RTB Q2 2017 Rent Index shows nationally private sector rents grew by 6.6% annually.
National standardised rent stood at €1,017 per month, up €63 from Q2 2016.
Rents in Dublin grew by 3.3% in Quarter 2 2017.
Two additional Local Electoral Areas meet the designation criteria for Rent Pressure Zones : Drogheda and Greystones.
Nationally, private sector rents grew 6.6% in the year end to the end of June this year. However, the rate of increase in the second quarter was marginally slower than in Quarter 1. The standardised average national rent stood at €1,017 per month in Q2, 2017 – up by €63 – compared to the same period last year, when it was €954.
While the quarter-on-quarter growth was relatively flat in Q1, 2017, the pace of growth has accelerated in the second quarter. Standardised rents increased 2.9% quarter-on-quarter in Q2, 2017, up from 0.04% in Q1.
Demand for rented accommodation in Dublin is very high as evidenced by rents in the capital now being 10.8% above their previous peak in Q4, 2007. Overall rents in Dublin increased in Q2, 2017 by 3.3% compared to the previous quarter. Rents for Dublin apartments are now 14.7% above the previous peak of Q4, 2007, while outside Dublin rents are 3.8% below their 2007 peak levels.
This data is contained in the Q2 2017 Rent Index Report of the Residential Tenancies Board (RTB), produced in conjunction with the Economic and Social Research Institute (ESRI). The Rent Index is the most accurate and authoritative rent report of its kind on the private accommodation sector in Ireland because it is based on the actual rents being paid for over 19,000 new tenancies registered with the RTB during the quarter.
The RTB Quarterly Rent Index now comprises two sets of rental indicators for the Irish market. The main Index is compiled on the basis of rents registered with the RTB for each Local Electoral Area (LEA) throughout the country, and was developed following the introduction of Rent Pressure Zones by the Government in December 2016. Based on the rental data of this latest Rent Index, two additional LEAs meet the designation criteria for rent pressure zones: Drogheda and Greystones. The Minister for Housing, Eoghan Murphy, T.D., is making a press statement at the Ploughing Championships this afternoon on the RPZ designations. Prior to today’s announcement about Drogheda and Greystones there were 19 RPZs in the State, including the four Dublin Local Authorities and Cork City. The RTB had confirmed to the Minister that the Drogheda and Greystones LEAs meet the RPZ criteria. Following designation as an RPZ, rent increases in these areas will be limited to a maximum rent increase of 4% per annum. (See Notes to Editor for fuller details on RPZs).
In terms of the Dublin market, overall rents in Dublin increased in Q2, 2017 by 3.3% compared to the Q1 2017. This increase was mainly driven by an acceleration in rents for apartments, which were up 4.4% quarter-on-quarter. Private rents for Dublin houses also rose in Q2, 2017, albeit at a more modest 0.9%.
On an annual basis, rents continued to grow, increasing by 5.8% in Dublin. In Q2, 2017, there was some evidence of a moderation in the pace of expansion for Dublin houses, continuing the trend seen in the first quarter. Also for Dublin apartments, the year-on-year growth rate dropped from 7.4% to 6.8% in Q2.
Outside Dublin, rents for houses and apartments continued to grow, both on a quarterly basis and an annual basis. The quarter-on-quarter growth rate overall was 3.1% in private sector rents, representing an increase from 1.3% in Q1, 2017. Annual growth rates also appeared to be consistent, at 8%, in line with the previous quarter. Behind the headline figure, there had been acceleration in apartment rental price growth outside Dublin on an annualised basis, increasing to 9.3% year-on-year. Commenting on the report, the Director of the RTB, Ms. Rosalind Carroll, said: "The findings for the second quarter of this year are a further reflection of the ongoing pressure in the rental sector as demand continues to outstrip supply, and with two further areas, Drogheda and Greystones, meeting the RPZ criteria. These results reflect the second quarter since RPZs were first introduced. It is still too early to identify trends from these results, particularly in such a volatile market with restricted supply.
"Annually in the Dublin market we have had 3 quarters showing decline in the annual rate of growth from 8.5% to 6.4% and 5.8% respectively. However, we did see quarter on quarter growth of 3.3% in Quarter 2 in Dublin and we would have liked to have seen more evidence of further dampening of the market. It is important to note, when looking at the results of the Rent Index that new supply, not rented before, is exempted from the RPZ measures and therefore the results for RPZ areas are a reflection of RPZ and non-RPZ rented dwellings".
"We would encourage any existing, or new tenants, who are faced with increases over and above the 4% cap to refer a dispute to the RTB, and the same advice applies to tenants entering a new tenancy. Even if a tenant has agreed to a rent in excess of the limit and signed a tenancy agreement, they are still protected under the law; they cannot contract out their rights. If a landlord has been found not to have not adhered to the limits, it can have significant consequences and damages of up to €20,000 can be awarded as well as repayment of the additional rent. Cases can be referred to the RTB up to six years after the tenancy was in place".
The RTB will also be on-site hosting a stand at the Ploughing Championships, to take the opportunity of such a large event to provide information to the public.
Private Rental Market by Numbers in Q2, 2017
Dublin was still the largest rental market in Q2, 2017, accounting for 37.7% of the total; the same as Q1, 2017. Compared to Q1 the share of rental properties in Dublin fell again marginally, by around 0.3%. In Q3, 2007, when rents were at their peak, this was closer to 41%.
Property size and type
Two and three bed properties were the most common in the rental market. Two bedroom properties accounted for 36.5% of the total, while three bed properties accounted for a further 32.4%. In terms of the housing type, apartments were the most common rental unit, accounting for 42% of total. The second and third most common property types were semi-detached and terraced houses, accounting for 25% and 15% of the total. Detached houses made up 11% of the total.
Rents and house prices
Both the CSO property price index and the RTB Rent Index for Dublin and outside Dublin increased in the second quarter of 2017. Further evidence of price pressures for housing in Ireland was evident in the acceleration of house price growth into Q2. Supply shortages and pressures will continue as housing completions remain below long term demand.
Distribution of rents
On a quarterly basis, the underlying trends have remained relatively stable over the last number of years. The most striking pattern over the last four years has been the increase in the proportion of rents in the top of the price range, highlighting the general rise in rent costs over the period. 23% of the total stock of rented properties now cost €300+ per week. This compares to only 9% back in Q3, 2013.
NOTES TO EDITORS
The Residential Tenancies Board and the Rent Index report
The RTB is a public body set up to support and develop a well-functioning rental housing sector. Its role is (i) to resolve cheaply and speedily disputes between landlords and tenants; (ii) maintain a national register of tenancies, and (iii) supply data and advice on the sector. Its remit extends to the Approved Housing Body sector, as well as the private rental sector.
The work of the RTB can be divided into three main areas:
All private residential landlords and Approved Housing Bodies, who are not for profit housing providers, often referred to as Housing Associations, are obliged to register their tenancies with the RTB. By the end of Q2, 2017, there were approximately 344,000 tenancies registered with the RTB and it has a public register of tenancies available on its website (www.rtb.ie ). The registration of tenancies enables the RTB to collect important data on the sector, but is also a key part of regulating the sector and ensuring landlords and tenants are aware of their rights and responsibilities.
Since 2004, the RTB has replaced the courts in dealing with the majority of disputes between landlords and tenants through its Dispute Resolution Service. This service offers a choice of resolution types to parties, mediation or adjudication. By the end of Q2, 2017, the RTB had received over 3,000 applications for dispute resolution, our highest number to date.
INFORMATION AND ADVICE
The RTB provides high quality information and advice to the public, tenants and landlords on rights and obligations in terms of both living and providing accommodation in the rental sector. The RTB also provides high quality data on the rental sector, such as the Rent Index, which allows it to monitor trends in the rental sector, but also allows individuals to check and compare rents in particular locations. The RTB continuously strives to improve and develop its services so that its customers are supported in registering with the RTB, resolving disputes, and accessing information.
RENT PRESSURE ZONES
Under the Planning and Development (Housing) and Residential Tenancies Act 2016, parts of the country where rents are highest, and rising, can be designated as Rent Pressure Zones ("RPZ"), and private rents are capped.
The framework for deciding an RPZ is a Local Electoral Area (there are 137 in the State), and the qualifying criteria are:
(i) if the annual rate of rent inflation in the area has been 7% or more in four of the last six quarters, and,
(ii) the average rent for tenancies registered with the RTB in the previous quarter is above the average national rent in that quarter,
that LEA is designated as a Rent Pressure Zone. That means that rents can only be increased by a maximum of 4% annually.
After today’s announcement by Minister Murphy there are a total of 21 RPZs, incorporating 21 LEAs, in the country. The previous 19 include the four Dublin Local Authorities (Dublin City Council, South Dublin County Council, Dun Laoghaire/ Rathdown County Council and Fingal County Council), and Cork City Council. The others are Cobh, Maynooth, Ballincollig – Carrigaline, Galway City Central, Galway City East, Galway City West, Celbridge – Leixlip, Naas, Kildare – Newbridge, Ashbourne, Laytown – Bettystown, Rathoath, Bray and Wicklow Town, and – from today – Drogheda and Greystones..
It is estimated that 57% of private tenancies in the country will now be included in RPZs.