Irish Property Market chat II - *read mod note post #1 before posting*

Two thirds are in employment.

72% of tenants rent a house (40% rent a semi-detached house).

81% are renting for more than a year,

40% for 5 or more years.

On average rent equals 36% of the renter’s after tax income (41% in Great Dublin Area).

57% of tenants were born in the Republic of Ireland, 24% in the EU or UK.

The average tenant has been renting for 5 years.

53% of tenants have been renting for 3 or less years (See table one).

The average tenant has been renting in their current property for 3.8 years.

67% of tenants have been renting in their current property for 3 or less years.

34% of renters expect to be owner occupiers in five years’ time.

50% expect to be owner occupiers in ten years’ time.

36% expect to still be renting in ten years’ time.

9% are currently on a waiting list for a local authority or Approved Housing Body.

43% of renters intending to buy expect it would reduce their monthly housing costs.

31% expect housing costs would remain the same if they bought.

7% think their monthly housing costs would go up if they bought.

There is an upward trend in rents with 34% of properties receiving higher rents now than the initial rate when the tenancy began, while 42% of properties have seen rent set higher when last let to a new tenant. The main motivation for increasing rent (for more than half, 56%, of those with two properties) is to ensure that rents are in-line with market rents in the local area. However, one in four small landlords set below market rents to keep them at a level their tenants can afford to pay (as well as to hold onto tenants they are happy with). Indeed, one in five renters in the tenants survey say their rent is lower than similar properties in the area they live in. Also, 27% of small landlords have only ever had one tenancy/the same tenant in their rental properties. 

The majority – (57%) – of small landlords see their rental properties as long term investments for rental income, while 40% also consider their property to be an investment for long term capital growth. That said, some 44% of small landlords say their pre-tax income is the same or less than their property related costs (including any mortgage payments, maintenance costs, agent fees etc.). Similar to larger landlords, smaller landlords are weighing up their options when it comes to the future. In total, 10% think it likely they will sell their rental properties in the next five years, the majority (61%) think it unlikely. For most of those expecting to sell, the main motivation is that they no longer wish to be a landlord (for 45% of those intending to exit), or it simply isn’t profitable anymore (30%). On the other hand, small landlords are highly unlikely to buy another property to let out – just 2% think it likely in the next five years. 

Some large landlords also said that the presence of RPZ rules has put a floor underneath the rental market and argue that rents might have fallen further in the pandemic if the rules had been different. For those with older properties (or conversions) in their portfolio, there is an argument that RPZs have disincentivised investment in refurbishment. Given that all come from a professional services background and are dealing with regulated entities for funding, they are comfortable dealing with the regulatory environment. But they do believe that the regulatory environment is driving smaller landlords from the market and in a sense, this is part of the opportunity that they are seeking to capitalise on. 

The pandemic has had an impact on large landlords. It has slowed down activity, particularly because many are engaged in new developments. It has had a particular impact within the canals in Dublin. It has also changed the viewing of properties, with viewing as the next to final stage rather than earlier. While some saw departures from tenancies, the scale and extent of this appeared to be relatively limited. They did have some (but not many) requests for rent reductions, but they appear to be far more limited than might have been anticipated at the start of the crisis. The research suggests that the pandemic has led to a softening of the market, in rent levels and demand terms. Given the absence of financial pressures, many large landlords suggested a willingness to live with higher vacancy levels for the moment to see how the market responds, rather than let tenancies at a lower rent, with long term consequences under RPZ rules.

According to the large landlords interviewed for the research, the main challenges in the future will be:

Some do hope that others might exit the marketplace, creating an opportunity for them to acquire comparable assets to extend their business scale. There are few other ways to get a 4% to 6% annual return.