Irish Rental Price Report Q1 2017 | Daft.ie

The rental market has, for over five years now, shown increasing signs of distress, with stronger demand but weaker supply each year. Market rents in Dublin, for example, are now 66% higher than at their lowest point. Outside Dublin, rents have risen 41%. A key part of the political reaction has been the introduction of Rent Pressure Zones.

This measure sits on top of existing measures, which limit the frequency with which landlords can increase rents. To be designated a Rent Pressure Zone for three years, rents in an area must increase by 7% or more annually for the majority of the last 18 months. Once a Rent Pressure Zone, rents can only increase by 4% per year.

New all-time high average rent

The principal aim of RPZ's is to protect sitting tenants from significant rent increases. While the measure is based on rents registered with the Residential Tenancies Bureau, trends in the RTB and Daft.ie are highly correlated, albeit with a slight lag in the RTB figures. If Daft.ie figures were used to calculate Rent Pressure Zones, 47 of the 54 markets covered in the report would currently be RPZ's.

What is common to both Daft.ie and RTB measures is that they use the rent at the start of the lease - in the case of Daft.ie, it's the listed rent, while in the case of the RTB, it's the rent on the formal lease lodged with the bureau.

Properties to rent nationwide

In a market where most leases lasted just one year, this kind of measure captures trends in the full rented sector well. However, if people choose not to move as regularly, it is better to think of the rented sector as divided into two categories: "movers" and "stayers". And one of the main reasons people choose not to move regularly is if rents are rising rapidly. Therefore, the RPZ measure could be mixing things up: using trends rents paid by movers ("market rents") to control rents paid by stayers ("sitting rents").

In preparing this Daft.ie Rental Report, we surveyed over 4,000 tenants, asking them details about the path of rents they have paid in recent years. What we were interested in was examining the extent to which landlords have passed on rent increases faced by movers to sitting tenants. In other words, have "sitting rents" followed the same trend as "market rents"?

Since 2013, market rents nationally have risen by just over 50%. However, sitting rents have increased by just 27%. In other words, those who have stayed in the same lease have enjoyed a discount relative to market rents, with rents increasing by just half the increase seen on the market.

The implications for the system of Rent Pressure Zones are obvious. In order to control sitting rents, sitting rents themselves must be measured. It is not helpful to rely on market rents in a rented sector where now the typical lease lasts over three years.

National rents rise 10%

Indeed, the survey undertaken for this Daft.ie Rental Report suggests that for many - although by no means all - sitting tenants, there has been no dramatic increase in rents. This may mean that the Rent Pressure Zone system makes things worse, rather than better, by amplifying the insider-outside nature of the rented sector.

Sitting tenants now enjoy not only a discount relative to the market rent, but also protection of that lower rent into the future. Meanwhile, movers in the private rented sector face not only far higher rents but almost no availability in the market. In such a market, it would be a brave prospective tenant who would ask the landlord to see proof that the rent they would pay is only 4% higher than a year previously!

The message from the rental market to policymakers is the same as it has been for over five years now: more supply is needed. Until policymakers understand why it costs so much to build a two-bedroom apartment here, compared to anywhere else in Europe, that's unlikely to happen.

Dublin rents up 13.9%

Discuss This Article

  • Re: Irish Rental Price Report Q1 2017 | Daft.ie

    Posted By: Tim Date: Tuesday May 9, 2017 @09:38AM

    Supply problem in agriculture? : Give the farmers grants and tax/inheritence breaks.
    Sluggishness in Industry: Give the businessman tax breaks/incentives and access to capital.

    Supply problem in private rental sector. Government Reaction: Harass small private landlords with layers of Quango based legislation. Tax them out of existence. Introduce Stalinist tenancy rights and rent controls. Abandon them to the Courts/Lawyers grist mill with zero assistanceif the tenant sits in the property wrecking it and paying zero rent.

    And the politicians are scratching their heads about why people are choosing to let their properties sit idle rather than let them!

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  • Re: Irish Rental Price Report Q1 2017 | Daft.ie

    Posted By: paul Date: Tuesday May 9, 2017 @11:21AM

    Corpo tax up to 12.5 but landlord taxed at full rate.

    A business can offset rates v tax bill but landlord cant for property tax?

    Alack of houses in dublin? Maybe spread the jobs around the country and not just in dublin?

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  • Re: Irish Rental Price Report Q1 2017 | Daft.ie

    Posted By: Anonymous Poster Date: Tuesday May 9, 2017 @12:13PM

    To the author of this report: people in this country do have money, so why you are worrying about cost of building? Its not the problem of money but problem of poor supply. You can see from the look of default irish house. They all look alike, no fashion. Why is that? It is because there is no competition on the market which means monopoly and high pices.

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  • Re: Irish Rental Price Report Q1 2017 | Daft.ie

    Posted By: Frank Date: Tuesday May 9, 2017 @12:40PM

    Miracle people are still offering residential property for rent

    2 x properties still in in neg equity bought in 2004 and 2006 and pay costs shortfall / property tax/ rental''profit'' tax USC etc.

    Mtg interrest allowable is neglibilbe and property tax not deductible. A farce which is well flagged but still not acted on by Govt and when they claim they will do something on it it will be gradually over 5 yrs.

    Only staying in this until properties rise enough to obvaite neg equity but not enough to be hit for capital gains the I am selling out.

    Dept of Housing take note there are a significant no of private landlords in this mind set.

    Better returns on offices / warehousing and mtgs int fully allowable for tax , propety tax (rates) not an expense for landlord but is for tenant.

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  • Re: Irish Rental Price Report Q1 2017 | Daft.ie

    Posted By: G Mills Date: Tuesday May 9, 2017 @01:11PM

    I'm really confused... are all tenancies (sitting tenants and new movers) included in the headline figure 'Dublin rents up 13.9% year on year'.?

    When you consider that a lot of sitting tenants have not had huge increases ( as a result of the the Alan Kelly legislation (which c2014/2015 said that increases are allowed only every 2 years, combined with the Coveney 4% legislation), I can't understand the 13.9% figure.

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  • Re: Irish Rental Price Report Q1 2017 | Daft.ie

    Posted By: Anonymous Poster Date: Tuesday May 9, 2017 @07:41PM

    Most landlord who hadn\\\'t upped rent for more than 2 years prior or December 2016 would have raised rent to market prior to 4% rent cap legislation came in. This must explain increase. Landlords who were previously happy to keep a good tenant are now forced to increase rent or devalue their property.

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  • Re: Irish Rental Price Report Q1 2017 | Daft.ie

    Posted By: RBoydd Date: Wednesday May 10, 2017 @11:35PM

    I am a long term landlord (20+ years) with 4 x rental properties. The drastic penal rates of tax, coupled with the severely restricted legitimate costs that are allowable as tax deductions has made the decision easier for me despite strong rental demand currently, similar to the majority of other "non professional" landlords, I want to off load my residential properties as soon as market prices allow.

    The landlord is assuming an increasing level of risk with each lease given the 2004 tenancies act and subsequent 2015 amendments with recent rent controls, for little reward. It no longer makes business sense for small private landlords to continue in the market given the taxation structures and penal tax rates.

    It is not the responsibility of private landlords to provide social housing. That service and facility is for government agencies to provide.

    More media focus on underlying contributing factors to increasing rents has to be firmly placed on taxation policies and treatment of private residential landlords and the effect these are having on the ability of landlords to sustain their business.

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  • Re: Irish Rental Price Report Q1 2017 | Daft.ie

    Posted By: Anon Date: Thursday May 11, 2017 @10:57AM

    I feel sorry for hard pressed tenants given the rising rents. However, its simply not financially viable for private landlords to continue with this current model. My tax bill on rent is so high that effectively I am subsidising my tenants monthly rent in order to just break even. So much of the tenant's rent is paid over by the landlord as tax to the revenue. Tenant's don't, and nor should they, see that side of the equation. Increased tax rates, a portion of USC tax applicable on rental turnover, higher mortgage interest at semi commercial lending rates, only 80% of interest cost deductible, property levies that are not tax deductible, PRTB registration costs, higher insurance costs etc. etc. Very few new investors getting into the rental market as there is zero return.

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  • Re: Irish Rental Price Report Q1 2017 | Daft.ie

    Posted By: Anonymous Poster Date: Thursday May 11, 2017 @12:49PM

    Hi Landlords

    How much you have to pay as task?

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  • Re: Irish Rental Price Report Q1 2017 | Daft.ie

    Posted By: Anonymous Poster Date: Monday May 15, 2017 @09:52AM

    Those who can't afford rentals in their preferred location should ..... Increase their income .... Cut their expenditure on everything else ..... MOVE. Increasing welfare benefits is not the answer, nor is more social housing being built. It's a market. Please let it operate effectively without wasteful government interferrence. Simply put, the more help available from the state .... Miraculously ..... The more people need this help. Less help leads to more self reliance.

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  • Re: Irish Rental Price Report Q1 2017 | Daft.ie

    Posted By: Sean Mc Date: Wednesday May 17, 2017 @12:49PM

    I like the way the financially illiterate landlord class who are presently running off with their tails between their legs, think that a dysfunctional market is to be blamed on young people not 'earning enough' or not "saving enough". All the blame going on young people spending their money on smart phones and the cheek ot them, on sandwiches. Well maybe landlords should learn to read investing for dummies because they soon start bleating when the investment they made which they were warned 'could go up as well as down' starts to gnaw away at their pride.

    It's always the same with landlords, there is no government interference in the housing market, there is government aid for developers indirectly though the past recent policies with help to buy nonsense. Government interference would mean the state building houses , a 7 year old would come up with that solution , but its the one thing the government won't do, and we will never have that, we all know why.
    Landlord's were just cogs in the engine, you have been dispensed with, the future now in the cities is big property companies owning apartment blocks, landlords will have to go back to working for a living. and not draining society.

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  • Re: Irish Rental Price Report Q1 2017 | Daft.ie

    Posted By: Anonymous Poster Date: Thursday May 18, 2017 @09:05PM

    You want social housing built en masse. Who gets them? Junkies. Single mums. The unemployed or more accurately the unemployable. Migrants from eastern Europe. The low paid thus subsidising low wage employers. ....... Thankfully only seven years old's think that building social housing ghettos is beneficial. Please realise that welfare merely traps people in dependency stopping them from helping themselves. Help the sick and disabled, let the rest fend for themselves. We have more than enough social housing estate breeding grounds already.

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  • Re: Irish Rental Price Report Q1 2017 | Daft.ie

    Posted By: HM Date: Friday May 19, 2017 @09:41AM

    The government has made more people homeless with the rent regulations. As a landlord there is no tax break when you let a house to tenants that destroy your house,
    There is no money to be made & after tax you will be left with a loss unless you have no mortgage. I think I will give up work & look for one of those houses that are going for free in Waterville if you sit around doing nothing or have a baby. Why would you wanna work when you can get a house for free & one that I could not afford. I know if I got a free house I would never go back to work. The government gives a lot of hand out's to foreigners that arrive here with nothing. They have not given a cent to middle earners, low earners & only taken more from us with USC, Bin charges & property tax. Social is the way forward, free house ( with one or two nice cars in the driveway ) no property tax, free maintenance & free bin charges.

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  • Re: Irish Rental Price Report Q1 2017 | Daft.ie

    Posted By: HM Date: Friday May 19, 2017 @10:01AM

    Sean Mc,
    I like the way you say landlords are financially illiterate class running off with there tails between their legs ! I must have missed out as the government has caught up with me with PRTP charges, Tax, Property Tax & USC plus the cost of repairs. Oh I forgot there is also a large mortgage to be paid also. You obviously know nothing about renting a property & to say there is no government interference is totally wrong. 4% cap in December 2016, 2 year rent review etc. Also you must not follow the news as Ireland is 8th most expensive country in the world to build.

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  • Re: Irish Rental Price Report Q1 2017 | Daft.ie

    Posted By: Sean Date: Friday May 19, 2017 @02:44PM

    HM, Ah you have a mortgage? Did you think the state would give you a free house then? So that you could get a tenant in and pump up the rent? That's why you are financially illiterate as a class, its the landlord class that wants 'something for nothing'.

    So I know nothing about renting and property? Well, you have just given an example of a landlord who is running off from the housing market only you would if you could I imagine. All those taxes are there for a reason, its because the government is riding on your back just as you , if you are a landlord are riding on the back of your tenants. Its a bit like watching a wall street investor crying on the trading floor because his stocks have gone down! You would have to ask what part of the educational system let them down.

    The only intervention that directly affected (adversely) the 'housing market' is the rental zones and those that implemented it did so knowing that the rents (and property prices) would go up short term as landlords per-emptively raised rents. So we still have the same situation - the government has done next to nothing to intervene in the housing market to avoid a boom and bust situation in the capital. In fact what they did made it worse (surprise surprise) That's why the only intervention that is needed and which will never be done is state back building of houses, not just for the rich or those obtaining huge (over -inflated) mortgages but for everyone.

    I can understand landlords selling up , what I can't understand is the ones who bemoan their lot. Its like griping about bills and then turning around saying that the landlord 'deserves' to make a profit. It just shows no real concept of what investment is.

    There is a really big irony there. Many will moan about their tenants being lazy, the classic example is a property with mold. Their is insufficient heating so the tenant cant leave the window open all day. The mold gets worse. Now, the landlord will say its the tenants fault while ratcheting up the rent and not solving the real problem ,( as the landlord knows or thinks that at the end of 25 years they can sell off the property anyway as its an asset paid for off the back of the tenant).

    The irony is that when the property market succumbs to external pressures the landlord scratches their head as to why they aren't making as much money as they used to.. The parasitical nature of the landlord is the same. This is nothing new. But excuse us for not getting the violins out because you pay 20 or 30 taxes on your little investment!

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  • Re: Irish Rental Price Report Q1 2017 | Daft.ie

    Posted By: Sean Date: Friday May 19, 2017 @01:35PM

    What about elderly people - if more houses aren't built , the price is unaffordable for all. I suppose that doesnt matter ? Easier to point to the existence of a few unemployed and a few junkies to do nothing but ratchet up the rent?

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  • Re: Irish Rental Price Report Q1 2017 | Daft.ie

    Posted By: Anonymous Poster Date: Sunday May 21, 2017 @04:48PM

    Elderly people have had all their life to sort out their own housing. Some failed to do so and now still think it's somehow everyone elses problem. This world does not owe anybody a living. Your attitude is corrosive in society and I do hope any children or grandchildren you have contact with don't pick up your freeloading way off life.

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  • Re: Irish Rental Price Report Q1 2017 | Daft.ie

    Posted By: Sean Date: Monday May 22, 2017 @02:31PM

    Who talked of anyone being owed a living? Affordable housing is essential if you want to have a society. I never realised old people had to prove their worth or be thrown out on the streets as rent prices increase. You don't seem to know any elderly people either? Quite an achievement to be able to live such a blinkered life !

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  • Re: Irish Rental Price Report Q1 2017 | Daft.ie

    Posted By: Anonymous Poster Date: Wednesday May 24, 2017 @08:40AM

    Affordable housing ....... Subsidising the feckless with everybody elses taxes ...... Creating further concentrations of poor people ......? How is this beneficial for society? Yes, high rent is a problem but new council estate ghettos is not a solution. Self reliance is key. Low taxes and opportunities for the many to succeed coupled with creative economic policy, decentralisation of investment and unshackled private house building firms. ... That's the soloution. Let the feckless shape up, ship out or shut up. It's decent young people migrating from Ireland, taking talent, dynamism and enterprise with them and breaking families hearts that should concern you most. ........ Not the fate of nerdowells..

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