Ireland's rent crisis: Seven of the country's top experts weigh in on solutions
Published 16/10/2016 | 02:30
What one measure would help tackle the rent crisis? We asked seven experts in the housing market what solution they would put in place. Here's what they said:
John Leahy, director at irishlandlord.com and author of Renting in Ireland
"We are constantly told the solution to the rental crisis is to increase supply, in fact the first step is to protect the existing stock of rental properties through tax reform. It is estimated that over 50,000 landlords have left the rented sector in recent years. A key driver of this exodus is the penal tax treatment of residential landlords. Many residential landlords incur a tax liability on their rental income, even though they make a cash loss on the property.
"We know from Residential Tenancy Board (RTB) data that 84pc of landlords own two or less properties. Independent research also shows that for 71pc of landlords, the rental income does not cover the mortgage repayment and there are still 27,000 buy-to-let properties in mortgage arrears.
"Many landlords remain under severe financial strain. One element of this financial pressure is the tax treatment of the sector. While the small increase in the Budget to the amount of mortgage interest allowable as an expense against tax is welcome (an increase from 75pc to 80pc), it will not be enough in the short term to stop the exodus of landlords from the market and further significant tax changes are required."
Aideen Hayden, chairperson of Threshold, national housing charity
"We welcome increased supports in Budget 2017 for low-income households, with improvements to the Housing Assistance Payment Scheme and Rent Supplement, however the main solution to addressing rent increases is capping exorbitant rents and we need a strong response to this issue. This year's Budget failed to introduce rent certainty measures, and it is urgent that a more permanent and balanced approach to regulating rent increases is put in place.
"Above all, we must have a national strategy for the private rented sector that is adequately resourced and has clear targets to address issues like long-term rent certainty, increasing affordable supply, improving the quality of rented housing and dealing with the difficulties in the buy-to-let sector."
Annette Hughes, director of DKM Economic Consultants
"Budget 2017 contained a number of measures to support the private rental sector. These are most welcome because they are predominantly aimed at encouraging investment and supply. Specifically the extension of the Rent-a-Room relief to €14,000 per annum is a good short-term measure which can increase supply immediately. This form of relief can encourage the take up of free space in dwellings by single tenants rather than having single tenants taking complete units. It can also assist new homeowners with their mortgage payments and has the potential to offer more affordable rental accommodation.
"The restriction of mortgage interest deductibility since 2009 contributed to significant tax increases for landlords, particularly for those who borrowed to acquire rented residential premises. The restoration of mortgage interest deductibility to 80pc from 75pc, although a small improvement, may encourage new investment. However, the restoration back to 100pc on a phased basis could mean another four years before the gap with the 100pc deductibility for non-residential rental property is closed.
"The most positive measure by far is the extension of the Living City Initiative to landlords. Unfortunately this scheme only applies to certain 'special regeneration areas' in five main cities. This scheme needs to be extended to cover other properties and other locations in our cities where tenants would willingly reside, allowing workers to live close to their place of employment and amenities and increasing footfall for existing businesses.
"What is needed is an audit of vacant units above business premises in our city centres to establish the scope for such an initiative. This extension to landlords should allow for both increased investment in the sector and should also assist in an improvement of quality and standards."
Owen Reilly, director of Owen Reilly
"The first thing to say is there's no crisis in the €2,000-plus market. If you are looking for a rental in Dublin at that level or higher, there is reasonable availability. The competition is at a lower level where there is a lack of good-quality accommodation at the €700 to €1,500-€1,600 level; we recently showed a one-bed apartment for rent at €1,350 to 40 people.
"At the heart of the matter is the fact that not enough new homes have been built for 10 years and the build-to-let institutions, building for executives, are not going to solve the crisis at the lower middle end of the market.
"I believe the Government has a role to play - in compelling the use of vacant sites for housing, in zoning land for long-term, quality, affordable rental accommodation, in removing levies and VAT, but key in my opinion, is to incentivise private landlords to stay in the business.
"While our investor clients last year and this year have been less reliant on mortgages, we would strongly support 100pc tax relief on mortgages; overall, we would like to see residential landlords afforded the same reliefs as commercial property landlords."
Edward Thurman, co-founder of collegecribs.ie, a countrywide hub for student accommodation
"We need to build more of the right type of properties in the right location. It is happening as part of the Housing Action plan announced in July, with a national policy of student accommodation which is encouraging. For example, Ashfield, a new campus in UCD, added 300-plus beds and they want to double the number of on-campus beds to over 3,000. The right things are happening but it takes time to bring to completion.
"In general, there wasn't as great a panic from students this year about accommodation. It could be because they are better organised, and are coming online in April to look for accommodation for the following September.
"All the media coverage is hitting home for second, third and fourth years but that does leave first year students, who don't know where they are going to be, looking for accommodation. However, we do see UCD, for example, promising enough beds for first year students by block booking them.
"It is a matter of time - the Budget's measures are helping. The help-to-buy is a step in the right direction, it's not a silver bullet but it incentivises first-time buyers to buy property and takes them out of the rental market where they are competing with students for the same type of properties."
David Bracken, of David Bracken Estates
"In order to encourage landlords back into the housing market, the Government needs to treat their service as they would any other business. On rental income landlords pay income tax, USC and PRSI. The LPT (local property tax) is the responsibility of the landlord yet it is not allowable as an expense. What this means is that a landlord is being asked to pay for services enjoyed by their tenants but cannot claim this as an expense.
"The rate of mortgage interest relief which is increasing from 75pc to 80pc is not enough and needs to be increased immediately to the previous level of 100pc.
"The costs of improvement to a rental property cannot be claimed as an expense upfront yet it needs to be paid by the landlord immediately. This means there is no incentive to improve rental properties. Replacing furniture can only be claimed by writing the costs off over an eight-year period, yet the cost of buying it has to be paid for straight away.
"A further incentive, giving property owners 125pc of mortgage interest relief if a property is rented to those on rental assistance (welfare allowance), would redress the current two-tier rental sector we now have."
Rosalind Carroll, director of the Residential Tenancies Board (RTB)
"Increasing rents is a huge concern for many, but the real and underlying issue is the overall shortage of adequate rental accommodation. Budget 2017 has introduced some measures which can help renters to find a home by increasing the stock of housing that is available to rent, and enabling renters on lower incomes to better compete for the available stock and to avoid homelessness.
"Clearly, the most vulnerable group of renters are those on low incomes and reliant on State subsidies such as Rent Supplement and the Housing Assistance Payment (HAP). Over the last year, the increases in market rents have pushed private rental accommodation beyond the readh of many.
"Therefore the Budget proposal to further increase resources for the HAP Scheme and Rent Supplement programmes is very welcome. The additional €105 million for HAP next year will bring the budget for this programme to €153 million, an increase of 220pc compared to 2016. According to the Government this will enable an additional 15,000 households to avail of HAP, and this is a very welcome development.
"Protecting existing supply and attracting new supply is equally important. The Budget proposal to increase interest relief on rental properties for landlords from 75pc to 80pc next year, and by 5pc instalments annually thereafter until it reaches 100pc, is a step in the right direction in supporting supply.
"However, the real test for us in dealing with the current rental crisis will be getting the forthcoming rental strategy right. The Housing Minister Simon Coveney has undertaken to bring forward a rental strategy by the end of this year, the first significant strategy for the sector since the Commission on Private Rental reported in 2000.
"Some of the key principles, which I believe must underpin this strategy, include: having a regulatory framework that is simple to understand and follow; understanding the market we have and avoiding unforeseen consequences; and the need to provide certainty to both renters and landlords about the type of rental sector we will have."