Chartered Surveyors calls for comprehensive rental market reforms and housing affordability initiatives

In its pre-budget submission, the SCSI said

“The current adjudication system for disputes between tenants and landlords is overly complex, takes far too long and is inefficient”
The SCSI calls for the setting up of a dedicated ‘rental court’ and a thorough revision of the Residential Tenancies Act
Case studies show impact of lack of rental supply – families are paying over a third of their income on rent in several locations
Focused action by Government needed to drive down costs and encourage increased adoption of Modern Methods of Construction

Monday 9^th September 2024: The Society of Chartered Surveyors Ireland (SCSI) has called for the establishment of a dedicated adjudication body or ‘rental court’ to deal with serious disputes between tenants and landlords as well as a thorough revision of the Residential Tenancies Act.

The SCSI believes a ‘rental court’ is needed to deal with tenants who are refusing to leave a property after the lease has expired – also known as overholding – the non-payment of rent and landlords who unlawfully hold onto deposits.

The SCSI says the current system for handling rental disputes run by the Residential Tenancies Board is overly complex, takes far too long and involves an inefficient use of resources.

SCSI research indicates two of the main reasons small landlords are continuing to exit the market in increasing numbers are complex rental regulations and the high risks involved in renting a property.

The President of the SCSI Kevin Hollingsworth says that the lack of supply together with serious shortcomings in the administration of the rental market are creating fear and uncertainty on both sides.

“The tenant/landlord relationship should be a cooperative one, involving willing partners. Too often in Ireland, the relationship becomes adversarial in nature. A lot of this is down to the chronic lack of supply but when problems do arise, tenants and landlords should have confidence in the dispute resolution process. That is not happening with the current dysfunctional system.”

“Estate agents who are members of the SCSI are reporting mounting concerns with regard to tenants over-holding of properties after the expiry of a tenancy as well as with rent arrears and the unlawful withholding of deposits by landlords.”

“The SCSI is calling for the establishment of a dedicated adjudication body or ‘rental court’ within the RTB whose sole purpose would be to hear and rule on such disputes within a three-month time frame. We are also calling for a thorough revision of the Residential Tenancies Act with the aim of simplifying the regulations governing tenant/landlord relations and creating a clearer and more user-friendly framework.”

“The RTB also needs more resources to enable it to audit the rental market adequately to ensure overall compliance and to address short-term lets without the necessary permissions. More and more people are renting in Ireland, and Government needs to address these issues if the country is to have a sustainable rental sector.”

Lack of rental properties = Rising prices

The SCSI recently undertook a rental affordability analysis for a family renting a 3-bed semi or 2-bed terraced home in five locations around the country. For 3-beds, rents ranged from €2,139 in Meath to €2,475 in Wicklow. Including reasonable living expenses of €3,504 for the family of four, this means that the estimated total expenses for a family renting in Meath would be €5,643 while it would be €5,979 in Wicklow.

Rents for a 2-bed terraced house ranged from €1,733 in Galway to €2,061 in Wicklow. Including living expenses, this means that estimated total expenses for a family of four in Galway would be €5,237 while in Wicklow it would be €5,565.

Mr Hollingsworth said the figures show just how challenging it is for a family to rent a home in Ireland and the minimum salary level required.

“In Meath, for the family renting a 3-bed semi, the rent comprises 38% of total living expenses, while in Wicklow, it comprises 41%. For a family renting a 2-bed terraced house in Galway and Wicklow, the figures are 33% and 37%, respectively. It is generally accepted that spending more than 30% of income on rent is an overburden and makes renting unaffordable.”

“We really need to look at ways of encouraging current landlords to stay in the market and new ways of enticing investment in the sector. One idea that we believe the Government should consider is the introduction of an incentive scheme which would allow private citizens to invest in the rental market through a state-backed investment vehicle. Of course, the serious shortcomings in the market outlined above would need to be addressed in advance of such a move.”

Housing

The SCSI says the viability gap which exists between the construction cost and the market price for new home buyers is at unsustainable levels in many parts of the country.

For example, in its mid-year property review the SCSI found the gap between what a Wicklow couple on average salaries could borrow and the price of a new 3-bed-semi in the county to be €78,000. In Kildare the gap was €65,000.* 

In their pre-Budget submission, the SCSI says the Government needs to adopt a longer-term strategy across several budgets if real progress is to be made on improving the viability and affordability of residential property across the country.

These include:

The longer-term removal of levies and utility charges until such time as housing completions consistently exceed targets.
Confirmation that the Help to Buy scheme will be put on a longer-term footing. This would bring more clarity to the development sector.
Dedicated funding to improve the property sales and conveyancing process via the roll-out of e-conveyancing.
Further financial resources to be made available to attract and retain appropriate skilled staff in our local authorities. This would enable 100% inspection of high-risk properties and facilitate delivery of social housing projects and support higher levels of building completions/inspections.
The introduction of tax incentives for homeowners who are unable to secure loans for retrofit projects. Repayments to be linked to energy savings.
Increased funding for flexible upskilling programmes which will help overcome barriers to the introduction of Modern Methods of Construction.

Mr Hollingsworth said that while Ireland was not alone in experiencing a housing crisis, more urgency and more focused work was required in addressing the root causes.

“Our focus needs to be on tackling issues within our control, such as procurement, planning and other soft costs. It also needs to be on enabling and encouraging the adoption of new and innovative ways of doing things via Modern Methods of Construction (MMC).

“According to SCSI research, 90% of surveyors believe technological advances will play a crucial role in the construction sector going forward. However, 60% of firms here say they do not plan to invest in MMC, citing high costs and the time commitment required by staff. If funding was available for flexible training programmes, this would encourage small and medium-sized firms to adopt MMC. That is where Government has a vital role to play as an enabler,” he concluded.