CPI or 2 per cent: which limb binds this month, and why it moves

Two per cent sounds simple until you try to apply it. Two per cent of what, measured from when, and what happens in a year when inflation falls below it?

The rule is genuinely a comparison, not a fixed number. Each year you work out both limbs and take whichever is smaller, which means the answer changes as CPI moves and the binding constraint can swap from one to the other mid portfolio.

Here is how the two limbs actually work, which one is biting right now, and the exception that lets some newer buildings ignore the 2 per cent entirely.

The rule, stated properly

Since 1 March 2026 a national rent control replaces Rent Pressure Zones. Rent may be reviewed once in any 12 month period, and the increase may not exceed the lower of 2 per cent per year or the rate of CPI inflation over the same period.

Two things follow that people miss. It is a ceiling, not an entitlement, so nothing obliges you to take the full amount. And because it is the lower of two figures, a fall in inflation tightens the cap rather than leaving it at 2 per cent.

Which limb is binding right now

CPI has been running above 2 per cent through most of 2026. When inflation is above 2 per cent, the 2 per cent limb is the smaller of the two, so 2 per cent is the ceiling for a standard tenancy.

If inflation were to fall to, say, 1.4 per cent, the CPI limb would become the binding one and the ceiling would drop to 1.4 per cent. That is the part landlords tend not to plan for, because the public conversation has fixed on the number 2 as though it were the rule rather than one half of it.

Our calculator pulls the CPI figure live from the CSO, so the ceiling it shows reflects the current position rather than a number typed in months ago.

Why the index matters more than the headline rate

The statutory test is not the annual headline rate you see in the news. It is the movement in the CPI index numbers between the date the rent was last set and the date you are setting it now.

For a straightforward 12 month gap those two are close. For anything else they diverge, sometimes materially. If the rent was last set 19 months ago, or 31, the annual rate tells you almost nothing useful and the index movement over that exact period is the only correct basis.

This is why a spreadsheet built on the headline rate can be wrong in both directions, and why the calculation belongs in a tool that holds the monthly index series rather than a single number.

The new build exception

Apartments and student specific accommodation in qualifying new developments follow CPI with no 2 per cent cap. In a year when inflation runs at 3.4 per cent, those properties may rise by 3.4 per cent while everything else is held to 2.

Qualifying is specific. Work must have commenced on or after 10 June 2025 to build a new apartment complex or student accommodation, to extend one by at least 25 per cent of its original floor area, or to change a building’s use to create an apartment complex occupying at least 25 per cent of the previous floorspace. In every case the landlord needs a commencement notice, or a 7 day notice under the Building Control Act 1990, submitted on or after that date.

If you think you qualify, the commencement notice is the document that proves it, and it is worth locating before you rely on the exception.

What happens when you skip a year

Landlords who did not review during the RPZ years often assume the allowance accumulates into one large catch up. It accumulates, but not without limit and not compounded.

The 2 per cent limb is pro rated across the elapsed time since the rent was last set, so a longer gap allows a proportionally larger increase, calculated on the current rent rather than compounding year on year. The CPI limb is measured over the same period from the index. As always, the lower of the two governs.

Whether a catch up is available at all depends on the review interval that applies to you. In areas that only became a Rent Pressure Zone within the previous 2 years the first review waits 24 months, after which the normal annual cycle begins.

The printout your notice needs

Getting the number right is only half of it. On the capped pathway the notice must carry a printout from the RTB Rent Calculator showing how you arrived at the figure, alongside details of 3 comparable properties.

Your own working does not satisfy that, which is deliberate on the RTB’s part. Use our calculator to understand the number and to sanity check it, then reproduce it in the RTB tool to produce the document that goes in the envelope. And send the notice to the tenant and the RTB on the same day, because missing that step voids the notice entirely.

How Rentalize handles this

Rentalize computes the cap from the official monthly index series rather than an annual approximation, so a 19 month gap is handled as accurately as a 12 month one. The result feeds the notice, the evidence bundle and the diary date for the next permitted review in one pass.

It sits in rent review software, used by letting agents running reviews across many landlords and by private landlords managing their own.

If you would like to see the cap calculated against a real tenancy, you can book a 20 minute walkthrough.

Frequently asked questions

Is the Irish rent cap 2 per cent or CPI?

Whichever is lower, assessed at the time of the review. With CPI above 2 per cent through most of 2026, the 2 per cent limb is currently binding. If inflation fell below 2 per cent, the CPI figure would become the ceiling.

Which CPI figure is used?

The CSO Consumer Price Index, which replaced the EU harmonised index used under Rent Pressure Zone rules. The legal test uses the movement in the index numbers between the two rent setting dates rather than the headline annual rate.

Can rent rise by more than 2 per cent in any circumstances?

Yes. Apartments and student specific accommodation in developments where work commenced on or after 10 June 2025 follow CPI with no 2 per cent ceiling, so they can exceed 2 per cent when inflation does.

What if the rent has not been reviewed for several years?

The 2 per cent limb is pro rated across the elapsed period on the current rent, without compounding, and the CPI limb is measured over the same period. The lower of the two still governs.

Do I have to use the RTB calculator?

For the notice, yes. The capped pathway requires a printout from the RTB Rent Calculator as part of the supporting statement. Other calculators are useful for understanding and checking the figure but do not satisfy the requirement.