Monday 22 January 2018

Rents keep rising while landlords and tenants disagree

The upward march on rental prices continues
The upward march on rental prices continues
Paul Melia

Paul Melia

The upward march on rental prices continues. New data to be published today from the Private Residential Tenancies Board (PRTB) shows that rents rose by almost 7pc in the last year, but by 9.6pc in Dublin.

It comes after the Irish Independent's series on the sector, 'The Rent Report', has shown that it is cheaper to rent a property today than five years ago in all areas of the country, unless you live in the cities of Dublin, Cork and Galway.

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The PRTB data shows that average monthly rents across the country now stand at €835, compared with €781 a year ago. An apartment costs €878, compared with €815, while a house has risen from €765 to €814.

But it's far higher in the capital, with a house costing €1,325 and an apartment €1,205. Across the board, rents have risen by 1.2pc in the last quarter - worryingly, rents in Dublin are now 7.5pc below the peak, compared with 22pc for the rest of the country.

The increases in our main cities are largely fuelled by a lack of construction activity, coupled with a resurgent economy which requires more accommodation for workers.

But what measures are needed to provide a more sustainable market, given that 700,000 people now rent a home and will remain doing so for the foreseeable future?

Landlords and tenants hold widely different views.

Housing agency Threshold says that two things are needed - rent certainty, and security of tenure. Currently, tenants are entitled to leases of just four years, meaning that at the end of the lease the occupier can be evicted and rents increased.

But any provision for long-term leases won't be effective unless rent increases are predictable. It proposes linking rents with inflation, which would protect both the tenant and landlord.

Landlords disagree, saying it results in less accommodation and poorer standards. It says that giving residential investors the same tax treatment as those in the commercial sector would help create a more professional market.

The Government is also proposing that the PRTB hold deposits, to be returned to the tenant at the end of a lease. Landlords say this is unworkable and it would result in a delay for tenants.

A combination of measures is needed, but the most important is increasing the number of homes coming on stream.

Releasing State lands to construct rental homes could be one solution, if the landlord were prepared to accept locked-in rents that are linked with inflation. A shift in mindsets is also required. Landlords should look for a steady rental income over a prolonged period of time, and almost ignore any capital appreciation of a building.

Tenants should also consider moving to a European mindset, where ownership is an option, and not a prerequisite to providing a home for their families.

Irish Independent

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