Half of all houses and apartments currently for sale around the country are owned by landlords fleeing the private rental market, the Institute of Professional Auctioneers and Valuers (IPAV) has claimed.
Pat Davitt, chief executive of IPAV, told an Oireachtas committee that landlords feel they are “subsidising” their tenants because they are barred from hiking rents which are capped in rental pressure zones (RPZ).
“Of our members most are saying 50 per cent of sales at the moment are from landlords leaving the marketplace,” he told the Oireachtas joint committee on housing, local government and heritage.
Mr Davitt said “landlords are feeling they are subsidising rent for those tenants”, insisting there should be “no reason” in cases where tenants leave a property that a landlord cannot then “charge market rent”.
It was “ridiculous” to suggest market rent in any area could not be accurately gauged, he told the hearing into recent trends in the private rental sector.
The IPAV represents more than 1,400 estate agents, auctioneers and valuers countrywide. Mr Davitt could not provide hard figures on the number of landlords leaving the market. But the exodus was being driven, he said, by a frustration among landlords at having to continue leasing out their property at the same rent as before under the RPZ controls. It means they have to “endure years of lower rent than in the marketplace”.
Mr Davitt said any plans to protect tenancies where a landlord decided to sell their property – where a buyer would have to honour the tenancy – “would mean even more leaving the market”.
Mr Davitt also blamed “huge problems” with the Residential Tenancies Board (RTB) – both technological and staffing – for compounding the grievances aired by landlords, citing “incredible delays” at the agency in dealing with issues.
Also, before the hearing Margaret McCormick of the Irish Property Owners’ Association (IPOA), which represents smaller private landlords, described the “exodus” as an “absolute emergency”. Any proposal for a rent freeze would make it worse, she told TDs and Senators.
The RPZ caps were linked to when a landlord began renting a property, and did not take account, for example, the “indebtedness” of the property owner, or outstanding mortgage, subject to interest rate hikes, she added. “The (rental) yield is too low. It is not workable as a business.”
Ms McCormick said if landlords were forced to sell properties with “tenants in situ” it would “devalue properties massively”, with only large investors being able to take them on. “Even the fear of that is leading to people leaving the market,” she said, adding that landlords would generally prefer to be making an annual income rather than getting a “lump sum” from a sale.
Ms McCormick said the entire private rental market was “dysfunctional” with “legislatively prescriptive” regulations which have been altered 88 times through statutory instruments and 21 times through direct changes since 2009. “There is no confidence and stability in the market. It is dysfunctional, it is constantly changing. There is nothing there to keep landlords in the market.”
Ann Marie O’Reilly, of housing charity Threshold, said the lack of private rental accommodation had resulted in a number local authorities currently turning away people who were in need of emergency housing. Quizzed on which local authorities, Ms O’Reilly declined to name them.
Ms O’Reilly suggested a focus on promoting long-term lease agreements in the private rented sector “where there is less obligation on a landlord on what to provide, maintenance and so on”.
She said many renters would never buy a house and have become very settled in communities and would like to see guaranteed tenancies of “10, 15, 20 years”.
Fine Gael Senator Mary Seery Kearney told the committee she had “a concern about the build-to-rent model that is going on at the moment”, suggesting it could be impacting on house prices in south Dublin. “We have a huge need for it, and I am completely supportive of it, but on the other hand I come from a constituency called Dublin South Central where pretty much every multi-unit development that is going on is build-to-rent. That has an onward effect on the property market, on the sales, on the lettings.”
Mr Davitt rejected the suggestion, insisting the model “isn’t going to have a huge effect on the market at the moment, because of the levels of properties for sale”.
“At the moment it is a sellers’ market and I don’t think it is having any effect or will have any effect on the price of property at all.”