It is an objective statement of fact that for most of the last decade Ireland has pursued a dramatically left wing approach to housing. Our housing market is one of the most regulated in the world: Landlords are taxed on rents at 52%, or more. We introduced rent pressure zones which froze rents, and regulated rent increases. We dramatically extended tenancy notice periods, making it harder to end tenancies – if somebody rents your property for a year in Ireland, they must now get a minimum of 180days (six months) notice before the tenancy is ended. Virtually the whole country is now covered in “rent pressure zones” – areas where rent can only be increased at the rate of inflation. Virtually the entire of the regulatory scheme for renting is designed to favour tenants rights over landlords, who are now amongst the most regulated people in Ireland.
This has had predictable effects: Landlords have fled the market. They are selling up at an unprecedented rate, or finding other uses for their accommodation. There has been an explosion, meanwhile, in institutional landlords: Big companies and pension funds buying up properties, because unlike the small landlord, they have their own legal offices and in house accountants and the funds to constantly refurbish properties to bring them up to regulatory standard. Ireland’s left wing approach to rental regulation has been – again, predictably – an absolute bonanza for this biggest capitalist institutions.
Government must take the blame for this. It is Government, after all, which passed all these obscene and stupid laws. But the opposition – mainly the noisy left – are the ones who campaigned on it, and for it, and who want to go ever further down the road to disaster. As of today, there are about 700 homes left available for rent in the entire country. About 22 in every single county.
That this lesson has to be re-learned in Ireland is a tremendous tragedy. Rent controls and their effects have never been a secret: In every country, and every city, where they have ever been introduced, the impact has been disastrous. They always lead to higher rents, and fewer properties available.
How they do this should be obvious to anybody who thinks about it for five minutes, or who has the basic capacity for empathy to put themselves in the shoes of a landlord. Renting any property is a risk: That is why rent is charged. When a landlord signs a tenancy agreement, he or she is almost always signing a risk agreement: Their property will suffer wear and tear. The tenants may default on the rent. They may host wild parties. They may, for all the landlord knows, run a drug dealership out of his property. If he tries to remove them, they may sue. Once you let people in, it may be years before you can get them out. This country has no shortage of stories of landlords who have gone years without receiving a penny – but the political system shows them no sympathy.
In the current economic situation, to use just one example, landlords who have mortgages on their properties are at particular risk from rent caps: Inflation is high, which means interest rates will rise over time. For those with a variable or tracker mortgage, their repayments will increase, too – but the rent is frozen, and every cent of it is taxed at the marginal rate. In a normal market situation, rents would rise to cover the cost of extra interest rates – this is the point, after all, of increasing the interest rates. But in a rent cap situation, the landlord is forced to eat the loss. Why wouldn’t they sell, instead?
Of course, in Ireland, like many other problems, the disaster that is Government policy is being neatly obscured by other crises: No doubt, many people are more willing to blame things like the influx of Ukrainian refugees for the shortage of housing. And that does play a role – but it doesn’t make our policy problems any more of a disaster. We had a housing crisis mounting in Ireland long before President Putin told his generals to march on Kiev.
What we have, as a result of this policy, is a mounting wealth crisis. It is the middle class that is paying: Middle class landlords are those being driven out of the market. This is a crisis for renters, too: Who do you suppose is more likely to be a reasonable and flexible landlord – the small landlord for whom the property is their pension, and who really values a good tenant, or the mega financial institution that sees you as just another customer?
I try rarely to write paragraphs starting with “if I was Minister tomorrow”, because I shall never be, but: if I was Minister tomorrow, I would abolish all of this. The rent caps. The tenancy lengths (six weeks is more than enough notice). The marginal tax rate (rent should be taxed for small landlords the way it is for big ones – as a corporate profit). I would abolish the rental tenancies board, which has done nothing since it was introduced except to drive landlords from the market. If there are disputes between landlords and tenants, they should be resolved the way other disputes are – in the courts.
Property must be a worthwhile investment. People who buy and renovate properties as an investment should be able to make money from them. It should not be taboo to note that buying a second property should be something people can and should aspire to as a place to put their wealth, and make money from it. This is what we want in a society, no? People investing their money in a way that benefits others as well as themselves?
Rather than enticing people into providing rental accommodation, we have hounded them from the marketplace. That this was always going to be a policy disaster is not hindsight – plenty of people, including this writer, warned about it at the time. We were not listened to, but Richard Boyd Barrett was. A generation is paying the price for that idiocy.
UPDATE: A reader writes:
The tenancy situation is actually much worse than you mention, from a legal perspective.
Once you’re in a property for 6 months now, you can’t be evicted unless the landlord is 1) selling 2) refurbishing 3) changing use to commercial or something 4) moving in a family member.
Outside of those 4 circumstances, you’re entitled to possession of a property literally forever.
It used to be the case (from circa 2000 until 2020/21) that 12 months in possession of a property entitled you to a further 5 years before a landlord could move you on. So at least the end was reasonably in sight for a landlord.
Cutting the 12 months to 6 months and extending the 6 year tenancies to forever was completely insane, and practically pushed landlords into selling up – particularly at a time of high prices.
To your list of “what I’d do if I was dictator” ideas, I’d add – slash the HAP payment (fka. rent allowance). It creates an artificial floor for the rental market and should be cut 20% per year over 5 years.
I like your idea of 6 week termination periods – but I don’t know how feasible that would be at the moment! With such a short supply of alternatives at the moment it could lead to total chaos. Which is maybe what is needed.