Student Crisis in the Housing Market

Conor Viscardi, UCD Students' Union President Kieran McNulty, TCD Student' Union President

23rd Aug 2016

Conor Viscardi UCD Students' Union President & Kieran McNulty TCD Student' Union President, commenting on the latest Daft.ie research on the Irish property market

Thousands of Leaving Cert graduates from the class of 2016 will need a new place to stay in a few weeks. But a cursory glance at the available data shows the difficulty of finding one. There were just 3,600 homes to rent nationwide on August 1st - 1,000 fewer than on the same date a year previously. The numbers for Dublin are lower still, with just 1,100 properties available to rent at the start of May.

Meanwhile, the average rent nationwide has risen by over one third since bottoming out in 2011 and has surpassed its 2008 peak. Monthly rents are now almost 10% higher than they were a year ago.

Rent Trends

This isn't a happy picture for anyone renting in Ireland. But the class of 2016 are really stuck between a rock and a hard place. They're low-income newcomers to the most competitive areas of the housing market because the colleges they're attending are mostly city-based. The majority can only afford to let for 9 months instead of the standard 12 and don't have the stable earnings or references of a full-time professional. In the private rental sector right now, it's unlikely they'll get a viewing, let alone a lease.

This situation in the general market is not going to change over the next few weeks. Recent promises of reform are largely dependent on measures aimed at the medium - long term. That isn't much help to young people looking to start studying in September. But there is an interim solution that doesn't depend on build time or industry reform.

Rent availability

By letting out empty room in their house as digs, Irish homeowners can put more bed spaces on the market tomorrow than any other stakeholder - including Government. Under the existing legislation, they can do this without going through a lengthy bureaucratic process and they are also guaranteed tax relief. The rental income on student digs is exempt from tax as long as it does not exceed €12,000 in a tax year.

The lack of paperwork and the financial incentives means that it is possible and profitable to increase student housing in this way in a very short space of time. But the scheme suffers from a lack of profile. The legislation behind it dates from the late 1990s, when it was introduced to increase the amount of rental accommodation, but Government only started funding large scale promotion of the scheme last month.

Rent highs

If this scheme doesn't see significant take-up, however, many young people relieved after their Leaving Cert results are going to have their spirits crushed. While available campus accommodation is generally allocated to incoming first years, it's not adequate to house them all. Funding cuts to higher education institutes have slowed down badly needed campus development and will continue to hinder it until they are reversed. High construction costs have similarly slowed down building activity in the wider market and there is now a distorted relationship between supply and demand with fierce competition as the result.

In this context, college authorities, students unions and Government need to promote college digs as a priority over the next few weeks to make sure Irish homeowners are informed of how they can contribute to solving this crisis and the cash flow gains to be made. Otherwise many young people coming from outside urban areas - who don't live near a university and can't shoulder the costs of a long, pricey commute - will have to defer their college courses this September.

Least and Most Expensive Areas

Discuss This Article

  • room for rent

    Posted By: sheila hanna murphy Date: Tuesday August 23, 2016 @08:49AM

    Hi ! I have a room to rent in leixlip.
    Suitable for student in maynooth. You can post to my time line

    • Reply to this message
  • Re: The Daft Rental Report Q2 2016

    Posted By: Anonymous Poster Date: Tuesday August 23, 2016 @10:05AM

    I think, that people should be buying houses, not renting them, because the mortgage repayment is way cheaper. There are plenty of houses in commuter areas, and it's very hard to sell them, because everyone seems to be renting, rather than buying.

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  • Re: The Daft Rental Report Q2 2016

    Posted By: Imigrant Date: Tuesday August 23, 2016 @09:42PM

    The total price for the house vs quality is also mental. Also good luck with down payment of 20% ~ 60k.

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  • Re: The Daft Rental Report Q2 2016

    Posted By: Anonymous Poster Date: Friday August 26, 2016 @05:30PM

    Don't buy the house for 300k, buy what you can afford.

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  • Re: The Daft Rental Report Q2 2016

    Posted By: Anonymous Poster Date: Friday August 26, 2016 @11:01AM

    That is a great idea however when people are hemorrhaging money into the pit that is renting, how are they supposed to get a minimum 20% deposit ready for said house?

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  • Re: The Daft Rental Report Q2 2016

    Posted By: Anonymous Poster Date: Tuesday August 23, 2016 @11:27AM

    For older citizens on the average Dublin rent over 9 months would yield an income of approx e18k - so I presume tax is payable on the excess over E12k I.e 6k. Also I wonder what the position would be for someone with a medical card - this extra income may well push them over the limit to retain their medical card. Perhaps mr lyons could elaborate on these points as we could well let 2 rooms in our Home! The income would be a nice extra for us so long as it did not mean we were worse off as a result.
    FH

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  • Re: The Daft Rental Report Q2 2016

    Posted By: Anon Date: Tuesday August 23, 2016 @09:06PM

    Actually if you earn in excess of 12k then the total is taxable. Not just the part in excess of 12k.

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  • Re: The Daft Rental Report Q2 2016

    Posted By: Anonymous Poster Date: Tuesday August 23, 2016 @12:48PM

    If the rent income is over 12K you are being taxed on whole income not the difference

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  • Re: The Daft Rental Report Q2 2016

    Posted By: Anon Date: Tuesday August 23, 2016 @02:48PM

    I think it shows that landlords are gouging people for rent.

    The fact is 5 years ago you wouldn't find a bedsit for 700 euro and now you find single room flats with a tack on bathroom for 700 and anything reasonable is 1500+

    The standards of accommodation for <1500 in the city is disgraceful.

    There is such a mismatch between average wages and average cost of living, it's like they're trying to push lower-middle class/lower classes out of the cities into the countryside.

    I just had a call with a property manager who nearly seemed to be trying to dissuade me from being interest in a property he was advertising, I got the feeling I was being looked down on as if it was out of my price range. When in fact it's not at all.

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  • Re: The Daft Rental Report Q2 2016

    Posted By: Anon Date: Tuesday August 23, 2016 @04:16PM

    When big corporations start leaving because nobody can find a place, they will leave Dublin and Cork.. it will be cheaper than raising wages.

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  • Re: The Daft Rental Report Q2 2016

    Posted By: Anonymous Poster Date: Tuesday August 23, 2016 @07:50PM

    I am currently renting in Louth - my rent had increased by 30% this year - it is impossible to save for a deposit and rent at the same time - it's like being stuck between a rock and a hard place - feels like we'll never own our own

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  • Re: The Daft Rental Report Q2 2016

    Posted By: Anonymous Poster Date: Friday August 26, 2016 @05:29PM

    There are plenty of cheap houses to buy in Louth, under 100k, but people too choosey to buy them.

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  • Re: The Daft Rental Report Q2 2016

    Posted By: Anonymous Poster Date: Wednesday August 24, 2016 @09:39AM

    I am currently renting a 2 bed apartment in Dundrum for 1450 per month. An apartment in the same block is being listed for 1750 and I personally saw 30+ people at the viewing.

    I am expecting a price increase in November when my 1 year contract expires and God only knows what it will be.

    This is what we get after years of austerity and bailing out the banks. I am now in a situation where I can not afford to save for a deposit on a house, (Thanks to the strict guidelines imposed by the central bank for mortgages) The government are totally useless they like to give press releases sayin

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  • Re: The Daft Rental Report Q2 2016

    Posted By: Anon Date: Thursday August 25, 2016 @05:14PM

    Im Irish from the West & Ive just returned home to take up a new role next month. I work in IT and I was delighted to finally move home and see the folks.

    BUT

    I have worked all over the world and Ive never seen anything like the shortage, the rates and the standards (lack of...) of what is passed off as liveable here in Dublin.

    Estate Agents hold OPEN VIEWING.. so by the time I arrive I am in a queue.

    Ive been here for 2 weeks, and the search is exhausting.

    Yesterday I viewed a room in a DAMP house where the landlord has put the rent up by E600. The windows were timber and there was no BER, 1 bathroom to share among 4 adults.

    Im turning down the job and leaving again Friday,

    The place is a joke

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  • Re: The Daft Rental Report Q2 2016

    Posted By: David Date: Wednesday August 24, 2016 @11:30AM

    Just wondering why my post wasn't posted yesterday?

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  • Re: The Daft Rental Report Q2 2016

    Posted By: Anonymous Poster Date: Wednesday August 24, 2016 @12:47PM

    The government is causing the rent hikes by increasing rent allowance. The people in a private rental market simpy can't compete.

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  • Re: The Daft Rental Report Q2 2016

    Posted By: EntitledMillenial Date: Saturday August 27, 2016 @08:45AM

    That makes no sense considering the cap on where you're allowed to live with rent allowance is so far below what landlords charge as to make it impossible to live anywhere central on RA. Anyone I know on RA has had to lie and say their rent is lower than it is to the SWO just to be eligible, then taking chunks out of the dole
    To pay it. I've been in that situation myself, after being forced out of my previous flat because the rent was 'too high' - this doesn't mean they'll give you more money towards the rent. Just that you're only allowed rent somewhere that's a certain price. There are ZERO properties in that price range in Dublin city.

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  • Re: The Daft Rental Report Q2 2016

    Posted By: Mike Date: Wednesday August 24, 2016 @03:45PM

    The government keeps looking at the UK for solutions to try to solve the housing crisis, because they have the same issues. Why not look at countries that don't have a housing crisis in the first place.
    It is also time to stop comparing everything related to housing to 2008, that is when everything fell apart, houses are still way overpriced in Ireland.

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  • Re: The Daft Rental Report Q2 2016

    Posted By: Analyst Date: Wednesday August 24, 2016 @05:45PM

    There are some major flaws in this analysis. For example in the buy vs rent analysis, using the financing assumptions provided gives an implied valuation of 250k for a 2 bed in Dublin 16. This is not realistic. Not only is the price of the property wrong but the analysis does not take any account of the cost to an owner of property tax, insurance, maintenance, management charges. Net effect is that owning is nearly always more expensive than renting even using the aggressive financing assumptions used in the analysis. The rental yields are also wrong for the same reasons. I suspect the valuations used in the report are a couple of years out of date. Totally changes the messaging.

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  • Re: The Daft Rental Report Q2 2016

    Posted By: Kieran Date: Thursday August 25, 2016 @05:23PM

    Nobody has mentioned the damage Air B N B are doing to the already broken rental market in Dublin.

    Why would someone let a room on a permanent basis when Air B n B are promoting E100 giveaway for new signups and they only need to let it out a few nights a month to make the same amount.

    Less rentals available now than ever, another bubble and with every bubble there will be massive unintended consequences. If these Tech companies cannot hire staff b/c they cant find accommodation they will just pull plant.

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  • Re: The Daft Rental Report Q2 2016

    Posted By: Gustavo Rocha Date: Thursday August 25, 2016 @09:19PM

    There should be a rent control.

    Taking the minimum wage as base.
    Its a simple math. Is said that you should spend a maximum of 30% of your salary on the rent. Considering dublin is expensive, lets say its 35-40%.

    Then, a rent, one bedroom should be 570,96.
    The price for bedroom should be 570,96. 2 bedrooms, 1141,92 and so...

    Simple like that.

    • Reply to this message
  • Re: The Daft Rental Report Q2 2016

    Posted By: Susan Kelly Date: Friday August 26, 2016 @01:48PM

    The cost of rent in Dublin is appalling. Dublin in itself is expensive enough as far a food shopping,entertainment,gas and electric bills. Then add on a high rent it pretty much eats your entire paycheck which leaves zero room to put any money away for savings, which means no saving for a deposit to try and buy your own home. It's a vicious circle we live in Dublin not because we really want to but because this is where the jobs are. The government really need to put a cap on rent and also set some serious guidelines when it comes to renting a home/rooms.

    • Reply to this message
  • Re: The Daft Rental Report Q2 2016

    Posted By: Anonymous Poster Date: Friday August 26, 2016 @11:48PM

    The interesting thing, that when the houses were very cheap, nobody wanted to buy them, tenants didn't complaind when the rents were cheap, and the landlord's were loosing money. I bought my house 3 years ago for 50000 and rent it now for 1300.

    • Reply to this message
  • Re: The Daft Rental Report Q2 2016

    Posted By: Jen Date: Saturday August 27, 2016 @10:54PM

    To the person in the comments that said 'I think people should just buy and not rent' - wow, oh my God, how did we not think of this idea before? Oh wait, we did. Everyone of us wants to buy but the economic storm that the generation before us caused, means that none of us can actually buy a house. Why not? I'll tell you why not. The banks won't give you a mortgage, and if they do, you won't get one big enough to afford a house prices are through the roof costing more than 10x the average income. Oh and even if you are on a high income and you think you will get a big mortgage, well you're wrong, because they won't give it to you unless you have 20% deposit, which is impossible to save when you are forking out the highest rents this country has ever seen. And while you are telling us all to simply just buy a house, everyone else is telling us to stay renting because 'sure don't they all rent on the continent?' - yes, they all rent on the continent, because their rental laws don't resemble something from the last century, people have actual tenancy security so they can make a home in a place knowing that they can stay for more than 12 months, and the landlords can't get away with renting out properties that resemble tenaments. Do you think I CHOOSE to live in a rented house paying dead money to my landlord? Yeah let's just all go out and buy a house, because it's so easy. Seriously, you have absolutely NO idea how hard it is.

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  • Re: The Daft Rental Report Q2 2016

    Posted By: Anonymous Poster Date: Sunday August 28, 2016 @08:19AM

    If landlords could keep 12k a year for properties they rented and not have to pay any tax on it, rents would fall considereably. Now they are charging 18k a year rent but only keeping 9k because of the tax that must be paid on the income.
    The gov't won't drive down the rent in private or public rents because they are making a fortune on the tax on the rents.

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