The Government is to cap rental deposits at one month’s rent and has vowed to crack down on landlords in rent pressure zones who take advantage of tenants, writes Elaine Loughlin and Daniel McConnell.
Housing Minister Eoghan Murphy is due to announce a list of reforms to help struggling renters next week, but will discuss the overhauls with his Cabinet colleagues today.
Mr Murphy is eager to close the loopholes being abused by landlords in rent pressure zones and is expected to announce changes in the coming weeks.
The plans include a cap on the amount a landlord can demand as a deposit to the equivalent of one month’s rent.
It comes after it was reported that the country’s largest private landlord, Irish Residential Properties Reit (Ires Reit), has been asking for two months’ rent as a deposit.
Daft.ie now puts the national average rent at €1,159 per month, meaning a tenant could be charged a €2,318 deposit on top of their first month of rent before moving into a property.
Mr Murphy also wants to stop landlords from taking advantage of loopholes in legislation around rent pressure sones.
Annual rent increases have been limited to 4% in identified rent pressure zones such as parts of Dublin and Cork in a bid to ease the soaring cost of leasing a house. Under the legislation, landlords cannot increase rents for two years.
Threshold, which represents private sector tenants, has claimed landlords are now using minor refurbishments as an excuse to evict tenants and hike prices. Landlords in rent pressure zones are entitled to increase the rent if the property is significantly upgraded.
Launching it pre-budget submission, Threshold chairwoman Aideen Hayden claimed the practice is an “incredibly sneaky” way of getting around rent rules.
“We have an example in Cork of a client who came to us,” said Ms Hayden. “The landlord put down new carpets and painted the house, and then asked for a 30% rent increase.”
It is understood officials in the Department of Housing are working on ways to close these loopholes.
Mr Murphy will also bring a memo on the measures around housing and homelessness announced last week which include a funding shift toward direct building of social housing by local authorities instead of acquisitions from the private sector.
It comes as the latest Central Bank statistics reveal that one in 10 homeowners are behind with mortgage repayments. The report also shows the extent to which vulture funds have taken hold in the property market — with non-bank entities now holding 48,199 mortgage accounts in Ireland. One third of these are held by unregulated firms.
Meanwhile, the latest CSO figures show residential property prices have risen by 12.3% in the year to July.
The 12.3% increase compares with a rise of 7.1% during the same period last year.
Reacting to the figures, which show Dublin City saw the biggest jump in property prices at 13.6%, Finance Minister Paschal Donohoe said he would work closely with Mr Murphy on measures to solve the housing crisis ahead of the budget.
“We are undertaking a review of the Rebuilding Ireland plan and we will look at any option open to Government which are affordable and which will increase the supply of housing,” he said.
Dún Laoghaire-Rathdown had the most expensive house prices in the country at an average of €583,862, according to the CSO. The cheapest property prices are in Longford, where the cost of a home was €95,138.
Mr Donohoe ruled out Vat reductions for the construction sector as he said he does not believe it would improve supply.
“I am not going to put large amounts of taxpayers’ money available to measures that I have no guarantee of delivery a return from and may not affect the price at all,” said Mr Donohoe.
This story first appeared in the Irish Examiner.