The private rental sector is like a game of musical chairs
Recent reforms in the private rental sector have improved the housing experiences of many tenants.
The private rental sector has been subject to an incredible range of new policy initiatives in recent years.
Before 2016, we had one of the most unregulated rental sectors in Europe. But since those days, there has been a never-ending stream of policy reforms, including four, increasingly stringent, forms of rent control, much more active enforcement and some, albeit modest, strengthening of security of tenure. But to a large extent this policy change has happened in a vacuum and it has been hard to say what, if anything, is working.
Thankfully, December 13’s publication of the second Residential Tenancies Board’s Rental Sector Survey gives us incredible detail into how the sector works and how it is changing. Most importantly, it gives us a much more nuanced, fine-grained picture of renters' experiences.
Digging into the detail of the survey, we can see that, far from the overly simplistic accounts that paint the rental sector as a basket case, recent reforms in the sector have improved the housing experiences of many tenants (83% describe their experience as positive or very positive).
But the report also shows that the two big issues in the sector continue to affect tenants: affordability and insecurity.
On average, tenants spend over 30% of their net monthly income on rent, and this is higher again for Dublin (30% is the threshold most experts use to classify unaffordable housing). More worryingly still, 18% of tenants state that they spend more than 40% of their income.
The report also finds that there is a ‘strong sense of insecurity’ among tenants and that, for many, the private rental sector provides ‘a house not a home’. Moreover, the average number of years that tenants are renting is five, and the average number of properties rented is just over two. This suggests a significant level of churn and that long-term tenancies are certainly not the norm.
The RTB’s survey also sheds light on a growing divide between existing and new tenancies, with the former being significantly better for tenants than the latter. We see this most of all in terms of rents.
Indeed previous RTB data showed on average new tenants pay 18% more on rents. Moreover, rents for existing tenancies are growing much more slowly (albeit still much too quickly). Rents for existing tenancies grew by 5.3% compared to the same quarter last year. Rents for new tenancies grew by 11.6% over the same period.
The survey tells us that tenants who have been renting for less than one year also pay a higher proportion of their income on rent and that, in contrast, many existing tenants have not received a rent increase in several years. This is likely a result of the RPZ legislation.
The RPZ rent caps don’t apply to properties which have newly entered the sector, so rents can be much higher for these properties. Indeed, data on landlords presented in the survey suggests that for some landlords, the RPZ rent caps create an incentive to set this initial rent as high as possible.
Moreover, under the RPZ legislation, when a tenant moves out of a property and then a new tenancy commences, the rent is supposed to remain capped. But in practice there have long been doubts about how many landlords comply with this, as it very difficult, if not impossible, for new tenants to know what the previous rent was.
Here, however, it is important to remember that today’s ‘existing tenant’ is tomorrow’s ‘new tenant’. This is where the affordability issues which are particularly pronounced among new tenancies dovetail with the general issue of insecurity in the sector. Due to this lack of security of tenure in the sector tenants can never be sure how long their tenancy will last. The high rents faced by new tenants—as well as the sheer absence of available properties—create a ‘chill factor’ for all tenants, as they dread being back in the market looking for a new property.
The RTB survey tells us that for tenants "the key fear is of not being able to find something similar for comparable rent and no one believes that the current situation is improving. Rather they feel that rental prices are becoming higher and supply tighter". As one of the tenants interviewed for the research put it, "You have no security—especially with the way the market is. Everyone is just dreading getting a notice of termination".
The insecurity issue, as documented in previous research in Ireland and internationally, affects to a greater or lesser degree all aspects of living in the private rental sector. The survey shows, for example, that 24% of tenants undertook maintenance work on their dwelling that should have been brought to the landlord attention, and of these 45% said that they did not want to bother the landlord.
I know from my own research with tenants, and this is echoed in the RTB data, that one of the most common things tenants say in relation to contacting their landlord is that they "don’t want to rock the boat".
The process of finding a new property relates to another divide in the sector, this time in relation to those households who experience discrimination in the sector. We know from previous research that this includes ethnic minorities and recipients of HAP.
This should be a cause for concern given that the report tells us that 40% of private renters are non-Irish born, and one in five are in receipt of a subsidy. Low income households in general will be at an acute disadvantage when rents in new tenancies are increasing so quickly. It is these, and other vulnerable cohorts, who are particularly vulnerable to homelessness.
All of this points to two things we need to focus on in order to make the private rental sector fit for purpose.
First, we need to contain the growing gap between new and existing tenancies. The most obvious ways to do this are to tighten up compliance with the RPZ rules so that landlords cannot increase rents between tenancies, to increase supply of housing in general, and by making available affordable alternatives, such as cost-rental or affordable homeownership.
Second, we need to strengthen security of tenure so that tenants need to move less, which will mean we will have more long-standing existing tenancies (the ones the data suggests are working reasonably well), and fewer new tenancies (the ones that aren’t). More security equals fewer moves, and fewer moves also means less chance vulnerable cohorts will end up with nowhere to live at all.
The private rental sector is like a game of musical chairs. If the music has stopped and you have a chair you are doing just fine—for now. But the more frequently the music plays, i.e. the more frequently tenants need to move, and the fewer chairs there are, the more difficult things will be.
- Dr Michael Byrne is a lecturer at UCD's School of Social Policy, Social Work and Social Justice, and Director of the Equality Studies M.S.c.
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