Threshold, the national housing organisation, has warned landlords against excessive increases in rents as they attempt to cushion themselves against interest rate hikes.
According to the Chairperson of Threshold, Aideen Hayden, mortgage interest rate increases are resulting in soaring rents, particularly in high-demand areas. This is having a knock-on effect on Threshold’s clients who are increasingly finding it difficult to cover rent costs.
“Over the past year, Threshold has noticed a marked increase in the number of tenants presenting with arrears due to the rising cost of rent. It seems that landlords are passing on interest rate increases, as well as cushioning themselves against potential further increases, when they are setting their annual rent rates. This is driving up the market for rents, especially in city centre areas, and is putting tenants under enormous pressure.”
Under the Residential Tenancies Act, 2004, landlords may only increase rents once per year. As 80% of Irish landlords own one or two properties, most do not have the capacity to maintain stable rents during a period of increasing interest rates.
“In considering a rent increase, landlords should show some restraint and avoid excessive, panic increases. Rents nationally have increased by 9% in the last 12 months.* But some of our clients have seen increases of up to 20%; this is simply beyond any realistic level of inflation and cannot be absorbed by people who – by and large – are on lower incomes.
“Over half of Threshold’s clients have an income of less than €15,000, which is below minimum wage. Many will rent for the rest of their lives because they cannot afford to purchase a property. Tenants who face high rent increases often struggle to meet other costs such as utility bills and the costs of children going to school. In the run up to winter, Threshold is calling on landlords to exercise moderation.
“By driving up rents, landlords may actually be out-of-pocket by losing reliable tenants and incurring the costs of having to advertise their property. A higher turn-over of tenants will also result in greater wear and tear on a property, thereby increasing maintenance costs. They need to consider these implications before they decide on their rent increases,” said Aideen Hayden.
Threshold will publish its 2006 annual report in October, when it will release new figures on rent increases, rising arrears and higher eviction levels, which are all a direct result of excessive rent hikes.