Towards a sustainable rental sector in Ireland - Understanding the Key Challenges and Opportunities April 2021
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Towards a April 2021 sustainable rental sector in Ireland Understanding the Prepared by: Key Challenges and Opportunities
2 CLÚID HOUSING
IRISH INSTITUTIONAL PROPERTY (IIP)
Preparedone
Section by:
Introduction
KPMG Future Analytics
Prepared by:
Section one
Introduction
KPMG Future Analytics
CLÚID HOUSING
IRISH INSTITUTIONAL PROPERTY (IIP) 3
Towards a Table of
sustainable Contents
rental sector
in Ireland
Section one Introduction 01
Section two Supply and Demand 09
Section three Towards Affordable Renting 41
Section four Tenant Security 69
Section five State-sponsored /Social Housing 129
Section six Summary and Key Conclusions 143
i CLÚID HOUSING
IRISH INSTITUTIONAL PROPERTY (IIP)
Executive
Section
Summary one
Introduction
Section
Executive one
Introduction
Summary CLÚID HOUSING
IRISH INSTITUTIONAL PROPERTY (IIP) ii
Executive Summary
Clúid Housing and Irish
Institutional Property (IIP)
have commissioned KPMG
Future Analytics to undertake
research into the methods by
which the sustainability and
attractiveness of the rental sector
might be improved in Ireland.
Until the early 2000s, Ireland’s Indeed, the growth of the rental sector Housing was at the forefront of the
status as a ‘homeownership’ (both private rented and social housing) Programme for Government 2020. It
society was supported and in Ireland in recent years has been acknowledges that securing ‘housing
facilitated through a range of significant, with nearly a third of all for all’ is one of the greatest tasks
Government policies and economic households occupying this tenure in to be faced in Ireland. With regards
and financial tools including various 2016. It is clear that a major shift has to the rental sector, the Government
tenant purchase schemes. Arguably, occurred with regard to this tenure, specifically states that “improving the
these trends inhibited the for a variety of reasons, including standards, security and affordability
development of renting as a viable unaffordability of homeownership, for renters is a priority” Yet, in order
alternative tenure option and has continuous inward migration, increasing to tackle the critical issues facing
led to a perception of rental as student populations, increasing precarity the rental sector, detailed analysis is
a ‘stop-over’ tenure on the way in the labour market, and an increased required around the nuances between
to homeownership, a thinking
recognised and acknowledged ten
“...these trends inhibited the demand for residential choice and
flexibility. This overarching trend has
various housing supply channels and the
specific challenges and opportunities
years ago in the Department of the
Environment, Community and Local development of renting as a also been accompanied by a growing
shift towards (rented) apartment
facing these. This study aims to
examine these dynamics and shed
Government’s 2011 ‘Housing Policy
Statement’. Indeed, the Statement viable alternative tenure option living specifically. In 2016, 72% of all
apartments nationally were in the rental
light on where interventions are most
urgently required.
sought to address and change this
trajectory, further asserting that and has led to a perception of sector, despite making up just 12% of
overall housing stock. In contrast, just
rental as a ‘stop-over’ tenure on
“the development of a vibrant, 21% of all houses nationally were in the
viable private rented sector – as a rental sector. Yet, the extent to which
the way to homeownership...”
real alternative – is essential”. the rental sector has developed into
a vibrant and viable ‘alternative’ to
homeownership remains to be seen.
iii CLÚID HOUSING
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Executive Summary Executive Summary CLÚID HOUSING
IRISH INSTITUTIONAL PROPERTY (IIP) iv
Executive Summary > Executive Summary >
In seeking to explore recent trends, this The study also presents the findings Section 6 builds on Delivery of an appropriately Ensuring an effective, facilitative
study has undertaken a comprehensive of a series of stakeholder engagement this analysis and scaled Cost Rental model: role for AHBs in the roll out of the
review of academic and policy literature exercises (Section 4) that have been Cost Rental Programme:
details a number
In order to
on the evolution of the rental sector in undertaken to build a more detailed
Ireland and the driving forces shaping understanding of the views and
of key emerging For a large cohort of the population AHBs play a key role in addressing
recommendations.
structure
its current trajectory (See Section 2). experiences of key stakeholders within who do not qualify for social housing the challenges facing the housing
In doing so, it identifies and analyses the sector (including those currently In particular, the but also cannot qualify for a mortgage sector in Ireland and delivering
the key thematic challenges and
opportunities across the sector including
residing in each core housing tenure in
Ireland (the private rental sector, social
and guide the focus is on the
following:
(due to insufficient income), a long-term
and sustainable solution for affordable
social and affordable homes. As this
report highlights, Ireland’s largest
those connected to supply, affordability,
development viability, tenant security
housing and home ownership), landlords/
investors, relevant public officials and
research, the housing delivery is critical. While the
introduction of the Cost Rental model
providers of social housing are
classified in the general government
and provision of state supported / social representatives from national housing study places is beneficial in this respect, there is an sector so that borrowing for local
particular focus
housing. bodies. This strand of the research urgent need to scale this up and develop authority housing adds to the deficit
outlines, for example, preferred and a long-term (5-10 years) programme for and debt. The decision to re-classify
on the five major
In order to structure and guide the expected tenure arrangements for existing the roll out of cost rental at scale. AHBs in 2018 (from non-profit
research, the study places particular focus tenants (both private rented and social institutions serving households
on the five major cities of Ireland – Dublin,
Cork, Limerick, Galway and Waterford.
housing) within the sector. In doing so, it
also identifies a number of key inhibiting cities of Ireland Within the 2020 Programme for
Government, a stated objective is to
(NPISH), to the general government
sector) will negatively impact the
It also examines four further towns to
further contextualise the urban centred
factors to tenants viewing the rental
sector as an attractive and sustainable
– Dublin, Cork, “explore expanding Part V to encompass
affordable purchase and cost rental
efficacy and speed of a scaled-up
programme for Cost Rental if not
research and provide insight into how the
rental sector is performing across smaller
tenure for them in the longer term. In
addition, the research investigates the
Limerick, units”. This commitment represents a
positive, enabling development in terms
addressed. If not rectified, funding
for AHBs will continue to compete
settlements of varying size and functions views of landlords and investors around Galway and of scaling cost rental. However, it should in government budgets with other
Waterford.
(See Section 3). The towns targeted for the motivating and constraining influences not displace social housing delivery. high-profile projects.
this are Athlone, County Westmeath; for operating within the rental sector. Rather, it is recommended that such an
Castlebar, County Mayo; Letterkenny, It also sheds light on the diversification inclusion should be part of an overall The 2020 Programme for
County Donegal; and Dundalk, County of the sector in more recent years with expansion of the Part V requirement Government commits to “Work on a
Louth. These nine settlements are profiled growing institutional investment in a package of reforms with Approved
with a view to understanding more housing market which has historically been However, in order to ensure the viability Housing Bodies, to ensure that they
localised trends around tenure over time dominated by relatively small scale ‘buy- of such a move (and indeed the can access finance and move off the
and how these relate to the national and to-let’ investors. appropriate scaling of cost rental more balance sheet”. It is recommended
international ‘picture’. This also provides generally), further state subsidy for the that a clear action plan for restoring
a basis for more detailed assessment of Section 5 then provides a detailed construction of affordable and cost rental AHBs to their former classification
varying levels of rental affordability across assessment of the various themes analysed housing is required. be developed as a matter of priority.
the cities and towns. in the preceding sections. Specifically, it
examines issues surrounding supply and
affordability (as discussed throughout
Section 2 and Section 4) which continue
to hamper efforts to develop the rental
sector into a sustainable and attractive
tenure. This serves to further enhance
understanding of the mechanisms or
interventions required to address them.
v CLÚID HOUSING
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Executive Summary Executive Summary CLÚID HOUSING
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Executive Summary >
“...our “...there are further potential policy
population implications of these marked
is changing changes in the size, composition
rapidly, and occupancy of household.”
with average
households Addressing existing viability
becoming both challenges in the market:
smaller in size In addressing the previously
and older as elaborated requirement for larger
scale apartment development
an increasing (particularly in Ireland’s urban cores),
number of Recognising new and emerging
housing demand drivers:
identified viability challenges must
be urgently addressed. As analysis
people live of Ireland’s five major cities (Section
independently Connected to the above, emerging
demographic and societal trends
5) demonstrates, only a 1-bedroom
apartment unit in Dublin City shows
in their later must be thoroughly analysed in order a positive return on overall delivery
“There is a need Achieving a more certain “The differing years.” to understand patterns of changing
demand across the rental sector. As
cost. Investment with all to the other
units types and locations was shown
for longer term opportunities and
regulatory environment: many interviewees highlighted, many to be unviable from the developer’s
people are marrying and having perspective.
certainty around There is a need for longer term certainty challenges facing children later in life and indeed larger
changes to housing Ireland’s various
around changes to housing regulations. numbers of separation and divorce are As Section 5 has demonstrated,
As the stakeholder engagement being recorded. additional housing delivery costs
regulations” highlighted, current levels of uncertainty housing delivery including VAT, Local Authority
channels must be
(connected to the review of the RPZs, for However, there are further potential contributions and professional fees
example) increases overall perception policy implications of these marked account for approximately 40% of
of risk across the sector. It also serves acknowledge” Enhancing and facilitating the changes in the size, composition and the overall project delivery cost. This
Providing for appropriate incentivisation to hinder supply as many landlords and delivery of apartment stock; occupancy of households. Indeed, the in turn is contributing to increasing
for smaller scale landlords and mitigating investors will seek to ‘wait it out’ until societal changes related to some of costs of homeownership as well as the
against their exodus from the market: greater certainty is established. This report has also highlighted a these shifts (including, for example, delivery of new rental property.
relative dearth of apartments across higher rates of separation of divorce)
The differing opportunities and challenges As part of the review of the RPZ system Ireland’s housing stock in comparison mean that a new cohort of older To enhance overall viability from
facing Ireland’s various housing delivery in advance of December 2021, there with many of its European neighbours. people, in many cases who could be the perspective of development /
channels must be acknowledged and is opportunity for a more localised and As the NPF highlights, our population on a pension, may be increasingly developer costs, there are a number
addressed. Smaller scale landlords play nuanced evidence-based approach to the Undertaking a review of the Housing is changing rapidly, with average entering the rental sector (both private of potential measures which could
a crucial role within the rental sector and designations - or indeed a new approach Assistance Payment (HAP) Scheme; households becoming both smaller in and social) for the first time. Such a be implemented, and which require
any potential growing exodus from the to market protections entirely. However, size and older as an increasing number shift is important as there is an inherent further detailed analysis. For example,
market must be mitigated against. This is any regulatory changes in this regard HAP should be reviewed and reformed of people live independently in their assumption underlying Ireland’s a reduction or abatement in the
particularly important to ensure that supply must not further sharpen acute challenges to meet the needs of tenants and reflect later years. While apartments may not pension system that people will own standard / normal construction VAT
constraints outside of urban cores (or areas around supply – which in turn would the private rental market. Caps on HAP be suitable for all cohorts of society, their own homes and will have little rate (13.5%) for housing provided for
typically under served by institutional impact affordability. A key objective of payments were last set in 2016 and there is a pressing need to further to no housing costs when they retire. certain lower income cohorts could
investment) are not further sharpened. this review process must be to establish rents have continued to rise since. These deliver on apartments and smaller (1-2 However, if people do not own their be considered. An alleviation in the
Mechanisms through which smaller scale greater certainty around regulatory caps should be reviewed as a matter of bed) housing units. Moreover, further own homes or enter the rental sector extent of planning development
landlords can be further incentivised to changes for both landlords and tenants. A priority. In addition, there needs to be a research into addressing perceptions for the first time later in life, there are a contributions in areas of acute housing
remain or enter the market should be the long term (5 year or greater) programme wider range of social housing options to of apartment type dwellings as longer- variety of potential social and economic demand as well as regeneration areas
subject of further detailed research. or plan for this is required. reduce the over-reliance on the PRS. term homes is important in this regard. implications for other policy fields. should also be explored.
11 CLÚID HOUSING
CLÚID HOUSING
IRISH INSTITUTIONAL
IRISH INSTITUTIONAL PROPERTY (IIP) PROPERTY(IIP)
SECTION
SectionONE one
Introduction
Prepared by: KPMG-Future Analytics
SECTION
Section one
Introduction
ONE
Prepared by: KPMG-Future Analytics IRISH INSTITUTIONAL
CLÚID HOUSING
CLÚID HOUSING
PROPERTY(IIP)
IRISH INSTITUTIONAL PROPERTY (IIP) 22
SECTION ONE | INTRODUCTION
...as the
Government
noted in 2016,
a strong and
viable private
rental sector
should be a key
Section
component in
any healthy
One
housing
market...
3 CLÚID HOUSING
IRISH INSTITUTIONAL PROPERTY (IIP)
Section one
Introduction
Section one
Introduction
CLÚID HOUSING
IRISH INSTITUTIONAL PROPERTY (IIP) 4
SECTION ONE | INTRODUCTION 1.1 Research Aims and Objectives
Clúid Housing and Irish There were 8,200 people homeless in the
week of the 21st - 27th December 2020
The overarching aim of this research
is to assess and evaluate the methods
Institutional Property (IIP) across Ireland. This figure includes adults
and children. The number of homeless
by which the sustainability and
attractiveness of the rental sector
have commissioned KPMG families has increased by 232% since July
2014 when the monthly figures started
might be improved in Ireland. One of
the central objectives of the project is
Future Analytics to undertake being published. With ever-increasing
housing demand and very little new
to provide a robust evidence base to
aid in supporting future decisions in
research into the methods by supply to meet the requirements in
recent years, there has been extreme
relation to sustainability of the sector.
To achieve this, the following core
which the sustainability and pressure on the rental sector in Dublin
and other cities in Ireland, which has led
tasks have been defined:
attractiveness of the rental sector to high rents, pressure on the state to
escalate rent supplement rates, and many
A detailed review of the academic and
policy literature on the evolution of the
might be improved in Ireland. people who are unable to meet rising
rates, causing acute homelessness.
rental sector in Ireland;
Engagement with a range of key
These trends provide immense impetus stakeholders, including those currently
to enhance our understanding of the residing in each core housing tenure
The growth of the rental sector (both private rented and rental sector in Ireland and to assess the in Ireland (the private rental sector,
social housing) in Ireland in recent years has been significant, functionality behind the various themes social housing and home ownership),
with nearly a third of all households occupying this tenure. associated with this crucial faction of the landlords/investors, relevant public
broader housing market. Indeed, as the officials and representatives from
...research shows, It is clear that a major shift has occurred with regard to this Government noted in 2016, a strong and national housing bodies; and
tenure, for a variety of reasons, including unaffordability of
the proportion of viable private rental sector should be a
home-ownership, migration, increasing student populations, key component in any healthy housing Comprehensive analysis of a range of
households within increasing precarity in the labour market, and an increased market, providing a housing option to key data sources to provide a picture
the rental sector demand for residential choice and flexibility.
those who either cannot or choose not
to enter the owner-occupied market.
of the current ‘state of play’ within the
rental sector.
has continued to Indeed, an effective, affordable rental
The global financial crisis has At the same time, it is widely sector enables the housing market In order to structure and guide the
grow as the share also brought about a new era of recognised that Ireland has an acute to adapt to the changing needs of its research, the study is particularly
in home ownership macroprudential mortgage regulations shortage of social and affordable population and enhances labour mobility. focused on the five major cities of
such as loan-to-value and loan-to-income housing, both private and public; Improvement within the rental sector Ireland – Dublin, Cork, Galway, Limerick
has declined. In restrictions. Such measures safeguard with 61,880 households still waiting is of utmost importance for Clúid and and Waterford. It will also examine
2006, the national the financial system, but can lead to
credit access difficulties, in particular for
to be housed in social housing at the
end of 20202, albeit that this is down
IIP in ensuring a fairer, more inclusive,
and liveable Ireland. The fundamental
four further towns of varying size and
function in order to further contextualise
1. https://www.propertyindustry.ie/
Sectors/PII/PII.nsf/vPages/Publica-
homeownership first time buyers. Indeed, there is now from 91,600 in 2016. The four Dublin interrelationships between security of the urban centred research and provide tions~the-irish-equity-loan-29-06-2020/%-
24file/The+Irish+Equity+Loan+-
a significant cohort of the population Authorities (Dublin City, Dún Laoghaire- tenure, building standards, economic insight into how the rental sector is
rate was 74.6%, unable to purchase homes at prevailing Rathdown, Fingal and South Dublin) viability, predictable rent increases, performing across smaller settlements
June+2020+version+3+July+2020.pdf
2. Households currently living in local
in 2011 this had market prices as they cannot qualify account for 43.1% of this national total. enhanced management practices and of varying size and functions. The towns authority rented accommodation, approved
housing body accommodation, accommoda-
for a mortgage. A recent report by Considering the gravity of the situation regulations needs to be examined to targeted for this are Athlone, County
fallen to 69.7% and Property Industry Ireland estimated this during the COVID-19 pandemic along reflect on how the market and non- Westmeath; Castlebar, County Mayo;
tion provided under the Housing Assistance
Payment (HAP) scheme, accommodation
declined again to
provided under the Rental Accommodation
at 440,000 people1. with the resultant, severe economic market provision of housing may evolve. Letterkenny, County Donegal; and Scheme (RAS), accommodation provided
shock as 2020 progressed, it is likely Indeed, there remains considerable Dundalk, County Louth. under the Social Housing Capital Expendi-
67.6% in 2016 that social housing waiting lists will scope for further measures to increase ture Programme (SHCEP) schemes or any
household on a transfer list are not included
increase. Moreover, just 20,676 the attractiveness of this sector for both in this total number.
dwellings were completed in 2020, the existing and prospective tenants and 3. https://ww1.daft.ie/report/ronan-ly-
lowest level of supply since 20063. those seeking to invest in rental property. ons-2020q4-dafthouseprice?d_rd=1
5 CLÚID HOUSING
IRISH INSTITUTIONAL PROPERTY (IIP)
Section one
Introduction
Section one
Introduction
CLÚID HOUSING
IRISH INSTITUTIONAL PROPERTY (IIP) 6
The growth of the
rental sector in Ireland in
recent years has been
significant, with nearly
a third of all households
occupying this tenure.
7 CLÚID HOUSING
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Section one
Introduction
Section one
Introduction
CLÚID HOUSING
IRISH INSTITUTIONAL PROPERTY (IIP) 8
1.2 Research Design and Methodology 1.2 | Research Design and Methodology >
A mixed-methods research design,
accounts connected to Clúid Housing
and KPMG Future Analytics). In addition,
using both quantitative and qualitative links to the survey were circulated to
the relevant Local Authorities operating
methodologies, has been used to meet
the primary aim and objectives. Three
within the study areas. Clúid Housing
further targeted their own tenants The majority of
respondents were
with text and email correspondence
complementary data collection strategies informing them of the study.
were used and are detailed below. There was a total of 696 responses
to this survey. Further details of the
smaller scale landlords,
breakdown of these respondents is
outlined in Section 4 below. However, with 71% owning less Semi Structured Interviews
than 5 properties (and
it should be noted that in terms of In addition to the online surveys, the views
their current living arrangements, 61% of key stakeholder groups were sought.
Literature Review
29% of these owning
of respondents were renting from an Specifically, 32 in-depth interviews which
Approved Housing Body (AHB); 19% were conducted by the authors across five
A comprehensive review of academic and
were renting privately; 12% were owner broad stakeholder groups; those currently
one property)
policy literature on the evolution of the
occupiers (with a mortgage); 5% were residing in each core housing tenure in
rental sector in Ireland and the driving
owner occupiers (with no mortgage); Ireland’; Landlords and investors; Local
forces shaping its current trajectory has
while 2% were renting from a Local Authorities; National Housing Bodies and
been undertaken and is presented in
Authority and just over 1% was living Charities; and AHBs. These interviews,
Section 2. This seeks to examine the
with parents or other family. The large undertaken using a semi structured format,
current national legislative and policy
proportion of AHB respondents reflects sought to supplement the survey data
landscape for the rental sector, including
the targeted advertising of the survey (as described previously) and to further
best practices examples from a number
by Clúid, as a commissioning partner interrogate themes emerging through both
of international contexts. Specifically,
for the study. The study records a There was a total of 204 respondents in the literature review and the survey data. In
the themes identified for the in-depth
significantly lower proportion of Local this case. The majority of respondents this report the views of these interviewees
analysis of the rental sector are – (i)
Authority tenants in particular. were smaller scale landlords, with 71% are anonymised, with stakeholders
Literature
Supply and Demand – Ongoing Trends
and Implications of the COVID-19 Crisis; owning less than 5 properties (and 29% identified only by their ‘stakeholder group’.
The second survey, entitled of these owning one property). Moreover,
(ii) affordable renting; (iii) tenant security
and; (iv) state-supported /social housing.
‘Understanding the key motivations 70% of these indicated that their Study Limitations
and constraints facing landlords and rental properties are located in Dublin.
investors in Ireland’ was targeted at
Online Surveys Institutional landlords and investors were As indicated previously, the survey and
landlords and investors with rental further targeted though a series of semi interview exercises broadly captured the
Quantitative and qualitative data property located within the study areas. structured interviews (see Sections 1.2.3 views of five overarching stakeholder
was collected through the use of two This was also hosted via SurveyMonkey and 4.2). Of the survey participants, 75% groups. A limitation of this research is
online exploratory surveys which were and was similarly advertised via a indicated that their rental property was not the extent to which certain sub-groups
open between November 2020 and number of social media channels their sole means of income. Indeed, 22% are represented within the results. For
A comprehensive January 2021. The first survey, entitled (including LinkedIn and Twitter accounts further stated that their rental property example, certain groups (such as Local
‘Understanding key factors shaping connected to Clúid Housing and KPMG generates less than 10% of their overall Authority tenants) proved more difficult to
review of academic the tenure decisions of households in Future Analytics). In addition, links to annual income. reach and as such, are underrepresented
and policy literature Ireland’ was targeted at residents of the the survey were circulated to the Irish in the data. Moreover, it is not possible to
on the evolution nine aforementioned settlements – the Property Owners Association (IPOA) and As such, these survey results cannot determine whether those private rental
major five cities of Ireland (Dublin, Cork, Irish Institutional Property (IIP). and should not be interpreted as a sector tenants (captured through the
of the rental sector Galway, Limerick and Waterford) and four representative sample of all tenants, survey approach, specifically) are tenants
in Ireland and the additional towns (Athlone; Castlebar; homeowners and landlords across the of smaller scale or larger, institutional
driving forces shaping Letterkenny and Dundalk). This survey various study areas. Rather, these results landlords. As such, the results serve not
was hosted via SurveyMonkey and was provide useful ‘signposting’ of key themes to demonstrate representative views of all
its current trajectory advertised via a number of social media influencing the relative sustainability and stakeholders, but to highlight a number of
has been undertaken channels (including LinkedIn and Twitter attractiveness of the rental sector from the key thematic challenges and opportunities
perspective of these 900 participants. facing the sector.
9 CLÚID HOUSING
IRISH INSTITUTIONAL PROPERTY (IIP)
Section two
Ireland’s Evolving Rental Sector
Section two
Ireland’s Evolving Rental Sector
CLÚID HOUSING
IRISH INSTITUTIONAL PROPERTY (IIP) 10
SECTION TWO |
IRELAND’S EVOLVING RENTAL SECTOR:
Understanding the Legislative, Policy and Research Landscape
The early
1990s marked a
transformative
period for the
Section
Irish economy...
Two11 CLÚID HOUSING
IRISH INSTITUTIONAL PROPERTY (IIP)
Section two
Ireland’s Evolving Rental Sector
Section two
Ireland’s Evolving Rental Sector
CLÚID HOUSING
IRISH INSTITUTIONAL PROPERTY (IIP) 12
SECTION TWO |
IRELAND’S EVOLVING RENTAL SECTOR:
Understanding the Legislative, Policy and Research Landscape
In 2011, the Department of the of 65% in the UK and 39% in Sweden During the same period, the 1986 Urban Renewal Scheme between 1986 and 1996 Fuelled by this “credit bubble”,
Environment, Community and Local during the same year. However, by 2016 Renewal Act introduced a range of fiscal were owned by private landlords. increasing demand for housing created
Government’s ‘Housing Policy Statement’ (the last Census period), this picture incentives intended to encourage new a situation whereby, in 2006, the
provided the following broad assessment began to change, as the Irish figure private residential construction and It is important to note that the development construction sector, of which housing
of the historically ‘hierarchical’ structure fell to under 70% (the lowest rate since refurbishment in selected inner-city areas of this housing stock saw the first ever (mostly for home ownership) accounted
of Ireland’s housing sector; 1971), with some variation across the (and later included new designated major development of apartments by for over 25% of Ireland’s GDP (Sirr,
state Indeed, urban areas recorded a areas in the inner and outer city suburbs the private sector at scale in Ireland. 2013). The sector was also employing
“Housing in Ireland has been rate of 59.2% and rural areas recorded and 42 large and medium-sized towns). Prior to that apartments had been nearly 20% of the national workforce
characterised by a persistently a rate of 82.4% in the same year. This Until they were abolished in 2006, these developed sporadically (and reluctantly and had an output of over 88,000
hierarchical structure for several represents a transformative shift in incentives subsidised up to 40% of the due to the higher cost of construction and houses, many more than was needed
decades. This paradigm of housing has patterns of home ownership; rates which capital cost of the units. Landlords could maintenance) by city councils and in very (by 2012, this had decreased by over
private home ownership at the top, with were, at one time, among the highest in write off 100% of eligible construction high value locations by the private sector. 90% to 8,488 units).
supported home-ownership (tenant the developed world. or refurbishment costs against all of Even though the incentives were ended in
purchase of Local Authority housing, their income from rent (on any property), the mid 2000’s construction of apartments
affordable housing) next, self-financed In earlier decades, Irish government whereas owners-occupiers only write off continued on the back of the financial and
private rented accommodation further policy played a significant role 50% of the eligible costs of constructing real estate bubble facilitated by the ready
down, and State supported rental in promoting a high level of a new dwelling, or 100% of the costs availability of capital facilitated by joining
accommodation at the bottom (rent homeownership through the provision of of refurbishing an existing dwelling. the Euro, deregulation in the banking
supplement/social housing tenancies).” subsidies including local-authority loans The impact of this was that 60% of all sector, and a subsequent “credit bubble”.
and mortgage interest relief4. Tenant residential units subsidised by the Urban
This assessment is echoed in Rebuilding purchase, whereby council housing
The rental sector Ireland’s ‘Strategy for the Rental Sector’, tenants can purchase their dwellings
published in 2016, which specifically at a significant discount on market
in Ireland has describes the evolution of the Irish rental rates (since the 1930s in rural areas and Kitchin et al. (ibid) further argue that this period had six important impacts:
traditionally been sector; since the 1960s in urban areas), was
a particularly significant way by which
a residual sector... “The rental sector in Ireland has owner-occupation was encouraged in
traditionally been a residual sector in Ireland. Indeed, between 1990 and 2016,
which households who would prefer 43% of the 82,869 council houses built
either to own their own home privately during the same period were sold to
DEVELOPMENT DEBT BORROWED
or access permanent social housing must tenants (Norris and Hayden, 2018) The development of a large A large increase in household debt, A significant increase in bank
serve time on their way to their true construction boom, as developers especially relating to mortgage debt indebtedness, as banks borrowed on
tenure of choice. It has been perceived The early 1990s marked a transformative sought to produce a large quantity the international markets to lend to
as a stopover and not a destination of period for the Irish economy, with of housing supply developers
choice, but that traditional picture is a notable rise in key economic
changing.” indicators, such as GDP and numbers
in employment. As the economy grew,
Ireland’s traditional perceived status as a the population increased through
‘home ownership society’ (Norris, 2013) immigration and natural increase and
has been underpinned not only by an average household size shrank through
overwhelming dominance of this tenure alterations in family structure. This, in HOUSE PRICES LAND ZONING EXPANSION
over time, but also by the normalisation turn, led to an increasing demand for
of this situation in Irish official and media housing; along with a need to produce a A surge in house prices, An increase in land zoning for The rapid expansion of urban
discourse (Gurney, 1999). In 1991, more diverse stock that would cater for especially in prime locations new development and speculative sprawl and long-distance
4. http://files.nesc.ie/nesc_re-
Ireland’s rate of homeownership peaked different sized and types of household acquisitions of land, leading to a commuting
ports/en/140_Homeowner-
ship_and_Rental.pdf at almost 80%. This contrasts with rates (Kitchin et al., 2015) dramatic increase in prices13 CLÚID HOUSING
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Section twoone
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Section one two
Ireland’s Evolving Rental Sector
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Today, tenure varies significantly across Census 2016 also revealed significant
social groups in Ireland. The decline in changes within owner occupier
home ownership has been particularly categories (i.e. owned outright or with
marked among the younger population; a loan or mortgage). The total number
...the private rented sector expanded with these rates declining from over 68% of households with a mortgage was
from 11.2 to 18.6 per cent of households of 25-34-year olds in 1991, to 42% in 2011,
and to just 30% in 20165. Among 35-44-
535,675 in 2016, down by 8% when
compared with 2011 (583,148). In
and owner occupation fell from 77.2% year olds, homeownership rates fell from contrast, homes owned outright
over 82% in 1991 to less than 61% in 2016. increased by 8% (from 566,776 to
to 70.8% In 2014, the NESC reported that mortgage- 611,877). This was a reversal of trends
holding was declining, in particular, among seen in the 2002, 2006 and 2011
Byrne (2019) highlights a seventh important young people in the unskilled, semi-skilled censuses where owner occupiers
impact of this period, this being that as and skilled manual classes, and most with a loan were the largest tenure
the property bubble reached its peak in notably the former, a trend which continued category throughout the State.
the mid-2000s, growing homeownership into 2016 (as reported as part of the 2016 Notably, the proportion owning urban
gave way to a resurgence in the rental Census). This evidence demonstrates that homes through a mortgage or loan
sector. The most intense period of change a smaller overall proportion of Ireland’s has fallen sharply from almost 40% in
came between 2006 and 2011, when the younger population now enter home 2006 to 30% ten years later.
private rented sector expanded from 11.2 ownership than was the case in 1991.
to 18.6 per cent of households and owner
occupation fell from 77.2 per cent to 70.8
This decrease in owner occupation raises
important policy concerns and questions Among 35-44-year olds, The trends in Ireland’s tenure mix
pose some challenging questions that
homeownership rates fell
per cent (CSO, various years). By 2016, regarding the capacity of the younger Irish housing policy must now address.
rented accommodation had continued its population to purchase a home, with or These questions are also central to
upward trend with 497,111 households without a loan/mortgage, in the future (as the 2020 Programme for Government
from over 82% in 1991 to
renting, an increase of 4.7 % on 2011. further discussed in Section 5). and its mission to deliver ‘housing
for all’6. This literature review delves
into a number of key themes in order
less than 61% 2016.
to illustrate the core challenges and
highlight potential opportunities to
enhance the rental sector.
5. http://files.nesc.ie/nesc_reports/en/140_Homeownership_and_Rental.pdf
6. https://www.greenparty.ie/wp-content/uploads/2020/06/2020-06-15-ProgrammeforGovernment_Corrected-Final-Version.pdf15 CLÚID HOUSING
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2.1 Ireland’s Growing Rental Sector 2.1 Ireland’s Growing Rental Sector >
In 2016, the Irish Government
published its ‘Strategy for the “in 2016, almost 40 per cent of households in the (Amendment) Act 2019’ which,
among other measures, increased
Rental Sector’7. Within this report, rental sector were non-Irish nationals. This may notice periods required for a landlord
the Government outlined its
The typical understanding of the nature and reflect the influx of foreign direct investment to terminate a tenancy to longer
profile of
than six months and shorter than
scale of Ireland’s housing policy
challenge. Specifically, the then
(FDI) and multi-national companies in Ireland five years. The combination of
the private
Minister for Housing, Planning, over the past two decades” such developments has served to
renter is Community and Local Government,
strengthen the overall legislative
younger, described the rental sector in
landscape and increase security of
with a large
tenure for tenants.
Ireland as “broken”. A strong and
Over the past two decades, there
viable rental sector, the report
proportion have been a number of important As discussed previously, 18.2%
asserts, can “provide a housing
being non- option to meet rising demand
legislative and policy developments of all households in Ireland rent
Irish and it can promote flexibility and
related to the rental sector. Perhaps privately, while 9.5% rent from a
the most significant of these was the Local Authority or non-profit Body.
better alignment to a more mobile
‘Residential Tenancies Act’, introduced However, the revival of the rental
labour market, making it easier for
in 2004, which sought to modernise sector, it can be argued, has, to date,
individuals and families to pursue
and professionalise the sector. The Act largely been an urban phenomenon.
job opportunities or adapt their
was an important step in providing Indeed, Ireland’s five major cities
accommodation to changing family
a sound legislative underpinning for record substantially higher overall
circumstances”. Furthermore,
the mediation of landlord-tenant proportions of households within the
it can also “reduce the macro-
relationships, setting out their roles rental sector than the state average
economic risks of an over-reliance
and responsibilities in a way that (see Table 1 overleaf).
on home ownership, acting as a
had not been done before. It also
stabiliser to mitigate boom or bust
provided for the establishment of the The typical profile of the private
cycles”. The stated ambition of
Residential Tenancies Board (RTB) as renter is younger, with a large
the Strategy was to support the
a dispute resolution service, holder of proportion being non-Irish. Data from
transition to a different culture of
a national register of tenancies and the 2016 Census show that renting is
renting in Ireland, where landlords
provider of important rental market the majority tenure for those under 35
would let properties for the long-
data. This service was established in years of age. Furthermore, non-Irish
term and tenants would consider
Over the these rental properties as their
order to re-direct private rented sector nationals are proportionally more
past two long-term homes.
disputes away from the courts and to likely to be renting; in 2016, almost
reduce costs for applicants. The same 40 per cent of households in the
decades, there legislation also provided tenants, who rental sector were non-Irish nationals.
have been a AS DISCUSSED PREVIOUSLY
18.2%
had completed a six-month tenancy, This may reflect the influx of foreign
number of with security of tenure of up to four direct investment (FDI) and multi-
important years and limited rent reviews to one national companies in Ireland over
per year, although did not limit rent the past two decades. Many of these
legislative increases. employees, who are, in the main, a
and policy ‘creative class’ of knowledge workers,
developments Thereafter, the ‘Planning and often have no choice but to rent and
OF ALL HOUSEHOLDS IN IRELAND
related to the RENT PRIVATELY, WHILE
Development (Housing) and Residential also prefer to rent (ibid), due to the
9.5%
Tenancies Act 2016’ introduced nature of their work contracts and
rental sector several amendments to this legislation, their own national and cultural norms.
including extending Part 4 tenancies As the Irish State continues to rely
(after 24 December 2016) from on FDI, notwithstanding the impacts
four years to six years for tenancies of the current COVID-19 pandemic,
commenced after that point. The demand within the private rented
2016 legislation also introduced ‘Rent sector should continue into the future,
7. https://www.housing.gov. RENT FROM A LOCAL AUTHORITY Pressure Zones’ (RPZs). Additional particularly in larger cities like Dublin.
ie/sites/default/files/publica- OR NON-PROFIT BODY changes to the 2004 legislation were
tions/files/strategy_for_the_
rental_sector_final.pdf
made via the ‘Residential Tenancies17 CLÚID HOUSING
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2.1 Ireland’s Growing Rental Sector >
Moreover, in 2016, over 50% of 25-34- A notable example of this was
“Between 2011-2016, the largest increase
year olds across the state were in private the introduction of the ‘Housing
rented accommodation, up from 15% Assistance Payment’ (HAP) in 2014 was in those renting from a Local Authority,
in 1991 and 44% in 2011, as the cost
to purchase housing grew significantly
(which has been made available
nationally since March 2017). HAP
up 11% from approximately 129,000 in 2011
relative to wages. The proportion of the is a form of social housing support, to 143,000 in 2016.”
35-44-year age group renting from a whereby the Local Authority pays
private landlord increased from 5% in rent to a private landlord on behalf
1991 to 24% in 2016. In addition to the of those households assessed as
changing housing tenure of the younger having a social housing need (further
population, this period has also seen explored in Section 2.5). Prior to
an increasing number of the younger 2014, rent supplement was the
population continuing to live at home only financial support available to
with their parents. In 2016, 458,874 households with a social housing
adults were living at home, increasing need who were renting directly from
by 19,396 on 2011. a landlord in the PRS.
Between 2011-2016, the largest increase The landscape of the private rented
was in those renting from a Local sector has thus changed considerably
Authority, up 11% from approximately in Ireland in a number of respects:
129,000 in 2011 to 143,000 in 2016. in terms of who is renting, and also
The number of households renting in the blurring of lines between the
either within the Private Rental Sector private and public rented sectors
(PRS) or within AHB housing rose by 2% due to an increased reliance on the
from approximately 320,000 in 2011, to private rented sector to house those
326,000 in 2016. Nevertheless, the role who would traditionally have been
of local authorities in the provision of housed by their Local Authority. The
housing has changed significantly over following sections elaborate on this
the last two decades. Their traditional shift, drawing on both national and
role as the main providers of rented international literature to highlight
housing for low-income households has lessons applicable to the Irish
been reduced as AHBs have become context. Moreover, this analysis also
increasingly important providers of focuses on the potential impact of
both mainstream and special needs the current COVID-19 pandemic on
social housing. In addition, the state has the housing sector.
increased its relative spend on a variety
of subsidisation schemes, enabling
low-income households to access
accommodation in the private rented
sector (see Section 5)
Table 2.1: Household tenure across Ireland’s cities, 2016
State Dublin Cork Galway Limerick Waterford
Social Housing (%) 9.4 13.2 17.7 11.6 9.2 13.2
Rented (privately) (%) 18.2 29.7 26.3 35.5 18.0 15.7
Owner Occupied (All) (%) 67.6 49.7 50.3 46.7 67.9 66.819 CLÚID HOUSING
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2.2 Supply and Demand - Ongoing Trends and Implications of the COVID-19 Crisis 2.2 Supply and Demand - Ongoing Trends and Implications of the COVID-19 Crisis >
“The Airbnb phenomenon is part of the Since July 2019, holiday (or short
-term letting) hosts in Ireland
so-called ‘sharing economy’, and provides are subject to regulations of
an online accommodation platform the ‘Residential and Tenancies
...trends have
(Amendment) Act 2019’. These
connecting tourists and local homeowners.” regulations require hosts listing a
translated into
room or rooms in the place where they
normally reside, otherwise known as a
‘principal primary residence’ (PPR), or
increases in house
an entire PPR, within a RPZ, to register
The Airbnb phenomenon is part of with the relevant Local Authority and
the so-called ‘sharing economy’, and fulfil specific obligations. The reforms
prices, especially
provides an online accommodation underpinned by the 2019 Act are
platform connecting tourists and local primarily designed to mitigate the
homeowners. Prior to the COVID-19 impact of the use of residential homes
in the latter half
crisis, there were reportedly more for short-term tourism letting on the
than 5,000 homes in Dublin available private rental market in areas of acute
of 2020
to tourists via Airbnb alone9. In 2017, housing need.
Airbnb published a report entitled
‘Home-Sharing: The Positive Impacts In Dublin the sudden increase of
on Dublin’. According to this report, supply in the rental market has
Airbnb users generated nearly €275 impacted rents. In all but two of
million for Dublin’s economy in 2016, Dublin’s 25 rental markets, according
as 6100 Airbnb hosts welcomed to data from Daft, rents were lower in
AIRBNB USERS GENERATED NEARLY
275m
403,500 visitors to Dublin for an the final quarter of 2020 than a year
average of 3.2 nights (Airbnb, 2017). previously – by an average of 3.3%.
According to the Daft report, there
€
However, there has also been are two ways of interpreting these
The 2016 Strategy for the Rental As noted in a variety of publications by years (Lyons, 2020). These trends have increasing commentary regarding trends. The first is a fall in demand
Sector characterises the difficulties the ESRI and elsewhere (see McQuinn, translated into increases in house prices, the potential for platforms like coinciding with rising unemployment.
facing the Irish rental sector as follows: 2017, for example), the Irish residential especially in the latter half of 2020. In Airbnb to displace scarce permanent The second is an increase in supply
market has experienced unprecedented Dublin, for example, where there were FOR DUBLIN’S ECONOMY IN 2016 accommodation in high-demand – as might happen where significant
“Severe supply pressures, a rising cost volatility over the past 25 years. A supply 20% fewer homes available to buy on AS 6,100 AIRBNB HOSTS WELCOMED
403k+
cities and to exacerbate affordability numbers of short-term lettings move
base for providers, a more complex gap continues to be a long-standing the 1st of December 2020 compared pressures for low-income groups. over to the long term rental market.
regulatory regime for landlords, feature of the Irish housing system and to the same date in 2019, average list The potentially high financial returns
rising rents, concerns in relation to these challenges have been further prices rose by 7.2% year-on-year. In of offering a home or a room on Outside of Dublin, however, the
security of tenure, examples of poor sharpened in the context of the current Connacht-Ulster, where supply is down Airbnb may encourage homeowners picture is vastly different. Compared
accommodation standards and an COVID-19 pandemic. Data from Daft.ie8 30%, prices rose by 8.8%. to move their property from private to the same period a year earlier, the
uncertain investment environment indicates by the second quarter of 2020, residential long-term accommodation number of homes available to rent
have proven to be impediments to the number of homes put up for sale was More recent availability in the rental VISITORS TO DUBLIN FOR AN to short-term letting to tourists. outside of Dublin fell by some 43%. By
delivering on a strong and modern down 50%. While things improved in the market is hugely varied across the state. AVERAGE OF 3.2 NIGHTS Indeed, in November 2020, Dublin the final quarter of 2020, rents were
rental sector that offers real choice third quarter of the year, as the economy In Dublin, availability has surged, with City Council reported that, since that 5.4% higher than the previous year. In
for individuals and households while reopened, the volume of listings in a 64% increase year on year and the start of the pandemic, up to 70% of Munster, for example, by the end of
contributing to economic growth.” any given month never even matched highest number of properties coming suspected illegal holiday lets in Dublin 2020, rents were 32% higher than the
the same month in 2019. For the year on stream since 2012. Such a shift has city returned to the full-time rental previous Celtic Tiger peak in 2008.
as a whole, just 49,000 homes were been attributed to the impact of the market.10 In Dublin, according to Rents across Ireland’s four other cities
advertised - the lowest total in over five platforms, including Airbnb, on the figures from Daft.ie, availability was are also rising, from 3.9% in Limerick
State’s housing market and the fact that almost double in August what it was a to 5.6% in Waterford.
many international workers relocated to year previous, with nearly 3,000 homes
their home country during the COVID on the rental market, compared to
8. https://ww1.daft.ie/report/2020-Q4-houseprice-daftreport.pdf?d_rd=1
19 pandemic facilitated by an across the fewer than 1,600 in August 201911.
9. https://www.irishtimes.com/business/economy/pandemic-reveals-impact-of-airbnb-on-irish-rental-market-1.4335784 board “work from home” policy.
10. https://www.irishtimes.com/news/ireland/irish-news/majority-of-dublin-s-airbnb-style-lets-return-to-long-term-market-1.4422915?_
ga=2.197526575.1208614445.1608028434-990189008.1608028434
11. https://ww1.daft.ie/report/2020-july-housingmarket-daftreport.pdf?d_rd=121 CLÚID HOUSING
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2.2 Supply and Demand - Ongoing Trends and Implications of the COVID-19 Crisis > 2.2 Supply and Demand - Ongoing Trends and Implications of the COVID-19 Crisis >
At the same time, the NESC highlights A consequence of these recent Finally, another significant impact A medium to longer term alteration of the Beyond the impacts of COVID-19, other
the impact of the pandemic in stimulating Government supports may be a major of the pandemic and related public composition of demand in Ireland would demographic factors are also influencing
greater willingness by policy-makers increase in State provision of longer-term health measures has been a substantial have serious implications for planning the composition of demand in Ireland.
to intervene in the housing market, as rental housing, which can be targeted increase in the number of people policy, which currently emphasises the An ageing population and increasing net
evidenced by the prompt introduction of towards providing affordable solutions working from home. While the need for compact growth (whereby inward migration led to a decline of the “Beyond the impacts
legislation to temporarily ban evictions
and rent increases, and the acquisition of
for lower income households (ESRI, 2020)
However, another concern, from the supply
permanency of this shift to remote
working remains to be seen, many
growth is directed to existing urban
areas) and higher density development.
average household size in Ireland from
2.7 in 2016 to 2.6 in 2018. In Dublin, the
of COVID-19, other
additional accommodation for homeless side in the rental market, is the extent to companies have already signalled Nevertheless, as Lyons (2020) points out, average household size dropped by 0.1 demographic factors
households (enacted through the which tenant protection mechanisms and that employees will be given greater urban centres not only offer employment to 2.6 in 2018. However, as occurred after
‘Emergency Measures in the Public Interest price cap limitations may, over time, feed opportunities to work from home opportunities, but also other benefits, the 2008 financial crisis, if unemployment are also influencing
(COVID-19) Act 2020’). Moreover, as
shown in Beirne et al. (2020) the immediate
negatively into market supply. While these
protections were wholly warranted, the
going forward. This may, in the medium
to longer term, reduce the need for
including retail, leisure and other
amenities, which people value. Thus, the
rises as a result of the pandemic and
adult children remain in the family home,
the composition of
impact on incomes during this crisis has ESRI (2020) notes, the extent to which these employees to live in close proximity longer-term implications of these trends delaying the formation of independent demand in Ireland”
been largely offset by the introduction of measures add uncertainty and price risk for to city centres, potentially impacting for the housing market are still unclear. households, this trend may be reversed.
extraordinary fiscal measures in the form investors remains open. The impact of the demand for housing in urban areas,
of the ‘Pandemic Unemployment Payment’ risk-return calculations of both household where house prices and rents are
(PUP) and the ‘Temporary COVID-19 Wage and institutional investors may lead to lower currently highest.
Subsidy Scheme’ (TWSS). As a result, the rental supply from private sources going
direct impact of the labour market shock on forward. If these impacts delay project
housing demand may, in the short-term, be starts now, this could intensify supply
muted, according to the ESRI (2020). challenges in the future.You can also read
