Joe O’Connor, organiser, IMPACT’s Boards & Voluntary Agencies branch
Yesterday’s report by the PRTB (Private Residential Tenancies Board) offers little hope for those of us who believe that emergency Government intervention in a chaotic private rental market is necessary. The report suggests the introduction of tax reliefs for landlords to encourage investment in the rental market and increase supply. Given our recent history this kind of incentive raises concerns, and offers nothing to people trying to rent a home.
The report looks at rent control in 11 different countries and six models of rent regulation, and advises against any such policy in Ireland. It states that there could be adverse impacts on supply and unintended consequences for tenants.
The current rental market was described during the Budget speech as “not currently meeting the needs of our citizens”, and the PRTB’s own data shows a further increase of over 10% in Dublin rental prices last month.
The Irish private rental market has always struggled to provide real security of tenure. It may even be the reason we are obsessed, as a nation, with home ownership.
There are ways of introducing rent control in a progressive and sustainable way. We need to draw a clear distinction between ‘rent freezes’ or ‘first-generation’ rent controls, which no longer retain economic credibility across Europe, and ‘tenancy’ or ‘second-generation’ rent controls where any increases are linked to the Consumer Price Index (CPI), inflation, or capped at a percentage above the average of market rent.
These operate successfully in many countries such as Denmark, Belgium and Switzerland, and offer more certainty for tenants. In Germany, the ‘Mietspiegel’ rent index policy controls rent increases, which saw increases of less than 5% between 2000 and 2012, at the same time as unregulated prices in France doubled during this period.
This type of model would guarantee landlords market rents at the beginning of a new tenancy, and prevent them from exploiting market conditions through proper regulation.
The €2.2bn overall investment in social housing announced in Budget 2015 needs to be recognised as a very important first step in tackling our enormous shortage of social housing units. The accompanying additional €10 million in resource for homeless services – which are experiencing substantial demand pressures – is also extremely welcome. These measures also represent an acknowledgement by the political system of issues which we have campaigned on throughout 2014.
The next crucial piece of the jigsaw is the Social Housing Strategy, due to be published shortly, which should answer questions on the timescales, mechanisms and locations for delivering a vital new wave of social housing.
We have 90,000 people on housing waiting lists, and more struggling with soaring rents, so the investment and planning is welcome. But houses that will take a minimum of two to three years to develop will do nothing in the short-term for the large numbers currently sleeping rough on the streets of Dublin.