WHILE recent economic indicators in Ireland and Dublin have been vastly positive, there is little doubt that the property market is again struggling to keep pace with demand and the result is a shortage of houses for first-time buyers. But there is also a chronic shortage of property available for those seeking to rent. Dublin is now the fifth most expensive city to rent in Europe, according to new research from ECA International. Although London, Moscow, Zurich and Geneva remain more expensive, Dublin is now costlier to rent in than cities such as Amsterdam, Paris and Stockholm. The research states that the average cost of a three-bed home to rent in Dublin is now €3406 per month (£2993). On the global rankings, Dublin is the 26th most expensive city in the world as it stands with Hong Kong the most expensive followed by New York.
One of the reasons for this rental crisis is that large corporations such as Google and Microsoft are relocating staff to Dublin to take advantage of Ireland’s low corporate tax rate. Brexit has also played its role with an increasing number of large UK banks relocating to Dublin and other areas so that it can continue to access the EU markets without any major barriers or legal complications should the UK exit EU without a deal.
Shortages and shortcomings
Overall the number of homes built in 2018 in Dublin was three-fifths of what was required. This shortage means the market continues to tighten and property prices continue to rise. House prices have risen faster than earnings growth in recent years and with mortgage lending becoming more strictly controlled since 2015, it has become increasingly difficult for people to buy homes. This has led to a swelling of the rental sector, with nearly 27 per cent of households in the capital now renting.
Lower-income households appear to be bearing the brunt of the growing housing crisis. With a documented shortage of available housing, they seem to be the hardest hit by climbing rental prices. The recent ‘Rent Index’ published by the Residential Tenancies Board documented a 6.9 per cent average rental price increase for the fourth quarter of 2018 in a continuing the escalation of rental prices in recent years.
The latest quarterly report issued in May 2019 from Daft.ie has also highlighted that there were just 2700 homes available to rent nationwide which is the lowest recorded since the first time these figures were compiled in 2006.
Sinn Féin housing spokesperson Eoin Ó Broin has said that the report made ‘for grim reading’ and that there was a need for ‘urgent action.’
“This demonstrates the need for an immediate rent freeze for existing and new tenancies combined with a refundable renter’s tax credit worth a month’s rent,” he said. “While the Minister lauds vulture fund investment in buying up blocks of apartments or applying to build so-called shared accommodation, none of this will assist in addressing the rental crisis if the accommodation is not genuinely affordable. The time for half measures is over.”
Paul Sheehan, spokesperson for the Simon Communities a homeless charity, said that ‘people’s lives are being immensely affected by this housing crisis every day.’
“We believe further strengthening of tenants’ rights is necessary,” he said.
The government has attempted to respond to this in recent times by the introduction of a Rent Pressure Zone (RPZ). It means an RPZ is a designated area where rents cannot be increased by more than 4 per cent per annum. This applies to new and existing tenancies—unless an exemption is being applied. Rent Pressure Zones are in parts of the country where rents are highest and rising, and where households have the greatest difficulty finding affordable accommodation. They are intended to moderate the rise in rents in these areas and create a stable and sustainable rental market that allows landlord and tenants to plan financially for their future. While this has been rolled out nationwide in recent times it will not resolve any of the issues facing renters.
While we can blame Airbnb and short-term letting as a main cause of this rental crisis, what has really happened to Dublin specifically is that over two construction booms in over two decades it has failed to deliver any high-quality apartment homes within the city or surrounding urban areas. The days of high-rise flats have long ceased and in recent times there has been a greater tendency to build two-storey homes.
The phrase ‘cuckoo funds’ has been used increasingly in conversations around Ireland’s housing crisis. A number of politicians have criticised the growing presence of these funds as they buy up rental properties. The official term for them is Private Rented Sector (PRS) funds and they are backed by institutional investors like pension funds. The first investments in Ireland started around 2013 and this has grown to €1.1 billion invested in almost 3000 units last year. But whilst these funds are given tax incentives we are now in position that makes it harder for first time buyers to purchase. At the same time these funds create further developments and employment opportunities, but the investment by PRS funds is simply not sufficient to counteract the net outflow of private buy-to-let purchasers from the market, and so the rental crisis effectively worsens.
Most people looking for accommodation in the Greater Dublin Area now must spend weeks, if not months, researching, hoping to get selected for viewings and interviews, and hoping against hope they will find somewhere. Barcelona recently introduced an attempt to block Airbnb by issuing city approved permits and something similar needs to happen in Dublin with short-term letting. Overall housing prices are too high in Dublin and surrounding areas and this can’t continue. Tenants’ rights are extremely limited, and the power is very much on the side of a landlord. What Dublin needs now is a huge increase in social housing if any of this is to be resolved.