Saturday 19 October 2019

Runaway rents at record high as tenants pay more than mortgage

  • New law will force landlords to give four months’ notice
  • The average rent is now €1,366 as supply drops
  • In Dublin, the average price is much higher at €2,002 – an increase of 6.8pc within the year.
  • New legislation also aims to clamp down on so-called ‘renovictions’
‘Significant reforms’: Housing Minister Eoghan Murphy. Photo: Frank McGrath
‘Significant reforms’: Housing Minister Eoghan Murphy. Photo: Frank McGrath

Claire Murphy and Kevin Doyle

It is now cheaper to pay a mortgage than to rent starter and family homes in all areas of the country, new research has found.

The runaway rents are symptomatic of the housing crisis which is spreading to all parts of Ireland.

The latest report from Daft.ie today reveals that rents nationwide rose by 1.5pc in the first quarter of the year and the average is now €1,366.

In Dublin, the average price is much higher at €2,002 – an increase of 6.8pc within the year.

As the crisis deepens, new rules that will severely weaken landlords’ powers of eviction are to be signed into law within the next fortnight.

Tenants are to benefit from a more than doubling of the notice period and stricter guidelines around the justifications for evictions.

The key measures are designed to enhance the enforcement powers for the Residential Tenancies Board (RTB).

The changes have been described by Housing Minister Eoghan Murphy as the “most significant reforms” in the sector since the introduction of rent pressure zones.

New legislation also aims to clamp down on so-called ‘renovictions’. This is where a tenant feels forced out by “renovations”, before a new lodger is brought in at a higher rate.

For the first time, landlords will now have to give a clear explanation if they ask a tenant to vacate a property in order to facilitate renovations.

Daft.ie reports that the number of homes available to rent across the country is at the lowest ever level since the series began in 2006 – at just 2,700 homes.

As a result, with tight supply, listed rents rose again in all 54 markets covered by its report.

In Dublin, rents are now an average of 39pc above their previous peak in 2008, while in Cork and Galway cities, rents are 32pc and 49pc above the levels recorded a dozen years ago.

Mr Murphy said the Residential Tenancies Bill 2018 provides the "ambitious and wide-ranging reforms" which are exclusively "in favour of tenants".

The legislation is expected to pass its final stage in the Seanad this week and will then be sent to President Michael D Higgins to be signed into law.

The RTB will now be able to investigate and sanction landlords who engage in improper conduct including non-compliance with rent increase restrictions.

Areas designated as rent pressure zones are to remain so until the end of 2021, meaning rent increases are limited to 4pc annually.

For the first time, landlords will now have to give a clear explanation if they ask a tenant to vacate a property in order to facilitate renovations.

So-called 'renovictions' have become increasingly contentious in recent years.

The new laws include a definition of the type of works that qualify as justification for breaking a lease.

The changes to a property must be "substantial" and consist of either a permanent extension increasing the floor area by 25pc or a combination of other improvements.

These include: a permanent alteration of the internal layout; adaptations for people with a disability; a permanent increase in the number of rooms; and an improvement in the BER rating by two or more points.

Before a notice to leave is issued, the landlord must obtain a certificate from an architect or surveyor stating that the work would pose a health and safety risk requiring vacation by the tenants for at least three years.

Where a landlord terminates a tenancy because they need to substantially refurbish or renovate the property, that property must be offered back to the former tenant upon completion of the works.

There is also to be a clampdown on landlords claiming they need a property vacated in order to sell it.

They must now enter into a contract for sale within nine months of the termination date, or else offer to re-let the space to the former tenant.

In cases where a landlord ends a lease in order to allow a family member to take over the property, it must be offered back to the original tenant if the relative leaves within a year.

The duration of tenancy termination notice periods are to be significantly extended.

Currently, a person who stays in a property for one year must be given 42 days' notice to leave. This is to be increased almost three-fold to 120 days.

A tenant who has lived at a property for three years must be given six months' notice, up from 84 days.

The changes received cross-party support in the Dáil - but Opposition parties did want further measures introduced.

The legislation stopped short of allowing for the publication of a much talked-about rent register, which would allow potential tenants to see what the previous occupant was paying.

Mr Murphy said he will "continue to look at the rental sector and make sure all the necessary protections are in place".

"But we also have to recognise as well that we have to have landlords," he said.

The RTB has recorded a significant 53pc increase in the number of complaints from tenants over rental prices in the space of two years.

It said that in 2015 there were just 313 dispute applications in relation to rents. By 2017, that figure had risen to 481.

All private residential landlords and approved housing bodies are obliged to register their tenancies with the RTB.

There are now 55pc of tenancies covered under rent pressure zone (RPZ) legislation and two additional RPZ areas were designated on March 28. These were Limerick City East LEA and Navan LEA.

The RTB is rolling out an awareness campaign on rent pressure zones for landlords and tenants.

Irish Independent

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