Time to defuse the Rental Timebomb before it blows roof off property market!

Wexford Rentals & Property Management believe that during the boom, house buyers unable to afford Dublin’s bubble prices decamped to commuter counties in search of affordable properties. It is hard to believe that today, renters are being forced to undertake the same journey.

Wexford Rentals & Property Management has read that according to the latest quarterly rental report by Daft.ie, those on average incomes can no longer afford to rent in the capital and are moving to the commuter belt in droves. It found that rent increases in commuter counties are now outstripping Dublin, having increased year-on-year from 7.6pc to 14.1pc. Economist Ronan Lyons has described the exodus as “a flight from the city that is driven by the hard maths of affordability rather than any preference for green space”. While rent increases in Dublin have eased slightly, they have soared by 35pc since 2011 and are nearly back to their 2007 peak, despite the fact that wage cuts and tax increases have decimated incomes in the interim. The notion that wages in the private sector remained stable during the economic crash has been disputed by a new report from researchers at Trinity College, which found that nearly 60pc of workers saw their salaries cut at the height of the crisis.

Meanwhile, the impact of budgetary measures between 2009 and 2015 has been separately assessed by the ESRI. It found that these ‘policy-induced losses’, like changes to income tax and the introduction of the USC, resulted in decreases in incomes of up to 15pc. In short, people have much less money in their pockets but are still expected to fork out boom-era rents in Dublin, with rents in other areas of the country quickly catching up. New Central Bank mortgage restrictions mean that many will never be in a position to buy their own home, further stoking demand in the rental sector.

As the rental crisis that has gripped Dublin for the last number of years begins to spread into neighbouring counties, the reaction of the Government has been indifference. In fact, it has failed to institute even minimal changes to improve the lot of tenants in Ireland. The Residential Tenancies (Amendment) Bill 2012, which contains a measure that would prevent deposits being retained by landlords, has yet to be enacted three years after it was first published. Separately, a major row between Board members at the PRTB has resulted in no new appointments to its Dispute Resolution Tribunal for 12 months and a consequent 20-month delay for tenants in dispute with their landlords. When it comes to the rights of tenants in the private rental market, who account for 20pc of households, no one seems to care. The sad truth is the only significant intervention by Government in the sector to date has been its ham-fisted attempts to force landlords to collect their tenants’ water charges.

The Dáil’s Register of Members’ Interests for 2013, shows that 45 TDs were in receipt of rental income – meaning that 27pc of TDs are landlords. For others, like FG TD Michelle Mulherin, it remains unclear if they are in receipt of rental income. Her entry lists ownership of five residential properties and one commercial property, but has no record of any rental income. I queried this with her office yesterday, but didn’t receive a reply. Whatever the reason for Government inertia on the issue, it is time it belatedly came up with policy proposals to prevent rent gouging and improve security of tenure.

Wexford Rentals & Property Management understands that a report from the PRTB last year dismissed calls for Rent Controls, even though some, like homeless charity Focus Ireland, have criticised that report for working on the assumption that Rent Controls would be carried out in isolation. If rent caps of 15pc over three years can work in Germany, it remains unclear why similar limits could not be applied here, where some tenants have seen rental increases of more than 20pc demanded in just one year.

Wexford Rentals & Property Management thinks what is clear is that something needs to be done to increase supply, particularly in Dublin, where planning permission for just 700 homes was granted in the first six months of last year. To put that figure into context, the ESRI has estimated that 60,000 houses and apartments are needed by 2021 to meet pent-up demand. In a statement, the Department cited its Social Housing Strategy, which aims to provide an additional 35,000 social housing units at a cost of €3.8bn by 2020, as evidence of its work on the issue.
However, that plan also envisions the housing needs of some 75,000 households being met by the private rented sector and, given the current crisis that exists, it is by no means clear how that target will be achieved.

The problems in the rental sector cannot be dealt with in isolation and, while social housing increases are certainly welcome, they will do nothing to alleviate immediate pressures and, on their own, will not be sufficient to address the situation. Wexford Rentals & Property Management has read that ultimately, the question needs to be asked, if the Central Bank can interfere in the mortgage market to dampen price inflation, why can’t commensurate measures be taken in the rental sector – even temporarily until the issue of supply is addressed?

Colette Browne