The latest figures on annual rent inflation reveal increases of 11.7 per cent, the highest increase on record according to daft.ie, following several years of rent inflation. In that regard, the government’s new bill limiting rent increases to 12 per cent over three years provides certainty to tenants. However, it is a further blow to those who are struggling to meet their payments.
For many people, rent consumes the majority of their wages, particularly for students who tend to work part-time jobs. Indeed, the only students covered by this bill are those extending current tenancies, which means incoming students and students leaving Halls will not be assured of the four per cent limit. Given that rent inflation has soared dramatically in recent years, far exceeding general inflation and rises in wages, a socially conscious approach would be to freeze rents at current levels. This would be a temporary measure to ease an immediate problem. A permanent solution thereafter is to tie rent to general inflation, which would align rent increases with wages.
Incoming students and students leaving Halls will not be assured of the four per cent limit
Neoliberal opponents will argue that governments shouldn’t interfere in rental markets. However, this would prevent further homelessness arising from rising rents and ease the current housing crisis. The clearly visible homelessness in Dublin stems from a shortage of available housing coupled with growing demand, giving landlords the leeway to push up rents as they please. In that sense, fair regulation of the housing market is required to ease the burden on tenants throughout the country. This would not only protect current tenants but also students coming to Trinity next year, for whom the cost of moving to Dublin is an obstacle. Indeed, Trinity would benefit from Dublin becoming more affordable. By reducing the economic burden of studying in Dublin, a greater talent pool of students will be able to come here, improving Trinity’s competitiveness.
Unfortunately, the vested interests of our parliamentarians do not bode well for such a progressive move. The Dáil’s registry of interests shows that over a quarter of our TDs are landlords, including the Minister for Housing, Simon Coveney. Their opposition to rent controls is thus unsurprising. Although they argue that market interference discourages investors, this is a time of record profitability for investors, who can afford to take a cut. Take for instance, Real Estate Investment Trusts (REITs) who have been buying up portfolios of Irish property, much of it from the National Assets Management Agency (NAMA). One such organisation, Green REIT, recorded a 137 per cent annual increase in Irish rental profits, at €24.8 million. Even if rent controls reduce their profit to assist struggling renters, their investment remains lucrative.
In addition to rent controls, an increase in the supply of social housing is necessary to balance the housing market. Given that the state owns vast portfolios of property through NAMA, a greater proportion of those properties must be designated for social housing and not simply sold for private investment. Moreover, undeveloped land sold to REITs should include that a percentage be developed as social housing, ensuring a social mix in future developments. However, supply alone is not the issue. There are over 259,000 vacant homes in Ireland, of which over 40,000 are in Dublin. By comparison, the official homelessness figure stands at 6,525. This leaves the government several options to increase the availability of rental accommodation.
In addition to rent controls, an increase in the supply of social housing is necessary to balance the housing market
Firstly, they could issue fixed-term development licences, meaning that developers who have land zoned for development would have to develop that land in a given timeframe before that licence expires. This would resolve the problem of developers sitting on land waiting for the value to rise. As for vacant properties, local authorities could buy a portion of these or indeed vacant properties could face an increased rate of property tax, as occurs in Scotland. These are just three measures that would increase the supply of accommodation.
In a world where we are appalled by North Korea’s treatment of its citizens, even North Korea guarantees housing for its people. That shows the primacy of shelter as a universal human need, the security of which is eroded by spiralling rents. Unfortunately, the government’s plan for a 12 per cent rent increase over three years makes people worse-off and doesn’t address supply. Rent controls tied to inflation, together with an incentive to develop land and use vacant properties, would increase the supply of housing and give people security over their rent costs. Rent controls don’t remove the right to profit, they affirm the right to housing.