Will new rental rules lead to an increase in rental homes and eventually to drops in rents?

The Minister for Housing, James Browne, says changes to rental laws that the government has brought in will increase the supply of homes to rent, which will, in turn, drive down the cost of rent in the future. 

“Increasing supply is the only way we are going to make rents affordable,” he said on RTÉ’s Morning Ireland last Friday. 

“I certainly expect rents to fall,” said Browne. “That is what my aim is – is to get rents to fall.”

But some experts say institutional investors won’t play along with that strategy – they won’t flood the market with new homes, causing rents to decrease, because doing that would reduce the value of their properties. 

“There are always lots of big apartment blocks that aren’t fully occupied,” says Ben Thompson, sales and marketing director at Churches Estate Agents. 

“You would think with the housing crisis, they would all be let, but the way these investment funds work is they are more concerned with their top-line, the ‘quoting rents’,” Thompson said.

Fund managers would prefer to let a development sit there only half-full with tenants paying €3,000 a month, he says, rather than drop the rent to €2,500 – because dropping rents hurts their balance sheet. 

“Because if you change the rent number, the whole spreadsheet recalculates, and it ruins their value of the property on the books,” Thompson says.  

A complex new system

The first question is, will the new rental rules increase rental supply overall? 

UCD professor in social policy Michelle Norris, who chaired the Housing Commission – an expert group established by government to examine the housing system and recommend reforms – says she isn’t sure they will. 

The new rules are so complicated, and together with security of tenure for tenants, could scare off some small landlords, Norris says. And those are still the majority of landlords. 

“I think the system they introduced is unbelievably over-complex,” she says. 

Big institutional investors might build more, but they provide only a small part of the overall rental supply, she says. 

So as she sees it, the extra rental stock they bring on could be lost somewhere else in the rental system, leading to no overall increase in supply, says Norris. 

Housing held by institutional investors is basically a niche product, Norris says. “They only deal with a very small segment of the market,” she says. “Either high-end private rental or high end student accommodation.”

“They only provide accommodation in very limited parts of the country, primarily Dublin to a lesser extent Cork,” she says –  and even that supply is limited to specific geographical locations within those cities. 

The ability to bring rents to market-rate in between tenancies could increase supply from institutional investors, she says. 

Because it’ll allow them to make more money, tempting them to invest more in the construction of more housing. Ires-Reit, the largest corporate landlord in Ireland, has said its rent intake could potentially increase by 25 percent over the coming years as tenancies turn over.

But most tenancies in Ireland are provided by small landlords, says Norris. 

And the complexity of the new rules would be off-putting to many potential landlords, says Norris. No one wants to get involved in offering a service if they struggle to understand the rules, she says.

“I think the rules are very unattractive for small landlords, and they are also very unattractive for landlords offering long-term tenancies,” says Norris. 

The new rules allow the landlord to reset rents each time a tenant moves out. Norris thinks that as a result, many landlords will deliberately seek out those tenants who are likely to move, she says. 

Students will become desirable tenants as they often move each year, and families looking for long-term rental homes may become less desirable as tenants, she says.

Rachel Slaymaker, research officer with the Economic and Social Research Institute (ESRI), says that strict rent controls can be a barrier to supply. 

But there are many other barriers to supply in Ireland, including finance costs and construction costs, she says. 

Another thing that acts as a deterrent to investors is constantly changing rules, says Slaymaker. “The fact that there are policy changes quite frequently and that instability is quite a deterrent for investment as well.”

Dropping rents?

Even if the changes do increase supply though institutional investment, enough to more than offset the potential loss of some small ones – would those new homes hit the market in a rush, jolting it enough to bring down rents?

Or will landlords drip-feed new homes into the market to avoid that very thing?

The Kennedy Wilson development the Cornerstone, in Stillorgan, with 232 homes, was completed in the first three months of 2024.

But only half the homes were let by the end of 2024. And only two-thirds were occupied after more than a year, in March 2025. 

The development was “stabilised” by June 2025, according to company reports. But it doesn’t say what percentage of it was filled at that stage. 

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In the United Kingdom, an independent report commissioned by the government in 2018, called the Letwin Review, found that developers were drip-feeding homes onto the market so they could maintain a high price for that type of home. 

One of the funds managed by LRC Group holds rental properties in both Ireland and the UK. Its accounts show how its board of managers thinks about releasing properties to the market, for sale.

In last year’s accounts, they note that the fund’s UK properties are all in six buildings in and around Nottingham city centre. So, “if they were to be made available for sale it would be important to drip feed the units to the market over a substantial period of time.”

“If the properties were to be sold as a single portfolio or the units within each of the six buildings were sold as single lots, then the combined aggregate values would be discounted,” it says.

Joseph Kilroy, head of policy and public affairs at the Chartered Institute of Building, says institutional investors can form a major pillar of housing supply, but he hasn’t seen a credible analysis to suggest that that supply would ever drive down the cost of rents. 

Investors work on modelling, Kilroy says. “It’s not necessarily in their shareholders' interests to be driving down the cost of rent.”

The government should provide a credible economic analysis of how much supply would be needed to cause rents to drop, Kilroy says. 

"If the position is that we are talking about so much supply that prices will go down, it's incumbent on those making this policy to explain this mechanism in quantitative terms," he says.

Remarkably, the government seems to be overhauling rental laws without any modelling of the impact, he says. “It's taking it on faith, which kind of plagues housing policy in this country.”

The new rules could cause some increase in rental supply, says Slaymaker, at the ESRI. But she wouldn’t expect rents to come down any time soon, she says. 

“For the foreseeable future, I think that would be unlikely,” she says. “That only happens when you have enough supply to cater for the demand.”

Investor funds might back off from investing in cities long before they have flooded the market with supply. 

“I think the big warning signs in real estate are capital and cranes,” said Jonathan Gray, Blackstone Global Head of Real Estate, in a 2015 interview with CNBC. “You become more cautious when you see a lot of building going on.”

That point at which institutional investors begin to fear that adding new supply might drive down rents, though, could be far off. 

There is so much pent-up demand, it would take a long time to clear that, Slaymaker says. “We do have to think about whether the private sector is going to be able to provide for everyone.”