Monday 3 August 2015

Ignoring the scale of renters' panic is a 
political failure on a monumental scale

Published 13/08/2014 | 02:30

House inflation is being driven by a supply shortage in Dublin.
House inflation is being driven by a supply shortage in Dublin.

When I was a kid, a German guy moved in down the road and his dad said something that summed up his disbelief at the way Ireland worked and it has always stayed with me.

One day, talking to my Dad at the gate, he shook his head and laughed "In Germany we buy our TVs and rent our houses; in Ireland, you rent your TVs and buy your houses."

That was true, we did rent our telly. Everyone on the road did, yet most of the houses were owned. The few renters came and went and mothers would refer to these people as "only renting".

This "only renting" attitude prevails today, 35 years later, and it is causing enormous insecurity for hundreds of thousands of people.

One of the many by-products of the latest housing bubble - which the State could stop tomorrow if it wanted to - is that more and more tenants are getting evicted. Landlords are calling time on leases either to get new tenants who will pay more, or to sell their property because they believe that this mini-bubble will end soon and now it's time to cash in.

The narrative of greedy landlords and needy tenants is an easy one, but mightn't be altogether true. Yes, there are "rogue" landlords, but there are also "rogue" tenants. There are also many, many bankrupt buy-to-let, part-time landlords who are up the creek. These people, largely boom-time buyers of second houses, will argue that they need to charge higher rents to make ends meet.

Although this argument is understandable from the individual landlord's point of view, raising rent dramatically is not the same - from a societal point of view - as raising the price of a car or laptop.

A home is different. Most people should understand this.

The trauma of being evicted and the prospect of being homeless are terrifying. While there are some laws to protect the renter, one of the endemic issues in our country is the way in which social attitudes (as opposed to the law) overwhelmingly support the land owner as opposed to the person who gives the land its value, the renter.

After all, investment properties have no value if there is no rent. Rent is the stream of income underpinning the value of the asset. Yet the person who pays this rent is seen as dispensable rather than essential.

This societal bias towards the landowner runs deep in the Irish psyche and as a result, the renter is almost a silent victim - renters are still seen as implicitly second-class families in our Republic.

This attachment to a type of neo-feudalism, where land ownership equates to status, is bizarre in an economic world where what is between our ears - rather than under our feet - is the most valuable commodity.

The Irish land obsession is feudal and the very antithesis of the modern economy. Do you think Silicon Valley entrepreneurs, the people who are changing the world, are talking about property values?

But property and the bias towards landlords is unfortunately an enduring and backward facet of our society and not even the most spectacular property crash in the Western world has diminished it.

As a result, the plight of thousands of families who are renting and who feel insecure is largely ignored. These are our neighbours, their children are in our children's schools, they are part of the community, yet they can be uprooted with deleterious ease.

By law, tenants can be protected for four years if they claim what is called a Part 4 tenancy. This means that technically a tenant's tenure is protected for four years. The only problem is that although these tenancies are supposed to rollover, there is a loophole which allows the landlord to throw the tenant out for no reason within six months of the expiry of the Part 4 agreement.

However, due to social attitudes that supports the landowner, tenants who look for a Part 4 tenancy are regarded as "difficult' and many landlords and leasing agents try to force tenants into a simple one-year lease. This is the reality and many tenants are living in limbo waiting for the landlord to deliver news of a rent hike.

 

Even with a proper lease or Part 4 Tenancy, there is no real security because there are still three ways the landlord can end a tenancy. He can sell or claim that he is keeping the place for a relative or needs to refurbish. These are "get-out" clauses for the landlord and they are being cited all over the place to get rid of tenants. In many cases, the refurbishment is an excuse to put the place back on the market in a few months at a much higher rent.

During the bust, when there was an opportunity to change the status quo, nothing was done to enhance tenants' rights and now the recent spike in housing demand, particularly in Dublin, has translated into an increased sense of power for landlords.

The Private Residential Tenancies Board (PRTB) statistics show monthly rents have increased in all Dublin areas this year, with Dublin 9 the hardest hit, by an annual increase of 12.7pc. The average rent across the city has risen to €1,089 per month.

This is causing what I would describe as a "renters' panic" as people try to out-bid each other to find a place to live, so much so that the experts think that rents will go up by 20-25pc in the next 12 months.

One way of preventing the sudden knock on the door would be a stipulation, which is the norm in Austria and Germany, that the landlord can serve a notice to quit but must give 12 to 24 months' notice. When families are involved, this notice period should be much longer. The long-term solution is to build many more social houses - or council houses as they were known when I was a boy.

The State can borrow for 1pc right now. This is the time to finance a massive social housing programme. The private sector simply isn't up to the job of providing decent, affordable accommodation.

Out-sourcing this social responsibility to a two-bit buy-to-let sector that is using housing and other people's rents to top-up their pensions, is political failure on a monumental scale.

Irish Independent

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