Co-Living

Embracing change or not?

In an ever more connected world, it is generally accepted that, people have a growing sense of isolation. The desire for a sense of community, alongside increasing levels of unaffordability and diminishing accommodation supply in many cities are claimed to have spawned the "co-living" concept.

According to some in Ireland, co-living units are “modern tenements” that should be “completely outlawed” and for now, eyes are on Niche Living (Bartra Capital) and its prospective co-living developments for Cookstown, Rathmines and Dun Laoghaire suburbs.

It may be difficult for some to understand but the co-living concept, synonymous with the millennial demographic, when done well, is a trend that merits consideration.

A commune (a French word appearing in the 12th century from Medieval Latin ‘communia’) is an intentional community of people living together, sharing common interests, often having common values and beliefs, as well as shared property, possessions and resources.

In the 19th and 20th centuries, boarding houses in cities, served as a transitory step between family life and independence and were places for new residents to get their city sea legs.

A bed-sit, a single unit within a house where a tenant rents a room but shares facilities, comes with a bad reputation. This type of accommodation arose from the low-cost conversion and subdivision of large Georgian and Victorian city dwellings in Ireland and the UK, into low-cost ‘sub-standard’ accommodation.

Rental Regulations that came into effect 1st February 2013 in Ireland were to see an end to bedsits as new standards required rental properties to have separate bathrooms, independently controlled heating, adequate food preparation and storage facilities and access to laundry facilities. Though the move was intended to improve conditions for renters, it inevitably reduced the supply of affordable accommodation for some.

Communities of people living together or dwellings with a large number of residents are not new concepts; so, you’d have to wonder what’s all the fuss about co-living?

Co-living emerged in the early 2000s in the United States alongside the digital revolution. In 2004, Mark Zuckerberg rented a five-bedroom house in Palo Alto, where early Facebook employees built the social network. For years, the "hacker house" or commune offered aspiring entrepreneurs a place to live for cheap rent.

Today, HaaS (housing as a service) online digital platform companies challenge the real estate industry spurred on in the belief they are revolutionising 21st century housing and satisfying new consumption patterns. Companies like, Medici Living Group, Open Door and WeLive have evolved the “hacker-house” concept into all-inclusive living experiences that come with lots of perks.

Millennials value experiences over owning things, apparently, so for those looking for a reasonably priced convenient living space in an expensive metropolis, co-living seems like a good a solution.

Its increasing popularity is rooted in its cost effectiveness and greater flexibility. With agreements typically less than 12 months, it is certainly less of a commitment than a 30-year mortgage or renting an apartment where you generally must stay at least a year. On the other hand, you could see co-living as an expensive option tenable for only a small section of the population; young tech employees with higher than the average earnings travelling the globe for work.

It’s certainly not for every city, however. Interestingly,  CBRE suggests “Dublin fits because of the high volume of tech operators we have from the US and these are used to this kind of living. To them, it’s not an alien concept”.

Node, a global co-living company, launched its latest development, in Dublin. According to Anil Khera, (formerly of Blackstone) founder of Node, its “new format bridges the gap between co-living and multifamily/PRS attracting global-citizens rather than digital nomads”.

With rising housing costs translating into smaller living spaces, officials and regulators must ensure these new living spaces don’t run afoul of our housing laws. Care must be taken to ensure PRS accommodation standards are consistent regardless of tenure so that these co-living projects, particularly in an Irish context, expand choice without compromising quality or diminishing standards.

Like it or not, the "hacker house," the "commune," the “boarding house”, or whatever your preferred name for dwellings with a large number of residents, is pushing to go mainstream and the co-living concept is transforming our long-held traditions of property ownership and a place to call home.

Change is real and inevitable. There’s no reason to fear it, all we need to do is embrace and manage it.

Airbnb

Changing the way we holiday

In just over 10 years, Airbnb has grown from a modest home-share site into one of the biggest disruptors in travel.  Airbnb experiences are generally considered excellent, in many cases rival hotel experiences and its popularity is dramatically changing how and where we choose to spend our holidays.

While Airbnb is perhaps unfairly blamed for many ills, we should not ignore the fact that it’s property listings aren’t regulated like private rented accommodation.  A difficult question facing building officials around the globe is how to classify these properties; are they hotels, guesthouses or are they residential properties?

According to Brian Chesky, its founder, Airbnb took root in a very simple idea.  He and his two co-founders started with an air mattress in their apartment in San Francisco to earn extra money.  Founded in 2008, Airbnb has experienced dramatic growth, going from just a few hundred hosts to more than six million rooms, flats and houses in more than 81,000 cities across the globe. On average, two million people rest their heads in an Airbnb property each night – half a billion since 2008. Airbnb claims its host and guest spending is worth €86 billion to economies in 30 countries.

Its positive impacts are undeniable but Airbnb’s exponential growth has begun to highlight certain issues around housing supply, regulation and safety.

The sharing economy is generally defined as people sharing intangible assets and underutilised tangible assets for money with the help of the Internet which results in a new business model.

Peer-to-peer markets, also referred to as the sharing economy, are online marketplaces that facilitate matching between demanders and suppliers of various goods and services.

Airbnb is a peer-to-peer marketplace for short-term rentals, where suppliers (hosts) offer different kinds of accommodations (i.e. shared rooms, entire homes, yurts and treehouses) to prospective renters (guests).

The sudden emergence of this sharing economy has introduced many unforeseen challenges for consumers, incumbent businesses, regulators and policy makers.

Critics argue that much of the growth in the sharing economy comes from skirting regulations.  Internet companies that exist solely online are subject to one set of regulations, while traditional businesses are subject to another. Online platforms therefore benefit from ambiguity about how they should be regulated.

Consumer safety is one of the major concerns that companies face with sharing economy business models. Traditional firms are subjected to regulations that are often not applicable to the emerging sharing economy business models. This leads to a larger question of who takes responsibility if anything goes wrong.

Home-sharing has been the subject of criticism with many of its critics arguing that home-sharing platforms like Airbnb have come at a huge cost.

Researchers (Zervas et al., 2017) have found that home-sharing raises local rental rates by causing a reallocation of the housing stock and raises house prices through the capitalisation of rents and the increased ability to use excess capacity.

Additionally, increased taxation on buy-to-let properties means it’s not so attractive to let properties over a longer term and many landlords have realised they can make more money out of short lets to Airbnb users than from renting to conventional tenants.

Because the total supply of housing is fixed in the short-term, concerns for the negative consequences of Airbnb on the housing market has garnered significant attention and motivated many policymakers around the world to review regulations.

Airbnb is now fighting claims, from cities around the world, that its services are changing the face of neighbourhoods and therefore its use needs to be capped, it should require permits and it must be better regulated.

Amsterdam limits listings to 30 nights per year while London hosts are restricted to renting out entire homes to 90 days a year. In Paris homes in the centre of the city can only be rented out for a maximum of 120 days a year and in New York a whole host of rules and restrictions make Airbnb rentals illegal in many cases.

In Ireland, Minister for Housing Eoghan Murphy introduced new rules in The Residential Tenancies (Amendment) Act 2019 aimed at curbing the loss of properties from the long-term rental market.

Under the Housing (Standards for Rented Houses) Regulations 2017 landlords have a legal duty to ensure their properties are fully compliant with fire and minimum safety standards.  The safety standards are basic and include smoke, heat and carbon monoxide detectors, fire blankets, window restrictors for windows above 1.4m above ground level to prevent falls and emergency evacuation plans for apartments.  Additionally, landlords have a responsibility to comply with the Fire Services Acts 1981 and 2003.  Our Local Authorities enforce these standards and proactive inspections are carried out.

Rental websites like Airbnb, do not have to enforce basic safety standards like carbon monoxide detectors, smoke detectors, or fire escape access. Their homeowners do not have to prove their properties are safe before letting them out and renters (unwittingly) are ultimately responsible for safety.

Airbnb will offer safety recommendations for its listed properties but it does not inspect them unless it is an Airbnb Plus home.  In this category, a thorough, in-person quality inspection including opening drawers, cabinets, and according to Airbnb “even the oven” will be carried out.  They look for thoughtful design and double-check that a space is clean and comfortable but not safety.

This year, Airbnb has taken a step closer to avoiding onerous national regulations after an adviser to the European Court of Justice said the company should be regarded as a digital service provider and not a real estate provider.

As officials haven’t come up with clear answers to the property type classification of short-term rentals, educating consumers and hosts who choose to rent units on sites like Airbnb as to their safety responsibilities and liabilities is increasingly important.

Women in Housing Finalist

Finalist – Women in Housing Awards

Inspex are honoured to be announced as a finalist for ‘Team of the Year: Corporate / Strategic’ in the 2019 Women in Housing Awards.

The Chartered Institute of Housing together with Inside Housing run these Housing Awards to celebrate the unsung heroes of the housing industry and recognise the women that make housing great.

Many thanks to Inside Housing for acknowledging the accomplishments of outstanding women working in housing.

Congratulations to all the finalists, the team at Inspex are looking forward to a night of celebrating great achievements at the awards in October 2019.

RTB/ESRI Rent Index

RTB/ESRI Q1 2019 Rent Index

The recorded annual growth in the standardised average rent increased to 8.3 per cent nationally in the period to Q1 2019, marking the highest rate of annual rent price inflation since Q2 2016. Despite Q4 2018 marking a notable fall in rent prices during the quarter, the first quarter of 2019 once again marked a rise in rent prices of 2.1 per cent in Q1.

Standardised average national rent for both houses and apartments increased in the year to Q1 2019 as 19 new areas come under Rent Pressure Zone legislation. Average national rents for houses stood at €1,129 in the first quarter of this year, an increase of €85 on the previous year, while average rents for apartments stood at €1,225, an increase of €90. The standardised national rent for both houses and apartments also increased on a quarterly basis, from Q4 2018.

Although the index saw an overall dip in Q4 2018, an unprecedented trend in more recent times, the index increased again in Q1 2019. With the RTB attributing the falloff in the last quarter to seasonality, it also notes a marked increase in the number of tenancies registered in Q1 2019, increasing from 17,830 registered in Q4 2018, to 21,004.

Looking more closely at the split of new and renewal tenancies and how the rent increases for both affect the overall standardised national average, with only 18 per cent of the tenancies registered in the first quarter being renewals. The annual growth rate of standardised average rent was higher for new tenancies (described as “unsurprising” due to the restrictions in place for ‘Part IV’ renewal tenancies). The standardised national rent for new tenancies increased by 8.7 per cent in Q1 while part IV renewals increased by just 6.7 per cent in comparison.

The concentration of the rental market in Dublin is apparent with two out of five of total new tenancies registered in the capital in 2019.

Along with the concentration of tenancies apparent in the capital city, Dublin also represents an area of corresponding price pressure, as presumably higher demand is inclined to push prices up. Just over 11 per cent of agreed tenancies in Dublin were for under €1,000, compared to over 70 per cent under that level elsewhere. Meanwhile, over 55 per cent of tenancies in Dublin had their rents set at over €1,500, compared to just over 5 per cent in other areas.

Albeit that the trend of rising rent prices returned in the first quarter of 2019, on a positive note a clear trend has emerged of longer-term tenancies with almost 30 per cent now for periods longer than 12 months compared to just over 20 per cent in Q1 2014.

Dun Laoghaire Rathdown Appoints Inspex

DLR CC Appoints Inspex

Dun Laoghaire Rathdown County Council has appointed the Inspex team to carry out proactive inspections of private rented properties in the Dun Laoghaire Rathdown Council Area.

All privately rented properties must comply with the Housing (Standards for Rented Houses) Regulations 2017. The current minimum standards for rented accommodation specify the requirements in relation to a range of matters including structural repair, sanitary facilities, heating, ventilation, lighting, fire safety as well as the safety of gas and electrical supply.

These minimum accommodation standards apply to all privately rented property that is currently let or available for letting from private landlords, approved housing bodies and institutional landlords.

All landlords have a legal obligation to ensure that their properties comply with the minimum standards whether a tenant is in receipt of a housing assistance payment or not.

Failure to comply with the minimum standards can result in penalties and prosecution. Dun Laoghaire County Council can issue Improvement Notices and Prohibition Notices to landlords who breach the minimum standards regulations.

Queries in relation to the Housing (Standards for Rented Houses) Regulations 2017 and how compliance may be achieved can be submitted to our online chat facility at www.inspex.ie or follow twitter.com/Inspex_ie where information in relation to compliance is regularly published.

Procedures and Regulations May Be Ineffective

Procedures May Be Ineffective

New laws are so often introduced that landlords find themselves unaware of failings to comply with the latest regulations. Bottom line, it's the landlords’ sole responsibility to ensure they stick to the rules. There’s no get-out-of-jail card when things go wrong.

Reality is tenants are getting smarter, becoming more educated, and more aware of their rights. Many landlords are unaware of their legal responsibilities and obligations and that can mean an expensive mistake.

Irish landlord and tenant law comprises a mix of common law and statute law, including the Landlord and Tenant Law Amendment Act Ireland 1960; the Conveyancing Act 1882; the Rent Restrictions Act, 1960 and 1967; the Housing (Private Rented Dwellings) Acts 1982-1983; and the Housing (Miscellaneous Provisions) Act, 1992. Most private residential tenancies are covered by the Residential Tenancies Act 2004 and the Residential Tenancies (Amendment) Act 2015. All such tenancies should be registered with the Residential Tenancies Board (RTB).

Since 2004, the RTB replaced the courts in dealing with most disputes between landlords and tenants through its Dispute Resolution Service. The process operates informally with fees but generally without the necessity of legal representation.

A tenant’s main legal rights and responsibilities derive from the landlord and tenant law as well as from any lease or tenancy agreement between the parties. If a tenant signs a lease on a property for a certain amount of time, then that tenant is legally committed to paying rent for that time.

There are no circumstances where a tenant can justify not paying rent. A tenant should never expect a landlord to take rent out of a security deposit when a notice has been served. A tenant is obliged to pay their rent in full and on time until the tenancy ends even where a dispute has arisen with the landlord.

One of the biggest problems for private landlords is tenants who don't pay their rent or don't pay their rent on time. Evicting a tenant who has stopped paying the rent is more difficult than many realise.

To landlords, it can seem as if the system permits a tenant that has stopped paying rent to continue occupying a property (over-holding) while a landlord is out of pocket. When tenants go bad, landlords can face huge difficulties moving them on.

In reality a landlord can do very little until the ‘established’ process has run its course. A landlord should not be tempted to take the law into his/her own hands. A dispute case referred to the RTB about an illegal eviction will be given priority and there are procedures in the Residential Tenancies Act under which an injunction to restrain the landlord may be applied for to the Circuit Court. The fine for an illegal eviction is €20,000.

If a tenant is in a property for less than 6 months and gets into difficulty paying rent a landlord can serve a 28-day Notice of Termination without giving any reason (if there is no lease agreement in place). If a tenant has been renting the property for more than 6-months and the landlord wants to end a tenancy because of rent arrears then the landlord must serve a 14-Day Warning Notice in writing (not an email) for failure to pay rent. This notice must state how much rent is due, give the tenant reasonable time to pay it, and outline what will happen if it isn’t paid. If the tenant fails to pay the rent due in the time period given in the warning notice, the landlord can end the tenancy by serving a 28-Day Notice of Termination.

It is reported that the RTB received over 4,800 applications for dispute resolution in 2016 with a year on year increase of over 20 per cent in dispute applications. In 2017 the RTB reported that it determined on the validity of 693 Notices of Termination where landlords served notice for rent arrears, 553 dispute cases regarding eviction orders and a 24.4 percent increase on 2016 in referrals for ‘overholding’.

But there are two stages to the RTB’s dispute resolution process. Stage 1 is mediation or adjudication. If the two parties do not agree to the mediation process, or if the RTB decides that mediation is not the best option, the case goes to adjudication.

If the parties do not accept the mediator’s or adjudicator’s decision, a dispute can be appealed within 10 days to Stage 2, which is a public hearing by a 3-person Tenancy Tribunal.

A more recent look at (23/04-24/05/2019) RTB dispute cases shows there are more referrals relating to rent arrears and overholding than for other reasons; 95 overholding; 31 arrears; 86 validity of notice referrals. The RTB ruled 67 per cent and 48 per cent in favour of landlords respectively for overholding and arrears disputes.

While determination orders can rule in favour of a tenant repaying rent owed to the landlord, collecting the money at this stage can be difficult.

Where the RTB issues a binding Determination Order and a party refuses to comply with the terms of the determination order, then enforcement proceedings must be brought through the Circuit Court.

Enforcement proceedings of an RTB determination order is permitted under SI 69 of 2018 while the District Court Rules Order 93C set out the procedure to be followed. This procedure should ensure that the applicants who have already gone down the route of going to the RTB will not have to come up with the finances necessary to sustain a Circuit Court action.

The eviction process can take far more than a year between getting a hearing date with the RTB’s dispute resolution service, to a decision, an appeal of a decision by the tenant, an enforcement by the court and an eviction by the sheriff. Combined with all of this recouping the loss of rent arrears due is considered unlikely.

A housing market fit-for-purpose includes an adequate supply of appropriate, affordable rental accommodation of a minimum standard.

Failure to collect or difficulty collecting rents due from tenants and the difficulties that can be encountered moving these tenants on would indicate that the procedures and options introduced in the Residential Tenancies Act to resolve disputes fairly are not working properly.

Energia Family Business Awards

Family Business Award Winner

Running a small business has many challenges but take it from us, there is absolutely nothing more rewarding than the effort being recognised.

The Energia Family Business Awards Ceremony took place 24/05/2019 in the Round Room at the Mansion House, Dublin and showcased the best of Irish across the island of Ireland.  The awards were a celebration of the impact of family-run Irish businesses at a local, national and international level.

The judging panel consisted of 11 distinguished industry professionals. Nominees were judged against a clear set of criteria across eighteen categories.

Inspex is truly honoured to receive its prize in the Professional & Business Services Category.

While multinationals have played a huge role in Ireland’s economy over the years and provide employment and trade on a large scale, SMEs in Ireland make up 99% of all Irish enterprises and employ 70% of private sector employees.  Small businesses play an important role in stimulating innovation, employment and growth.

Well done to Energia for taking this initiative to acknowledge that family businesses are the backbone of the Irish economy and to celebrate the generations that work together.

Many thanks to Energia, the Irish Times and to the judges for making 24/05/2019 a great day for Inspex.

South Dublin County Council

South Dublin CC Appoints Inspex

South Dublin County Council has appointed the Inspex team to carry out proactive inspections of private rented properties in the South Dublin Area.

All privately rented properties must comply with the Housing (Standards for Rented Houses) Regulations 2017. The current minimum standards for rented accommodation specify the requirements in relation to a range of matters including structural repair, sanitary facilities, heating, ventilation, lighting, fire safety as well as the safety of gas and electrical supply.

All landlords have a legal obligation to ensure that their properties comply with these minimum standards whether a tenant is in receipt of a housing assistance payment or not.

Failure to comply with the minimum standards can result in penalties and prosecution. South Dublin County Council can issue Improvement Notices and Prohibition Notices to landlords who breach the minimum standards regulations.

Queries in relation to the Housing (Standards for Rented Houses) Regulations 2017 and how compliance may be achieved can be submitted to our online chat facility at www.inspex.ie or follow twitter.com/Inspex_ie where information in relation to compliance is regularly published.

Rent Pressure Zones

PRS Pressures Steer RPZ Extension

It was announced last week by the Táiniste Simon Coveney that Ireland’s Rent Pressure Zones (RPZs), first introduced at the end of 2016 by Coveney in his then position as Minister for Housing, would be here to stay, at least until 2021.

RPZs were enacted under the Planning and Development (Housing) and Residential Tenancies Act 2016 (the “2016” Act) intended to control the rise in rents in parts of the country where rents are highest and rising.

Speculation about the future of RPZs had been widespread in recent weeks and months as their initial lifecycle began to draw near. People began to wonder if the now common practice of rent increases at the point of a rent review not being permitted to surpass 4% in designated RPZs would soon end, with a return to unbridled market rent increases at each rent review.

The RTB have commented in recent months on the positive effects the RPZ restrictions have had in the rental market. They have partly credited RPZs with the recent  slowdown in the rate of rental inflation, as the increase in rents for existing tenancies compared to new tenancies were considerably lower in the third quarter of last year (5.4 per cent and 8.0 per cent respectively, year-on-year).

Still, it is worth noting that the RPZ rules cap rent increases at 4 per cent every two years (for tenancies which began before the end of December 2016), indicating that a deeper analysis of factors contributing to and locations in which these increases occurred may be required.

In some areas with high concentrations build-to-rent investment, entire blocks of apartments funded by institutional investors are the driving force behind significant increases in the cost of renting new apartments in Dublin. The perceived growth in pricing power of some large landlords in addition to the fact that RPZ rules only apply 12 months from the date the market rent is set means that in some cases the effects of RPZs can be diminished.

Despite these and other perceived deeper-rooted issues in the private rental market and persistent calls from some market commentators and campaigners for further policy measures to be implemented by government to alleviate market pressures, the continuation of the RPZ measures has been welcomed by many.

In conjunction with the extension of their period of operation, the Táiniste also announced the inclusion of two new RPZs – Navan (Co. Meath) and Limerick City East.

RTB/ESRI Rent Index

RTB/ESRI Q4 2018 Rent Index

The final quarter of 2018 marked a notable, quarter-on-quarter fall in the national standardised average rent, according to the RTB Q4 2018 Rent Index, published in association with the ESRI. National standardised average rent fell in the quarter by 0.3 per cent, marking the first quarter since Q1 2017 that the standardised average rent has fallen relative to the previous quarter. Though in the full year period to the end of 2018, standardised national average rents increased by 6.9 per cent, a slightly slower pace than the 8.6 per cent annual growth rate recorded in the previous quarter.

There were 17,830 tenancies registered in the fourth quarter. Standardised average rent for new tenancies during Q4 was €1,237 while for existing tenancies it was at €987.

Disaggregating houses and apartment standardised average rents across the country in Q4 2018 finds that average rent for houses was €1,136 per month, up from €1,066 in Q4 2017. For apartments the average rent was €1,241 in Q4 2018, up from €1,158 the previous year.

On a quarter-on-quarter basis, the growth rate of rental prices in Q4 2018 fell to -1.1 per cent, down from 3.4 per cent in Q3 2018. This marks the first time since Q4 2017 that house rents have fallen on a quarterly basis. The quarter-on-quarter growth rate for apartments decreased in Q4 2018 when compared to Q3 2018 to stand at 0.4 per cent.

The highest standardised average monthly rent in the country for the fourth quarter on a county-by-county basis was recorded in Dublin at €1,650, while the lowest was in Leitrim at €517. In Q4 2018, Dublin accounted for nearly 2 in every 5 tenancies registered with the RTB.

As for other cities across Ireland, outside of the capital, the second highest standardised average rents in Q4 2018 were in Cork City – €1,095 per month. The third highest, Galway City, standardised average rents stood at €1,064 for Q4 2018, and the standardised average rent in Limerick City and Waterford City for Q4 2018 stood at €929 and €682 respectively.

While the data presented for Q4 2018 shows that, nationally, rents moderated somewhat during the quarter, the results of this latest Rent Index from the RTB resulted in the Local Electoral areas of Navan and Limerick City East being designated as the latest Rent Pressure Zones (RPZs) in Ireland.