There wasn’t much good news for tenants in Monday’s report from Daft.ie on the state of the rental market, and the situation might actually even be worse than the report suggests.
Overall, the report made for dismal reading for those either looking to rent a property for the first time, or those hoping to move home. While it pointed to a couple of “silver linings”, such as rental growth falling to a five-year low at a national level, and rental inflation in Dublin now lagging behind the rest of the country, overall growth rates remain high, at 8.3 per cent nationally and 6.8 per cent in Dublin.
This is despite the implementation of rent controls in the capital back in 2016. The big issue behind continued price growth, as outlined in the report, is the fact that Ireland's rental market "remains starved of supply". Indeed stock on the market across the country stood at just 2,700 properties on May 1st – the lowest ever figure, since the series began back in 2006.
But when you look at Dublin, supply for the long-term rental sector may be even lower than even the figures suggest when you consider just what type of properties are available.
The rise of the “serviced” sector
One reason for this is the rise of the so-called “serviced” rental sector, which offers short- to medium-term lets to corporate clients willing to pay that bit extra to get their laundry washed or properties cleaned as part of their rental agreement.
Such lets have always been in existence, but the sector has exploded in recent years, on the back of increasing regulation in the rental sector.
So much so in fact, that 10 operators in the sector came together to form the Corporate Housing Alliance to lobby the Government last year, as it considered new regulations for the short-term rental sector, which is dominated by Airbnb.
The alliance, which includes companies such as Adoor, Scandik and Dial a Short Let, says it represents companies who offer “extended-stay accommodation and relocation services”, and was set up to ensure that regulation of the short-term letting sector wouldn’t “negatively impact” on this area of the market
It was pleased then, when the regulations were finally announced last October, and its clients received an exemption from having to apply for a change of use planning permission – which they may not have received in Dublin – provided that lettings were for at least 14 days.
At the time, the Department of Housing explained its decision by saying that the new regulations would not affect “longer-term flexible lettings which are provided for those coming to Ireland under employment contracts”.
But avoiding the Airbnb rules isn’t the only perk of operating in this sector. Members of the Alliance don’t own the properties that they let out. Instead, they link up with landlords to find properties for staff being re-located to Ireland for work, or those who are being moved around the country on a project-by-project basis.
In addition, by virtue of the flexible nature of these lettings, it seems that these landlords do not have to be registered with the Residential Tenancies Board (RTB), which means that they are also outside of the scope of rent controls and can set rents as high as the market can take. While the RTB did not offer a definitive answer on this when queried, short-term lets such as those advertised on Airbnb, are exempt from the RTB rules.
Unsurprisingly then, some have noticed an uptick in the number of landlords moving into this sector, and out of the soon-to-be-regulated short-term one.
Docklands estate agent Owen Reilly says that ahead of the implementation of the short-term letting rules on July 1st, he has seen some landlords who used to let out properties on Airbnb sell up altogether, rather than have to apply for planning permission or move into long-term lettings. Others have opted to make the switch to long-term lettings, he says, but adds that another cohort altogether, have gone into the corporate sector, with the ability to neatly side-step the Airbnb regulations – while still charging outsized rents – by offering lets of two-weeks or more.
Supply
According to Daft.ie, there are currently 1,378 properties advertised for rent in Dublin city, encompassing both the city centre and surrounding suburbs such as Blanchardstown and Sandyford. But of these, some 178, or about 13 per cent, are for serviced apartments offering short to medium lets.
And the concentration is even higher in Dublin 2. Home to Silicon Docks, the area around the southside city centre has always been popular with new arrivals to the capital, particularly those who want to be within easy reach of both their offices and the city’s nightlife. However, those looking for a long-term home will find it challenging, given that some 38 per cent of all properties available for rent in the area are actually targeted at corporate lets.
Such lets make settling into a new city an easy prospect, as they offer fully equipped apartments plus extras such as a concierge service and weekly cleaning.
But they are also extremely expensive. A “fully serviced” two-bedroom apartment in the plush new Capital Dock development, for example, costs the not inconsiderable sum of €6,500 a month for a two-month minimum lease. And, while you might get the use of a Nespresso coffee machine as well as a housekeeping and concierge service, you’ll have to pay extra for a car parking space.
At Adelaide Square, the aforementioned Scandik is offering a one-bed apartment for rent for €860 a week (€3,440 a month), while Adoor has a one-bed apartment for €3,900 a month on Warrington Place.
Even if the Alliance is correct in its claims, that the sector plays “an important role in providing a positive environment for both indigenous businesses and FDI [foreign direct investors] in Ireland”, it still doesn’t really explain why the Government opted to exclude such lettings from its new short-term regulations. Airbnb would argue that tourism is just as important.
It just remains to be seen whether or not the market can sustain a greater number of these type of lettings at such high level of rents.
