Wednesday 23 August 2017

Country's average rent rises by €134 a month - and is now at an 'all-time high'

Cost of renting hits 'all-time high' as supply at record low

There were just over 3,000 properties available to rent at the start of this month. Photo: PA
There were just over 3,000 properties available to rent at the start of this month. Photo: PA
Charlie Weston

Charlie Weston

The cost of renting a home has continued to shoot up, while the number of properties available to rent is at an all-time low.

Rents rose nationwide by an average of 13.4pc in the year to March 2017, or €134, according to the latest report from Daft.ie.

The average monthly rent nationwide during the first quarter of this year was €1,131.

It was the fourth quarter in a row that a new all-time high for the cost of renting has been set.

There were just over 3,000 properties available to rent at the start of this month.

This is the second lowest number since the Daft.ie rental report began in 2006. It is now cheaper to buy a property in almost all parts of the country than it is to rent. However, there are very few homes for sale, and a small number being built.

Rental costs have now shot up by 14pc in Dublin in the year to March, with the average cost now €1,668.

The rest of the country has seen the cost rise by 13.2pc, with an average cost now of €800.

The rate of inflation represents only a slight slowdown in inflation from the rate recorded in the final quarter of 2016, which was the largest on record.

Author of the Daft.ie report and Trinity College lecturer Ronan Lyons said: "The rental market has, for over five years now, shown increasing signs of distress, with stronger demand but weaker supply each year."

In Cork, the cost of rents rose by 10.4pc to €1,107.

Galway saw a similar rise, with the average cost now just below €1,000 a month.

Read more: It doesn't add up: 20,000 first-time buyers chase 10,000 new homes

Limerick had stronger gains, at 12.6pc in the year, with the average cost now €892, while Waterford saw a rise of 10.2pc in costs to €757.

"Rents are at an all-time high, while the number of homes available to rent remains at the lowest levels on record," Dr Lyons said.

He said that regulatory measures designed to limit rent increases could only ever have a very limited effectiveness in a market with such a scarcity of supply.

There are two measures in place in an attempt to crimp rent rises. Landlords are limited in the frequency they can increase rents. On top of this, a number of mainly urban areas have been designated as rent pressure zones. In these, rents can only increase by 4pc a year.

Rents in Dublin have now shot up by 66pc from their lowest point, with a surge of 41pc outside our biggest city.

Dr Lyons said rent pressure zones may be making the situation worse. This is because they are set based on rental leases registered with the Residential Tenancies Bureau.

However, there is evidence that existing tenants are not being hit with the same level of increases as new agreements.

In many cases increases for sitting tenants have been only half the size of increases faced by new tenants.

The economist said the rent pressure zones are amplifying the problem by reflecting new tenancy agreements, when sitting tenants are paying less.

"The more appropriate solution remains to increase supply. This includes both making better use of the existing stock of housing and building substantially more, in particular more apartments," he said.

Stephen Faughnan, of the Irish Property Owners' Association, said the Daft report shows that landlords were rewarding their existing good tenants by keeping their rent below market value. "This has always been the norm in the market with landlords valuing their good tenants and showing that value by not increasing to market rent," he said.

Rent controls introduced in over half the tenancies in the country now restrict these landlords when their tenants leave to 4pc rent rises.

The controls affect rental properties that are being sold, discouraging new investors to purchase rent controlled properties, Mr Faughnan added.

He claimed the State has punished landlords who kept their rents low.

Irish Independent

Also in Business