A new report says that 30% of renters give their inability to get a mortgage as a reason for renting, a significant increase from 20% in 2019/20 – while, on average, tenants spent 32.44% of their monthly net income on rent in 2022/23, though this percentage is higher in Dublin, for those renting an apartment and for those renting for less than one year.
The median rent for a property, both in and outside Dublin, continued on an upward trend – increasing by 30% from €1,000 in 2019/20 to €1,300 in 2022/2023.
The Residential Tenancies Board (RTB) report also found that there is a strong sense of insecurity of tenure and this is compounded by the lack of availability of alternative properties. Renters believe that the emergence of more secure tenure would make a big difference.
“You have no security – especially with the way the market is. Everyone is just dreading getting a notice of termination,” one renter told Amárach who carried out research on behalf of the RTB.
The 2022/23 results indicate that amongst those tenants who are on rental assistance, the proportion receiving the Housing Assistance Payment (HAP) has increased from 58% in 2019/20 to 83%.
In addition, the proportion of tenants on rental assistance who are having to make a top-up payment to their landlord has increased from 66% in 2019/20 to 88%. The average top-up payment has increased from €255.88 per month in 2019/20 to €284.38 in 2022/23.
TENANTS
With just one or two exceptions amongst non-Irish nationals, all those interviewed would prefer to be property owners, the RTB research found.
The exceptions are those who have not fully decided as to whether they are staying or not. The availability of affordable property to rent will be one factor which contributes to the stay or go decision.
Tenants would like to buy but cannot afford to, the report said. “The barriers to affordability mentioned include lack of income, the cost of rent not being taken into account in mortgage calculations, the inability to afford a house on a single salary, the cost of living and higher rental costs in all parts of the country.”
“Those in middle age are particularly aware of their vulnerability as tenants as they grow older. Some aspire to buy in the short to medium term, but they would be a small minority. The majority do not see buying as a realistic option in the short, medium or long term.”
Since the 2008 financial crash, banks impose an upper limit on the amount homebuyers can borrow of 3.5 times their income. That rose last year to four times income, but only for first-time buyers.
LANDLORDS
The Residential Tenancies Board report found that changes in the age profile of small landlords landlords indicate a transition to an older cohort – saying that the proportion of small landlords aged 65 and above more than doubled from 10% in 2020 to 23% in 2022.
“An ageing landlord population may have a material effect on the rental market depending on what a landlord is hoping to achieve with a rental property. Older landlords are more likely to sell their property as they near retirement age,” the RTB said.
Small landlords expecting to exit the market told researchers that one significant concern was their belief that taxation is too high on rental income, with a jump to 45% holding that view in 2022 in contrast to 25% in 2020.
When compared to small landlords, medium landlords (those who own between 3 and 20 properties) are more likely to sell within the next five years (37% vs 27%), the research found.
None of the larger medium landlords (21-99 properties) who participated in the in-depth interviews had purchased any property recently and none had plans to expand their portfolio. Many of these landlords are older and have plans to retire in the next 5-10 years, the report said.
In contrast, it found that large scale landlords – defined as those landlords that let 100 or more residential properties – are “ambitious and growing”, although some are reluctant to increase portfolio size as the current market is perceived to be too expensive at prevailing prices and too competitive, the RTB said.
“Demand continues to exceed supply across all property types and will continue to do so for the foreseeable future,” the RTB concluded. “In order to meet demand and government targets, housing completions need to continue to grow.”
They said that greater use needed to be made of existing supply by bringing vacant or derelict properties back into use via tax incentives to refurbish them.