State urged to intervene on rising house rents

Average rents in Dublin rose by 2.1% year-on-year to €1,745 and Cork rents grew by 4.5% to €1,252.

The Government must overhaul rental legislation and do more to speed up the supply of new houses as residential rental costs continue to rise across the country, an industry group has said.

Average nationwide residential rents rose by 2.7%, year-on-year, in the final three months of 2020, according to the Residential Tenancies Board (RTB). 

The national standardised average rent stood at €1,256 at the end of the year.

The RTB said while the cost of new leases continued to rise in the fourth quarter, the rate of inflation was well down on the 6.4% increase seen in the corresponding quarter in 2019.

However, average rents in Dublin rose by 2.1% year-on-year to €1,745 and Cork rents grew by 4.5% to €1,252.

One industry group has said rents remain inflated, meaning it is much more expensive to rent a property than it is to service a mortgage on a home.

“The answer to the rental crisis is to build more homes. The minister should be prioritising getting rid of impediments to home building,” said Pat Davitt, chief executive of the Institute of Professional Auctioneers and Valuers.

IPAV said “piecemeal legislative interventions”, such as the Rent Pressure Zone regulation — which caps rent rises on certain properties at 4% — has only succeeded in keeping rents elevated rather than tapering them.

“The 4% annual increase allowable became a target for landlords willing to charge lower than market rents who felt compelled to rush through a closing gate fearing that if they did not do so they would be locked into low rents into the future,” Mr Davitt said.

The RTB figures mainly cover newly-registered leases in the quarter. Existing leases are largely excluded, many of which would not have seen any price increase as there was a blanket freeze on rent increases in earlier lockdowns and current rules prohibit rent increases for tenants affected by Covid.

“The impact of Covid-19 on the rental sector continued into the fourth quarter of 2020. The national standardised average rent remained static in the quarter and, overall, in the year there had been a significant trend of moderation in rental inflation relative to previous years," said RTB interim director Padraig McGoldrick.

"While there has been a definite trend in moderation in rent levels, it is clear affordability issues and related risks remain,” he said.

Welcoming comments from Housing Minister Darragh O’Brien suggesting the Rent Pressure Zone legislation could be scrapped or removed, Mr Davitt said there is no rationale for continuing to allow new properties to remain outside the RPZ legislation on first lettings.

He said it is “widely acknowledged” that the legislation was badly drafted from the start and there have been so many amending bills that it is now “very confusing”.

An interpreting industry has had to be built around it. An increasing number of disputes are extremely complicated to unravel and hearings can take an undue length of time to resolve.

Mr Davitt said the minister should consider abolishing the residential tenancy acts altogether.

He also urged the Government to set up, without delay, its promised commission on housing.

Recent figures from property website Daft.ie said annual rent inflation hit its lowest rate since 2012 in the final quarter of last year. 

However, it said average national residential rental prices are now nearly double the lows hit at the end of 2011.