THE SUPPLY of rental properties has fallen and rents are on the rise despite a continuing fall in house prices, according to the latest report from property rental website Daft.ie.
Average national rents for 2011 were down by 0.7 per cent. However, January 2012 has seen a marginal 0.4 per cent increase on the same month last year, putting rents at almost the same level as in December 2009.
The number of properties available has fallen by 5.7 per cent in 2011, primarily in Dublin, where the number of properties available to rent has fallen by almost 1,000 over the year. Overall, the supply of rental properties is at a 3½-year low.
Minister for Social Protection Joan Burton said the failure of rents to fall in line with house prices supported her decision to cut social welfare rent supplement.
Ms Burton wants to save €22 million from her department’s annual €503 million social welfare rent bill.
Writing the introduction to the report, published today, Ms Burton said the maximum rent limits set by the department for supplement recipients were too high based on market averages.
She said in most parts of the country her department was paying more than 100 per cent of the average rent when it should be paying less as averages included “penthouses” and detached residences. “Once these are excluded, and focusing on availability, there is scope for reductions for all categories, including Dublin.”
She said rent supplement was distorting rents nationally as evidenced by the stabilisation of prices and had acted as a “floor” for landlords in dealing with rent supplement tenants and non-supplemented tenants alike.
“It is essential, therefore, that State support for rents are kept under review, reflect current market conditions and do not distort the market in a way that could increase rent prices for others, such as low-paid workers and students.”
Daft.ieeconomist Ronan Lyons said a direct link between the reduction in the number of properties available for rent and the failure of rents to fall could not be made. "It's not really a case of cause and effect; the fall in the number of properties to rent has mainly been in Dublin and to some extent the other cities, but supply is much the same in the rest of the country."
