By Editorial

Copyright independent

In politics, there is always a danger of a seemingly popular decision having knock-on drawbacks. In his memoir, former taoiseach Leo Varadkar explained how the eviction ban of the winter of 2022 came about.

“At the end of October, the government introduced a five-month ban on evictions. Fine Gael had been bounced into agreeing this. Housing minister Darragh O’Brien and the taoiseach had flagged it to the media and, whether by accident or design, effectively announced it before it was agreed. I was annoyed. It was sharp practice and wasn’t how business was done normally. But it was too late.

Today’s News in 90 Seconds – September 22nd

“‘This is a bad idea,’ I said to Darragh. ‘It’ll help for a few months but it’s just going to store up evictions, which will happen en masse in the spring, making it even harder to manage. We’ve already increased protections for tenants. They get several months’ notice. It’s also going to create other problems. People returning from overseas won’t be able to move back into their own houses, and once the ban is lifted we’ll see even more landlords selling up for fear of another ban’,” he writes in Speaking My Mind.

The exit of the smaller landlords is a double-edged sword

Varadkar’s sentiments echo other warnings about interventions in the rental market. Eviction bans and Rent Pressure Zones are intended to protect tenants, but the unintended consequence is making the market less attractive to landlords. The after-effects of the Rent Pressure Zones reached crisis proportions in the past year when funding from institutional investors dried up, thereby resulting in a virtual halt to apartment projects. The fall-off in investment prompted reforms of the existing system to provide greater certainty of the future.

This summer, the Government announced that Rent Pressure Zones are to be extended across the State, but landlords will be allowed to reset rents every six years. Landlords of newly built apartments will be allowed to impose higher rent increases in line with inflation.

However, looking at the current state of the property market, the Irish Independent REA Average House Price Index shows landlords are jettisoning their properties in large numbers since Rent Pressure Zone rules were changed.

The exit of the smaller landlords is a double-edged sword. Yes, it does bring more properties on to the market, some in need of renovation, and an increase in supply will likely push down prices for buyers. No, this is not necessarily a positive for tenants as there are going to be fewer properties to rent. Having landlords in the market is vital for renters. Any tinkering with the market rules causes unforeseen consequence, as evidenced once more in this latest development.