Every three months Daft, the online lettings site, makes a contribution to the gaiety of the nation by publishing its rent survey. It is invariably grim reading and usually comes with a critique of the Government’s policies such as rent controls.
This week was no exception with the Daft report saying that rents rose by an average of more than 7 per cent in the year to the end of June. The average monthly rent was €1,922 nationally and €2,427 in Dublin. The author of the report, Ronan Lyons, an associate professor of economics at Trinity College Dublin, is a well-regarded commentator on the property market. He lamented that it was “most unfortunate” that pro-rental policies were scrapped “just as the evidence was starting to emerge of their success”.
[ Fewer than six properties to rent per 10,000 people in Republic, report findsOpens in new window ]
The first thing to say about the Daft report is that it looks at properties that are currently being offered for rent on the open market, of which there were 2,200 on August 1st. It does not directly collect data on rents being charged for the roughly half a million other rental properties in the State.
The main takeaway is that Daft and the Residential Tenancy Board are measuring different things
Information on what is happening to rents for these properties is available from the Residential Tenancy Board (RTB), which is responsible for regulating the rental market. It extracts the data from tenancies registered with it and publishes its own quarterly reports. It doesn’t paint a pretty picture either, but it is not the same as the one given by the Daft report.
The most recent RTB report shows that 15,246 new tenancies were registered between April, May and June and 44,640 tenancies were renewed. This is a more comprehensive indicator of the number of properties that were available for rent during the period than Daft’s snapshot figure of 2,200 on August 1st. But it is clearly not enough whichever way you count.
[ Rents rise by an average of 7.3% in the second quarterOpens in new window ]
The most recent RTB figures on rents are from the end of 2023. They found that the average rent in Dublin at the end of last year was €2,094. Figures from Daft’s end of 2023 report are not directly comparable, but they show average rents in Dublin ranging from €2,195 in the north of the county to €2,628 in the south. Quite a bit higher than the RTB figure. The year-on-year increase in Dublin, according to Daft, ranged from 4.1 per cent in north Dublin to 2.5 per cent in South Dublin, which is lower than the RTB figure of 6.2 per cent for Dublin.
The pattern is the same for the national figures with Daft reporting a higher average of €1,823 (compared to the RTP’s figure of €1,594) and a lower annual increase of 6.8 per cent (RTP 9.1 per cent).
Confused yet?
The main takeaway from all of this is that Daft and the RTB are measuring different things. Daft tracks rents that are being sought for properties coming to the market and the RTB tracks rents being paid. The approach adopted by Daft doesn’t capture as much information about properties that were rented during the period and appears to over-estimate average rents.
The Daft reports are a vital tool for someone looking to rent or let a property, but less so for someone trying to figure out what is going on in the bowels of the rental market.
In a functional property market, you would expect these two sets of data to track each other closely as landlords would look to push up rents for existing tenants based on market rates. The divergence is most likely due to the introduction of rent controls in 2016 and a general enhancement of tenants’ rights that followed. The controls mean landlords’ hands are tied when it comes to increasing rents in all the main urban areas and their immediate hinterlands. Daft’s figures include a higher proportion of properties being let for the first time and whose landlords are not subject to rent controls.
The biggest anomaly between the Daft data and the RTP data is the rate of growth in rents, with the RTP data showing faster growth. This would appear counter-intuitive as the vast bulk of the tenancies registered with the RTP are for properties that are subject to rent controls. In theory, rents on these properties could only have gone up 2 per cent last year dampening rental growth nationally. There is no clear explanation for why rents went up by 6.1 per cent in Dublin and 9.1 per cent annually according to the RTB figures. Supporters of rent controls say it’s because the controls are not strong enough and the figures are skewed by the extortionate rents being extracted for properties being rented for the first time. The higher average rents reported by Daft – whose survey methodology in theory should catch more of these properties – supports this.
Opponents of rent controls don’t dispute the latter point but say it’s proof rent controls don’t work and are counter-productive because they drive small landlords out of the market and discourage investment.
The truth probably lies somewhere in the middle.