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Pain, again, with no sign of gain

Recent evidence indicates rental sector insanity is here for the long-haul

There’s been more fun and games in the Irish rental sector in recent months, as evidence continues to pile up that the market is in a heap, with apparently all current government policies having embarrassingly limited impacts, and no clear way out of the situation being sig­nalled by anything else on offer. In addition to the ever-rising numbers of homeless children, a chronic undersupply of social housing, and little movement from the entrenched private sector, rental prices have climbed to new, record highs, while available rental supply has dwindled to barely a fifth of what it was five or more years ago.

 

The main testimony as to the grotesque state of the market came in Trinity College economist Ronán Lyons’ quarterly report for Daft.ie. Accord­ing to Lyons, nationwide rents are at an all-time high for the fifth quarter running, eclipsing pre­vious boom-time highs even as house prices stay below their 2008 peaks. Average rents in Dublin city centre rose by 15.7% year-on-year, to €1,741, with the average in south County Dublin as high as €1,902.

 

Nationwide, nowhere is escaping the upward pressure. Rents are up 17.5% in Louth year-on-year, though still marginally below their all-time peak. Waterford and Limerick cities are similarly feeling the squeeze, though there rents remain 12% and 28% below the summit respectively. It’s in Dublin, Cork and their respective hinterlands that the insanity of the crisis is most fully expressing itself.

This chaos in the sector comes as the biggest government policy initiative in the last few years to try and cope with the crisis, the introduction late last year of Rent Pressure Zones (RPZ) in key locations around the country, comes into effect. The RPZ policy limited most residential rent reviews to 4% per annum for the next three years. In late August, the Residential Tenancies Board (RTB) released its own report, detailing a massive spike in queries since the policy was introduced. Disputes have remained in line with the overall growth of the sector, though the Board wrote in the Irish Times that it is “actively encouraging existing and new tenants faced with increases over 4 per cent in RPZ areas to refer disputes” to the Board.

Cartoon unrelated. By @jasonmcn.

Any indication of the efficacy of the policy will have to wait a while. “You hear anecdotally of landlords hiking rents beyond the 4%”, said Lorcan Sirr, a DIT housing lecturer. Anecdotal evidence isn’t particularly reliable though. What the RPZ has done, said Sirr, is give a modicum of rent certainty to existing tenants, without doing anything to dampen price rises for new tenants, or in properties coming onto the market. The 4% limit has become a target for landlords, leaving tenants with what are essentially upward-only rent reviews, he said.

55% of all residential tenancies are covered by an RPZ. This suggests one of the problems iden­tified by Sinn Féin’s housing spokesman Eóin Ó Broin – 45% of the country’s tenancies remain unaffected. Vulnerable people like recent immi­grants and Travellers are less likely to avail of supports in the event of abuse. What’s more, said Ó Broin, key areas in the Dublin commuter belt, in parts of Meath for example, remain out­side the RPZ remit. Ó Broin and Sinn Féin maintain that increases should be pegged to the Consumer Price Index (CPI). Jan O’Sullivan, Labour’s housing spokesperson, has deemed the policy a failure, arguing also for increases to be pegged to the CPI. “The rate of rent increases is completely out of control with no reference towards affordability, salaries or the inflation rate in the economy as a whole”.

 

Limited respite is offered by the RPZs then. As to what the government could or should to in the medium term to alleviate the situation, Sirr and Ó Broin both recommend beefing up security-of-tenure legislation – making landlords who wish to sell a property let the tenant remain in situ during the sale, for example. Large-scale social housing initiatives will inevitably have to be part of the solution, though whether this will be achieved, and the associated governmental iner­tia overcome, before the related crises in homelessness worsen is another matter. Some­thing, somewhere, is going to have to give. “It could be that this right now is the painful lesson we’re going to have to learn before we start to actually do things differently”, said Sirr.

 

The lack of effective action seems so compre­hensive that it plausibly could be being directed. More likely is it that our biggest political parties stand for nothing so much as the rights of those who already have property, or more particularly, properties. Fine Gael and Fianna Fáil are deliver­ing for them, again – for now.

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