The numbers behind the rent crisis

There is a huge disparity between the average national house price and the average that people are paying to rent properties in Ireland, recent statistics have shown.

Despite recent growth, national house prices in Ireland are 25 percent lower than they were in May 2007 at the height of the boom.

Rent prices, however, now stand at a national average of €1,200 per month, an all-time high.

The rent price index never experienced the same dramatic fall as the residential property price index (RPPI) in the worst years of the recession, falling by only 25 percent in total. In contrast, the housing market saw prices decrease by more than half by the end of 2012.

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Furthermore, the twelve quarters between the fourth quarter of 2014 and the third quarter of 2017 saw consecutive year on year increases of six percent or higher, with inflation standing above ten percent for the previous six quarters.

House prices have experienced a significant growth since 2013, when they were at their lowest, and grew by close to eight percent nationally in 2016.

Having said that, the far more dramatic fall of house prices in the wake of the recession has caused such a disparity to exist between house prices and rent prices.

Such a gap between house prices and rent prices highlights the extent of the rent crisis in Ireland and there is nowhere in which that gap is more evident than in Dublin.

The rent crisis has manifested itself in the capital, where it is now 23 percent more expensive to rent accommodation than it was at the 2008 peak. On the other hand, house prices in Dublin are 25.9 percent lower than they were at the same time.

Despite significant growths for both the rent and property industries in Dublin in recent years, rent continues to grow at a faster pace.

Dublin rent growth exceeded Dublin property growth in 2016, averaging a quarterly growth of 2.2 percent, compared to a 1.4 percent average quarterly growth in house prices.

Rents have been broadly increasing in Dublin since a low in quarter one of 2011.

South Dublin has been the area worst affected by the rent crisis, and it now costs just under €2,000 per month to rent property there, with the average standing at €1,955.

Apartments, in particular, have been subject to extreme rises in rent prices in the capital and are now 17.6 percent greater than they were in 2007.

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In real figures, a Dublin house costs €280,380 on average compared to €412,324 in July 2007. In contrast, it cost roughly €1,725 to rent in an area like Rathfarnham at the start of the year and cost €1,518 to rent in Rathfarnham in 2007, which further emphasises the growing rent crisis in Ireland.

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Rent Prices in South Dublin are nearly four times more expensive than in Leitrim.

Growing rent prices have led to a fall in living standards for a number of tenants, with overcrowding becoming an issue across the country.

Last month, RTE’s Primetime Investigates televised an investigative look into some of these rental properties, in which up to 12 tenants were living in one bedroom in bunk beds, in filthy and unsafe conditions.

Many of these properties did not meet health and safety regulations, and would put the tenant’s lives in danger if a fire broke out. The high price and low standard of rental properties in Ireland has led to people choosing to save for a mortgage to buy a home rather than waste ‘dead money’ on rent.

Dr Rory Hearne of Tasc believes that the rent problem can be traced back to the Celtic Tiger and the subsequent collapse of the construction industry in Ireland.

“Up until last year we were only seeing 10,000 new houses being built every year, when in actual fact we needed roughly 25,000 a year. There is a gap between the housing that’s needed and the housing that’s being supplied,” said Dr Hearne.

Dr Hearne is supported by statistics which show that there were only 251 properties available to rent across Cork, Galway, Waterford and Limerick cities, as compared to 2,250 properties in 2009 – a 90 percent decrease.

Dr Hearne believes that the policies implemented by the Irish government following the crash in 2008 have led to this current crisis and is critical of how Real Estate Investment Trusts (REITs) are dominating the private rented sector here.

A Real Estate Investment Trust is a foreign company that bought up cheap Irish assets during the recession and are now renting these properties at ‘significant prices’. Dr Hearne believes that the government is at least partly responsible for allowing these companies to flourish in Ireland.

“The government attracted these companies in and gave them a tax break on the profits they made,” said Dr Hearne. “These companies know that it will be very difficult for Irish people to buy property in the coming years and, therefore, know that there are huge profits to be made in the rented sector.”

With homelessness, and the threat of homelessness, at the fore of much political discussion, such statistics show that there is no easy fix to the problem.

By Shane O’Brien and Aimee Walsh

 

Budget 2016: A student’s view

With this week’s Budget still fresh in the minds of many across the country, how are the measures announced going to affect the third level students of Ireland?

Cian Gaffney is a final year Religion, History and Teaching student in Mater Dei who had this to say about the Budget as a whole: “I do think the budget was technically fair, in that its pros slightly outweighed its cons. I think this is a carefully crafted budget that finely walks the balance between being safe for the parties involved, while giving the illusion of being more progressive than it probably is. Put simply, it’s just politics.”

Students like Cian Gaffney could breathe a sigh of relief when they discovered the Student Maintenance Grant would remain at the same amount as the previous year. However, with rent prices in Dublin continuing to increase the Wexford native felt it was “unfair” not to increase the monthly grant, given the current cost of living.

“Given the ever-increasing exorbitant rent in cities around the country, [particularly] Dublin from personal experience, I think the grant remaining the same is absolutely unfair. The grant should be relative to the average cost conditions of the student body, and this is simply not the case. A balance needed to be struck, and it wasn’t,” he said.

“Whether by incorporating more into the existing student grant, or creating another measure entirely, something should have been done to tackle this directly. The exclusion of such is all the more obvious in this budget given the progressive strides in other areas.”

Those who like Mr Gaffney will be entering the workforce in less than a year also had to pay attention to tax measures being addressed in the Budget. With the hugely unpopular Universal Social Charge (USC) remaining in place but being decreased it was clear the Government was out to win some votes before the general election next year.

“In terms of the USC, taking into account the field my studies would naturally enter me into, I shouldn’t realistically be affected too much either way. However, any adjustment to an unpopular levy in the general populace’s favour will naturally be seen as a positive one,” Mr Gaffney said.

By Matthew Colfer (@_Gogery)

Rent prices increase as property available plumet

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Bad news for students this week as figures released by Daft this week have shown an average nationwide rent increase of €150 a month, a total rise of 11%.

Over the last two years rent has risen nationally from €790 a month to €933. The report from Daft claims that the national drive in rent prices is coming from Dublin, with the capital’s rent increasing by €300 since 2012.

The cost of rent in Dublin has increased by 17% since last year. Despite this, Daft claim that the increasing prices in the capital have slowed down for the first time in five years.

The report, compiled by Ronan Lyons, Assistant Professor of Economics at Trinity College, says that rent has risen nationally by 11%. Counties surrounding the capital have seen large increases in price, with Meath witnessing an 11% growth, Wicklow 13% and Kildare 14%.

The number of properties available on the rental market have also dropped significantly. Fewer than 5,400 properties were available nationwide on the online property website Daft this month, the lowest it has been since May 2007. The lack of available properties has resulted in rent prices soaring.

Ronan Lyons commented on the report saying that the lack of available properties to rent is more concerning than the high rental rates.

“Clearly the two phenomena are inextricably linked. The only silver lining is the fact that this quarter was the first time in five years that rent inflation in the capital eased somewhat.

“However, even if an easing in Dublin inflation continues and stops the affordability crisis from worsening, it does nothing to change the availability crisis,” he said.

Less than 500 properties are currently under construction by Dublin City Council on land under their control, which Mr Lyons expressed his concern about.

“The lack of housing supply was particularly worrying as Dublin’s population is growing by roughly 10,000 households a year,” he said.

Leitrim remains the cheapest place to rent in the country, with the average rental price being €422 a month. Other significant increases outside the Dublin commuter belt are Laois, up 8.1% on last year, Kilkenny, up 7.8% and Galway, up 7.0%.

This increase in rental prices is bad news for students who already feel the burden from college fee and rises in transport costs.

Nicole Whyte (22), a nursing student in DCU, told The City that she had to consider commuting from her hometown in Monaghan for her final year.

“My rent has nearly doubled since first year, from €240 to €416, and now I’m in my final year I’ve considered commuting from Monaghan.

“If you take into consideration the increase in transport and the cost of living, it’s a struggle to stay in Dublin. Unfortunately I’m on placement for most of the year so I have no alternative but to rent,” she said.

Water tap

Wat-er you on about? Talking charges with your housemates

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Photo: Conor McMahon

 

The first water charges will gush in early next January, so its a good idea to consider how much responsibility lies with the landlord and how much trickles down to you?

If you are a student living in rented accommodation, here are a few quick talking points you should run by your housemates when it comes to thinking about next year’s bill.

Who pays – us or the landlord?                                                   

Landlords should have received application packs from Irish Water, which they should have forwarded on to you. The Water Services legislation says “It shall be presumed, unless the contrary is proved, that the owner of a premises is also the occupier of that premises”, so it is their job to pass the application on to you unless they want to foot the bill. It is your responsibility to submit the form by October 31 (or apply online using your PPS number). Your landlord is only responsible for any unoccupied properties they own. If Irish Water doesn’t know that you are renting, then the pack will be addressed to you as ‘The Occupier’.

We live in an apartment, so how will we be metered?

Metering properties with a shared water supply (like an apartment complex) is a bit tricky. For now, apartments will not be metered, so renters will be issued a set unmetered bill in January. After that, the official line is: “Irish Water is looking at metering options for further phrases of the metering programme and apartments will be a part of this analysis process.” In other words, they don’t know how to monitor your water consumption just yet.

We’re students. Don’t we get some sort of deduction?

Probably not – especially since students are the most likely to own an iPhone, much to Joan Burton’s disgust. The Budget is rumoured to include a €100 per annum payment to long term unemployed people and some sort of tax relief for homeowners. No mention of broke ass students.

If we don’t return the form, can Irish Water still charge us?

Yes. If you don’t return the form, you’ll be billed as ‘The Occupier’ and Irish Water will base your bills on a “default unmetered charge”. In other words, they will assume you are a household with two adults and you will not be able to avail of the allowance of 30,000 litres of water that you won’t be charged for (worth 48c per litre).

If I don’t pay, will my water be shut off?

No, Irish Water doesn’t have the authority to do that. But they can restrict your allowance (a last resort, they say). So if you go down that route, get used to having Electric Picnic “showers” – a quick baby wipe under the pits followed by a douse of Lynx.

Are we being charged for that leaky tap in the kitchen?

Yes, but it is your landlord’s responsibility to get it fixed. Pipework past the property boundary is the responsibility of the landlord to maintain and repair at their own expense. The government has promised €51m to pay for fixing certain leaks on private property for “free”. The details have yet to emerge.

If we move in to a place just as the first bills come in, will we have to pay charges racked up by the previous occupant?

Nope. Irish Water should have their PPS number, so they can pursue them for any outstanding charges.

And what should we do when we’re moving out?

If the apartment becomes vacant, it is up to both you and your landlord to let Irish Water know. Any outstanding charges will be charged to your new account.

Why does Irish Water need our PPS numbers?

They said they need them to validate eligibility for water allowances (the 30,000 free litres). Irish Water is likely to share your PPS number with the Department of Social Protection to validate it. You have the right to request your personal data from Irish Water.

How can we save money?

The average Joe consumes 150 litres a day – two bathtubs full. That’s 54,750 litres per person a year. So how might you cut down this figure?

  • Never let the water run: Brushing your teeth with the tap on can use up to six litres of water per minute. Don’t say Barney didn’t tell you so.
  • Cut your shower time: Unsurprisingly, showers are big guzzlers of water, and power showers use up way more than electric showers. See if you can manage a three-minute shower (yes, it is possible). Seven minutes is now a luxury.
  • Pull the plug on baths: The average bath uses 80 litres of water compared to an average shower using 49 litres.
  • Tea for two, not four: Only fill the kettle with the amount of water you want to use.
  • Kill two birds with the one stone: We know that showers use a lot of water, but so too do toilets. One toilet flush equals about 10 litres of water a day. So you could try Go with the Flow’s idea: pee while having your shower (your housemates might not be impressed). Or if you’re not feeling adventurous, put a displacement device into the cistern – it can cut the volume of water per flush by three litres.

“Quality” Tenants Only?

Recipients of jobseekers allowance and other social welfare payments are finding it increasingly difficult to access rented accommodation in Dublin.

Landlords in the capital are extremely reluctant to rent to people receiving social welfare payments with an overwhelming number on daft.ie and other rental sites specifically stating that they will not accept those applicants.

“Finding rented accommodation in Dublin is a nightmare if you’re on the dole” said Cathy, 28, who has been receiving JSA since graduating earlier this year. In the current economy all kinds of people are on the dole, but landlords still have this idea that you must be unemployable or unreliable in some way”.

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Sick of seeing this?

This week daft.ie had no listings for rented accommodation open to people receiving social welfare. Jobseekers allowance is currently €188 per week which means rent supplement is a necessity for those unable to live with family or friends.

“The main reason I suspect for rent allowance not being accepted by landlords in general is because the Social Welfare pay in arrears whereas a professional tenant pays a month rent and deposit up front,” said Kevin Delappe of Brock Delappe Estate Agents.

“It is also commonplace for the Social Welfare to stop the rent mid tenancy as the Social Welfare tenant has not filled out a certain form for their payments. This in turn forces the land into further arrears and susceptible to repossession by banks.”

Several landlords currently renting property on daft.ie were reluctant to go on the record as to why they didn’t wish to have rent allowance tenants.

“Landlords have the right to choose who they rent to – I don’t want to exclude groups of people but it’s too much hassle.  I had [rented to] people on welfare before and never will again.  I was left getting less rent after the council cut what the people could claim, no consultation, no appeal, nothing” said one landlord who wished to remain anonymous, advertising on daft.ie this week.

At present 83,000 Social Welfare recipients receive a total of €400m in Rent Supplement.