Supply still choked but multiple new developments in the pipeline

The government are planning on bringing in legislation to give landlords something back

“Landlords often see themselves as being in a thankless role."

While the supply of homes into the rental market is still hopelessly inadequate, the fact that a number of new developments are on the horizon offers some quantum of solace.

“In the next half, we certainly are getting on a lot of new properties,” says Kelly Mellerick of REA Downey McCarthy, “but all of these properties are coming in at market rent rates, as they’ve obviously never been rented before.” 

What it means, in effect, is that many cheaper rents below market value risk being replaced by new ones which will charge market rates, which are now very high.

“I’m not seeing an increase in supply right now,” says Pauline O’Sullivan of Prime Lettings, “but I am seeing an increase in the number of landlords using management agencies, but I wouldn’t say that they’re necessarily new properties to the market.

“There seem to be quite a few properties due to come on the market, though. I’ve also seen quite a few of our tenants moving to City Council properties as well, and that’s something that we hadn’t seen for years. That’s a great welcome change as far as we’re concerned, we’ve been pleasantly surprised in several cases where people had been tenants and who had to leave and where we’d been worried about them finding another place, have actually found council housing.” 

“There’s no doubt that supply is coming,” says Mark Rose of Rose Property in Cork, 

“It’s just that they’re struggling to get supply up to 30,000, when they say that they need to get supply up to 60,000 per year at the height of the boom, I know that there were 90,000 homes built in one year. We’d like to see that happen again now or at least as close to that figure as possible.” 

“There haven’t been a lot of new developments on the horizon,” says Cormac Aherne of Choice Property Management in Cork. “Those that have come onstream in the last year were either student-specific or for approved housing bodies for social and affordable housing.” 

Another positive trend in the last couple of years in Cork city and the surrounding areas has been that of investors purchasing large properties and renovating them to turn them into multiple accommodation units, showing that government incentive initiatives have had a certain degree of success.

Renovation costs remain high, however, and this development is more of a trickle than a stream.

“The elephant in the room is still the supply issue,” says Cormac Aherne, “but hopefully over the next few years, we will get there.” 

“While we welcome the delivery of new housing and the shift towards greater home ownership, the reality is that these gains are being undermined by the simultaneous loss of private rental stock,” says Pat Falvey, MD of Carlton Property Management. 

“The overall outcome is a shrinking rental sector not an expanding one.” The issue, he points out, is not demand, but sustainability. As more landlords exit the market, supply tightens, rents rise, and tenants face fewer options.

“It’s not enough to celebrate increased supply in one area of the housing market if another essential segment is being eroded,” cautions Pat.

Tax credits for landlords are positive in theory but may not have desired effect 

The government is also planning on bringing in legislation to give landlords something back. Conscious of the fact that landlords are leaving the market in large numbers (down by 71,000 from September 2021 to December 2023, according to Department of Housing figures), legislators hope that giving landlords increased tax credits will incentivise them to remain in the market. 

Because they also recognise landlords as a vital component in the business of providing housing to the population.

“From our point of view, what we’re saying to any landlords who are unsure out there is to get in touch with our office,” says Kelly Mellerick of ERA Downey McCarthy. 

“We’ve a designated letting team who are on hand and who are as informed as you could be, and we’re here to offer guidance.” 

For Mark Rose of Rose Property Services, there will have to be significant tax credits for landlords to have any effect: “The only thing that matters to our clients is where you have a situation where the house next door is getting €2,600/month and where their current tenants are paying something like €1,300/month. 

"They just want to know under what circumstances and scenarios the person at €1,300/month allowed to be unshackled from the rent controls, and what wording will refer to that in the new legislation. That’s all that matters. Anything else is window dressing.” 

“There is talk of increasing tax incentives for landlords, and I think that would be such a positive thing,” says Orla O’Donovan of Trading Places. “It’s like a thank-you for providing something so badly needed in this country.

“Landlords often see themselves as being in a thankless role. There’s more and more legislation, standards are quite high now, and with all these demands coming at them on various levels, they can often feel like they’re in a very negative space.” 

Cormac Aherne of Choice Property Management said: “Most landlords feel that the taxes on rental income are very high, but the reality is that most of our landlord clients see property investment as a reliable one, and they prefer to invest in mortar rather than anything else. 

“Many of our clients would have grown their portfolio of properties over the last number of years, and they would have come to us for acquisition services, which we’ve been doing more and more over the last five years or so.” 

This is a growing trend and another part of the services that property management companies provide; in this case, asking advice from someone with an expert point of view about where best to buy property for the rental market, and even to act on their behalf in purchasing.