Rental sector report identifies challenges and opportunities for a sustainable future

In partnership with Irish Institutional Property (IIP) and KPMG Future Analytics, Clúid Housing has published Towards a Sustainable Rental Sector in Ireland: Understanding the Key Challenges & Opportunities. 

The report was launched by Minister for Housing, Local Government and Heritage, Darragh O’Brien TD and focuses on improving the sustainability and attractiveness of the rental sector in Ireland.

The research was compiled by KPMG Future Analytics on behalf of Clúid Housing and IIP as part of Clúid’s annual Adrian Norridge Research Bursary. The report offers an analysis of the rental sector, and examines the many layers that need to be considered to ensure the sector offers a stable, secure and sustainable option for both tenants and landlords.

The key findings from today’s report launch show that between 2006 and 2016, owner occupation in Ireland fell from 74.6 per cent to 67.6 per cent. During the same period, private rental grew from 9.9 per cent to 18.2 per cent. Lack of supply, affordability, migration, increasing student populations, increasing precarity in the labour market, and an increased demand for residential choice and flexibility have all contributed to the growth of the rental sector in recent years. The report also found that nearly a third of all households now occupy rental accommodation.

Along with this growth, the landscape of the sector has also changed. 18.2 per cent of all households rent privately, while 9.5 per cent rent from either a social landlord, local authority or non-profit body. The typical profile of the private renter is younger, and renting is the majority tenure for those under 35 years of age.

The report found a growing trend towards apartment living. Apartment stock has grown by 44 per cent - from 140,000 units in 2006 to 201,000 units in 2016. 72 per cent of apartments nationally are within the rental sector. Meanwhile, the research also determined that while large scale institutional landlords (excluding AHB’s) only make up 4.6 per cent of tenancies, their activities are pronounced at a local level. 

In drawing together this profile of the sector, the research makes some key recommendations including:

• Scaling of the government’s Cost Rental Scheme
• The important role of AHBs in the roll out of the Cost Rental Scheme
• The incentivisation of smaller scale landlords
• Achieving a more certain regulatory environment
• A review of the Housing Assistance Payment (HAP) Scheme
• Enhanced delivery of apartment stock
• Recognising new and emerging housing demand drivers
• Addressing viability challenges.

The report highlights the fact that a significant cohort of people who are middle income earners and do not qualify for social housing are struggling to afford to rent in the private market. Thus, the report recommends that the affordability of renting is a key issue to be addressed in the sector.

As well as examining national trends, the report examines nine ‘study areas’ covering five major cities (Dublin, Cork, Galway, Limerick and Waterford), and four towns (Athlone, Castlebar, Dundalk and Letterkenny). Whilst highlighting urban centres serves to reflect the goals of the national planning framework, comparing towns and cities also provides an overview of the differences between regional and local contexts. 

The research was conducted through on-line surveys and interviews and includes comprehensive analysis of key data sources. Whilst the sample sizes of the surveys do not claim to be fully representative of the whole sector, they provide valuable insight into the trends, influences and issues that have been identified elsewhere in the report.

The research identifies the contribution of different providers within the sector, including non-profit organisations like Clúid and local authorities, large institutional landlords like those represented by IIP, and smaller landlords. It looks at the interface between them and how they each contribute to the wider landscape and evolving needs of the market. The research also examines demographic, socio economic and spatial factors affecting supply and demand within the sector.

Supply and affordability were identified as the dominant challenges facing the sector. A number of other challenges were also identified. These include: 

Security of tenure; 
Quality of rental stock; 
Construction and land costs; 
Uncertainty in the regulatory environment; 
Sustainability and effectiveness of rental support mechanisms; 
Tax incentives 

Minister for Housing, Local Government and Heritage, Darragh O’Brien TD, says: “I’m very pleased to be launching this report today. It’s a comprehensive analysis of how the rental sector has developed in Ireland and brings together the many facets that influence the market, including the crucial role of both social and private landlords. There’s no doubt the sector has grown in recent years and moving forward, we need to make sure it develops as a viable rental option as it’s a key aspect of how we meet our current and future housing demands. 

"We’re already moving forward with some of the recommendations made in the research including developing cost rental schemes and in the coming months I will bring in a new comprehensive bill for renters to the Oireachtas which will deal with security of tenure and sustainable rent levels. This report will certainly add to our understanding of the challenges faced in the rental market.” 

Speaking at the launch of the report, Fiona Cormican, Clúid Housing’s New Business Director, says: “The rental sector in Ireland is a growing market and this research demonstrates the essential role in meeting the housing needs of our population now and into the future. To meet the challenge of ensuring the sector’s growth is sustainable and relevant, we must understand the many factors that have influenced its development so far, and the policy responses that are required to meet demand into the future.”

“In order for the rental sector to thrive, it is essential that it offers a stable, secure and sustainable option for both tenants and landlords. We cannot continue regarding renting as a mere transitory sector but promote renting as a viable housing choice. This report will help us to understand the challenges facing the sector and therefore we hope will contribute positively to its future development,” she says.

Pat Farrell, CEO of Irish Institutional Property, adds: “Institutional investors represent a small but growing source of supply, are here for the long term and therefore have a keen interest in the development of a sustainable rental sector that meets the needs of all stakeholders. We welcome the opportunity in partnership with Clúid to support this research which we trust will contribute to a reasoned and evidence-based discussion on how the sector evolves to meet demand and renters need for a stable and secure supply of good quality residential rental accommodation that meets their changing needs over time.””