IN THE ONGOING debate around the housing crisis, one argument that repeatedly crops up is the claim that small landlords are leaving the private rental sector in significant numbers.
The claim is seen as so much of an issue by the Government that it has directly influenced public policy in the form of tax breaks for landlords in Budget 2024.
Among those to support the claim is Housing Minister Darragh O’Brien, who said recently that 40,000 properties have left the Irish rental market in the past five years.
But is this true?
Darragh O’Brien recently claimed that it is “indisputable” that Ireland has seen a reduction of around 40,000 rental properties over the last five or six years.
The Minister was responding to a question from The Journal during a press conference on Budget day, when he was asked if it makes sense to introduce a tax break to keep small landlords in the market when we don’t know for certain how many are leaving.
“We’ve seen a significant reduction in the number of individual landlords in the last five or six years, around 40,000, that’s indisputable,” he said.
The Minister didn’t point to a source for this figure, but the Department of Housing later provided The Journal with details of where it came from.
In addition to referencing roughly 40,000 landlords leaving, the Minister said that there are very few new landlords coming into the market and pointed to data from Banking and Payments Federation Ireland (BPFI) as evidence of this. He also noted that population growth is a factor to consider.
So where did this 40,000 figure come from?
According to the Department of Housing, the 40,000 figure comes from research carried out by the Residential Tenancies Board (RTB).
The RTB is the independent public body that is responsible for registering tenancies and regulating the residential rental sector in Ireland.
In 2021, the RTB published one of the largest studies of the private rental sector ever to be conducted in Ireland.
It cited a reduction in the number of private tenancies registered with the RTB from a high of 319,822 at the end of 2016 to 297,837 at the end of 2020 - a drop of 21,985 over four years.
The number of registered tenancies decreased again to 276,223 in 2021, with according to the RTB, a further reduction of 21,614 between 2020 and 2021.This means that in the five years between 2016 and 2021, there was a reduction of 43,599 rental tenancies registered with the RTB.
The department also pointed to a report from real-estate agent Sherry Fitzgerald, which was based on a review of transaction activity earlier this year; it cited “21,000 landlords leaving the marketplace in 2022”.
Data from the RTB may seem pretty conclusive on its own, but it comes with a health warning – it doesn’t match similar data collected by the Central Statistics Office.
Earlier this month, The Journal reported on a discrepancy between the CSO and the RTB, with the statistics agency counting approximately 84,000 more homes in the private rental market than the RTB.
According to the CSO, it has recorded 330,632 private rented homes whereas the RTB has 246,453 registered tenancies in its 2022 data.
This issue was flagged by the department in correspondence with The Journal.
“At the outset it’s important to point out that the Department understands that there are differences between the RTB’s registration data and the figures published by the CSO from the 2022 Census,” the spokesperson said.
As a result of this inconsistency, housing researcher at University College Dublin Dr Michael Byrne told the Oireachtas Housing Committee on 10 October that it is “unknown” whether the rental market is growing or shrinking.
He told the committee that the discrepancy is likely due to tenancies going unregistered with the RTB.
The CSO is due to carry out an analysis of the figures to discover the true number of private rental homes, due to begin in November.
It has proposed a “matching exercise” between the two organisations’ records to better understand the reasons for the difference in the figures.
Another measure that can be used to calculate the size of the rental sector in Ireland is tax returns which declare rental income paid to the Revenue Commissioners.
According to the most recent data published by Revenue, referring to 2021, 157,600 taxpayer units declared rental income on residential properties.
However, these figures also contain income from overseas properties, so are not an exact measure of the Irish rental market on its own.
In the absence of consistency between the CSO and the RTB, as UCD’s Dr Michael Byrne said, it is difficult to be conclusive in the exact scale of landlords leaving the market.
Byrne even questioned whether landlords are “fleeing the market” due to a lack of “accurate data” on the sector.
This view was also shared by Barra Roantree, assistant professor of economics at Trinity College Dublin and Ronan Lyons, economist at Trinity College Dublin.
Speaking to The Journal Roantree put it bluntly and said housing statistics in Ireland are “an absolute mess”.
Roantree explained that data collection has improved, but for now we are still left working off a variety of different, imperfect sets.
Because of this, he raised the same concern as Byrne and questioned the sense of basing public policy on what he described as anecdotal evidence of an “astronomical reduction” in the number of small landlords.
Lyons told The Journal that on balance it is quite likely that the rental sector is shrinking at the moment.
However, he said it is impossible for any researcher in this area to say this conclusively, because of problems with both the CSO and RTB data.
The Housing Minister claimed that it was “indisputable” that approximately 40,000 landlords have left the Irish housing market in five years.
This 40,000 figure aligns with the RTB data which shows that between 2016 and 2021 there was a drop of 43,599 rental tenancies registered with the RTB.
However, the discrepancy that exists between the CSO and the RTB data has called into question the accuracy of statistics gathered on the rental sector.
Overall, experts say that data issues surrounding this topic makes it difficult to assess not just the scale of landlords “fleeing” the market, but the size of the market in general.
They say that while there may be a moderate reduction in small landlords in the sector, issues with data collection mean that we cannot say this for certain.
Available data sources do indicate that landlords are indeed leaving, but the extent of this figure is unknown.
But because of the issues with the data, we rate the claim that 40,000 rental properties have left the market in five years as: UNPROVEN.
As per our verdict guide, the evidence available is insufficient to support or refute the claim, but it is logically possible.
A more accurate picture will hopefully be available once the CSO finishes its matching exercise with the RTB data.
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