A new study by economist Jim Power and commissioned jointly by the Irish Property Owners’ Association and the Institute of Professional Auctioneers & Valuers has concluded the rental market is in a state of crisis exacerbated with the exit of non-institutional landlords in significant numbers, reducing supply and putting upward pressure on rents.
The study finds, amongst other issues, that:
- The constantly changing and very challenging regulatory and taxation environment that treats private landlords very differently from institutional landlords, is largely responsible for private non-institutional landlords leaving the market
- RPZs (Rent Pressure Zones) are creating a 2-tier rental market and leading to a situation where maintenance of quality accommodation is not economically justifiable and negatively impacting on capital values where the property is the subject of the RPZ rules.
- It is likely that landlords that historically charged rents under market rate and are confined to minimal increases arising from RPZ regulation are exiting the market in greatest numbers.
- These landlords are replaced in the market in part by new properties at much higher rents owned by institutional landlords with no evidence available to confirm if any net additional new properties have come onto the rental system.
- Rent Pressure Zone regulation has prevented rents from falling as well as rising beyond the limits set.
The study says there has been a collapse in private investor participation in the market, dropping from 19.9 per cent of total mortgage lending in 2006 or €7.9 billion to 1.4 per cent in 2021 or €143 million.
It concludes there has to be a move away from policies that discriminate against private landlords and which give them little incentive to participate in the rental market. “If private landlords continue to exit the market, the situation is going to get worse,” it warns.
IPAV and IPOA also released the findings of a joint survey amongst their respective memberships with 892 respondents of which:
- 94 per cent believe that recent Government policy and changes in regulations have impacted negatively on their attitude to continuing as a landlord;
Over 57 per cent plan to sell their rented properties in RPZs;
- 91 per cent believe they or their landlord clients will not invest further in residential investment property;
- Over 50 per cent said rental properties are the sole pension source, apart from the state pension.
The report is available HERE.