Last Sunday, an article in The Sunday Business Post by Jack Horgan-Jones reported that 82% of Dublin rental properties had failed inspections last year – with Dun Laoghaire-Rathdown reporting a staggering failure rate of 97%. These are significant statistics for a number of reasons.
The Irish property experience has traditionally been skewed towards people owning a house or apartment. In the same way, renting in this country has generally been perceived as something to do as a student, and for a few years in your 20s before you have money saved up for a deposit to buy a property. Recently however, renting has become a much more acceptable way of living, but despite this there are no real regulations in place to develop and maintain a sustainable, healthy rental market.
After the crash, we have seen a number of real estate investment trusts (REITs) enter the Irish market. Essentially, these are huge property investment trusts listed on our stock exchange. Since their emergence in Ireland, they have, among other things, been building or finishing out rental properties which will fully comply with our regulations, which in itself is not an issue.
One of the issues is that, for the most part, rental property in Ireland largely comprises aging buildings (or part thereof) that can be up to a century old. In a large number of cases, landlords who own these properties are diligent and understanding of their tenants’ needs – decorating, updating and investing in the property as needed. However, certain issues simply cannot be resolved without huge investment e.g. ventilation and condensation issues.
Take an anecdotal example, we have seen first-hand a situation whereby a landlord of a recently built property (within the last twenty years) has supplied a de-humidifier to a tenant in a building that needed it. The tenant diligently and faithfully used the equipment, and there was no issue with condensation and damp. Afterwards, however, a new tenant moved in, didn’t use the equipment frequently, and it failed an inspection. Now, is it fair to expect the landlord to take all the blame for that, and, crucially, pay thousands of euro to ensure the property is up to date?
Now, let’s go back to the key statistic in Horgan-Jones’s article. If over 80% of rental properties in Dublin city aren’t up to the requisite standards, what exactly is the government going to do about it? Supply is already a critical problem in the city, with landlords selling up in their droves because of poorly drafted legislation.
What will happen if these same landlords are told to pay thousands of euro on refurbishments that have been thought up by a group of civil servants who may not have any real knowledge of the market?
We have a big problem here, whereby landlords are expected to bear the brunt of all costs to meet regulations without any kind of assistance from the government.
It goes without saying that essential fire and key structural regulations should be in place, and be adhered to by all landlords and homeowners. Indeed, we argued as much last time we published a blog post. However, the heady combination of overly restrictive regulations and an uncomfortable environment for landlords will only add to the problem, and further exacerbate the problems in a rental market that’s already hurting badly.
The government needs to figure out where its priorities lie in the coming months and years. Yes, REITs and other investors can help the rental market, but there are negative consequences to skewing regulations in favour of ultra-wealthy groups who have no qualms with building development blocks from scratch, and forgetting about the thousands of landlords who are operating in an environment that rarely paid such heed to these regulations until a few years ago.
If regulations are not loosened with a degree of common sense, and tax reliefs not given to landlords who want to help future-proof their properties, then the pain will only get worse.