Research by economist Jim Power on behalf of the Institute of Professional Auctioneers and Valuers (IPAV) and the Irish Property Owners Association (IPOA) have established that the changing regulatory and taxation environment is mostly responsible for private non-institutional landlords leaving the rental market.
Rent Pressure Zones (RPZs), which limit the extent to which rental prices can be increased in an area, have also created a two-tier rental market. The report concluded that RPZs have also prevented rents from falling, as well as rising, beyond the limits set.
It appears that the share of private investor participation in the mortgage market has fallen from 19.9% of total mortgage lending in 2006 to 1.4% last year.
Power found that RPZs have created a situation where maintaining quality accommodation is not economically justifiable, and that this is negatively impacting the capital values of properties in these areas.
In his view, most landlords currently exiting the market are those who in the past charged rents that were less than market rates, and are now only able to minimally increase rentals because they are subject to RPZ rules. Institutional landlords are replacing them with their properties being let at much higher rates of rent.
The Department of Housing has stated that it recognises the need to retain small landlords and that the Government will support the continued participation of small scale landlords in the rental market. But that a balance needs to be struck between restricting the level of rents tenants are paying and keeping ordinary landlords in the system.
“The Government will keep the operation of the Residential Tenancies Acts, including its rent control provisions, under constant review, with a view to making any necessary changes. The aim is to ensure that the residential rental sector represents a viable investment option within a stable regulatory environment, with a fair and effective balancing of tenant and landlord rights and responsibilities,” it said.