herald

Saturday 3 December 2016

Dan White: Pressure mounts to bring back rent controls in Dublin

Rising rents
Rising rents

Average rents rose by 8.2pc nationwide in the 12 months to the end of April. However, rents are rising far more quickly in and around Dublin, where a rising population and strong employment growth are coming up against a virtually static supply of housing.

According to the latest survey by property website daft.ie, average rents rose by between 6pc in south county Dublin and 10.1pc in the city centre.

While at first glance this would seem to indicate that rents in Dublin are rising at about the same pace as those in the rest of the country, look again.

While the average monthly rent outside of Dublin and the commuter belt ranges between €516 and €651, the average Dublin rent now ranges from €1,179 in west Dublin to a towering €1,528 in south county Dublin - the highest average rent in the country and almost three or four times the average rent in Connacht/Ulster.

relocate

Average rents in Dublin have now risen by between 28pc and 35pc from the post-crash low point a few years back.

With rents in the capital now so high, many would-be tenants are being forced to relocate farther and farther out of the city to the surrounding commuter counties of Louth, Meath, Kildare and Wicklow.

Surprise, surprise, these counties are the ones that have experienced the fastest rate of rent increases over the past 12 months, with average rents rising by 13.9pc to €911 per month. Rents in Wicklow, now an average €1,046 a month, are close to Dublin levels.

Exploding rents are no longer a problem that is confined exclusively to the greater Dublin area.

The ripple effects have now reached the other major cities, with average Cork rents jumping by 7.5pc to €911 a month and average Galway rents up by 7.4pc to €889.

With rents outside of Dublin and the surrounding counties having risen by far less from their post-crash troughs, there is clearly considerable scope for further major rent rises in the provinces.

So what can be done? In an ideal world there would be a major increase in the number of new houses and apartments being built.

But we are currently building less than half of the estimated 25,000 annual total needed to accommodate our growing population.

This is the result of the unwillingness of the banks to lend to developers and the fact that, with the Exchequer taking more than 40pc of the cost of a new house in VAT and local authority development levies, it is uneconomic for developers to build houses and apartments at current prices.

Even with the best will in the world, it will take several years to clear these blockages and bring sufficient new houses on stream to meet the increased demand.

So what do we do in the meantime? Clearly, with a growing proportion of the population unable to afford to either buy or rent and with homelessness levels rocketing, sitting twiddling our thumbs and doing nothing until all of these new houses come on stream many years from now is not an option.

Something must be done in the meantime. That something is almost certainly rent controls.

Of course, the property lobby will scream blue bloody murder and our old friend "constitutional difficulties" will be trotted out by our political masters as an excuse for doing nothing.

scared

That's because ever since the Supreme Court threw out the last set of rent controls, in 1982, ministers have been running scared of such controls.

And that, quite simply, is not good enough.

The rent controls struck down by the Supreme Court, which dated from the First World War, were draconian and effectively banned any rent rises even at a time of runaway inflation.

Don't tell me that a more moderate set of rent controls, giving tenants long leases during which rents can only increase in line with the general price level, couldn't be successfully introduced.

Ministers need to get cracking on rent controls.

If they don't, they had better be prepared to pay the price at the ballot box next year.

Promoted articles

Entertainment News