Report says rent controls would make things worse for tenants

The introduction of rent controls would make the problems in the private-rented sector worse, a major study on the issue published this morning concludes.

The long-awaited study from the Private Residential Tenancies Board (PRTB) says rent controls would not address the underlying problems in the sector, would not generate better outcomes for tenants, and could lead to tens of thousands of rented properties exiting the system.

Among its recommendations are a cut in the tax burden on landlords and a code of conduct between lenders, landlords and tenants when buy-to- let mortgages fall into arrears

The Rent Stability in the Private Rented Sector report was commissioned by former minister Jan O'Sullivan. It is likely to be met with dismay by those working with the homeless and the housing-vulnerable, who have called for rent controls to address escalating rents, particularly in Dublin.

Property owners, in contrast, have argued such controls could depress property prices, decrease housing supply and could be unconstitutional.

Anticipated

The report, carried out by DKM Economic Consultants, has been with Minister for the Environment

Alan Kelly

for the past month. It has been anticipated as the guidance document on which the Minister will likely base his decision on the introduction, or not, of rent controls.

It notes the private rented sector almost doubled between 2006 and 2011, with one in five households now renting their home from a private landlord. Increasingly, the sector is accommodating households who have postponed buying, those who have lost their homes, as well as students and those who are choosing to rent.

It notes affordability has become a pressing issue in the sector, particularly in Dublin, and particularly for single people and low-income households.

However, following an examination of rent regulation models in 11 countries and an extensive review of available literature, the authors concluded there were "many unintended negative consequences for tenants" as a result of rent controls, says Annette Hughes, a senior economist with DKM.

Regulatory models

They look at six models of rent regulation and what would have happened had they been in place from 2000 to 2014.

While controls would give rent certainty to tenants, they could lead to a reduction in housing supply and quality, and to rents that were higher than they would be on the open market, and they could be open to challenge in the courts.

Rent controls could increase costs for landlords, lead to thousands of landlords exiting the sector, discourage new investors in the sector, reduce investment by landlords in their properties, lead to increased rents as supply diminishes and reduce tenant turnover and labour mobility.

“The current most pressing problem is how to increase the supply of private rented housing for rent, particularly in urban areas and most notably in Dublin,” says the report. The level of supply will not increase in the short term and some “quick-win” solutions are needed to address escalating rents in Dublin, which are now at 2009 levels.

Supply could instead be protected and increased by encouraging landlords to remain in the sector by reducing their tax burden and the drawing up of a code of conduct between lenders, landlords and tenants when buy-to-let mortgages fall into arrears.