Rory Hearne: 'Shopping around' is not an option for tenants facing €1,800 rent hike 

As most parts of the country are not covered by rent caps, this is one area where the Government can actually intervene to reduce the cost of living, writes Rory Hearne

The ability of landlords to evict tenants for sale should be removed.

Most renters have been in a cost-of-living crisis for years as constantly rising rents have eaten up more and more of their income. The Government’s cost of living plan doesn’t address the core problem for them: the rents are too high and continue to increase. How can renters cover rising rents and rising electricity, gas, and other basics? Renters are going without heat and even food, bills are going unpaid, arrears are building up. 

The latest Daft.ie report showed average rents are €1,524 a month, up 10%. What that means for some renters, is their rent will increase by €1,800 over the next year. That is an unbearable increase for most. 

Given the lack of supply, and more importantly, the absence of an affordable supply, renters can’t just, as one Government TD advised, "shop around". Yet the cost of rents is an area that the Government can actually intervene on to reduce the cost of living crisis.

The majority of towns and areas are still not covered by any rent caps. So it means landlords have free reign to increase the rent as much as they want in these places. It explains incredible rent increases from 20% in Co Mayo, to 19% in Co Sligo and Co Galway, 15% in Co Clare, 14% in Co Kerry, to 10% in parts of Co Cork, and Co Limerick.

However, even in the rent pressure zone areas where rents are supposed to be capped to 2% we are seeing increases by multiples of the limit. Rents increased in rent pressure zone by 11% in Waterford and Dublin City, to 6% in Cork City.

Too many exemptions

The rent pressure zone system is clearly not functioning. There are too many exemptions to the caps. And the enforcement and penalties for landlords in breach of the rules is inadequate. Most importantly, there is no rent-control mechanisms for new tenancies, and new properties. 

This means that when a tenant is moved out, and a new tenancy is started in an existing rental property, or where the landlord sells on the property and a new investor-owner buys it and rents out to new tenants, then the new market rent is being charged.

Completely new properties, or properties vacant for two years, such as the expensive build-to-rent units can also charge whatever rent the landlord or investor wants.

Tenants are being evicted so landlords can bring in new tenants on higher market rents.

There are cases where landlords are evicting the tenants with the stated aim of selling the property or moving a family member in, but doesn’t do that and just gets in new tenants on higher market rents. So we have situations of tenants (who are likely to be on lower rents), being evicted, and then new tenants are brought in on higher rents, thus increasing overall rents. 

The huge increase in numbers of notices to quit being issued to tenants  shows that there is a real issue of the ‘churning’ of tenants by landlords in order to bypass the rent pressure zone caps and get rent increases from new tenants. Latest RTB figures show 3,038 notices to quit  issued to private tenants in 2021. 

That is a 62% increase in 2020 (up from 1,902). In the fourth quarter of 2021 there were 965 notices to quit issued, the highest number of  since landlords were required to register them from 2019. Over 90% of the evictions were for no fault of the tenant.

This is wrong, these are tenants homes, and the rent pressure zone exemptions are being used as a way to push up rents.

There is an urgent need for a public rent register, just like the property price register. This would give real transparency and greater information for tenants to know what previous tenants were being charged. A new rent setting and control mechanism is required as well, that would reform and strengthen the rent pressure zone regulations. 

Berlin brought in a law that actually sought to reduce rents in 2019. We should be doing similarly and setting maximum rent levels for new properties and reducing rents for existing properties. Policy measures should aim to reduce rents by at least 30%.

Ministers are making the case that the rental crisis will be addressed as the supply of homes increases. However, supply will take years to address this crisis. While a lot of the new supply is being bought up, or delivered, by investor funds which rent it out at unaffordable rents. 

'Vampire funds'

Home buyers are being locked out, and are left with no option but to rent. The investor funds have been called vultures and cuckoos, but it is more accurate to describe them as vampire funds as they want to create a generation of permanent renters, left with no option but to rent their properties. The vampire funds will feed off their rents into the future.

Given the extent of unmet demand that has built up, the projected supply in the coming years will not reduce rents, and particularly not when new homes are being rented at unaffordable rents. Also, most of the increase in new supply is in Dublin (where investor funds are building their high-rent apartments). 

So in towns around the country, such as  Mullingar Co Westmeath, or Youghal Co Cork, or Dingle Co Kerry, the crisis will continue as there are very little new homes being built for rent or purchase. Landlords are also converting rentals into AirBnB, worsening things further.

While waiting for supply, there are immediate interim measures the Government can do to address the current cost of living crisis for renters, while also solving the wider housing crisis. 

Rent freeze

An immediate rent freeze should be put in place, along with extending the rent pressure zone to every part of the country. Local authorities and the RTB should be resourced to undertake a major monitoring of private rental tenancies and landlords and identify and act on breaches of the rent pressure zone rules. 

The ability of landlords to evict tenants for sale should be removed. This would give stop the churning of tenants leading to evictions and higher rents. An emergency tax should also be introduced on non-household buyers so that investors are stopped from buying up housing and apartments, this will free up more homes for homebuyers and take pressure off the rental market. These should be homes not investment assets. Ultimately, we need a major increase in the right type of supply: affordable and social housing. 

The Government must ramp up delivery. A State construction company should be formed to build on the huge public landbank we have to build affordable homes to rent and buy, instead of relying on a market that will never deliver affordable homes.