There have been lots of buzzwords in the news concerning the housing market lately: pressure zones, rent caps, renovating landlords. Dr Aideen Hayden, Chairperson of Threshold, Fintan McNamara of the Residential Landlord’s Association and Tom Dunne, Head of the DIT School of Surveying and Construction Management joined Sean O’Rourke this morning to take him through the situation as it stands, following the release of the latest Daft.ie report on the rental market.
Tom doesn’t think rent caps are working.
“The literature on rent controls shows that what they tend to do is protect those who have accommodation, the people who are sitting in accommodation, at the expense of those who are coming to rent…The difference between the rents that existing tenants are paying and the rent that new tenants are paying, as that increases you’ll just provoke the emergence of a black market. People will find ways to get around it and landlords are already finding ways to get around it, it appears.“
Sean put it to Fintan that landlords seem to have it pretty good at the moment. He doesn’t think it’s that simple.
“On the face of it, that’s the way it does look but…there’s actually very, very little out of it for an investor, at least in the early years…We’re now one of the most highly regulated rental sectors in Europe…There is a continued blanket ban on budget accommodation, 2000 units lying idle or going for Airbnb.”
Aideen pointed out a drop in the rate at which rental prices are increasing.
“I think there’s been a lot of negative comments today, in the media, about rent pressure zone legislation and it not working. I would have to disagree with that. If you look at the rate of increase in Dublin, it’s 10.9%. It was 13.5% in 2016. So, it actually is a lower rate of percentage increase than it was last [recorded] year”.
However, she told Sean that there is a “real problem” with enforcing existing legislation.
“A landlord is not supposed to charge more than the previous rent plus 4% to an incoming tenant. The difficulty is, the law is being flouted. If the law was respected, we would not be seeing rent increases of the nature of 10%. It just wouldn’t be happening.”
Aideen believes something like a “rent register” may help.
“We have a property price register, for example. There should be a rent register. So, somebody coming to look at a property that’s currently on the market should be able to check the register to see that that property was rented at €1400 to the last tenant.”
Tom thinks the discussion is focused on the wrong issue.
“You can have a system of rent certainty and rent controls but only in the case where you’ve got a reasonably balanced market. Where rent controls will not work is in the kind of conditions we have now where the market is not an equilibrium. Where you’ve got an acute shortage. When you’ve got those sorts of conditions, rent control will only exacerbate the situation. It’s a different thing to argue for rent controls when you’ve got a balanced market.”
Listen back to the whole discussion on rent prices on Today with Sean O’Rourke here.
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