The current cap on rent increases is fuelling Ireland’s rental crisis, according to a spokesperson for Ireland’s Institutional landlords.
It emerged yesterday that rent inflation is now at a 15-year high – with average rents now 12.6% higher than they were this time last year.
Meanwhile, the supply of rental properties has “collapsed” as smaller landlords sell up.
This morning meanwhile, one of Ireland’s largest private landlords posted profits of €42m alongside revenue growth of almost 7%.
The six-month report published by Irish Residential Properties REIT claimed that 99.3% of its properties were occupied.
On Breakfast Business this morning, Pat Farrell, CEO of the Irish Institutional Property group claimed caps on rent increases are actually part of the problem rather than the solution.
“What is, in my mind, accelerating this exodus which we have seen in the reports yesterday is the 2% cap on rent,” he said.
“People may say, well the 2% cap is providing relief for tenants - and it may be in the short term - but the reality is it is storing up much bigger problems for tenants in the future.
“With a 2% cap in an environment where headline inflation is running at 9.1%, again, a first-year economic student will tell you that is going to damage supply even further.
“Nobody is going to invest … landlords are not going to stay in the market if their costs are going up by multiples of what they’re allowed to actually collect in rent.”
Yesterday’s Daft report, which examines advertised rent asking prices, found that the average rent nationally is now €1,618 per month.
South County Dublin is the most expensive place to rent in the country, with average rents of €2,387. Leitrim is the cheapest place in the country.
Mr Farrell said supply remains the major issue when it comes to Irish housing – and warned that institutional investors are now the only sector building rental properties.
He said the Government needs to introduce tax breaks for landlords to keep smaller and medium sized investors in the market.
“While institutional landlords are generating new supply, they’re not going to be able to address all of the requirements, particularly in more rural areas where institutional investors are not likely to invest in rental accommodation,” he said.
“Definitely something is needed in policy terms to address that issue of smaller landlords leaving the market.”
Mr Farrell criticised opposition parties’ housing polices insisting: “I haven’t seen any solutions put forward that will make any meaningful contribution to date to the actual problem.”
“For example, one of the proposals that has been put forward by some of the opposition parties is for a rent freeze for a couple of years and again, based on what I’ve already said, this would just further exacerbate the problem,” he said.
“We have already seen smaller landlords exiting and a rent freeze will just accelerate that even further.”
Currently, landlords are only permitted to increase rent in line with inflation or by 2% per year - whichever is lower.
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