This morning, Ireland’s number one residential property website, Daft.ie published its quarterly rental report which showed asking rents has increased by 2.7% in the past year. This supports the results of the monthly CSO index which shows actual private sector rents had increased by 3.4% in the past 12 months. Rents are rising, it seems, albeit at a relatively modest pace. The CSO doesn’t analyse rents by area, but Daft.ie does and it says that rents in Dublin are up 5% in the year whilst provincial rents are up just 0.2%.
A question often asked about NAMA is whether or not it is distorting the rental market by withholding property. This is an understandable question, after all NAMA is a colossal company, now controlling €23bn of loans (down from €32bn which was its acquisition value and the original par values were €74bn).
But NAMA does not really have a very large impact at all on the residential market. We previously learned that NAMA has 14,000 homes securing loans under its control. This is in a State which has 2m homes in total. And of the 14,000 homes, 10,000 are already rented out mostly in urban areas. The other 4,000 are available for sale or rent.
When asked in the Dail last week, the Minister for Finance Michael Noonan pointed out that the last Census 2011 results showed that there were approximately 320,000 private rented properties in the country, so NAMA’s 4,000 which are vacant and available for sale or rent are not sufficient to distort the market.
As Daft.ie’s economist, Ronan Lyons says today, it really does seem that there are supply constraints in some areas which are driving up prices. Unfortunately with existing building costs, there is no sign of waves of development to meet the demand, so it would seem in some areas prices may be set to continue to rise until it becomes attractive to build again.
The parliamentary question and response are here:
Deputy Pearse Doherty: To ask the Minister for Finance further to Parliamentary Question No. 91 on 21 March 2013, if he considers the 4,000 homes that the National Asset Management Agency controls which are vacant to be distorting rent levels in the urban areas where NAMA says the majority of its housing is located. [18450/13]
Minister for Finance, Michael Noonan: As advised in the response to Parliamentary Question No. 91, all properties securing NAMA’s loans are ultimately available for rent or sale. As advised in my response to Parliamentary Question 91, of the completed residential property securing NAMA’s loans, approximately 10,000 units are currently rented, primarily in the private rented market. The residual NAMA residential stock is being actively marketed for rent or sale by NAMA debtors and receivers at market prices or has been made available for social housing or is currently being marketed under the Agency’s 80/20 Deferred Payment Initiative. According to the most recent Census there are over 320,000 private rental properties in the country. Therefore, the scale of NAMA’s vacant homes is not large enough to distort the market.
NAMA Wine Lake 
Really until it’s known who and from what section of society is renting any statistic may as well draw itself from tossing dried chicken leg bones from Tesco and reading a conclusion based on the picture so rendered.
OK, here’s a spitball to the tiles. The rents are going up in the University areas and towns since they are the only true cause of large scale migration within the State right now. There is nothing else that I can see.
Is it possible for a break down of where In the country these 4000 properties are located? Mainly within Dublin.?
No surprises that rents are starting to go up.
Govt policy is to protect the banks ‘at all (Irish) costs’, as per Trichet in Sept 2008.
Protecting the banks, means protecting bank interest income, particularly the vulnerable BTL income.
Ergo, no change in UORR, no or very little bank lending for any type of housing building, no or very little house or building completion by NAMA.
It all about limiting supply and therefore trying to drive the rents and prices up.
Reinflating the ‘bubble’ and to hell with the economy.
We must protect the banks.
Hi all,
I have a real life example for you. We just moved from Dublin to Clonmel, Tipperary. We wanted a 3-4 bed to rent in a nice estate, within walking distance to town. I was suprised to find there were only 4 or 5 suitable properties. Of these two went before we got a chance to view them! We finally chose a house in a new but completed estate. This is where it gets weird! On the road in the estate are 3 houses finished but completely empty. I’ve counted a further 10 so far in the rest of the estate and that’s just one estate.
Someone, i assume the banks, is sitting on all these empty houses and making no attempt to rent them, let alone sell them, in a town where employment and wealth are significantly above average due to the pharmaceutical industry.
My take is that,
a). Banks are not forcing sales either by repocessions or getting developers to sell empty properties to protect market prices so that they dont have to take further mark-downs on exsisting loans
b). Banks are not forcing the renting of empty properties they controll to protect rents of BTL investors so preventing further carnage in this loan book.
I can understand how in the near term this is an effective strategy but I cant see how the banks plan to extricate themselves from this?
Correct
We have a full estate in the North West where the Houses have been Completed along with the Estate Itself,In Fact it is ready to go( One of the Best Finished Estates in the County) But yet the Security Fences and Security Guards Keep watch.However understand that this Estate was being Funded by Ulster Bank and was being Built by a Well Known Property Developer who would of had other Borrowings from Anglo Secured on the Clanree Hotel and other Leisure Interests in the Town.
Such a Shame Really.
@ Karl,
For the land lord the cost of renting can seriously eat into rental profit, by as much as 40% in some cases, and that’s not including mortgage costs.
With the Govt policy of “Taxation on a loss”, in some cases it would not make economic sense to rent out a property. The paltry return would not be worth the effort.
In some rural areas rental rates are very low, down to 600e / month. Renting at this low level is just not economical. In fact it could be considered a form of charity.
With bigger properties… more cost is incurred in refurbishment i.e surface area for painting than that of a smaller property i.e. an apartment .
In the last few years the following costs have been added to Landlords..
BER Cert 200e, once off fee.
NPPR tax 200e, expiring this year
Household tax 100e, expired last year.
LPT 0.18% of property value… lets say 200e, in full effect next year
PRTB 90e… with very heavy penalties for late registrations.
Mortgage rates have risen over the last 24 months, apart from Trackers.
Incoming for next year..
TV license fee 160e.. perhaps 180 euro.
Water charges.
And of course these charges will gradually be increased over the coming years.
I would not be surprised if laws are passed enforcing landlords to buy all the household groceries and tuck the tenant into bed at night.
There is nothing compelling landlords to pay for the TV licence (in my experience they do not) or for water charges (these will be paid like any other bill).
Most landlords who insist on paying bills, or keeping bills in their name, are ropey.
No WE wouldnt be paying TV Bills or water charges
However correct on other Taxes/charges mentioned above.
@ Robuachalla, Patrick.
Re TV License Fee,
I was referring to future developments, not present. That’s why I wrote
“Incoming for next year”
Open to debate here, because the TV license fee is about to become mandatory. So how will it work?
At present a TV license fee is with the occupant of the property, not the owner. So we are in agreement here. But for the future…..
What if the property is empty? The TV license fee will still have to be paid, even if there is NOBODY in residence, even if there is NO receiving apparatus on site.
The point I am making is that the onus of the TV License fee is shifting, from the occupant to the owner of the property.
This means another bill for the landlord.
That’s the only way I can see it working. It is an attachment charge to the property… not the occupant. See the difference?
If you think I am mistaken… say so… I would gladly be proved wrong.
Karl is spot on and it is happening in Dublin too.
The value of Irish residential property nama has is a lot more than 14,000 homes. There are loads of half empty apartment blocks that could be cheaply made habitable and raise money for nama to give back to the citizens of the state, but nama know this will bring rents down and put some buy to letters into even more arrears. I think there is also evidence of the landlord classes using the opportunity to buy up properties, thus consolidating the number of powerful landlords in Ireland (what can possibly go wrong there) but hold off on releasing them for rent in order to bring rents back up on all the rest of their stock. Its a similar strategy to developers who buy land and then do nothing with it until the time is right. Its why we should have gone with a site valuation tax as per Ronan Lyons suggestions
But its not just nama, All the banks are the same. Its a legalized property Cartel.