New tenancies face 18% higher rents than existing ones in second quarter

Rents in new tenancies were an average of 18 per cent higher than rents paid by existing tenants in the second quarter of this year, according to new research from the Residential Tenancies Board (RTB).

On Thursday, the RTB published its latest rent index which, for the first time, also included existing tenancies as well as new ones.

The body found that new tenants faced higher rents than existing tenants across all counties. However, there was considerable variation in the extent of the gap, with the largest difference found outside of the major urban centres.

Nationally, the standardised average rent stood at €1,332 for existing tenancies compared to €1,574 for new tenancies, a difference of €242 per month.

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The highest standardised average rent in new tenancies for between April and June was in Dublin, at €2,102 per month, while the lowest was in Leitrim, where the standardised average rent in new tenancies stood at €879 per month.

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For existing tenancies during the same period, the highest rent was in Dublin at €1,767 per month, €335 per month lower than for new tenancies. The lowest monthly rents for existing tenancies were also in Leitrim, with an average rent of €679 per month, €200 per month lower than for new tenancies.

The annualised rental inflation for new tenancies increased again in the second quarter of the year, standing at the highest level since the series began at 11.6 per cent nationally.

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However, rents for existing tenancies grew by less than half the rate of new tenancies on an annual basis (5.3 per cent) and by less than the Consumer Price Index over the same period.

Nationally, some 26.8 per cent of new tenancy rents were more than €2,000, compared to 13.5 per cent of rents for existing tenancies. A further 10.9 per cent of new tenancies and 4 per cent of existing tenancies had a monthly rent level in excess of €2,500.

Niall Byrne, director of the RTB, said the inclusion of existing tenancies is “a major step forward”.

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“Information is now available for sitting tenants which was not available in the previous Rent Index Reports. The RTB, in conjunction with the ESRI, is committed to publishing, and further developing, the new tenancy and existing tenancy rent indices,” he said.

“Over time, these indices will provide strong evidence and deeper insights into the private rental sector for the benefit of policymakers and the public.”

The publication of the latest index comes as the Shannon local electoral area and the administrative area of Westmeath County Council are designated rent pressure zone as of November 30th, capping rent increases at 2 per cent per year.

Pat Davitt, chief executive of IPAV, the Institute of Professional Auctioneers & Valuers, said: “It’s worth remembering that this is an average figure and, therefore, many existing rentals are much lower than the average, particularly those that have been subject to Rent Pressure Zone rules for a number of years, some since 2016 when the RPZ rules were introduced.”

Mr Davitt said it was concerning that the number of new tenancies registered in the second quarter at 10,673 has fallen substantially from 14,085 in the previous quarter.

“This is very likely the result of private landlords leaving the market with the added pressure of much increased interest rates. The rental proposition as an income stream had already lost much of its appeal as an investment class, despite record high rents. This is as a result of the weight of high taxes, up to 52%, and an unbelievably onerous regulation regime,” he said.

“We’re seeing some landlords no longer wanting to leave properties vacant for a two-year period as they may have done previously, so that they could move to market rent.”

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