Dáil Éireann Debate, Thursday - 20 February 2014
28. Deputy Richard Boyd Barrett asked the Minister for Finance the action he will take to deal with rapidly rising rents in Dublin and other urban centres particularly in terms of reviewing the appropriateness of real estate investment trusts, the private housing and rental market generally and the policies of the National Asset Management Agency; and if he will make a statement on the matter. [8364/14]
View answerAccording to the consumer price index, private rents rose nationally by 6.0 per cent in 2013, following on from an increase of 2.5 per cent in 2012. However, this follows a fall of over 25 per cent between 2008 and late 2010. It is important to note that, on this basis, private rents are now at approximately the same level as they were in January 2003.
The PRTB rental index, which provides a geographical breakdown of developments in the residential market, shows that monthly rent levels were up by 6.4 per cent on a mix-adjusted basis in Dublin in the year to Q3 2013. Rents outside the capital were down by 0.2 per cent over the same period. As a result, rents in Dublin stood 14.1 per cent below the levels seen in Q3 2007 (the beginning of the index), with rents outside Dublin down 23.4 per cent over the same period.
As regards Real Estate Investment Trusts, I would like to highlight that potential benefits for property tenants were a motivating factor in the introduction of the REIT framework last year. REITs are specifically designed for the long-term holding of income-producing property. They are not designed to hold development activities, or to be a vehicle for short term speculative gains, and so can provide greater scope for stable, long-term tenancies.
The first REIT launched in July 2013, and made its first property purchases in October 2013, so there has not as yet been sufficient time to determine the impact, if any, which REITs have had on rental prices in Ireland. To date the REITs that have launched have focused on the commercial sector. My officials will be monitoring the uptake of REITs in the Irish property market, but it is not expected that REIT ownership of property will reach the level of concentration at which a distortion of competition in the market may occur.
As regards the National Asset Management Agency, NAMA is funding both unfinished housing units and new development. It is estimated that approximately 4,500 residential properties will be completed and available for sale or rent in Dublin over the 2014-16 period through NAMA debtors/receivers or joint ventures involving NAMA. In addition, NAMA is funding the completion of existing and the development of new residential developments in the main urban areas to which it has an exposure. NAMA is working closely with the various local authorities in this respect. NAMA has indicated that in many instances, planning issues and other obstacles need to be resolved to facilitate the delivery of new residential supply.
In summary, I wish to assure the deputy that my Department will continue to monitor developments in the property and rental markets. As set out in the Government's Medium Term Economic Strategy, the Government will continue to work on addressing remaining challenges in the property and construction sectors. This will include developing an overall strategic approach to housing supply, identifying and implementing further improvements in the planning process to facilitate appropriate development, and seeking to improve financing options for development and mortgage provision.
