Ireland’s biggest private landlord is asking tenants for two months’ rent as a deposit.
The move by Irish Residential Properties Reit (Ires Reit), which owns 2,400 apartments in greater Dublin, adds to the rapidly growing financial pressure on people looking to rent in the private sector.
Ires Reit charged an average of around €1,500 a month in rent on its property portfolio, according to figures published last year. For tenants, that means finding over €3,000 to pay up-front as a deposit along with about €1,500 in rent for the first month before moving into their home.
And rents are rising, especially in the capital. Ires Reit announced recently that two-bed apartments in its new Maple development in Sandyford, south Dublin, are being rented at €2,570, with one-bedroom apartments costing €1,950.
While Ires Reit ran a special “move-in incentive” at the 68-apartment Maple, – under which people moving into the scheme in May and July were not required to pay any security deposit, only the first month’s rent – the rising cost of private sector rents will see tenants having to find very substantial deposits to secure accommodation from the landlord.
Many of properties owned by institutional landlords operate at the higher end of the rental market. Ires Reit, an offshoot of Canadian investment group Capreit, said it was “not aware of other landlords’ policies in this regard”.
Another significant institutional landlord, Kennedy Wilson Europe, said it requires a security deposit of one month's rent across its six Dublin developments.
Hibernia Reit, which owns 293 units in two schemes in Dundrum, also confirmed it was its policy to require a deposit of one month's rent alongside the first month's rent in advance. It said this was "in line with standard industry practice".
However, this standard industry practice has come under pressure, with more landlords seeking higher deposits, following the example set by their institutional counterparts, the Irish Property Owners’ Association (IPOA) confirms.
"Most traditional landlords still look for one month's rent as a deposit, but institutional landlords have introduced two months' rent or more as a new standard and that is spreading," said IPOA chairman Stephen Faughnan.
“It is creeping up gradually,” he said. “It went from a month to six weeks to two months, and now, in some cases, three months. Certainly, it is something we have seen in the last few years and particularly in the last 12 months.”
Mr Faughnan agreed the trend meant up-front costs for tenants had increased, but he said it was the length of time it takes to resolve arrears cases that was motivating landlords to seek a bigger cushion.
Tenants should by law given 14 days’ warning notice to catch up with arrears. Mr Faughnan said it was a common practice, although not required by law, for a second 14 days’ notice to be issued before the 28-day notice terminating the tenancy is served.
If the property is not vacated, the dispute can then be taken to the Residential Tenancies Board for mediation, but this process can also take some time.
“It is only good practice for the property owner to look for a higher deposit,” he said, adding that tenants were “more reliable” when they paid larger sums at the beginning of a lease and that higher deposits were the norm in other European countries.
Security deposits should be returned promptly to the tenant at the end of a lease, although landlords may make deductions for damage to the property above normal wear and tear.