Government rent freeze is not working, says Ronan Lyons

Economist says rent freeze not working, ‘extreme shortage’ of housing supply

Economist Ronan Lyons says the government should have gone for a system where landlords could not increase rents more then the general rate of inflation

Economist Ronan Lyons says the government should have gone for a system where landlords could not increase rents more then the general rate of inflation

 

Economist Ronan Lyons says that the rent freeze isn’t working and that the government should have gone for a system where landlords could not increase rents more then the general rate of inflation.

Professor Lyons is author of the Daft Report released today which found the annual rate of rent inflation, in the year to March 2016, was 8.8 per cent and rents in Dublin are now 1.3 per cent higher than their previous peak in early 2008.

Lyons said that the nine per cent increase in rents was now the “new normal” while in the wider economy 1 per cent is the norm.

“You don’t blame strong demand,” he told RTÉ’s Morning Ireland.

“It’s a good sign there’s people moving to the country, starting families. You want your housing sector to respond by having a supply, building new homes. Now there’s an extreme shortage.”

He also said that safety certification costs in the Republic were 100 times more expensive than in Northern Ireland and this was adding €20,000 to €30,000 to the cost when building.

“Costs will have to be a key priority for the new minister, he will need to get the various parties around the table, to agree all the elements that go into building a home whether a city centre apartment, a suburban three bed or a four bed bungalow in the country.

“By doing that and comparing with other countries he can then establish the top three actions that will be needed to bring the cost of housing back in line with our own incomes. That’s the real problem.”

He added that in most cities in Europe, they certify the safety of a new built home by inspecting it during and after building.

“That involves having teams of inspectors and 100 per cent inspection rates. In Ireland during the bubble I’ve heard of inspection rates of only three to five per cent.

“The response to that, to situations like Priory Hall was effectively to transfer the liability to the developer. I can see the reason for that, but it is significantly more expensive than having teams of inspectors going around.”