Why we need a pub­lic reg­is­ter of rental rates,

Sunday Independent (Ireland) - Property - - FRONT PAGE - RO­NAN LYONS

WITH all the com­mo­tion of the last decade or so, mar­kets are not very fash­ion­able these days. We for­get that mar­kets work a lot of the time and when they work well, they are in­valu­able. They help identify who has the great­est need for some­thing, as iden­ti­fied by how much they are will­ing to give up to get it, and trans­fer it to them.

Ob­vi­ously, there are many in­stances where mar­kets are not the so­lu­tion. In most coun­tries, you are not al­lowed to sell your vi­tal or­gans, for ex­am­ple, as there is a con­cern that the vul­ner­a­ble will be tempted into mak­ing short-run de­ci­sions with long-run costs.

Less dra­mat­i­cally, we know that not all hous­ing can be left to the mar­ket. As dif­fer­ent house­holds en­joy very dif­fer­ent in­comes at any given point in time, if hous­ing was left com­pletely to the mar­ket could mean that many house­holds would not be able to af­ford hous­ing. (In­deed, this has largely been the prob­lem with so­cial hous­ing over the last two decades: it has been left to a mar­ket that was never go­ing to pro­vide it.)

For the bulk of peo­ple, though, the mar­ket is where they source their home. And for mar­kets to work well, certain key in­gre­di­ents are needed. One of those key in­gre­di­ents is in­for­ma­tion. Those ac­tive in the hous­ing mar­ket a decade ago or more will know all too well the feel­ing of not know­ing whether you have over­paid for a prop­erty.

That fear may still ex­ist, as those who buy to­day worry about over­pay­ing com­pared to what their prop­erty might be worth in two or 10 years’ time. How­ever, there was a more ba­sic fear that ex­isted: un­til the Res­i­den­tial Prop­erty Price Reg­is­ter was launched nearly five years ago, you had no idea if you were over­pay­ing com­pared to the per­son who bought next door, a month or a year pre­vi­ously. The Price Reg­is­ter helps solve that prob­lem, by pub­lish­ing in­for­ma­tion about prop­erty trans­ac­tions in the coun­try on one site.

In truth, it is only half­way there. It in­cludes only the most rudi­men­tary in­for­ma­tion on trans­ac­tions — the date, price and ad­dress. A proper Reg­is­ter would also in­clude the Eir­code and in­for­ma­tion about the dwelling it­self, such as size, type, age and en­ergy rat­ing.

But even with it only half­way there, it is a world away from the pri­vate rented sec­tor. Last week, I wrote about how the sys­tem of Rent Pres­sure Zones will strug­gle to have any im­pact on the vast ma­jor­ity of ten­ants.

This is pri­mar­ily be­cause the sys­tem does noth­ing to ad­dress the lack of new rental homes that are needed — and in­deed may make things worse by en­cour­ag­ing ex­ist­ing land­lords to sell up.

How­ever, the other rea­son RPZs are un­likely to work is that they re­quire polic­ing by ten­ants. Given how dif­fi­cult it is for a ten­ant to get “short­listed” by a land­lord cur­rently, it seems very un­likely that one lucky enough to get a home is go­ing to then try to pick a fight with their land­lord.

I sus­pect, though, that we will not see Rent Pres­sure Zones scrapped in the life­time of this Gov­ern­ment. Thus, pol­i­cy­mak­ers should be con­cerned with how to make them work as best as pos­si­ble in min­imis­ing rent in­creases for both ten­ants, old and new.

One thing that could help, at least in part, is to do as is done in the sales mar­ket: make pub­licly avail­able in­for­ma­tion about all rents paid, by ad­dress. Some land­lords would baulk, I am sure, but many more would be keen them­selves to see if they are charg­ing the right amount.

Such a change re­quires very lit­tle new work on any­one’s part: the Res­i­den­tial Te­nan­cies Board al­ready col­lects this in­for­ma­tion when the ten­ancy is reg­is­tered, to­gether with in­for­ma­tion on the type and size of the prop­erty. The one ma­jor tweak would be that land­lords are re­quired to no­tify the RTB when they change the rent, as the RTB cur­rently only cap­tures rents when the lease starts.

Again, Eir­codes would come in handy here. If they were manda­tory on RTB forms, this would al­low a pub­lished reg­is­ter of rents to be linked up, by ad­dress, to on­line list­ings.

This would bring an el­e­ment of self-polic­ing into the mar­ket. Any­one view­ing the prop­erty on­line, on a rental site, would be able to see the rents paid by the ten­ant leav­ing, and pre­vi­ous ten­ants.

Do­ing this will not level the play­ing field. The rental mar­ket will still be an in­sider-out­sider one, where sit­ting ten­ants are un­likely to move be­cause of the ben­e­fits and cheaper rents or stay­ing put.

But it will make things a lit­tle less un­fair, as it would use pub­lic in­for­ma­tion — that is al­ready col­lected — to es­tab­lish a com­mon ground for ne­go­ti­at­ing a rent. Ro­nan Lyons is as­sis­tant pro­fes­sor of eco­nomics at Trin­ity Col­lege and au­thor of the Daft. ie Re­ports

‘It will make things a lit­tle less un­fair, as it would use pub­lic in­for­ma­tion — that is al­ready col­lected — to es­tab­lish a com­mon ground for ne­go­ti­at­ing a rent’

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