The latest Residential Tenancies Board (RTB ) rent index for Q3 2017 showing an increased rate of growth in rents is evidence that rent controls, introduced one year ago last month, do not work, the Institute of Professional Auctioneers & Valuers (IPAV ) has said.
Pat Davitt, IPAV CEO, said that the growth is an unintended consequence of Government intervention in the market, as his organisation predicted.
“The RTB rent report for Q3 2016 had found a slowing rate of growth in rents and a fall in Dublin house rents of 0.6 per cent," said Davitt. “This in our view was an indication that the market felt that this was what could reasonably be sustained and there was probably a natural tapering off of the level of increase at that point.
“The three year rent control system introduced by the Government in December 2016 appears to have panicked the market, and in that situation you are going to have unanticipated consequences.
“This is especially the case when the state treatment of the private landlord is unequal by comparison with the commercial landlord,” he said, adding: rent increases are “an unfortunate consequence of rent controls without any counterbalancing to assist private landlords.”
Despite the apparent stability before Government intervention, rents across the country have steadily climbed over the past several years.
The average monthly rent for a three-bedroom, semi-detached house in Athlone in 2016 was €650, up from €571 in 2012. A one-bedroom apartment in the town cost an average of €560 per month, up from €489 in 2012.
Davitt said the Government should give absolute priority to issues that will assist supply, such as land availability, building costs particularly for SME builders and planning and service impediments.
This year's Budget promised a new €750 million Home Building Finance Ireland (HBFI ) scheme, which offers loans to SME builders throughout the country.
"Post Budget it emerged that these loans could be at interest rates of as high as eight per cent," Davitt pointed out. "At a time when money can be borrowed from institutions for less than a third of that."