How do rental deposits compare around the world?
Readers abroad share their experiences of rents and tenancy rights where they live
‘Rents in London are high... but I couldn’t fathom paying the kind of sums that are being asked for in Dublin.’ Photograph: iStock
Ireland’s biggest private landlord Ires Reit is now asking tenants for two months’ rent - an average of ¤3,000 - as a deposit, it emerged this week. Irish Times Abroad asked readers living overseas about their experience of the rental market where they live: how much they pay every month, what is expected as a deposit, what tenancy rights they get in return, and whether the Irish rental market would deter them from returning to live here. Below is a selection of the responses we received, by email and on the Irish Times Abroad Facebook page.
Conor Hartnett, Sydney
In Sydney you pay one month bond and the first month up front, but you often need to pay two to three months to secure a place in the crowded renters market. I paid a month’s security and three months’ rent to get the place I am currently living in, as there’s a shortage in the more sought after areas like Bondi, Coogee and Balmain. I’ve never seen so many people leaving Sydney due to housing crisis here, so I expect returning Irish migrant numbers to increase steadily.
Rent for a two-bed apartment is typically €500 per week. But salaries are higher here, and tax rates are far more forgiving. Furnished apartments are the exception; 99 per cent of apartments in Australia are unfurnished, which means your start-up costs are significant.
Most Irish I know are planning to buy in Ireland before moving home, because rents are so high compared to salaries. But non-residents having to come up with 40 per cent deposit to get a mortgage is a disgrace and this along with Dublin rents, lack of IT contract jobs outside Dublin, the cost of car and health insurance, and high taxes has turned a sizeable amount of people off.
Simon Wilson, Hong Kong
A two-month deposit is standard here. You also have to pay your first month’s rent in advance, amounting to 25 per cent of a year’s rent in one lump. We also need to pay solicitors fees, stamp duty and an agency fee, which is 50 per cent of one month’s rent. Even if you find a property on a listings website, it is likely to have been posted by an agent and you will have to apply through them and pay them a fee. The landlord also has to pay them 50 per cent of one month’s rent. Often there are multiple agents representing the same property, so it can be very competitive. I’ll be moving house for the second time in Hong Kong this coming weekend; it’s a pain!
Sarah Foley, Copenhagen
I grew up in Denmark and lived there until five years ago, when I moved to Ireland. The norm in Denmark is three months’ deposit paid up front, and one month’s rent paid in advance. In Copenhagen and other large cities, especially when renting from institutional landlords, it is not uncommon to have to pay three months’ rent in advance on top of the deposit. Many renters have to take out loans from banks or parents. The notice period for terminating a tenancy is typically three months.
The average cost of renting a one-bed apartment in Copenhagen (regardless of size) was €1,466 a month. The second city of Aarhus, comparable in size to Cork, was cheaper at €974. Apartments come unfurnished, and the landlord usually either requires a place to be freshly painted before you move out or deducts the cost from your deposit. But you are free to decorate a place as you like. You can paint the walls in your favourite shade, and hang shelves or pictures without permission. You can make your place feel like home, which is something I have missed while renting in Ireland.
There are strong protections for renters. Rents can only increase in line with increased costs for managing or letting out a property, or if significant improvements are made, like a new kitchen or bathroom. The proposed increase has to be approved by the local council if it exceeds 5 per cent.
Your tenancy is normally indefinite (not just one year like in Ireland). You are free to move out whenever you want, provided you give three months’ notice, which makes things a lot easier if your work or personal circumstances change.
There are 550,000 properties for rent in housing co-ops (“Almene Boliger”) which are much cheaper than the private market, as these housing schemes are non-for-profit. Each has a local committee, or democracy, where residents vote on things like whether or not to install balconies, to improve the common garden areas, to upgrade the heating system, etc. Residents are also expected to help with keeping common areas maintained.
Stephen Cass, New York
New York City is one of the most cutthroat rental markets in the world: you don't go apartment hunting without your checkbook and a willingness to sign a lease on the spot after one walkthrough. I've lived in four of the five boroughs, renting eight apartments over the last 19 years, (not counting four years I lived in Boston in another rental).
Most people here hope to find an apartment let directly by the landlord (or management company). The usual arrangement is the first month's rent up front, plus a security deposit equal to another month. For apartments that fall under New York's rent-stabilisation rules (about one million units, roughly one-third of the total number of apartments), it's actually illegal to demand more in the way of a deposit, as high deposits were historically used to exclude "undesirable" tenants. Even though "market rate" apartments don't have this restriction, many landlords still tend to fall in line with this norm, although higher deposits can apply in luxury apartments and/or those in particularly desirable locations.
If you end up going through a broker (because you're unfamiliar with the city, or don't have the time, or simply because you can't find anything you like on your own), then you'll have to pay the broker's fee, typically between 10 to 15 per cent of the yearly rent, although it can be higher. Sometimes there's an additional charge for "key money", but that's generally a sign you're dealing with a shady landlord, and I've never paid it.
Garrett Byrne, London
I moved to the UK in 2010 when economic conditions were at their nadir. I miss home as much as any other Irish person, but the cost of moving back now would be too much. I have rented all my life and have never accepted the established wisdom that you must spent hundreds of thousands of Euro on somewhere small just to get on the infamous ladder. I am an excellent tenant and have been in the same house for five years. My landlady is lovely and is happy to keep things as they are, knowing the property is well maintained.
Rents in London are high, don’t get me wrong, but with the Euro/Pound level so close now, the prices are not all that different. I couldn’t fathom paying the kind of sums that are being asked for in Dublin. Perhaps, with a number of major international banks moving to Dublin soon, landlords are trying to price people out to make way for bigger wallets.
Patrick McKenna, Montreal
The province of Quebec has a rental control board that intervenes in the market. Every year the board decides how much rents can be increased. Usually the increase is one per cent or lower. Landlords are obliged to comply. Rents cannot be increased when a new tenant signs a lease. He or she has the right to pay the rent the previous tenant paid. Tenants must receive a written notice of a rent increase three months prior to renewal of the lease. A landlord cannot summarily evict a tenant or decide not to renew a lease. Deposits are against the rules. The weight of the law is on the tenant's side.
In Montreal prices vary from a low of about $750 (€515) per month to twice that for a two bedroom. That's usually before heat and electricity (Quebec has lowest Hydro rates in North America). I simply can’t imagine renting in Ireland or the UK.
My husband and I are looking to move back next year to Dublin. We have been living in Dubai for seven years. We live in a fully furnished one-bed apartment. The deposit is 10 per cent of the yearly rent, which works out about €2,600, paid up front. For unfurnished properties, the amount is less.
On top of this you have to pay your full yearly rent up front in cheques: usually one cheque covering 12 months, or two cheques covering six months. It is extremely rare to pay monthly. Most people either get a loan from their company or bank to cover the first cheque. I was able to get a loan for the first six month cheque from my employer. We had to get an advance on our credit cards to pay for the next six months.
If you break your tenancy contract within the year, you have to pay two months’ rent as a penalty and give two months’ notice. It is different for single people as they can rent a room from someone, unless they want an apartment by themselves. Some people - mostly teachers - are lucky enough to have accommodation provided by their company.
Yvonne Houde, Edmonton, Alberta
I am a caretaker for two properties in Edmonton. I have lived in Canada all my life, though my mother was of Irish descent. It has always been my dream to visit Ireland but with the cost of living there is no way I could afford it.
When I read about the rent deposit hike was I was appalled. How on earth can anyone afford that? It is hard enough to come up with the first month’s rent, equal damage deposit and hook up fees, not to mention the cost of renting a truck or moving company. And then you have the cost of groceries, car payment, insurance and other incidentals. For this company to insist on an extra month’s rent for a deposit is unacceptable. If they are worried about a tenant doing damage to their properties they need a more stringent screening process. It is not enough to ask the referee just if the tenant paid their rent on time. You must ask more questions to find out the character of the applicant. The end result is a tenant who will not damage your property.
Dermot O'Sullivan, Rio de Janeiro
I'm from Dublin and have been living in Brazil for a year now. I work as an English teacher. Deposits here are typically three months and contracts for three years. If you are dealing directly with the owner this can be negotiated. I paid two months deposit for two years. At the end of the contract you are entitled to the interest (which can be quite high).
Rental prices in Rio are high by Brazilian standards but have fallen recently. They are comparable to prices in pre-lunacy Dublin, let's say 2013. This varies widely between buildings and neighborhoods.
I also think it's important to note the context in which this attempt to increase deposits are occurring in Ireland. It is not that this landlord is simply innocently trying to increase deposits, bringing them to a level that exists in other countries. It is in the context of Government attempts to control abusive rack-renting. This is basically an attempt to squeeze more money out of the lucrative property market in Dublin. I really hope that this article won't help their cause by implying that two month deposits are normal elsewhere. They are but they are not normal in Ireland.
Charlotte O’Toole, Manchester
I rent a large two-bed apartment in a converted Victorian house. We have the ground floor with a beautiful garden, modern kitchen and lots of storage. It’s only three miles from the centre of Manchester and in the trendy suburb of Chorlton. It can be damp in winter but the landlord is great and has a team of handy men who fix everything. The best part is, they don’t require a deposit; it just isn’t the norm here. We just signed a contract to say we’d pay for any damage or excessive cleaning or decorating if needed. The cost? £685 (€766) a month. I’d love to move home to Wicklow but without a deposit to pay I just can’t afford it.
Anonymous, regional Queensland
My family has been renting here since 2012. We have always paid four weeks’ rent as a deposit, equal to AUS$1,600 (€1,090). If the weekly rent increases then we have to pay the difference in the deposit. The deposit is held by the Rental Tenancy Authority and not by the real estate or the owner.
The majority of rental properties are completely unfurnished, with no fridge or washing machine. Tenants are also obliged to return the property in the same condition that they received it. This means washing walls, windows, outside walls and gutters, carpets need to be professionally cleaned, and if you have pets, then the house needs to be flea treated. While there is a clause for fair wear and tear, this is generally difficult to apply.
Landlords have more rights than they have in Ireland, but it is a system I am in favour of. In Ireland, landlords have been demonised and have little rights in deciding what they do with their own property. Tenants are even protected when they damage the property or refuse to pay their rent. So if landlords want to charge two months’ rent in order to get tenants who can afford to rent their properties, I think they are well within their rights.
Denis J Buckley, Brussels
The normal deposit in Continental Europe is two months’ rent as deposit, plus one month’s rent in advance. References or guarantors maybe also required. The deposit is put in a Joint Escrow Account and not held by the landlord. In Belgium, banks are obliged to give loans to people who cannot afford the deposit, provided the tenant has capacity to repay. Two months is a fair amount to seek. Social services also can provide a loan.
Many tenants in Ireland do not respect the property or leave it the way they found it. In Belgium at the time of taking possession, an inspection report is compiled on the state of the property, sometimes by an independent surveyor paid for by both the landlord and tenant. This report is relied upon when a tenant leaves, and if the property is left in a bad state, the tenant forfeits some or all of their deposit.
The biggest issue for Irish tenants renting in Europe is that they don’t read or understand the rental agreement. Sometimes they err to sign up for a three-year lease when only one year is required. If you break the lease period, you have to give minimum notice and may forfeit some of your deposit. The tenant is also obliged to have property insurance.
Rent is index linked, and it is at the discretion of the landlord to raise the rent to the indexed level. Not all landlords do, preferring to keep a good tenant. The law stipulates on how much extra rent a landlord can charge a new tenant. To protect the rights of the tenant, the lease must be registered at local commune. Rents are about 60 per cent higher in Dublin than they are in Brussels, but the quality is much better here with more rights and protections.