For years, tenants have lamented the problems associated with a private rental market dominated by accidental, amateur and absent landlords.
Too many of them posted ads on supermarket billboards, rarely published a rent book, were impossible to reach when the boiler burst, and had little knowledge of the legal rights of tenants or the responsibilities of landlords.
If only the sector had been able to professionalize. Well, now the professionals are in town and there are new issues to be faced.
Build-to-rent (BTR) as a housing model is a relatively new concept in Ireland.
It is a housing model that has worked quite well in other countries where tenants get good quality, professionally maintained housing at reasonable rents with security of tenure, while investors get a modest return. compared to the potential gains of the stock market but infinitely more secure, stable. and long term. With the slow pace of housing construction, increasing demand and skyrocketing rents, the government has decided that BTR should be encouraged here.
International investors had access to funds that domestic builders struggled to unlock, so it seemed logical to invite them in and get into construction.
Not only were they offered the sweetener of Fast Track Planning through the Strategic Housing Development Arrangement (SHD) for developments over 100 units, but new apartment design standards were introduced. specifically for them in 2018.
BTR apartments could be smaller and have fewer windows than their counterparts built to sell with fewer individual amenities. The logic, apparently, is that it would allow them to build faster and more cheaply, and since they weren’t going to be homes forever, tenants wouldn’t hesitate to temporarily accept a lower specification.
Such an approach acts on the presumption that the rental would be temporary, but the very fact that many new developments are BTR means that there is less housing available for purchase.
Rents, meanwhile, have remained very high, as have property prices in general, so saving for a purchase deposit has become impossible for many.
This is not necessarily an inherent flaw in the BTR model, but some of its best attributes seem to have gotten lost in translation into the Irish market.
A rental agent targeting BTR customers has a website intended for use by both renters and investors. Yet the blurb boasts of having achieved record rents in some areas. Framing it like this doesn’t solve much of BTR’s image problem.
It also terrifies those who never see themselves having a home that isn’t rented and wonder what will happen when they get older and can no longer afford to be part of the private rental industry’s record attempts.
BTR does not yet dominate the housing market. Figures correct up to May 21 show that a building permit has been granted for just over 49,000 units under the SHD agreements, excluding cohabitation units and students.
Of these, 12,991 are houses, 27,816 are conventional apartments and 8,729 are BTRs. A small number of subdivisions were also built on the BTR model.
But planning decisions are due on more than 1,600 BTR apartments in the coming months, and no doubt new applications will be submitted before the end of the SHD arrangements which are expected to end next February.
The end of SHD is unlikely to deter BTR as the “fast-track” process wasn’t always very quick anyway. Apartments are also excluded from the new restrictions promised by the government on investment funds buying subdivisions.
It therefore seems likely that BTR will hold a growing share of the country’s building stock in the years to come, especially in our cities.
This could work well, provided that an effective rent control system is designed and implemented, and some thought is given to how life tenants should be insured once their wages drop to pensions.
It’s ironic that at a time when cities are seemingly re-imagining as post-Covid places of community, amenity, and space, much of the housing needed only allows for temporary, transient and stressful residence. It is also at odds with the government’s stated policy of prioritizing home ownership.
One of the small but depressing aspects of the long months of foreclosure has been hearing tenants in large apartment complexes being reprimanded by management companies for allowing their children to play in the few open spaces.
If BTR is to be a fixture here, some ground rules must apply, and daily reminders to renters that “this is not your home, this is our investment” cannot be tolerated. Accommodation can’t be just business – it’s way too personal for that.