THERE HAS BEEN a dramatic rise in rents across Ireland in the last year.
This increase has been particularly notable in Dublin. In September, figures by the Private Residential Tenancies Board (PRTB) showed that the cost of renting in the capital had increased by 10.5% on the same period last year.
With this there have been calls from some quarters for the introduction of rent control.
But if this was introduced, how exactly would it work? What models are used in other markets? And could they be successfully applied here?
How would it work?
Early this year a proposal was made by the the Minister of State for Housing and Planning, Jan O’Sullivan, on possibly introducing rent control. Her plan included the introduction of measures that would fix rents to the consumer price index (CPI).
This particular system has faced criticism as an ineffective control on prices. By linking to CPI – it is possible that rents would have been substantially higher over the past 10 years.
Last month a report by the PRTB argued that rent control would do little to prevent the issues experienced in the market, and that instead, it would be more effective to give landlords tax breaks and afford tenants more rights.
So despite rent control failing to gain a foothold here, how come it seems to work internationally?
Germany
In 2013 – it was shown that only 43% of Germans own their homes. Renting is the norm, and buying a house isn’t an automatic choice. Even for those who can afford to do so.
It is thought that the structure of their housing market stems from factors relating to the end of the World War 2. With a huge demand for accommodation after the destruction over the previous six year period – the Government of the day stepped in to implement a programme of housing.
This, along with a number of economic factors, subsequently led to a large number of people in the country renting their homes.
In Germany rents remain cheap and there are a number of stringent government controls on the market. Rent increases are capped at no more than 15% over a three-year period and tenants are often able to avail of long-term rental contracts.
The strength in the German rental market lies in in the huge voter block of renters. In Ireland – where home-ownership sits at over 80% – it would be hard to see such favourable conditions implemented.
New York
In New York rent control has been in place since the 1920s. Under the current programme – tenants in rent-controlled apartments are afforded favourable conditions, like tying rent increases to the costing of an apartment, and restrictions on a landlords ability to evict.
However, these conditions are limited to rent controlled apartments – and in general renting is an expensive business.
While the cost of letting a rent controlled property remains fairly low – this drives the cost of accommodation elsewhere up – and people who have rent controlled properties tend to hang onto them.
Last year the average rent on an available apartment was over $3,000 a month.
Ontario
In Ontario, Canada, the Residential Tendencies Act introduced in 2006 means that landlords are only able to increase rents by 2.5% in a year.
Despite what seems to be quite stringent legislation – loopholes still exist depending on the type of properties owned – and rent increases can be much higher if a property falls outside of the necessary conditions for rent control.
It can be seen that while there has been some success internationally – necessary conditions have to prevail – and the measures involved cannot be applied unilaterally.
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