LANDLORDS are abandoning the rental sector and selling off rental properties in significant numbers in an attempt to cash in on the lucrative property market.
New figures from the Residential Tenancies Board (RTB) outline how almost 500 notices of termination from landlords intending to sell were lodged between April and June alone.
The figures supplied to the Irish Independent show a steady upward trend in landlords selling when compared with pre-pandemic levels. The RTB received 367 notices in the second half of 2019 and 395 notices in the first quarter of 2020.
The current numbers may be even higher as thousands of tenants left cities during the pandemic and these homes can be sold without the landlord alerting the RTB.
It comes as a Daft.ie report suggests the number of homes available to rent in the country is at an all-time low of 2,455.
This compares with an average of almost 9,400 homes to rent at any one time over the past 15 years. It says there are fewer than 800 homes available to rent outside Dublin.
Rental costs have also doubled within the space of a decade, despite efforts of the Government to ease the rate of increase. They rose by an average of 5.6pc in June, according to Daft.ie. The average rent nationwide is now €1,500 a month, up 2.4pc on a year ago.
A reduced supply of rental properties in the market will likely increase the cost of renting.
However, it does mean the supply of houses for sale will increase.
The figures supplied to the Irish Independent show a steady upward trend in landlords selling when compared with pre-pandemic levels.
The RTB received 367 notices in the second half of 2019 and 395 notices in the first quarter of 2020.
However, the number of landlords exiting the market may be even higher as thousands of tenants left cities during the pandemic and these homes could be sold without alerting the RTB.
Many have also waited for restrictions to ease to sell their properties, as landlords were not able to serve eviction notices when the 5km travel limit was in place during the pandemic.
Lucrative house prices as well as tight rent controls are the main reasons behind many landlords’ decision to sell, according to sources in the industry.
During the second quarter of 2020 the RTB received 53 notices of termination from landlords who wanted to sell their properties.
In Q3, this figure jumped to 186 and by Q4, it was 263.
At the end of March of this year, the figure fell to 157 due to lockdown restrictions.
However, it jumped to a high of 498 by the end of June.
The Irish Property Owners Association (IPOA) previously warned conditions for landlords, including rent pressure zones, are forcing them out of the market.
“Rent controls have distorted the market totally,” said Margaret McCormick of the IPOA.
“Continually changing legislation in the sector is encouraging landlords to leave the sector.
“It’s very difficult to rent a property – legislation is complex, there’s high taxation and when you have a difficulty, it takes a very long time to go through the RTB,” she added.
It is bad news for tenants who will be asked to leave their homes and look for somewhere new at a time when supply of rental accommodation is already low.
In June, homelessness figures rose to over 8,000 and homelessness charities sounded the alarm that a reduction in homelessness during the pandemic will be “short-lived”.
Mike Allen, Director of Advocacy at Focus Ireland, said there was a need for “more effective protections” for tenants and measures to reduce the numbers of landlords “selling up”.
“A chronic shortage of affordable homes to rent or buy means that, for families who receive a notice to quit, it is incredibly difficult to source alternative accommodation.
“This is placing many households at very serious risk of homelessness,” he said.
His concerns were echoed by Sinn Féin housing spokesperson Eoin Ó Broin, who obtained the RTB figures.
“What we are seeing is a very, very dramatic increase in notices to quit, suggesting that we are potentially looking at a very significant number of families presenting as homeless and going back to pre-Covid trends,” Mr Ó Broin said.
He has called on the Housing Minister to intervene now and “make sure that this does not lead to a steady increase in the number of families with children presenting as homeless”.
Meanwhile, rental costs have shot up again despite the efforts of the Government to ease the rate of increase.
Chronic supply shortages have been blamed for the latest spike.
Rents rose by an average of 5.6pc in June, according to Daft.ie.
The average rent nationwide is now €1,500 a month, up 2.4pc on a year ago, and double what it was a decade ago.
A new record low has been hit for the number of properties for rent. The number is at an all-time low of 2,455 across the State. People moving out of the capital city is having a large impact.
Dublin rents were up by 1.4pc in the April to June period, the second quarter in a row that they have risen. But they are just 0.5pc above the level seen a year ago. The average rent is now €2,035.
Other cities have seen much larger increases. In Cork, Galway and Limerick cities, rents are between 9pc and 10pc higher than a year ago, while in Waterford, they are nearly 12pc higher.
Outside the cities, rents rose by 8.6pc in Leinster, by 14pc in Munster and by 15pc in Connacht-Ulster, in the April- June period, when compared with the same quarter in 2020.
The rental cost surge comes as the Government grapples with the issue.
Housing Minister Darragh O’Brien has proposed limiting rent rises, while also designating more rent-pressure zones.
Under the new proposals, annual rent rises will be based on inflation rates instead of set caps.
Current laws mean rents within rent-pressure zones can only rise by a maximum of 4pc annually.
Under the new rules, which will run until 2024, there will be no cap on rent increases and instead rents will only be allowed to go up in line with general inflation, as recorded in the EU Harmonised Index of Consumer Prices (HICP).
But the proposals will not address the issue of what Daft.ie economist Ronan Lyons says is the “extraordinarily tight supply” of homes to rent.
He said the 2,455 homes available to rent in August was the lowest point in the series going back to January, 2006.
This compares with an average of almost 9,400 homes to rent at any one time over the past 15 years.
Dublin has seen a 44pc fall in the number of homes to rent in the past year. Outside the capital, there were fewer than 800 homes available to rent.
Dr Lyons said that as the impact of Covid-19 on daily life begins to recede, the underlying issues facing Ireland’s rental sector are re-emerging.
“It is a sector facing unprecedented shortages, with extraordinarily tight supply.”
He said there were just 15 homes available to rent in Waterford, city and county, on August 1 and only eight in all of Offaly.
“Ireland’s rental sector has undergone a lost decade and a half, with almost no new rental homes built.
“This cannot be solved by trying to regulate prices. It can only be solved by adding significant amounts of new supply – and not only in Dublin.”
He said policymakers and citizens should be wary of anything that limits the ability of foreign savers to build new rental homes here.
In May, new rules came in to ensure cuckoo funds pay higher stamp duties on bulk purchases.
This was in response to the bulk sales to institutional funds, after it emerged an entire housing estate in Maynooth, Co Kildare, was set for a fund.