Greystones in Co Wicklow and Drogheda Co Louth have been added to the Government’s list of rent pressure zones, Minister for Housing Eoghan Murphy announced on Tuesday.
Both areas have witnessed what Mr Murphy described as “exceptional rent increases” in the four of the six previous quarters. Like other rent pressure zones (RPZs), they will now be subject to an annual 4 per cent cap on rent increases.
Mr Murphy said the latest figures indicated that RPZs had had some effect in modifying rent increases.
According to figures from the Residential Tenancies Board released on Tuesday the average cost of renting a home in the Republic jumped by 6.6 per cent in the year end to the end of June and the cost of renting in Dublin was now almost 11 per cent higher than it was at the height of the Celtic tiger at the end of 2007.
The figures show that demand for rented accommodation in Dublin remains very high with average rents in the capital 10 per cent above the previous peak in the fourth quarter of 2007.
Overall rents in Dublin increased in the second three months of this year by 3.3 per cent compared to the previous quarter.
This data is contained in the RTB’s latest Rent Index Report produced in conjunction with the Economic and Social Research Institute (ESRI).
It is the most accurate and authoritative rent report of its kind on the private accommodation sector in Ireland because it is based on the actual rents being paid for over 19,000 new tenancies registered with the RTB during the quarter.
“If this trend is repeated over the next six months,” said Mr Murphy, the annual rent inflation in Dublin in 2017 will be around 3 per cent, a significant improvement over the 8.5 per cent increase in 2016.”
AirBnB licensing
Mr Murphy has also signalled that he will be introducing a new licensing system for those who share out their homes for tourism purposes, using such services as AirBnB. Mr Murphy said it was clear to him that a “new licensing system” may be needed to properly regulate the relatively new home-sharing market.
Mr Murphy said there was also some anecdotal evidnece that the RPZ legislation was not being complied with by some landlords. They sought ways around the restrictions. For example, he said, they used an exemption for refurbhishment to make cosmetic changes to properties, but still hike up rents.
“We believe these actions may be leading to a higher presentation rate of families in to our emergency accommodation services,” he said.
“Measures like the RPZs take time to bed down. It takes time for people to understand them and for the changes in behaviour that they induce to become clear.”
He added that a new powerful regulator for the rental market was needed and the Government would underpin this with legislation.
Rental indicators
The Index now comprises two sets of rental indicators for the Irish market.
The main Index is compiled on the basis of rents registered with the RTB for each Local Electoral Area (LEA) throughout the country, and was developed following the introduction of Rent Pressure Zones by the Government in December 2016.
Based on the rental data from the latest rent index, two additional LEAs meet the designation criteria for a rent pressure zone.
In terms of the Dublin market, overall rents in Dublin increased in the second quarter of the year 3.3 per cent.
The increase was mainly driven by an acceleration in rents for apartments, which were up 4.4 per cent quarter-on-quarter.
Private rents for Dublin houses also rose, albeit at a more modest 0.9 per cent.
On an annual basis, rents continued to grow, increasing by 5.8 per cent in Dublin. In the second quarter 2017 there was some evidence of a moderation in the pace of expansion for Dublin houses, continuing the trend seen in the first quarter.
Also for Dublin apartments, the year-on-year growth rate dropped from 7.4 per cent to 6.8 per cent.
Outside Dublin rents for houses and apartments continued to grow both on a quarterly basis and an annual basis.
The quarter-on-quarter growth rate overall was 3.1 per cent in private sector rents, representing an increase from 1.3 per cent in the first quarter. Annual growth rates also appeared to be consistent, at 8 per cent, in line with the previous quarter.
"The findings for the second quarter of this year are a further reflection of the ongoing pressure in the rental sector as demand continues to outstrip supply, and with two further areas meeting the RPZ criteria," the director of the RTB, Rosalind Carroll, said.
“These results reflect the second quarter since RPZs were first introduced. It is still too early to identify trends from these results, particularly in such a volatile market with restricted supply.”
She said it was is important to note, when looking at the results of the Rent Index “that new supply, not rented before, is exempted from the RPZ measures and therefore the results for RPZ areas are a reflection of RPZ and non-RPZ rented dwellings.
“We would encourage any existing, or new tenants, who are faced with increases over and above the 4 per cent cap to refer a dispute to the RTB, and the same advice applies to tenants entering a new tenancy.
“Even if a tenant has agreed to a rent in excess of the limit and signed a tenancy agreement, they are still protected under the law; they cannot contract out their rights.”
If a landlord has been found not to have not adhered to the limits, it can have significant consequences and damages of up to €20,000 can be awarded as well as repayment of the additional rent. Cases can be referred to the RTB up to six years after the tenancy was in place.
Vacant Homes
There was also an indication from the Minister that new actions will be announced over the coming weeks to get more vacant properties back into use, especially in areas like cities where there was strong demand.
He said that already 1,000 properties had been registered as vacant on the nationwide vacanthomes.ie site, managed by Mayo County Council. Its director of services Tom Gilligan said the site had been contacted by 10,000 people in total, many of them living abroad, who were open to suggestions about property they owned in the State.
