Housing affordability is a controversial topic globally because people on average wages are priced out of the housing market, particularly as salary increases have failed to match hikes in rental and housing. Feeling squeezed by increasing rents and house prices, voters threaten to make their frustrations felt at ballot boxes and politicians respond with policies aimed at controlling rental and price increases.

Changes in population and household formation have significant implications for housing demand.  With the population in Ireland projected to increase by 1,953,300 by 2051, 53.8% of the increase due to net inward migration and 46.2% due to natural increase, real housing demand in Ireland is now estimated to range between 32,000 and 50,000 units per year.  Delivering sufficient housing to create an affordable choice for renters and owner purchasers is an immense challenge and one that is not likely to be solved in the short or medium term.

In Ireland a decade of under-investment following the property crash in 2008, has led to a significant decrease in the housing stock per capita.  As a result of persistent housing shortages, house prices have grown faster than household income and home affordability has worsened.

The standard method to measure affordability is to define a threshold value that housing cost should not exceed as a proportion of household income. In the United States, affordability is considered a problem if housing expenditures exceed 30% of income. By comparison Eurostat sees households spending more than 40% on housing as overburdened. Tenant organisations are increasingly targeting 25% as a threshold. Given the competing definitions, the widely accepted metric for affordability is above a level of 30% of gross income is ‘unaffordable’.  Nationally, an average home is listed as being €303,000; €412,000 in Dublin and €254,000 outside of Dublin.  This means that people on average wages (€40,000 gross per annum) are priced out.

While incomes have grown recently, rents have grown much faster, putting increasing pressure on the ability to save.  High rental costs, extends the time needed by a potential first-time buyer to accumulate down payments via savings. The number of years needed for a first-time buyer to save the required down-payment to purchase an average house in Dublin increased by between one and two years between mid-2014 and mid-2016, and by between three and six months in the rest of the country. The cost of paying rent while saving to accumulate a down payment postpones homeownership. While the age that marked the changeover between renting and home ownership was broadly stable between 1991 and 2006 (27 years on average), it increased from 28 years in 2006 to 35 years in 2016.

Home affordability has worsened for both tenants and homebuyers in Ireland since 2013, especially for low-income tenants and homebuyers living in and around Dublin. Property and rental prices have increased faster than household disposable income while the relative cost of housing is higher for tenants than for owners.

The traditional developer and buy-to-let landlord in the private rented sector are being replaced by institutional investors.  While institutional investors enjoy the benefits of organisational structure, economies of scale and stronger equity, greater compliance and regulatory costs, rent control and the current tax regime continue to drive smaller investors from the housing market.

The high cost of building apartments in Dublin is more than owner-occupiers or first-time buyers can afford.  In the first six months of 2021, investors funded the supply of 2,949 new homes for the rental market. Even though investment funds have had the capacity to pay the high construction costs of apartment blocks in urban areas while satisfying the Government’s requirement to deliver scale in a demanding housing market, others believe some of the larger landlords are of now of sufficient scale to possess rent setting powers in certain locations.

For housing to be more affordable, supply must increase.  Encouraging construction activity is vital but simply building more houses is not the solution. The balance between owner occupied and build-to-rent developments needs to be effectively managed to deliver affordable rents which frees up the money to save for a deposit.

The ‘Housing for All’ plan includes the aim of building 90,000 social houses, 36,000 affordable homes, around 18,000 cost rental homes, and 164,000 private ownership and private rental homes by 2030. It is reported the project has more than €20 billion in funding through the Exchequer, the Land Development Agency (LDA) and the Housing Finance Agency over the next five years.

Housing affordability is a controversial topic because people on average wages are priced out of the housing market, particularly as salary increases have failed to match hikes in rental and housing. Constructing new affordable homes and increasing housing stock is not something that takes a short amount of time. If affordability continues to be an issue in Ireland more people may demand government steps in between developers, landlords and renters.  Such interventions can be costly and may not be in the interest of everyone.

Despite successive governments’ efforts to curb rising homelessness, affordability issues and housing inequity with multiple funding streams there is seemingly no quick fix. The urgency to build quickly with little regard for the future has meant that construction issues and building defects persist.  An estimated €1 billion is likely to be spent to deal with construction defects.  Any industry that regulates itself will be susceptible to conflicts of interest, inconsistent application of standards and inadequate oversight.

The intent of changes made to a building control system is to ensure stronger compliance with building standards and to provide consumers with a better means of assessing new construction. Without an effective and independent inspection system in place, there really is no mechanism to ensure that buildings comply with standards.

In June 2017 existing planning policy was changed to allow for a temporary system of “fast-track planning”, enabling applications for large-scale housing developments of 100+ units to by-pass local planning and go directly to  An Bord Pleanála (ABP). In March 2021 Government introduced changes to the planning framework to curtail the purchase of homes by institutional investors and ringfence a portion of all units for first-time buyers and for affordable purchase, in addition to the 10 per cent reserved for social housing under the Affordable Housing Bill.

Budget 2021 committed €5.69 billion in funding to the Department of Housing Local Government and Heritage (DHPLG). This included €3.3 billion to be spent on housing, 24% more than 2020 and the highest single investment in housing by government in any year to date. But increases in budget spending, Ireland’s liberal approach to planning policy, decades of cheap credit availability, a rising population and changing demographics are the recipe that has led to a series of most unfortunate events.

Updates and changes to regulations, including Construction Products Regulation 2013, Building Control (Amendment) Regulations 2014, Minimum Standards in Rented Houses Regulations and the CIRI register have come largely in response to widespread building defects, revealed through several cases associated with a lack of transparency, compliance with building practices and independent oversight

Priory Hall in Dublin is perhaps the best-known example of a scheme developed with no oversight of and adherence to standards. The 189-unit development was condemned, with residents being forced to vacate their homes by a court order in 2011 due to serious fire hazards and safety concerns. More recently the Crescent Building in Dublin 12 constructed in 2003 has been deemed a fire safety hazard with inadequate fire stopping throughout and requiring a new fire alarm system. Before 2014 amendments, compliance with building safety standards were so light touch that a Fire Safety Certificate for an apartment complex was issued by the Building Control Authority provided the works or building was constructed in accordance with the plans and specifications submitted.

Pyrite and mica are now synonymous with the poor application of regulations and standards of construction.  Multiple areas of North Dublin, as well as Meath, Kildare, Wicklow, and other areas in the east have been affected by pyritic heave.  In 2010 it was estimated that around 20,000 claims were made to HomeBond in relation to pyrite. Despite the HomeBond scheme (underwritten by Allianz) having a latent defects element to the policy, HomeBond did not accept liability.  With mounting pressure on the Government at the time, the Pyrite Remediation Scheme was set up to remediate dwellings significantly damaged caused by the swelling of hardcore under ground floor slabs.  Several thousand properties in the northwest, including Mayo and Donegal, are now presenting with serious structural defects having been constructed with concrete containing around 17% mica mineral content causing the buildings to crumble.  With so many properties affected the Government was forced to establish the Defective Concrete Blocks Grant Scheme.

While the new building control regime brought in new roles and administrative procedures, it is still possible for real estate developers to employ their own certifiers directly. Creating a project-specific company and employing a registered professional directly is allowed under the new regulations.  Meanwhile a Local Planning Authority (LPA) is only required to validate statutory certificates. Clearly, there are limitations to the amendments and there are concerns in the residential sector that the self-certification regime remains entirely in the control of a developer.

Despite successive governments’ efforts to deal with the housing issue there is seemingly no quick fix. The urgency to build quickly with little regard for the future has meant that construction issues and building defects persist.  Property defects could be avoided if we have fit-for-purpose regulation combined with an independent inspection and verification regime.

The RTB/ESRI Q1 2021 Report produced by the Residential Tenancies Board and the Economic and Social Research Institute tracks price developments in the Irish rented housing market. The current Report is based on rents paid on 15,899 private tenancies registered with the RTB in Q1 2021 compared to the 16,235 tenancies registered in Q4 2020.

The decline in the number of tenancies registered with the RTB in this quarter is most likely linked to the increased Covid-19 restrictions in place during the first quarter of 2021. There were a higher number of tenancies registered in Q3 and Q4 of 2020 and a lower number of registrations in the first two quarters of 2020 compared to the same period in 2019. Renewal tenancies were not included in the sample used to generate Q1 2021 Report; tenancies that commenced before 24th December 2016, landlords were required to register a tenancy as a Part IV Renewal after 4 years. For tenancies that commenced after 24th December 2016 landlords are required to register the tenancy as a Part IV Renewal after 6 years. This change means that no Part IV Renewals will be registered until Q1 2023.

Dublin and the Greater Dublin Area (GDA) accounted for 55.8 per cent of all tenancy agreements registered. In terms of property type, 60.4 per cent of the tenancies were for apartments. In Dublin, 77.2 per cent of tenancies were for apartments while it was 43.8 per cent and 50.6 per cent in the rest of the country and the GDA respectively.

On a quarterly basis, rents rose in all except 5 counties in Q1 2021, with 17 counties recording annual growth of more than 5 per cent in the first quarter of 2021. The highest standardised average rent was in Dublin at €1,820 per month while the lowest monthly rent was in Leitrim where the standardised average stood at €596 per month.

The national standardised average rent stood at €1,320 in Q1 2021 – an increase of just under €33 compared to Q4 2020.  On an annualised basis, rents grew by 4.5 per cent in the first quarter of 2021. This growth rate is higher than that of the previous quarter (3.3 per cent) and the highest since the 4.7 per cent annual growth recorded in Q1 2020.

The standardised average rent for houses was €1,304 per month in Q1 2021, a rise of 2.6 per cent on Q4 2020 and a rise of 7.0 per cent year-on-year. The standardised rent for different housing types varied between €1,121 per month for a one-bed house to €1,442 for a house with four or more bedrooms; inflationary pressures continue to be greatest (year-on-year) for houses with four or more bedrooms.

The standardised average rent for apartments stood at €1,351 per month in Q1 2021, an increase of 2.3 per cent on Q4 2020 and a rise of 2.2 per cent year-on-year. The standardised rent for different apartment types varied between €1,207 per month for a one-bed apartment, €1,374 for a two-bed apartment, and €1,574 for an apartment with three or more bedrooms. The year-on-year increase for two-bed apartments was 2.7 per cent while apartments with three or more bedrooms had the highest year-on-year growth at 4.9 per cent.

The economic context determines the drivers of rental inflation in Ireland. Having grown at 4.7 per cent per annum in Q1 2020, the national rate of inflation dropped to 1.6 per cent in the second quarter of 2020 as the Irish economy and society experienced various levels of restrictions.  In Q3 and Q4 of 2020, the annual inflation rate increased to 2.5 and 3.3 per cent remaining below the pre-pandemic level of inflation. The 4.5 per cent annual growth rate Q1 2021, similar to the rate recorded in late 2019, suggests a return to pre-pandemic levels of rental price inflation.

Dublin has seen a greater initial drop and slower rebound in rental price growth since the onset of the Covid-19 pandemic than elsewhere. This reflects the impact of Covid-19 on both the demand and supply sides of the market in the short term.

The more accurate information is at RTB tenancy registration, the more efficient the process is in the wider context of seeking to maintain the standard and safety of accommodation generally across the private rented sector.

The Residential Tenancies Board (RTB) was set up under the Residential Tenancies Act 2004 to deal with the regulation of private rented sector housing.

Registering a new tenancy with the RTB as required under the Residential Tenancies Amendment Act 2019 is not the last link in the chain for a landlord with a new tenancy. The RTB uses this information to maintain a publicly available property register as well as for a variety of intergovernmental requirements.  All landlords are responsible for registration and are expected to update the register when information about a tenancy changes.

At present, new tenancies must be registered with the RTB within a month of the start of the tenancy. Each new tenancy is allocated a Registered Tenancy (RT) number. When a tenancy has been in existence for 4 years or more, a new tenancy begins and the landlord must re-register this new tenancy with the RTB.  The basic rate for registering a private rented or Approved Housing Body (AHB) tenancy is €90 per tenancy. A late fee of €180 per tenancy applies if a registration is received more than a month after the tenancy commenced.

The introduction of annual registration is being floated as important to assist the RTB in monitoring and regulating the rental sector. Under the Act 2019, landlords will be required to register a tenancy annually, rather than simply registering a new tenancy when it commences or 4-years later. The Act creates a new fee structure, €170 for bulk registration, €40 for private rented tenancies, and €20 for AHB tenancies. Yet to be enacted, the RTB intend to roll-out a new tenancy management system (RTB360) to underpin the administration of the annual registration scheme.

Information provided in a tenancy registration is used by the RTB to facilitate a variety of requirements under relevant legislation and where necessary the information provided at the point of registration can be shared between agencies such as the Revenue Commissioners, Department of Social Welfare, local authorities, and officers of the local authorities such as Inspex.

Most landlords already know the current minimum standards for all private rented accommodation are set out in the Housing (Standards for Rented Houses) Regulations 2019.  Our local authorities are responsible for checking and enforcing these minimum standards. Officers of the Housing Authority, such as Inspex, are authorised under section 18(2) of the Housing (Miscellaneous Provisions) Act 1992 to access rented properties for the purpose of rented house inspections.

Where contracts and data agreements exist, Local Authorities issue Inspex with a schedule of rented properties for inspection as registered with the RTB together with landlord and tenancy details as registered for the purpose of processing inspections of rented properties in accordance with Housing Standards.

With there being two types of business relationships – let-only/managed - between landlords and property agents, landlords should know registering precise information about a tenancy on the RTB portal is important.  The information registered is the foundation that ensures to avoid confusion and time wasted further down the line. Information should be accurate and timely if it is to be actioned efficiently.

A let-only service is for those landlords who wish to manage their rented properties day-to-day and collect rents while the letting agent finds the tenants, checks bonafides and prepares the legal documents including registering the tenancy with the RTB.   When these tenancy agreements are being registered on the RTB portal the details of the Agent should not be included as authorised to act on behalf of a landlord.

A letting agent that manages a property will perform the same services as let-only but will also take care of the general day to day running of a rented property and deal directly with the tenants. When these tenancy agreements are being registered on the RTB portal the details of the Agent should be included as authorised to act on behalf of a landlord.

Where bulk registrations are completed by an agent on behalf of several landlords, form fields relating to an agent’s details are automatically filed without user interaction.  This setting does cause problems further down the line.

Once local authority inspection activity recommences in July 2021, Inspex will be reviewing the data already received from the RTB and will be contacting landlords and agents again to arrange an inspection of rented properties as per Housing Standards.

With local authorities working to meet DHPLG targets for independent inspection of the rental stock and with Inspex working on behalf of several local authorities to deliver the targets, the more accurate information is at RTB tenancy registration, the more efficient the process is in the wider context of seeking to maintain the standard and safety of accommodation generally across the sector.