarter of a century, according to a new report.

Prices are also rising fast, with rents hiked by as much between December and March (4.4%) as they were over the whole of 2025, as outlined by property website Daft in its latest study on trends in the private rental sector.

For a two-bedroom apartment, the national average for monthly rent in the first quarter of this year was €2,176 – a jump of 7.8% over the previous year.

In Dublin city centre, this was €2,828 while Galway was the next most expensive city at €2,309 on average per month. Cork city’s average rent was €2,103, Limerick city’s was €1,900 and Waterford city’s was €1,490.

The report also found that there are significantly more homes available to rent, with 2,500 homes available to rent nationwide as of 1 May, recorded as a near 40% increase in availability. However, these are primarily outside Dublin, with the capital’s supply still suffering amid the wider housing crisis.

Taken over a longer timeframe, market rents are now 40% above pre-Covid levels and 81% higher than 10 years ago.

But the increase in prices since Covid has been uneven across the country, at 23% in Dublin but an astonishing 86% in Connacht-Ulster.

Ronan Lyons, professor of economics at Trinity College Dublin and author of the Daft report, said that the initial impact of sweeping changes by the government to the rental sector has seen an increase in market rents “larger than any seen over the past 25 years”.

“This sharp surge in rents coincides with the new rent control system,” Lyons said, adding that it comes at a time when the overall availability of rental housing remains very limited.

“As a result, the price effects of the new system have appeared more quickly and more clearly than any increase in supply.”

New rental rules

Today’s publication covers the period from January to March of this year and includes the first month of the government’s ‘market rent’ reset.

This allows landlords to reset rent to the top of the market when a new tenant moves in, in a major change from the past decade of rent caps.

“The scale of the increase in early 2026 suggests that this opportunity has been taken up widely, where tenancies have recently turned over,” Lyons remarked.

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The government took the move as a way to entice investment in the sector to revive supply of accommodation, but opposition parties have blamed the changes for causing spiking rents.

It has resulted in criticism by the opposition because there is often a disparity in cost between longstanding tenancies and new tenancies. This is because many private rental properties, especially in urban areas, have had any annual increases capped under Rental Pressure Zone (RPZ) rules for several years.

On whether the government’s move will turn out to be successful, Lyons commented that it “remains to be seen” whether the new framework will influence investment and supply decisions in the sector.

“The goal of changing the rules, to increase the supply of rental homes and thereby improve affordability for tenants, depends on whether new rental housing is built,” Lyons said.

As the construction of new homes takes years, rather than months, it will be some time before the ultimate impact of the rules can be assessed.

Sinn Féin housing spokesperson Eoin Ó Broin said that it was “staggering” that the average monthly rent now costs a household €26,000 a year.

He warned that some renters may now face either “increased financial hardship or be forced to move back in with their parents, to emigrate or, worse still, be forced into homelessness” as a result of the surging costs.

How hard is it to get a place to rent?

According to the report, there were just under 2,500 homes available to rent nationwide on 1 May – an increase compared to the same date one year earlier, when just over 2,300 homes were available.

But it is an almost 40% increase when compared to three months ago, when fewer than 1,800 homes were on the market.

This does not apply to Dublin, which continues to see a more restricted supply, but the number of homes available to rent in the four other cities was almost twice what it was a year earlier as of the start of May.

Lyons, the report’s author, warned that this increase needs to be “interpreted with care” due to different factors and may not reflect a broadbased expansion in rental supply.

However, Lyons added that the pattern is more consistent with the timing of the government’s rent reforms.

“The delay between announcing, in June 2025, and introducing, in March 2026, the new rent control rules appear to have prompted some landlords to delay listing properties until the new regime came into force,” he said.

“Nonetheless, overall supply remains very constrained, and the recent increase is unlikely to represent a sustained improvement in rental availability.”

Journal Media Ltd has shareholders in common with Daft.ie publisher Distilled Media Group.

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