herald

Monday 5 December 2016

Rent regulation is 'tinkering around the edge' of solving shortage, says top economist

There are half the amount of properties available in Dublin than there were only three years ago
There are half the amount of properties available in Dublin than there were only three years ago

The private rented market is tightening in Dublin, with half the amount of properties available in the capital than there were only three years ago.

This problem has been exacerbated by a growing number of people seeking to rent in Ireland.

"According to the last national census in 2011, the number of households renting from a private landlord more than doubled in the five years since 2006, reaching slightly over 300,000," a spokesman for the Private Residential Tenancies Board (PRTB) said.

"This means that one in five households now live in the private rented sector and it is an extremely important part of the national housing profile. By comparison, 9pc of Irish households lived in Local Authority Housing in Census 2011."

Difficulty in getting a mortgage has forced younger households and individuals to seek rented accommodation, rather than looking to buy their own home.

Mortgage

"A RED C national survey commissioned by the PRTB last year found that young adults, aged between 18-34, made up 63pc of tenants in their sample, and they also found that 29pc of tenants are non-Irish nationals.

"The same survey found that 66pc of the respondent tenants had been renting for four years, or more, with 32pc renting because they could not get a mortgage," the PRTB spokesman said.

The cost of renting has soared due to the rise in demand and a shortage of available properties in Dublin. As evidenced by the graph above, there also exists a disparity in the average price of similar properties across the capital.

For a two-bedroom apartment in South Circular Road, the monthly average rent is €638.80. Meanwhile, to rent in Grand Canal Dock is more than three times that price, with the average cost at €1,965.50.

Uncertainty in price has added to calls for the Government to introduce rent regulation.

However this is "just tinkering around the edge", said housing economist Dr Ronan Lyons (inset).

"It's a very tight market at the moment and it is tightest in Dublin," Lyons told the Herald.

"As a whole, when you look at 2012, Dublin had 3,500 units at any one time. At the moment it's half that at about 1,800. It is a significantly tighter market.

"The same issue affects the sales market, the homelessness issue and students trying to rent and that's the number of housing stock."

Lyons said that high building costs are discouraging any major development which has a knock-on effect on the number of available properties.

"The most important number at the moment is how much it costs to build per square metre in Ireland," he said.

"At the moment we're looking at statistics which suggest that Ireland is 50pc more expensive than Northern Ireland and Germany and other places.

"If you build an apartment block in Dublin 2 or Dublin 4 you're not going to make your money back," he said.

"There's talk about should we do rent certainty or fixed leases, but that's just tinkering around the edge. In Dublin there are 1,750 units on the market at any one time and an average of 2,200 for the rest of the country. That is a dramatic tightening."

The tightening of the market has pushed some out of being able to afford rent in Dublin, which in turn has increased the demand for social housing.

Ned Brennan, chief executive of the Respond housing association, said this development was at "a very slow stage".

"There are 90,000 families on Local Authority waiting lists at the moment," Mr Brennan said.

"Fianna Fail recently had figures which suggested it could even be as high as 140,000 people.

"What we would suggest is the establishment of a national housing agency like the one in Northern Ireland, because it is difficult when there are different local authorities operating across the country."

He said that one agency should be involved in the delivery of social housing in Ireland.

"We regularly deal with families who are going to be homeless and they can't afford long-term private rented accommodation.

Clients

"Particularly in Dublin and the east coast, during the downturn landlords were taking in people with rent allowance that they wouldn't have done before because they needed private rental clients.

"Now the economy has not produced any new homes in eight years and the shortfall has caused them to revert to pushing the market price higher. Where they might have been getting €700 or €800, they can now get up to €1,400.

"Another problem is that we lost the big developers who went into liquidation and receivership, so that is slowing the process down. Tradespeople also moved abroad who had the building skills to develop new housing."

"The return to the fully functioning housing market is slow," he added.

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