Average rents in the city grew 2.4 percent from the start of July 2020 to the end of June 2021, said the Residential Tenancies Board (RTB) at the end of September, in one of its regular updates.
But that smoothed figure conceals a lot.
Zoom in and average rents in the Clontarf local electoral area actually fell by 2.37 percent, and in the South East Inner City by 0.4 percent, show RTB figures.
But northwards in Ballymun-Finglas, rent inflation skirted double digits at 9.97 percent. In the city’s western areas of Ballyfermot-Drimnagh, it topped 11.5 percent.
Meanwhile, in Artane-Whitehall, rent inflation was greater still, running away at 12.6 percent.
The whole city is a “rent pressure zone” (RPZ), meaning that during this period – save for the first month when a rent-increase ban was still in place – rent increases were capped, for the most part, at 4 percent a year and had to be in line with market rents.
That later changed, with rent increases linked to the consumer price index, a model which looks set to be changed again, with Housing Minister Darragh O’Brien, of Fianna Fáil, now suggesting a move to cap annual rent increases at 2 percent, or the consumer price index, whichever is lower.
But that some Dublin neighbourhoods overshot the 4 percent rent-increase cap by so much in the recent past sparks questions as to how much changes to tie rents to any percentage, without other reforms, will be effective. That depends, perhaps, on why they did.
One way to examine the most recent figures is to briefly put aside any questions of legal or illegal rent increases and consider market forces, says Mick Byrne, a lecturer in the school of social policy at University College.
The pattern looks familiar, he says.
During the pandemic and its lockdowns, industry reports suggested stagnation or decline in city centres while rental markets in smaller cities or suburban areas saw high demand. “One possibility is something like that,” he says.
That said, if simple market forces do explain much about these dips and spikes, it does raise continued questions about the effectiveness of RPZs as a means of rent controls, Byrne says. “The whole point of the RPZs is to moderate market forces in an area.”
Is it the Market?
A few trends could explain the differences in annual rent inflation as you move outwards from the city centre, says Byrne, of UCD.
In the city centre, renters enjoyed less competition from international students and corporate visitors and tourists, he says, while some short-term lets were returned to longer-term lets.
Meanwhile, people may be relocating to more suburban areas, he says, and more affordable places with more space.
That was already happening nationally, says Byrne, with average rents rising outside of Dublin faster than within the city.
In Drimnagh, anecdotally, demand has been high for some time. Two and a half years ago, Bernadette Ryan went to view the rental house where she now lives.
Thirty to forty people were crammed inside, looking around and the same number queued outside, she says. “It was nuts.”
She hasn’t noticed dramatic rent changes since then, she says, and her rent has only nudged up once, slightly, since she moved in.
She has noticed homes being sold though, she says, and new neighbours renovating. “There’s lots of young couples buying, young new families.”
She thinks that affects renters, a knock-on impact on rents. “It’s like, this is a nice neighbourhood now.”
For Ryan, one pull to the area was its affordability and she assumes others are the same, looking for areas they think would have fairer prices. “For me, even Drimnagh, I figured it would just be cheaper as well.”
Further west, in Ballyfermot, Roger Berkeley, a local estate agent and owner of Berkeley & Associates, says competition for rental homes is frantic. “There’s such a shortage of properties available for the demand out there.”
Many properties they rent out aren’t advertised, he says. “They don’t actually hit the market as we’ve already people lined up.”
Those renters-in-waiting are generally tenants of properties they already manage but where the landlord is selling up, he says.
Some of those landlords are motivated by the burden and costs of meeting standards, says Berkeley, while others are decent landlords who kept the rent low for tenants and were stuck at those low rates when rent-increase caps came in. “It has triggered more landlords getting out of the market.”
Other patterns are also visible in Ballyfermot, says Berkeley.
One is investors buying up homes, renovating them and leasing them to Dublin City Council for social homes instead of, as happened in the past, the council buying them itself, he says. “Now, the investment companies are creaming off the high rents from the council.”
He doesn’t understand it, he says. “Why isn’t the council buying these properties and keeping the rent in-house? Nobody’s answered that for me.”
Rents set under these long-term leasing schemes do fall outside of the RPZ laws, a difference that has been in the past pitched to investors as “a significant advantage in comparison to a regular residential property investment”.
But these tenancies don’t have to be registered with the RTB, so those rents wouldn’t be included in its rent data. Although it could be indirectly reflected, if those higher rents are adding to rent inflation in an area.
Hazel De Nortúin, the People Before Profit councillor for the Ballyfermot area, says she wonders how much rental growth in Ballyfermot is driven by the Homeless Housing Assistance Payment (HAP), the rental subsidy granted to those who are homeless or at risk of it.
Searching tenants will often be asked what they qualify for through HAP when looking for a place, she says. “And that’s how they base your rent.”
A spokesperson for Dublin City Council said that if a property is being rented on Homeless HAP for the first time, the council doesn’t check that the rent level is in line with rent pressure zone legislation.
If it’s reletting the same property through Homeless HAP, it does ask for evidence, they said.
Elsewhere in the city, there are hints that Homeless HAP payments may have nudged up rents. One tenant moved into a two-bed flat in a complex in the south inner-city in July 2018, rented with help from Homeless HAP for €1,900 a month. A year earlier, other two-bed flats were being rented in the same complex for an average of around €1,100 a month, shows an estate agent brochure.
Dublin City Council said it was working on a query about figures for Homeless HAP tenancies by local electoral area, but it hadn’t sent them by deadline.
De Nortúin says that, these days in Ballyfermot, competition is fierce for homes.
Lots of families on the social housing list are desperate to rent there, close to family and kids’ schools, while they wait for a social home, she says. “If they could get the homes, they would probably pay twice the amount.”
Could Legal Increases Account for It?
When RTB figures have been published each quarter, there’s often been a back-and-forth around the reasons why in some areas in rent pressure zones, average rents have gone up more than the old threshold of 4 percent.
That discussion can turn on whether or not the increase can be explained by legal or illegal hikes.
In a paper published in the Journal of Housing Economics in May, researchers analysed detailed data from the RTB and concluded that, while the data was gappy for the period they looked at, non-compliance was likely a valid explanation why so many tenancies had seen annual rent inflation of more than 4 percent.
Not everybody agrees, though.
“We are not convinced that it is properties inside of the rent pressure zone that are subject to the 4 percent or now the inflation, that’s actually increasing the prices,” said Pat Davitt, the CEO of the Institute of Professional Auctioneers and Valuers (IPAV).
After all, there are homes inside RPZs that are not subject to the cap on increases – and they could be driving the price spikes in some areas.
Under current rules, landlords can set the rent without regard to RPZ rules if a property has undergone a substantial change, which can mean, for example, it’s been made bigger by 25 percent or upgraded energy efficiency.
They can also ignore the RPZ rules if a dwelling hasn’t had a tenancy in the previous two years, or one year for a protected structure. That “includes the first setting of the rent in a newly built property or a property which has never previously been let”,says the RTB website.
Landlords relying on those exemptions, though, have to tell the RTB. And “they must still set the rent at market rate”, said an RTB spokesperson.
In the second half of 2020 and the first half of 2021, landlords across Ireland notified the RTB that they were relying on one of those exemptions a total of 567 times, show figures from the agency.
At the end of 2020, there were just short of 298,000 private tenancies registered with the RTB, says the RTB annual report. Which suggests that exemptions were claimed for roughly 0.2 percent of tenancies nationwide.
“I don’t think they can be made to account for the rent increases based on the scale of them,” says Maedhbh Nic Lochlainn, a PhD student at Trinity College Dublin who researches the rental market.
“But it is difficult to tease out how a series of interacting factors play out on the ground differently in different areas,” she says.
Is It New Builds?
It’s possible that landlords don’t know that they have to notify the RTB that they are relying on the exemption.
Davitt, the CEO of IPAV, said he thinks new builds may be a big factor behind the rising rents. “You can charge what you like for it when you put it in for the first time.”
Central Statistics Office (CSO) figures for new builds – it’s not known if all of them became rentals – for different Dublin areas for the year up to July 2021 don’t immediately appear to show correlation with rising rents.
In Ballyfermot-Drimnagh, where average rents went up 11.5 percent, there were just 36 new builds completed in the same period, show CSO figures.
In the Artane-Whitehall area, where average rents went up 12.6 percent in the year to end of June 2021, CSO data shows 294 new dwellings completed.
But “trying to prove correlation in space is really difficult,” says Nic Lochlainn, the PhD student at Trinity College Dublin. “It’s a messy thing.”
Local electoral areas may be too large a frame for considering the impact of new builds, she says. “They are really concentrated geographically, when they’re coming on stream.”
But there is both a possible clear and a vague impact, she says. The rents of new builds are added to the area data, of course.
But also, concentrations of higher-rate new builds can affect how rents are set in an area, she says, in an atmosphere where the rent caps are ignored. “It will drag the rental price up.”
She sees cases in the RTB where smaller landlords have pointed to the higher rates in nearby new build-to-rent developments to argue that rent increases are in line with market rents, she says. Meanwhile, big build-to-rent landlords can point to their own portfolios, she says.
But the scale at which the data is analysed probably makes a big difference to what you see, she says, as does tracing the detail of what is going on on the ground.
In Santry, which falls within the Artane-Whitehall area, local residents have been tracking plans for big build-to-rent developments, like Swiss Cottage, a complex of 120 apartments, which when listed as “coming soon” in March 2021, had two-beds from €1,775 a month.
The RTB’s rent index lists average rents for Santry as of Q2 this year at €1,779.80 for a two-bed and €1,465.59 for a one-bed.
There was some surprise among the group at the prices that were being quoted for new developments in the area when they went up at first, says John Nolan, chair of the Santry Whitehall Forum, which was set up in late 2019 to try to give the community a stronger voice and more weight in planning consultations.
“Obviously they’re at higher rents but they’re higher spec,” he says.
Nolan says he would look elsewhere though, other than the new builds, for the main reasons for rent inflation. “You’ve got two factors that would drive that.”
Demand from students wanting to live close to Dublin City University, and employees wanting to live within the orbit of Beaumont Hospital, he says. “I think that would contribute to it.”
There wouldn’t be other great industry-led dynamics to the area, he says. “There’s no large retail developments, no new employer employing people significantly.”
“So there’s no driver of people into the area other than general demand for accommodation throughout the city,” he says.
Davitt says that IPAV has been asking the RTB for figures to show how many of the new tenancies registered are for properties that are exempt from the RPZs.
And how much of the 7 percent increase in rents nationally is accounted for by tenancies that fall within those categories, like new builds, or in areas that aren’t even in RPZs at all, he says. “I don’t think that the RTB have the actual figures that they should have.”
Says Davitt: “We have these guys standing up in the Dáil all the time telling us, ‘Oh the landlords are rising the rents, oh the landlords are doing this.’” But “we don’t even know if that’s the case”.
And “okay, if we do know that that’s the case, let’s go and do something about it”, he says.
Nic Lochlainn says the RTB does have lots of data, which it puts out in a transparent way. But it’s information without knowledge, she says.
She’s noticed strangely periodic peaks and troughs when looking at quarterly data for average rents in different Dublin neighbourhoods, she says. (Some might be accounted for by rolled-over rent increases, she says, when tenants get an 8 percent increase in one whack.)
But she’s not sure the extent to which the RTB spends time interpreting its data rigorously, says Nic Lochlainn. “There doesn’t seem to be much detailed unpicking of data to see what is going on. It’s probably capacity.”
Meanwhile, in Drimnagh, Ryan says she feels as if she is watching a story repeat itself, neighbourhood by neighbourhood.
“You know, it was Rathmines years ago, that became like high-demand. Suddenly, you couldn’t get anywhere there,” she says. “Now, it’s Drimnagh-Ballyfermot.”
“And it’s like where do you go now?” she says. “It just seems like you’re just running from neighbourhood to neighbourhood, trying to, you know, find somewhere affordable until there’s nothing left.”