Residential private rented market in crisis since 2008 – Rent inflation of 9% year on year not sustainable
New report calls for more institutional investment and increase of supply
Surveyors recommend longer term leases for tenants and rent supplement to be paid directly to landlords
Thursday 23rd October 2014. The Society of Chartered Surveyors Ireland has called for an increase of institutional investment in the private rented sector as well as an increase in supply and an improvement in overall standards.
The SCSI believes the sector is too dependent on non-professional landlords and is suffering from a lack of supply.
The Society also believes that the current rate of price inflation in rental accommodation – 9% year on year – is not sustainable in the long term.
The report entitled ‘A new model for the Private Rented Sector in Ireland’ was launched today at the Society’s annual conference in Dublin which was attended by over 300 surveyors from all over the country.
The President of the SCSI, Pauline Daly said the collapse of the property market in 2008 has led to a crisis in the residential rental property market with many landlords now trapped in negative equity and unable or unwilling to invest in an asset which is financially ruinous for them.
“Previous tax treatments supported the entrance of private individuals into the rental market and we are now seeing the consequences with the high number of buy to let mortgages in arrears. We need to encourage more professional investors to enter the market such as pension funds. Consideration should also be given to introducing and extending the 12.5% rate of Corporate Tax for multi-unit rental companies” Ms Daly said.
The Society believes the supply of residential properties need to be drastically increased and says this would modify the pace of rent inflation. It has suggested the creation of a Builders Finance Fund, a Revolving Infrastructure Fund and a reduction in VAT and development contributions.
The report proposes that a ‘Built to Rent Scheme’ should be introduced in Ireland – as in the UK – where developers and the government have shared the risk or where the latter has provided bridging finance to allow schemes to be built.
The report says the rules and regulations governing the private rented sector including the Residential Tenancies Act need to be simplified while there is also scope for innovation and the introduction of longer term leases.
Pauline Daly said more resources are required by regulators but she also said that in order to build a lasting and sustainable legacy the Society believes there should be a single point of contact in Government to lead and manage ongoing engagement with all stakeholders.
“We need more resources to identifying non compliant and unregistered landlords so as to increase standards in the industry. The PRTB must be fully resourced in order to speed up the dispute resolution process and adequate enforcement procedures for determination orders must be put in place. This is currently not the case.
“Rent supplement should be paid directly to the landlord in order to avoid social welfare fraud, illegal top up payments and anti-social activity. The supplement itself should be increased in a targeted away and on a locational basis. Many of these issues are contentious and we believe that if the right person was appointed to manage and steer through the required legislation it would leave a lasting legacy” Ms Daly concluded.