With the seasonal third-level student accommodation rush happening this month, the rental crisis is making headlines again. Apparently one landlord is Blackrock, South Dublin is asking €800 per month for a shomera (effectively a garden shed with windows) for five days per week! While this news broke in an angry article on Buzz.ie, the journalist concluded that this ‘home’ is likely to get snapped up quickly by some desperate student and their parents.
Ireland’s residential lettings market has seen successive growth for almost six consecutive years now, with average rental prices now almost 35% above any previously recorded peak. And this phenomenal growth is not restricted to Dublin and the regional cities, in fact, rural towns and villages across Ireland are experiencing an unprecedented boom in housing rents.
Earlier this year, Housing Minister Eoghan Murphy pushed forward the Residential Tenancies Act, giving statutory effect to a host of new measures designed to dampen price hikes and to increase protections for tenants in the private rental market but critics do not believe the measures are working as intended.
While rent controls of 4% per annum are in place across designated ‘Rent Pressure Zones’ or RPZs, average increases this year are up to four times that limit. Under the new rules, landlords who disregard the RPZ restrictions and illegally increase rents in excess of 4% per annum will stand to be criminalised.
In terms of house prices, we are starting to see a slowdown in the rate of increase, with expected annual inflation over the next three years recently downgraded from 8% to 5% (7% down to 2% for the Greater Dublin Area). The average house price nationally is now €237,000 (€359,000 in Dublin), while the average monthly rent is €1,300 (€805 in Wexford).
In simple terms, this is bad news for tenants but good news for would-be landlords, particularly those outside the designated PRZs.
But the increases in rental income come at a cost to landlords and investors in the guise of increasingly onerous regulations and more complex compliance. Of course compliance is important; in our experience, credible professional landlords want to see rogue operators taken out of the market. Compliance is a necessary function of any professional landlord, however, this is particularly tough given the lack of certainty and almost-constant flux in the regulations governing this sector. This might, in part, explain statistics from the team at Sherry Fitzgerald (who are involved in 15% of all residential transactions in the Irish market) revealing that for every one landlord entering the Irish marketplace, two are leaving. There does not appear to be any initiative to encourage new landlords into the market, despite the fact that meeting short-term housing targets under Rebuilding Ireland actually depend on this.
Of course, ignorance of the law is not an excuse; landlords will need to pay attention to new regulations and seek the necessary legal and property advice to avoid unwittingly falling foul of the system. The fines being considered are upwards of €15,000 and the Minister is apparently “exploring” options of jail time for non-compliant landlords.
For your FREE, no obligation, valuation in the South Wicklow and North Wexford area, call into one of our offices (located in Carnew and Gorey) and chat to any of our expert team or you can contact us online at www.KinsellaEstates.ie. We are happy to facilitate overseas buyers and sellers via Skype or similar, outside of regular office hours. Alternatively, email me directly on email@example.com or telephone: +353 53 94 21718