Bold measures to solve the crisis
IF, AS is expected, Housing Minister Simon Coveney designates additional towns as rent pressure zones in the coming weeks, it will demonstrate once again just how out of control the rental market remains.
The average rent across the country is now almost €1,000 a month, but new data from the Residential Tenancies Board is likely to show an increase.
Averages don’t tell the full story. A search on Daft.ie paints a much grimmer tale.
As of last Thursday, just 493 three-bed houses were available for rent anywhere in the country for €1,000 or less a month. None was in Dublin city. Cork and Galway cities had just two each, and 12 were in Limerick city and 17 in Waterford city.
In Dublin, just two were available for €1,200, and 10 for €1,500. The fact that so many people manage to keep a roof over their head is testament to their budgeting skills.
But it’s evident that measures introduced over recent years are not doing enough to boost supply and tackle soaring price rises.
In November 2015, former environment minister Alan Kelly banned annual rent reviews, extending the period by which landlords could secure an increase to 24 months. His successor, Mr Coveney, has introduced the concept of rent supply zones which limited hikes to 4pc a year.
But the big problem is lack of supply. There are simply not enough homes being built to meet the needs of a growing population either willing to rent or hoping to buy. That means landlords will charge the maximum for all new tenancies.
The Government needs to tackle the lack of supply. While the number of homes completed is steadily rising, and the number of units granted permission and under way also up, it is still well below the level needed to meet demand. Accessing finance is still a problem, and banks must get lending. The 99pc State-owned AIB announced profits of €1.7bn for last year, and is paying a dividend of €250m. That’s a lot of houses and apartments. The State also needs to implement the vacant site tax earlier than 2019, as is planned. It also needs to be higher than the current rate of 3pc of land value to encourage owners to utilise the site or sell. More needs to be done too in relation to building the types of properties we need. In our cities, high-density development is needed. High density is not high rise. In many areas, there is no compelling reason not to be bold. Not every part of every town or city is historically significant. And apartment developments must accommodate a range of tenancy types – larger units with adequate storage suitable for growing families, and smaller units for the elderly and workers.
All should be mixed tenure – there’s no reason why the rich, poor and everyone in between can’t live together as happens in many other countries.
But crucially, more needs to be done on affordable rental for key workers and others on low incomes. The more money spent on rent, the less there is for the wider economy.
The State needs to utilise publicly owned landbanks to enter into joint ventures with cash-rich developers to boost supply.
And there’s nothing wrong with the State intervening to assist its citizens secure decent accommodation at an affordable price. A modest State subsidy for rent, and policies that allow landlords and developers to earn a decent but not exorbitant return, will pay dividends across the wider economy.
It will help create jobs and boost tax revenues, as well as giving hundreds of thousands more peace of mind.