The collapse in property values and increased security for tenants means renting is now a more profitable option than buying, writes PAT IGOE

ONE of the effects of the turmoil in the property market has been that people are now taking a fresh look at the rental market. In Ireland, as in England, the refrain immediately goes up that, to quote one English estate agent, renting a house or apartment is just “putting money into somebody else’s piggy bank”. You never, ever get to own the place is the argument.

Yet, other European countries, including Germany, Austria and Sweden, have strong traditions of long residential lettings. Similarly in parts of the US, renting your home long-term is for many a way of life.

The tradition here is very different. So why are families now even thinking of renting and what should they look out for?

Firstly, the trauma suffered in thousands of households whose security has ebbed away with the decline in property values is ushering in a fundamental re-think.

When you buy a mortgage, you are supposed to be left after 25 or 30 years with a valuable asset that you can then sell and down-size and fund either your dream cruise or your pension or your nursing home. Not any more.

Secondly, particularly in the 20 to 35 year age group, there is greater mobility with people frequently changing jobs and home addresses. Stability and security of income and location are not as important as they once were. Lifestyles change. Renting a property is simpler.

Thirdly, renters say they can save by not putting their money into a mortgage and all the costs of buying a property, including the booking and contract deposits, stamp duty, legal costs, surveyors’ costs, possible renovation costs, etc.

Looking back, a wide spread of investments, money in the Post Office, even gold – all seem positively inspired compared to buying property. At this stage, so also would leaving money under the mattress. It’s the renters who are smiling now.

Fourthly, and most relevantly, even for those still in positive equity, that equity has been decimated. If they need to sell because of redundancy or reduced income, the option of obtaining sufficient mortgage funding on another, smaller property is uncertain. At least until matters improve, the rental market beckons.

But it is by no means all bad. The Residential Tenancies Act of 2004 has hugely improved the lot of the tenant in Ireland and has ushered in fundamental reforms. The Housing (Miscellaneous Provisions) Act 2009 continued the improvements on the required quality of rental accommodation.

There is now significant security for tenants. An investor, now a landlord, cannot behave unfairly or whimsically. After the first six months of a tenancy, there is security for the tenant for a further three and a half years. If the tenant is still there after four years, the four-year cycle starts again. And so it can continue. During that three and a half years, the landlord can only reclaim the house or apartment for very specific reasons including misbehaviour by the tenant; sale of the property; the landlord needing the property for his or her family; and the landlord intending to refurbish the property.

The Private Residential Tenancies Board, chaired by solicitor Orla Coyne, is a statutory body with strong powers to penalise breaches of the Act, which might be described as landlord-fair but tenant-friendly.

It has statutory procedures for resolving disputes between landlords and tenants. They involve either mediation or arbitration and a tribunal. In April alone last year there were more than 130 disputes decided on by the Board. Its decisions are enforceable by the Circuit Court.

All tenancies must be registered with the Board. Its website contains lists of registered properties and their details, except the rent. Anybody considering renting should check the register. The rental market is now a more civilised place. Know what you want, ensure that the entire rental agreement is in writing and that it complies with the law.