Sunday 23 October 2016

We need new type of landlord who will offer tenants certainty to ease the housing crisis

Kieron Brennan

Published 16/12/2015 | 02:30

These more professional, longer-term institutional landlords will be large companies or trusts who are in the business for a continuing income stream and not in the hope of speculative capital gain
These more professional, longer-term institutional landlords will be large companies or trusts who are in the business for a continuing income stream and not in the hope of speculative capital gain

Every day, two more families become homeless. Every month, a thousand landlords leave the private rental sector. These two facts are obviously connected. But the haemorrhaging of landlords from the sector is having an impact across the whole of the market.

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Last week, the Private Residential Tenancies Board (PRTB) confirmed what many tenants felt - that rents had increased by an average of 8pc in the last year, with higher increases in Dublin. This chimes with the findings of recent research by Co-operative Housing Ireland.

The Housing Sentiment Survey uncovers some of the underlying problems in housing - particularly the private rental market. The nationally representative survey (more than 1,000 respondents) showed a dramatic reduction in the number of people reporting that they lived in private rental. This fits with PRTB reports that it had a decrease of 55,000 tenancy registrations between 2012 and 2014. Landlords are selling up and no new supply is coming in to take their place. Overall, it appears that the number of houses available for private renting is shrinking at an alarming rate.

There are fewer properties available but the number of people looking to rent what's left is actually increasing. The Co-operative Housing Ireland survey found that 16pc of households have someone looking to move out to form their own household, up by 3pc since only a year ago.

We are all familiar with the daughter and her family living, not by choice, with the grandmother. Or with the adult offspring who has moved home to save for a deposit. The survey suggests there are 265,000 such people who would buy or rent a home but who are not in a position to do so.

The private rented sector is being hit by a double whammy - a reduction in supply on one side, and an increase in demand on the other.

The pressure is particularly being felt by people trying to find new rental accommodation. Last year, the Co-operative Housing Ireland survey found that of those who moved in the previous 12 months, 28pc said they had difficulty finding new rental accommodation. This year's survey reported this figure at 65pc - this is a massive increase but easily understood in light of the supply and demand figures.

Little wonder that 32pc of private tenants nationally, and nearly half of private tenants in Dublin, fear losing their homes. This fear factor is not restricted to people on low incomes. Nearly a third of tenants on incomes in excess of €60,000 have the same fear of losing their homes.

The simple solution to the housing crisis is to build more housing - to increase supply. There is a need to build the right mix of private, public (local authority) and social and co-operative housing in the right places. The market is interrelated and interdependent - supply and demand in one part of the market affects other market sectors.

Co-operative and social housing providers are willing to play their part, and the whole sector is working at full tilt to put in place plans for new supply. However, building new homes does take time.

In the meantime, is there a case to take action to try to stem the flow of landlords leaving the rental sector?

Our experience of State interventions in the private housing market has rarely been positive. But it certainly seems sensible to ask whether this is the right moment to add further burdens and restrictions to the dwindling number of private-sector landlords, many of whom are not landlords by choice and intend to leave when the opportunity presents itself.

In the long term we need to get a different type of landlord into the market. In particular more professional, longer-term institutional landlords who will offer certainty to tenants. These landlords will be large companies or trusts who are in the business for a continuing income stream and not in the hope of speculative capital gain.

They would offer long leases to tenants and could accept more affordable rents on the basis of certainty around the long-term income stream from tenants.

To bring about these changes, new policies are required. In the absence of a comprehensive policy around the private rental market, we will continue to see people losing their homes, and increasing pressure on social and co-operative housing and services for homeless people. The number of people affected may only increase in the next few years.

Tenants pushed out of the private rental market will increase demand on other forms of housing. Social and co-operative housing supplied by voluntary bodies and local authorities needs to make a much bigger contribution. The Government launched a Social Housing Strategy this time last year. More work is needed to ensure that systems and practices are changed or reformed to ensure that the strategy delivers. An obvious example would be that a number of State-owned sites are provided for the voluntary bodies to build upon.

All efforts at increasing housing supply by the voluntary bodies could be undermined if they have nowhere to build.

All parts of the housing market must produce new homes in increased numbers if we are to address our housing crisis in a meaningful way.

Kieron Brennan is CEO of Co-operative Housing Ireland

Irish Independent

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