Dublin's rental market is broke and there's no blueprint to fix it

Here's how other European cities have tackled rent crises...

Dublin's rental market is broke and there's no blueprint to fix it

RollingNews

Each quarterly report on Ireland's out-of-control rental market raises fresh questions - and today's Daft figures which show that rents are past their Celtic Tiger-peak are no exception.

So, what can we learn from our European cousins when it comes to managing volatile rental markets?

Project Berlin

Germany's robust renting culture has its roots in the Second World War and has been fostered through strong public/private partnerships.

Facing a jolt in rental costs, Berlin became the first city in Germany to introduce rent caps in 2015.

Gero Breloer / AP/ An ice-breaker passes the snow-covered Oberbaumbruecke connecting the two districts Kreuzberg and Friedrichshain over the icy Spree river in central Berlin

This is how the law works: A rental observatory calculates the average rent per meter squared in a neighbourhood. Then homes are separated into three categories, "simple," "medium," and "good" factoring in the condition and the age of the building.

These figures are set for five years, and no rent can exceed the recommended rent by more than 10%.

One of the fears of interfering in rental markets is that measures like rent controls will disincentivise landlord investment in improvements and upgrades.

Under the Berlin rules, if work is carried out which costs more than a third of the value of the property, then the owner can increase rents beyond the 10% threshold. But renters in Berlin generally take properties unfurnished and are allowed to carry out their own smaller upgrades.

After a dip in rents when the rules came into place, they rose again and shot up by 5% during 2015.

Policing of the policy is retroactive - so rather than being enforced from the off - the onus is on tenants to take legal action against landlords who are charging beyond the legally permitted price.

Saving Stockholm

Flickr / edward stojakovic

In Left-leaning Sweden rents are heavily regulated - and the average tenant spends a quarter of their income on their rent.

They are negotiated each year through negotiations between the city's tenants association, and the Stockholm property agency association. Over ten years they increased by 19% - with rent inflation at 1.1% in 2014.

But this has lead to a massive shortage of rental space in the city and long waiting lists to obtain properties.

Young workers, immigrants, and students have felt the wrath of the squeezed market and The Guardian reports that bribes to obtain properties and illegal high-price sub-lets are common in a thriving rental black market.

Double Dutch

PA

Amsterdam is similar to Dublin in many ways, it is a city of some 1 million inhabitants with geographical factors constraining the area available to develop.

The Netherlands has three brackets of housing, social, public and private. Rent in the first two is tightly controlled.

Properties score points for their facilities and conditions - these criteria are used to set a maximum rent per square metre. Tenants can have their houses examined within six months of securing a property to evaluate whether they are being charged too much.

Shipping container housing

Again there's a catch - most properties do not fit into this bracket and are 'private.'

Amsterdam's rent market is similar to Dublin's - the city has turned to modern innovations including floating apartment complexes on water and student accommodation built out of repurposed shipping containers.

What's the moral of the story?

It's hard to stop the march of rising rents - particularly in a city like Dublin with a market that is maturing and facing an extreme supply squeeze.

Housing Minister Simon Covney said today there's no shortage of ambition from the government to help to fix this dysfunctional market and that it is fundamentally a supply shortage that is pushing up rents.

Even when more supply comes on market renters face and uphill battle to save mortgage deposits which satisfy the Central Bank's mortgage deposit rules while also paying sky-high rents.

Internationally there has been a shift in older 'millennial' attitudes towards home ownership, with a decrease in appetite to own property.

Ireland has traditionally been a nation with one of Europe's highest rates of home ownership per capita but the fallout of the popping of the Tiger bubble could be the shock which breaks that trend.

While older generations believed that rented money was wasted younger renters know that they are paying for the space to live in - and also avoiding the risks associated with owning a property.

This awareness is particularly acute following the cautionary tales of negative equity from the last boom and crash and could have a long-term impact on Irish people's attitudes towards home-ownership.