Rents continue to rise but signs of a slowdown emerge

Rents continue to rise but signs of a slowdown emerge

According to the latest Rent Index from the Residential Tenancies Board (RTB), in the October-December period of 2018, the standardised national average rent was €1,134 per month, up from €1,061 one year earlier (€73 increase). Conversely, on a quarter-on-quarter basis, rental price inflation dropped from 2.3% in Q3 2018, down to – 0.3% in Q4 2018. This marks the first quarter since Q1 2017 that the standardised average rent has fallen relative to the previous quarter.

The RTB Rent Index, which is compiled in conjunction with the Economic and Social Research Institute (ESRI), is the authoritative guide to the Irish rental market. It is based on actual rents paid on 17,830 tenancies registered with the RTB in the quarter.

Based on the rental data of the latest Rent Index, two additional LEAs meet the designation criteria for rent pressure zones; Navan in County Meath and Limerick City East. The RTB have confirmed to the Minster that these two LEAs meet the RPZ criteria. Following designation as an RPZ, rent increases in these areas are limited to a maximum rent increase of 4% per annum (see here to view new RPZ map locations).

As a result of ongoing increases in the cost of renting in the areas of Navan and Limerick City East, both will be designated Rent Pressure Zones.

This is the first time two new areas have been designated RPZs, which limits maximum rent increases to 4% each year.

“This should help moderate rents in these areas,” said Rosalind Carroll, Director of the RTB.

“We would encourage both landlords and tenants to contact us for more information on their rights and obligations and we will be rolling out a targeted information campaign in these areas over the coming weeks.”

Registration with the RTB is on a per tenancy basis, so it currently cannot see if rents have been increased by more than 4% in rent pressure zones, when there is a new tenancy.

“New legislation will see annual registration which means the RTB will have much better data on the sector, and will be able to better measure compliance. The RTB will be given new powers to allow it investigate and sanction non-compliance,” she said.

The Rent Index, compiled by the RTB in conjunction with the Economic and Social Research Institute, is based on actual rents paid on nearly 18,000 tenancies that were registered with the RTB.

During the final quarter of last year, average rent nationally was €1,134, up €73 on the same period a year earlier.

The rate of rental inflation is running higher in new tenancies. “The biggest rent increases are in new tenancies,” Ms Carroll said. “You would see quite a difference between rent for a new tenancy and a rent increase during an existing tenancy.”

Rent inflation at the end of the three months to the end of December was -0.3%, compared to 2.3% for the quarter to the end of September.

According to the RTB, this is the first quarter on quarter drop since the first three months of 2017. The RTB Director said it was too early to call this a trend, adding that the board hopes more supply will come on stream.

Average national rents at the end of 2018 are now 15% higher than at the peak in 2007, and 25% higher in Dublin.

In the capital, average rent in the final quarter of the year was €1,650, up 7.8% on the same period in 2017, but there was a small drop of less than 1% recorded  versus the third quarter of the year.

Cork had the second highest average rents, followed by Galway, Limerick and Waterford.

In the Greater Dublin area of Meath, Kildare and Wicklow, rental costs were 5% higher at the end of the final quarter of 2018 than they were at the end of the same period 12 months earlier.

While in the rest of the country, the cost of renting a home was up nearly 6%.

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