Responding to the RTB Rent Index, IPAV, the Institute of Professional Auctioneers & Valuers, said the fall in annual rent growth and a drop of 3.3pc year-on-year by June is hardly surprising given the extent of the lockdown and the drop off in short-term lets, particularly in Dublin, arising from the halt in tourism.
Pat Davitt, IPAV Chief Executive, said what happens in terms of rents into the future will be dictated by a number of factors – the shape of the recovery; how long the pandemic will remain with us without a vaccine and the extent to which new work practices will emerge from Covid-19.
“Even though the Index does not cover existing rentals but new stock; new tenancies in existing rentals, and renewals - 20,878 in total – the entire rental market is likely to be impacted,” he said.
“Demand and supply in residential lettings is changing utterly, particularly in high demand urban areas.
“The downward pressure on rents evident in today’s report is likely to be sustained for a period. Factors such as employment levels and any new work patterns to emerge will play an important part,” he said.
In any event he said rents had reached unsustainable levels.
“Among the factors that contributed to this was the shape of the Rent Pressure Zone regulations introduced in December 2016, which attempted to curb rents but had the unintended consequence of driving them up.
“Unfortunately despite IPAV’s best efforts to convince policymakers, new properties were left outside of the RPZ legislation until July 19. This meant that vulture funds buying new properties were able to charge exorbitant rents.
“We now have a situation where they are charging froth rents, above market rent, and many landlords who did not even charge market rents were caught by the RPZ regulations and kept at that low benchmark by the regulations.”
Mr Davitt said the whole rental market needs a fresh look and the voice of professionals in the market must be taken into consideration.
“Many landlords want to sell their properties and are prepared to provide long leases, provided the same protection is afforded to them as is to commercial leases. The government should facilitate this by enabling these landlords to charge market rent if they provide a long lease.”
Mr Davitt said on the supply side ther2e is a continuing exodus of private landlords from the market. The RTB in its 2018 annual report identified the number of tenancies registered by private landlords fell by nearly 6,000, or 1.8pc, to 307,348.
He said the RTB has committed to undertake further research into the drop off from the market of private landlords. It intends to: ‘provide a more comprehensive understanding of the dynamics and drivers of this change’.
“The organisation may well find, as our Institute did in our own research, that the three most influential factors motivating this trend are: high taxes; onerous regulation and irresponsible tenants,” he said.