State’s private rented sector trebles in size in 21 years

The private rental sector in the Republic has trebled in size since 2000 as high house prices have forced more people to rent, a conference on housing has heard.

Christine Whitehead, emeritus professor of housing economics at London School of Economics (LSE), said Ireland had experienced one of the most rapid expansions in private renting seen anywhere on the globe.

The sector is now accommodating one in five households, she told a webinar event hosted by housing charity Threshold and the Economic and Social Research Institute (ESRI).

“Private renting has been growing across many countries – partly because of declines in social housing provision but more because it has become more difficult to enter owner-occupation – and because rental housing has become a more popular investment,” Prof Whitehead said.

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This has triggered a focus on regulation including rent controls.

She said the Republic in the 1980s and 1990s had almost no regulations in the private rental market. “It was the closest thing to a free market,” she said.

Most countries, including Ireland, have since moved to impose tighter regulations on the rental sector.

The Government on Wednesday introduced new rules for so-called rent pressure zones (RPZs), which now cover most of Dublin, which will cap rent increases to the rate of inflation.

Overheating market

Rent controls were introduced in December 2016 to temper overheating in the rental market here.

“A core issue is the relationship between local incomes and rents and house prices – which is broken in a large number of countries,” she said.

There is a significant amount of people at the bottom end of the income distribution who can’t afford housing, she said, noting that housing was driving increased rates of income inequality and job insecurity.

She said Germany had imposed rent controls in several cities and other areas, but the results had been mixed and they had not dampened the appetite of investors

Prof Whitehead said the other big change in the private rental market was the arrival of institutional investors, particularly overseas investors.

“This has caused a great deal of tension – some groups seeing it as disastrous, other groups seeing it as a way forward to a more stable sector,” she said.

In May, the Government introduced a higher, 10 per cent rate of stamp duty on the bulk buying of homes, seemingly in response to a single transaction, the purchase of a housing estate by UK property investor Round Hill Capital.