As a landlord and tenant, Tanya Sweeney found herself in the unenviable position of issuing a notice to quit just as she received one herself. Here, she investigates why owners like her are leaving the market and what it means for our housing supply
As soon as our landlord requested access to the property to obtain a BER energy certificate, I knew that he would be selling and we would have to leave. Sure enough, the notice to quit arrived not long after. We had moved into our dream home less than a year earlier, but we would be out by summer’s end. We would be moving house for the third time in two years. Our next house will be my three-year-old daughter’s fourth home.
Oddly enough, I was more sanguine than the time, a year ago, that I was handed another notice to quit by a landlord. “You’re honestly going to put us out in that?” I wailed to the property manager, meaning the cut-throat rental market. That market is even more hostile now than it was last summer, but I’ve somehow come to accept this as the way it is. And we are among the lucky ones. We have been offered another property in the area. The monthly rent amounts to well over half my take-home pay, but still. Any port in a storm. And it really is a storm.
I find myself in a rare position in that I’m both a renter and a landlord; not quite an ‘accidental’ one, but one who outgrew her Celtic Tiger apartment and found herself a very different person to the one who bought it in 2007.
I’ve faced the ups-and-downs of both experiences. On the one hand, there has been little security of tenure as a renter. I’ve signed leases that would have left me without a kidney if I so much as scratched a coffee table. I’ve had my fair share of unsavoury landlords waving grubby rentbooks. There was the one who had split a three-bed terraced house in Ranelagh into eight separate apartments. There was the one who asked me to pay for repairs and that he would eventually “get me back”. I also had a landlord who would skulk around at night in the back garden for no discernible reason.
On the other hand, being a landlord is no picnic. In the six or so years since I’ve become one, the repair bills have arrived at a clip. Some tenants simply decided not to pay rent for a while. Furniture and artworks have disappeared into thin air. Holes in the bath, holes in the wall, holes in the wardrobes, holes in the floor. Getting any of it addressed has been an exercise in futility.
I did the sums recently and realised that between tax (on which more later), Residential Tenancies Board (RTB) fees, insurance, property tax, management fees and the ever-increasing costs of repairs, it was in fact costing me €350 a month just to own the apartment.
Facing a cost-of-living crisis that government tells us will get worse before it gets better, I knew that I’d not be able to hang on to it in the long term. So I found myself in the wholly unenviable situation of issuing a notice to quit to my own tenant just as I was receiving one.
Smaller landlords are leaving the market. According to RTB data, the number of private registered tenancies fell by 15,000 to 298,000 between 2017 and 2020. The number of landlords associated with private tenancies fell by 8,000 from 173,000 to 165,000 over the same period.
The other figure that has been falling is the number of new tenancies being registered each quarter, according to Rory Hearne, assistant professor in social policy at Maynooth University and author of the forthcoming Gaffs: Why No-One Can Buy a House and What We Can Do About It.
“The question I have is how many are selling up, leaving the market and not being replaced by another investor landlord, or how many are being turned into short-term lets and tourist accommodation,” he says. “We just don’t know.”
Some figures suggest the impact of short-term rentals on the sector. A report from the estate agent Sherry FitzGerald last year indicated the stock of rental accommodation in Dublin alone jumped by over 90pc in the previous year during Covid, when landlords withdrew their rentals from short-term letting sites such as Airbnb and put them back on the traditional long-term letting market.
The report also showed that the number of properties available for rent in the capital rose from 1,593 in November 2019 to 3,039 by the end of March 2020. According to Daft.ie, there are 878 properties to rent in Ireland as of this week.
Legislation announced this week would introduce stricter rules on short-term lets, which Housing Minister Darragh O’Brien said would return more properties to the long-term rental market. Airbnb, however, said it did not know how to comply with the new regulations.
Economist Jim Power published a report on the private rental market last month, on behalf of the Institute of Professional Auctioneers and Valuers (IPAV) and the Irish Property Owners’ Association (IPOA). It lays bare the challenges faced by many private small and medium-sized landlords.
“It is clear from survey and research data… that private non-institutional landlords are finding the current regulatory and taxation environment very challenging,” his report read. “This is causing an exit of private landlords from the market and is reducing the supply of rental property and putting upward pressure on rents.”
Among the issues forcing private landlords out of the market, the report said, were rental pressure zones (RPZs). These meant some landlords were falling behind market rents, it explained, creating “an inefficient two-tier market where the proper maintenance of rental quality is not economically viable”.
Figures from Eurostat, the EU agency, last week compared rental figures from the first quarter of 2022 with 2010 and found that rents in Ireland had increased by 77pc. (RPZ legislation, which caps rent increases at 2pc a year in certain areas, was introduced in December 2016.)
“If you have a property that is [rented at] below market rent, there is no mechanism to bring it to a sustainable level,” says Margaret McCormick of the Irish Property Owners’ Association. “Anyone who kept their rents low and below market rent, when the rent pressure zone [legislation] came in, they were unfairly penalised. They’re the very people the market wanted and needed to keep in place. They have no incentive to invest, upgrade or modernise the accommodation because there’s insufficient income to do that. If a landlord’s income is restricted and their costs are not, it makes it untenable for businesses to stay in place and for landlords to stay in the sector.”
Taxation remains another hurdle for many landlords. Often, and dependant on their earnings outside owning property, private landlords are taxed at a rate of 52pc of their rental income. Real estate investment trusts (REITs) or institutional landlords, introduced by a Fine Gael-led government in the Finance Act 2013, are neither charged corporation tax on income from property rentals nor taxed on their gains when selling property assets. Additionally, and because they are being given incentives to keep investing, many funds have not been subject to the same RPZ caps as smaller landlords.
Other factors come into play. In the next few months, interest rates on tracker mortgages are due to rise, meaning small landlords with such loans will feel a squeeze. New legislation also requires them to register tenancies with the RTB every year. As of this month, they are also required to inform the board of a Notice of Termination on the day it is issued to the tenant.
“The legislation is one-sided and continually changing,” McCormick says. “[You would] expect that the market works for both sides, but it doesn’t. They’ve made it so complicated that you really need to have legal training to comply with the legislation.”
Power’s report concluded: “The net result of these factors is that private landlords are exiting the market and those seeking to rent properties are the ultimate losers.”
Greg Duff, who works in homeless services, has found that to be true. After living in a two-bedroom property in Rathcoole for six years, rented at €1,450 a month, he was recently received a notice to quit. Duff has been told to leave his home by October because his landlord wants to move a family member into the house.
“I’ve been working on the camper van for the last five years, so I plan to live in that at the end of the month,” he says. “It could be temporary, it could be a couple of months, it could be years. I just don’t know. I’ve been looking at Daft.ie and Renter.ie and there’s nothing there that’s affordable.”
In his line of work, he knows the parlous state of the rental sector closer than most. “I’ve had one client in one of the big old tenement houses in Dublin, and if the next-door neighbour uses the toilet, basically their excrement and urine comes up into their shower,” he says. “They’ve been told if they say anything, they’ll be out.”
Searching for alternative accommodation has been an ordeal for Duff. “Looking for a place [six years ago] was a meat market before I got this house. There were bidding wars going on,” he says. “Nowadays, cash is king wherever you go, which makes it almost impossible for HAP [Housing Assistance Payment] tenants. It’s about who will pay at the end, and whoever offers a couple of hundred euro over [the listed price] will probably get it.
“I know a lot of people who don’t know what they’re doing from one year to the next,” he adds. “Landlords think they can take the house back whenever they feel like it, and once you’re given the standard notice, you’re out on your ear.”
A reported 1,132 notices to quit were sent to tenants in the first three months of the year. “[This is] the highest since data collection started in 2019,” Wayne Stanley, chairman of the Home for Good group, told members of the Oireachtas housing committee this month. He also said a total of 3,818 eviction notices had been issued since the pandemic ban was lifted in April.
Hearne suggests that people who bought properties to rent out were encouraged to view them solely as an investment rather than as a home for someone else. He agrees that, at the same time, the nature of renting has changed. What used to be seen decades ago as a student staple, or certainly a more temporary or transient way of living, soon became a more permanent arrangement for professionals, older renters and families. With that, tenants’ expectations of rental properties also changed.
“People bought the property as an investment in many instances,” he says. “When landlords were getting into the market back in the Celtic Tiger period, people were encouraged to buy property as a landlord as a second or third investment. There was no real proper regulation of tenants, no real requirements of landlords. It was a very different situation back then than it is now. Many landlord representatives will express this as a new burden on landlords.
“It’s true that the situation has changed but I think the problem was that they were invited into the market into the first place. They were sold a pup. They were told by government, invest in property. It was encouraged. The banks were lending to them. We didn’t have a sense that people were living in the private rental sector, that people were going to be living in the private rented sector for their lifetime, and it was going to be families.
“That culture of renting and understanding of what it means to provide a rental house as a home wasn’t there when many small landlords bought their property, and we didn’t engender a culture amongst them, either supporting them or enforcing regulation.”
The dynamic between landlords and tenants can be fraught at the best of times. In periods of adversity, and certainly in periods of crisis, will things get even more combative?
The RTB said it received 5,657 applications for dispute resolution last year, up 9pc on 2020.
“It has been found that most tenants actually had quite a good relationship with their landlords, but what happened was that the longer they are there, the more the relationship seems to deteriorate, largely because of issues like maintenance,” Hearne says.
McCormick says the number of disputes that go to the RTB is “minor” compared with the overall number of tenancies. “The dispute resolution process is too slow, and there’s no protection for a landlord if rent is not being paid,” she adds. The process can take months to resolve, especially if it ends up before the courts. “All the while, there is no income coming in, and no protection for [rental] payments at the end of this.”
One suggested solution to stop smaller landlords leaving the market is to retain rental controls but let them retain more of their rental income via tax cuts or relief. Change in that regard has been slow in coming.
When the housing system remains mired in dysfunction, everyone eventually loses out. Meanwhile, institutional investors have developed what Pearse Doherty of Sinn Féin has described in a Dáil debate as “monopolistic and oligopolistic pricing powers”. These bodies spent €2.27bn in the residential market last year and that amount is expected to grow in subsequent years without political intervention.
“When you [prioritise] housing as an investment, you don’t necessarily build the right type of housing,” Hearne says. “We’re now in this situation where we’re building all these apartments that not many people want to live in. And you’ve families and couples who want to live in homes with gardens. All they’re building is more boxes. They’re not building homes that people will want to live in, or can live in.”
Greystar, one of the country’s biggest corporate landlords, last week indicated it would be raising rents in line with inflation, sparking fears that other investors would follow suit.
We may have had a mixed bag of experiences with Ireland’s small landlords, but it’s probably safe to say that, if things continue as they have in recent years, we’ll probably miss them as their numbers dwindle. Grubby rentbook and all.