Ireland to reduce maximum rent increases in designated zones

DUBLIN (Reuters) - Ireland will significantly reduce the maximum annual increase in residential rents allowed in designated "Rent Pressure Zones", the government announced on Thursday in a move to tackle surging housing costs.

Landlords in the designated zones, which cover many of Ireland's urban areas under 2016 legislation, are currently limited to annual rent increases of 4%.

From early July, the maximum annual rent increase will instead be set at the Harmonised Index of Consumer Price inflation rate, the department of housing said in a statement.

The Irish Central Bank on Thursday forecast HICP is likely to average 1.8% between 2021 and 2023.

The limited increases would impact a number of institutional investors that have built portfolios of Irish residential property in recent years including Irish Residential Properties REIT, Ireland's largest private landlord.

Rents and house prices in the Irish capital Dublin have both roughly doubled over the past decade. Prime Minister Micheal Martin recently described tacking growth in housing costs as the government's top priority.

Opposition party Sinn Fein said in a statement that the cut in maximum rent increases was "too little, too late."

(Reporting by Conor Humphries; Editing by Lisa Shumaker)