“Better living made simple” is the slogan on the construction fence around The School Yard – a nearly completed block of flats on Dublin’s North Circular Road.
How much the apartments are actually being rented out for is anyone’s guess, but for the educated one you can always consult the latest report from Daft.ie, published last Tuesday – although its estimate is now rather conservative.
In the capital, two beds cost an average of €2,119 a month, up 10 percent from this time last year, according to the Daft report. You can certainly pay a lot more in Dublin city center e.g. B. in the new Quayside Quarter development on the North Wall asking €3,320 per month for a twin.
Or, if you have enough money to live in Spencer Dock, a luxury two-bedroom penthouse will cost you €4,250 a month, which is more than paying off a €1 million mortgage every month. Better living indeed – and very, very expensive.
Overall, Daft.ie’s latest survey of its own numbers has been grim reading for renters across the country.
A three bed house in Galway city averages €1,440 – up almost 12 per cent at this time last year. Five bedroom homes in Limerick have seen an increase of over 30 per cent in the last 12 months.
However, the most alarming numbers in the report were not the prices, but the total number of 815 properties currently listed for rent on the portal across the country, down 70 percent year-on-year.
When Daft.ie published these headlines last week, the stories of a rental market in extreme dysfunction inevitably surfaced.
Landlords popped up on the radio and talked about receiving almost 90 applications within three seconds of posting the latest rental properties.
Working 35-year-olds who still live with their parents made headlines again – but this time they were complaining not about not being able to buy houses, but about not even being able to rent.
Things might get worse before they get better.
According to Marian Finnegan, economist and managing director at Sherry FitzGerald, demand could continue to rise.
“I think we’re probably getting to where we were right before the pandemic,” she said.
“With Covid, people went home, but with businesses fully reopening and everyone having to be at their location five days a week, there just isn’t enough accommodation. That will be a massive problem for competitiveness.”
So, as adult males and females return to the nest in increasing numbers, have the socioeconomic defaulters of years of government housing policies also come home to settle?
“You have to look at the time 30 years ago when the government decided to strategically move away from direct social housing construction and instead put people into the rental sector and instead gave them rent supplements,” said Lorcan Sirr, a senior lecturer at the TU Dublin and expert on housing policy.
“Before that, renting was only for students, temporary workers, immigrants and maybe people living apart — more of a temporary place to house yourself when transitioning from one job, career or stage of life to another.”
according to dr Rory Hearne, assistant professor of social policy at NUI Maynooth, says the need for social housing has increased significantly.
“The state pays €1 billion in rent to landlords every year, and that has put massive pressure on the housing market,” he said.
“I argued for six years that this would happen and now it is happening. Behind this is the country’s completely distorted view of social housing policy. They basically said, ‘We don’t want to build any more social housing.’
“Go back to 2011 as Willie Penrose of the Labor Party [and then housing minister] said the state will no longer build large public housing units, but will increasingly receive them through the private rental system. Now you have this basically perfect storm. People are stuck because they can’t afford to buy when the state gets its public housing from the private sector.”
Sirr argues that the original function of the rental sector has changed fundamentally. He said that alongside all the people who used to be in the private rental sector, there is a new cohort who would normally have moved into social housing. But because the municipalities ran out of social housing, people were put into the private rental sector instead.
“Between around 2006 and 2011, the number of private households for rent doubled. Some of these were immigrants who won’t buy houses until they settle down or get on their own. Some of these were people who got stuck in the rental market during the crash.
“But the rental sector has stayed – we don’t know where it will be in the next census, but it will probably make up over 20 per cent of private households. That’s a level we probably haven’t seen since the 1950s.”
The migration from public housing to private rental housing means, he said, about 59,000 households are renting that would previously have been in public housing.
This puts a huge strain on the rental stock as the state is effectively competing with its own citizens for the procurement of rental properties.
Nearly 20 percent of tenants in the private rental sector receive rental subsidies, according to a 2021 survey by the Residential Tenancies Board.
Meanwhile, he said, the state’s involvement in new home purchases has risen from about 10 percent to about 25 percent in five years — crowding out the market for first-time buyers and keeping more of them in rentals.
“Five years ago, in 2017, half of all new housing would have come onto the market. That’s up to about 27pc or 28pc. Last year we produced 21,000 houses – but fewer than 6,000 came onto the market,” he said.
Add in an exodus of small private landlords from the market and you have something approaching a death spiral.
“If you go back to the Celtic Tiger, there was a strong focus on investor activity in the market, but then it went to the other extreme,” Finnegan said.
“After the crash, we saw a significant exit from investors from the market – and it was sustained.
“Every year we could see that the level of investor buying was negligible, going down to low single digit percentages and only very gradually returning to around 10 percent.”
Since then, Finnegan said, one hopes institutional investors would solve the investor shortage problem by replacing smaller landlords with professionals.
Their concern is that as sparsely populated land this may only work for areas like Dublin and Cork and a few other regional urban centres.
“Ultimately, we need policymakers to prevent investors from exiting the market and encourage more to re-enter.
“I know it’s politically very sensitive. There’s a perception that landlords are this wealthy group of people. But in reality, some people are random landlords.
“They bought an apartment, the market fell, they stuck with it and moved into a house as their families grew. But they are an important cog in the real estate market.”
Finnegan argues that individual investors’ tax revenues should be reduced to incentivize them. This is not currently the case, she said.
“If you make the rate of return unrealistically low for private landlords, they have no incentive to invest in their property and the result is poor quality housing.”
Sirr agrees that we need to reform the tax treatment of small landlords so they can be treated as a business rather than treating rent as personal income as is the case now.
“We’re losing a lot of them,” he said. “And we need a functioning rental sector.”
Hearne, meanwhile, believes there is another way to relieve the rental sector.
“A majority of renters do not want to rent in the private sector. They either want to live in permanent social housing or own their own house.
“The solution is that the state needs to build affordable housing on a large scale for people to buy, and they also need to build social housing. We need a state construction and development company to build on the huge public lots we have.
“The state could do that if it wanted to – but I think ideology is stopping that.”
Meanwhile, it looks as if rental prices could only go up.
Case study: “If we can’t find a place to live, we’ll be homeless next week”
Aga Nowak is sitting in her rented apartment, surrounded by packed boxes. “I’m so sorry,” she said, breaking down in tears. “It’s such a difficult time.”
Originally from Poland and now living in Dublin 18, the mother-of-two received notice from her landlord in November to vacate the property to make way for a sale.
After a six-month search, she and her husband are now one of 20,000 people searching for fewer than 1,000 homes in Ireland.
“When our landlady gave us notice, I asked if we could stay until June when the kids finished school, but she didn’t give us any time.
“She has to sell and she has the right to sell – it’s her house – but it’s been very stressful.
“I tried about 45 properties and only four got back to me,” Ms. Nowak said.
“I started a job at An Post last May and had been waiting for the six month trial period to secure a mortgage but with property prices it was impossible to find a flat for five people as my mum also lives with us.
“We have around 2,300 euros in rent a month. I would still like to save for a mortgage but when I look at the prices it scares me because there is absolutely no way to rent and save.
“It’s very difficult because the kids can see me packing and they’re like, ‘Mom, where are we going next week?’ There’s only a week left and I have to tell them, ‘I don’t know’.
“When I got a message from another agency yesterday that we couldn’t get the house, I lost all hope. And today another phone call made me so angry.
“A landlord asked me how old my children are and what schools they go to. How is this relevant if I can pay?
“I don’t tell them my mother lives with us because I know they don’t rent us a double bed and that’s the only thing I can afford because even that costs around 2,300 to 2,500 euros. I can’t dream of renting a triple room.
“This morning I could see my daughter packing boxes and she tells me she is fine but she is very calm.
“I know I have a better chance of getting a community center if I go to an emergency shelter, but I don’t want that and it’s not worth it for the impact it will have on my children.
“I don’t want anything for free, I want to pay my way, but there’s so little out there.”
https://www.independent.ie/business/personal-finance/property-mortgages/cant-buy-cant-rent-an-entire-generation-is-left-with-nowhere-to-turn-41650744.html Can’t buy, can’t rent: A whole generation no longer has a place to go