‘Biggest rip-off of renters in a generation’ – State’s largest landlord says new rent rules could boost income by 25pc

Ires Reit said the controversial changes could lead to a rise in rents for its tenants by up to 25pc over time.

New rules coming into force on Sunday will allow landlords to set rents at market rates for tenancies signed from that date.

Landlords will be restricted on existing tenancies to rent rises of 2pc or the inflation rate, whichever is the lower.

Ires Reit owns 3,627 properties, mainly in Dublin. Property experts say that rent levels it sets could have an impact on the rest of the market.

In a presentation to investors, Ires Reit said the rental changes could lead to a “plus 25pc potential rental income uplift with minimal added costs”.

However, it could take up to 10 years for its rental stock to be fully reset to higher market rates.

This sends a shiver down the spine of every renter right across the land

It is understood around 10pc of Ires Reit’s housing stock changes tenancies on an annual basis.

The firm will only be able to reset rents to market rates if a there is a no-fault termination in the tenancy.

Average monthly rents for Ires Reit tenants are €1,852, the firm told investors.

In the Dáil on Wednesday, Sinn Féin leader Mary Lou McDonald said the Government had been found out after the biggest property investor in the country was “saying out loud what you are denying”.

She claimed the property funds “are set for a bonanza”.

“This paints a frightening picture of the size of the rent increase coming down the tracks due to your decisions,” she said.

“This company is telling their investors that they stand to make an extra €21m in rents every year, once your legislation flows through.”

Tánaiste Simon Harris hit back in the chamber on Thursday, accusing Sinn Féin of “scaremongering” and saying the projected figures were over a period of ten years.

The Government has said its Residential Tenancies Bill will provide greater security for renters and boost supply, while the opposition has said it will dramatically increase rent costs by thousands of euro a year.

The legislation overhauled Rent Pressure Zone (RPZ) caps for areas of high rental demand and extended them nationwide, where rents must be linked to the rate of inflation or at 2pc.

Any tenancies beginning from this Sunday, March 1, will be of a minimum duration of six years.

These new tenancies can have rents set at market rates, which is likely to be beyond the 2pc cap.

Ires Reit has said these measures will lead to “increased cashflows”, while changes to design standards for apartments and Vat changes would see “greater liquidity”.

It also said that the exemption of new-build apartments from the 2pc cap would “incentivise” new builds and provide “opportunities for growth”.

Ms McDonald said yesterday during Leaders’ Questions: “Now, Taoiseach, you’ve been found out. Now we see the proof straight from the horse’s mouth.

“The biggest corporate landlord in Ireland is saying out loud the very thing that you denied – they will make a fortune from your legislation, all on the backs of renters.

“This is a recipe for a disaster in the lives of workers, of families, of our young people.”

Responding, Mr Martin said that more than 290,000 people who are currently renting would not be “impacted negatively” and said the changes were based on analysis from the Housing Commission and the ESRI.

The Housing Minister has balanced that with security of tenure for tenants of six years, essentially ending no-fault evictions, he said.

“This bill will give far more legal protection to renters than they’ve ever had in the history of the State, that is the bottom line,” Mr Martin said.

He said that 36,000 houses were built last year and that needs to reach 50,000 a year, which will cost an estimated €20bn between public and private funds.

“Yes, we do want to bring investment back into the market because we have not been building enough apartments to date,” he said.

“Supply is the key instrument we have to moderate rents in the medium term – let’s be under no illusion.”

Ms McDonald replied: “Security of tenure my eye.

“We’re talking about the biggest rip-off of renters in a generation.

“This sends a shiver down the spine of every renter right across the land, and it is directly because of your decisions, your choices, Fianna Fáil and Fine Gael. Your legislation is causing this to happen.”

Meanwhile, landlords have been warned by their regulator to get up to speed and comply with the rent reforms.

Residential Tenancies Board director Rosemary Steen said the new rules set out when rents can be reset and warned landlords that enforcement action will be taken against them for breaching the rules.

She admitted that rents will rise “at least in the short term” but insisted it “is not a free for all”.

‘Scaremongering’

In the Dáil on Thursday, the Tánaiste denied the new rules will result in 25pc rent spikes.

Simon Harris said such allegations from Sinn Féin leader Mary Lou McDonald were misleading.

While the country’s largest landlord, Ires Reit, has projected an extra 25pc return, this was “over a period of ten years,” Mr Harris said.

Sinn Féin had left that element out in its Dáil portrayal, he said, while Ires Reit believed its current rents were 20pc below the market rate.

“So let’s not scaremonger over rents increasing by 25pc in March. No existing tenancy will see any change,” he told Pearse Doherty, SF spokesman on Finance.

Mr Harris said the main Opposition party was portraying large property firms as the “Big Bad Wolf,” while meeting them regularly for discussions.

“We’re on the side of renters,” the Tánaiste said, provoking howls of derision from Sinn Féin. He told them: “You’re on the side of absolute hypocrisy.”

There was an Oppositon effort to misrepresent the factual situation in relation to the new rent rules and rental reform, he said.

“I hope to disprove some of the scaremongering and misinformation. Firstly, from March1 (Sunday), there is no change at all for existing tenancies – none, zero, no change. That’s really important,” he said.

“What does come into place from the first of March is a balanced package of measures, which includes within it some of the greatest protections that we’ve ever had in the history of our state for renters.

“For the very first time ever, we’ll see a nationwide Rent Pressure Zones for the first time ever. We’ll see six-year rolling tenancies, providing people with that security of tenure.

“And for the first time ever, we’ll see an effective no- fault eviction ban.”

But Mr Harris conceded: “Yes, from March, it is possible for new tenancies to be set at market rates. But here’s the next bit, it’s only possible to re-set once, and then they need to be locked in at that level for the next six years” (other than an increase for inflation, capped at 2pc per annum).

“Somebody who takes out a new tenancy in March will have that six-year security, an effective no fault eviction ban, and will also know that the rent cannot rise further during that six years, except in line with inflation, but by no more than 2pc.”

The 25pc figure that Mary Lou McDonald “threw around” is not a fair representation at all, he said. The representative body for Ires Reit “felt it necessary to go on national radio and describe Mary Lou McDonald’s comments as ‘not correct’ and ‘a complete mischaracterisation’ of the issue,” he said.

“They have come out and said what you (Sinn Féin) are saying in relation to 25pc simply isn’t true. The 25pc was a projected figure over a period of ten years.”

But Mr Doherty said that landlords are about to be handed the power to increase rent to full market levels for new tenancies.

“Corporate landlords are preparing to cash in. And they are not hiding it. They’re telling their shareholders that increased profits are coming because of decisions taken by your Government,” Mr Doherty said.

One executive had described the opportunity to re-let freshly vacant properties at prevailing market rates as “a substantial opportunity”, he said.

He talked about it “leading to enhanced returns for the company and our shareholders”. Mr Doherty held up a document, saying it set out “in black and white that you will allow them to raise rents and boost their shareholder returns.”

But at the same time, figures from the Residential Tenancies Board show that rents are already at record highs, he said.

Tens of thousands of renters have to start new leases annually, he said. “They’re ordinary people right across the State — people who, under your rules, will face rents re-set to full market levels.

“Behind each of those numbers are real households, forced to move because of work, the sale of a property, family breakdown, or because of landlords’ decisions.

“Many of them are already stretched to their limits.”