Did the CSO underestimate the number of illegally unregistered tenancies?

In its recent research into unregistered tenancies, the Central Statistics Office (CSO) said it found around 47,000 possible “informal rental agreements” across Ireland.

Those are cases where, it said, a landlord may not have to register with the Residential Tenancies Board (RTB).

The CSO has been researching why its count on census night of rentals produced a figure that was so much higher than the number of tenancies registered with the RTB.

These “informal” arrangements make up the bulk of the gap, its findings suggest. But a closer look at the indicators that the CSO relied on confuse those findings.

Gareth Redmond, a research and policy officer with Threshold, says it is useful to have an estimate of how many unregistered tenancies appear to be informal arrangements.

But he is cautious about the claim that all these probably don’t need to be registered with the RTB, he says.

“That 47,000 is really up in the air,” says Redmond. “We don’t know how many of those are licences and how many are rogue landlords.”

Not all rental arrangements need to be registered with the RTB, says Gavin Elliott, a barrister with expertise in housing, but in his experience genuine exemptions are fairly rare.

“I’m sure there are some but I doubt it would make up those numbers,” he says. “The simple explanation is that there are a lot of unregistered tenancies.”

Housing lecturer at TU Dublin, Lorcan Sirr says the solution to the uncertainty is to require all residential rental arrangements to register at first, and then for the RTB to issue exemptions where necessary.

A spokesperson for the CSO says that the report is based on a statistical exercise to match datasets available to it to show whether the properties had the characteristics of a private-rental property.

“The purpose of the research paper was to examine the difference between the two datasets and provide any additional information possible on the characteristics of the properties or the rental arrangements,” she says.

The distinction between possible informal rental arrangements and possible formal rental arrangements were statistical designations and not legal classifications, they said.

Some properties within the 47,000 could require RTB registration, says the spokesperson.

How the CSO counted

In April 2022, 330,000 households said they were private renters in the census.

At the end of that year, the RTB had 246,000 tenancies registered.

In its recent report, the CSO analysed the gap between the 2022 census data and the RTB registration figures, to try to shed light on it.

The CSO found that 84,000 households said they were private renters in the census while their homes didn’t have a tenancy registered with the RTB.

Then, the CSO removed those homes where there was a claim for the rent-a-room scheme, homes owned by councils that had slipped in, and all homes with multiple households.

That left at least 73,000 unregistered tenancies, says the report.

In other words, 22 percent of all those who said they were renters in the census didn’t have a tenancy registered with the RTB and nor did they live in a home where the rent-a-room scheme was being claimed.

The CSO then examined those 73,000 against four datasets available to it. It found that 25,000 had characteristics of rental properties and should likely be registered with the RTB.

It said that 47,000 were informal rental arrangements that likely didn’t need to be registered with the RTB.

Not all rental arrangements need to be registered. A spokesperson for the RTB said holiday rentals are exempt, as are dwellings where the owner lives.

If the spouse, civil partner, parent or child of the owner is living in the property and there is no written lease, they are not required to register with the RTB.

The methodology employed by the CSO was to examine four data sets that it had access to, to look for potential indicators of whether the rental agreement was formal or informal.

It looked at whether the property was listed as a primary private residence on the local property tax forms.

It also looked at whether tenants claimed the renters’ tax credit, whether a housing subsidy was being paid, and whether the property owner had self-declared income.

The CSO report originally said that if any property met two or fewer of the indicators it was classed as informal.

Following a query as to why an arrangement would be classed as informal if a landlord declared a rental income and was receiving HAP, a spokesperson for the CSO says that was a mistake.

The “potential informal rental agreement” category was based on the property fitting into one or none of the indicators, said the spokesperson.

The spokesperson said that, for the properties captured as private rentals in the census and registered with the RTB, the majority of those met two or more of these criteria.

“Individually, these characteristics could not in themselves be used to determine if a property is privately rented because of timing and definitional differences between the datasets used for analysis,” says the CSO spokesperson.

“However, this set of four objective metrics can collectively provide more detailed information about the nature of a rented dwelling,” they said.

Because this was a statistical exercise, some properties categorised as possible informal rental arrangements might still need to be registered with the RTB, he says.

Some of the informal arrangements are likely to be licencees and family arrangements.

But some landlords don’t pay taxes on the rent and therefore cannot accept rent subsidies. Tenants cannnot avail of the renters’ tax credit in an unregistered tenancy.

As such, not meeting any of the indicators could still tally with a landlord operating outside the system, who should have registered the tenancy.

Who is exempt?

The CSO report includes examples of situations that it says are classed as informal rental arrangements, which include subletting, guardianship arrangements, and accommodation that is connected to employment.

However, experts say that most subletting and guardianship arrangements should be registered with the RTB – although there are some exemptions.

“Sub-letting arrangements are usually subject to the RTB,” says Redmond, of Threshold.

Renters may be considered licensees rather than tenants in particular situations, though, he says, and in those cases the owner wouldn’t need to register with the RTB.

If a renter shares the home with an owner-occupier or a close family member of the owner, they may be licencees, he says.

People whose accommodation is tied to their employment can also be licencees. There is a grey area too around non-traditional buildings and things like renting a caravan in a caravan park, says Redmond.

Elliott says that in his experience many landlords can claim to be exempt from the RTB rules for various reasons but if a dispute arises the RTB usually finds that renters are tenants.

According to the CSO report, examples of informal rental arrangements include “informal letting arrangement whereby an owner lets the property to a relative or acquaintance for no or below market rent”.

According to the RTB website, there is an exemption from the requirement to register a tenancy with the RTB in cases where a very close family member – that is a spouse or civil partner, a child or parent – lives in the property.

The amount of rent charged is irrelevant to whether a rental arrangement is a tenancy, says Elliot, and this exemption does not extend to other relatives or acquaintances.

In some cases “granny flats”, attached to a homeowner’s property can be exempt, says Redmond. This would need to be looked at on a case-by-case basis and will often be decided on whether they have their own front door, he says.

“The examples provided of the types of potential informal arrangements that may exist were for illustrative purposes only,” says the CSO spokesperson.

The CSO has no role in enforcement of the legal requirement to register with the RTB, he says.

What next?

Sinn Féin TD and housing spokesperson Eoin Ó Broin says the CSO report is useful because it sets out for the first time that there is a substantial cohort of renters who are not registered with the RTB but should be.

It estimates that around 25,000 renters appear to have formal rental arrangements, which likely should be registered.

Ó Broin says the gap between the number of renters and the registered tenancies is greater, because new and more reliable RTB data for 2023 showed a decline in registered tenancies.

That cohort of informal rental arrangements needs to be examined further, he says. “My gut instinct is telling me that the cohort of 47,000, some of those should probably be in the other category.”

He wonders why dwellings with more than one household were eliminated from the dataset too, he says.

“The main question now is what is the RTB going to do about enforcement?” says Ó Broin. “To ensure that everyone who is supposed to be registered is registered?”

“It’s useful to raise these questions and look at these categories,”says Sirr, the housing lecturer at TU Dublin. “It’s obvious there is loads more work to do on this.”

He urged caution around assuming that a large number of rental arrangements are exempt. “Landlords are exempting themselves,” he says. “That is just self-regulation.”