It would be wrong to believe an increase in private house construction will automatically lead to a fall in rents. It didn’t happen during the building boom when rents chased the spiralling cost of homes. And while the housing market remains dysfunctional, there is no reason to expect a different outcome.
The harsh reality is that the cost of buying or renting property is unsustainable for a great many people, in the context of their existing incomes. A more intrusive approach is required.
Government and opposition politicians have been wringing their hands over this situation for a number of years and have taken limited, ineffective action because of the vested interests involved: from homeowners in negative equity, to buy-to-rent landlords, the hoarders of private development land and the wider construction sector.
Publication of an Action Plan for Housing that focused on the provision of social housing units, last month, along with a commitment to spend €5.35 billion over five years on public and private accommodation was a welcome development. But elements of the plan will remain aspirational in the absence of promised legislation and the advancement of tenants’ rights.
The latest figures on rental costs from Daft.ie represent a worrying, if partial, picture as students attempt to find accommodation in advance of the academic year. Increases in the asking price for rents exceed 11 per cent in university cities and, with only a limited number of properties on offer, are rising elsewhere.
These are “new lets” and the rent being sought may reflect legislation that imposed a two-year moratorium on further increases in 2015. Elsewhere, the number of homeless families continues to rise – in spite of that legislation – and more than 2,000 Dublin children are living in emergency accommodation.
As a response to severe rent inflation, the Peter McVerry Trust has urged the Government to link increases to the consumer price index. The previous government opted for a two-year rent freeze, rather than antagonise international property investors and landlords by such long-term action.
As things stand, that approach is unlikely to change. Already, the Irish Property Owners’ Association has begun to complain about the “punitive tax treatment” of the rental sector.
Minister for Housing and Local Government Simon Coveney has recognised the importance of a stable rental market and supports the emergence of Continental-style leasing. His ambition, however, appears limited to issues of availability and tenant certainty. Legislation is being prepared on tenants' rights and the powers of the Private Residential Tenancies Board.
A new set of teeth for the PRTB will not, however, address the issue of affordability. Other countries link rent increases to the cost of living to protect competitiveness and dampen wage demands. Why not here?