The February 2019 report on institutional investment in the housing market prepared by the economics division of the Department of Finance examines the role of institutional investors and large-scale landlords in the Irish residential property market. The report finds that the combined purchasing activity of property funds, real estate firms and real estate investment trusts accounted for a net 1% of transacted units in 2017. Ownership of rental properties by large-scale landlords, that is, those who own more than 100 rental units, is also low, accounting for 4.6% of the wider market.
The report acknowledges that the purchasing and ownership activity of such firms can be more pronounced at a local level, particularly in the context of the apartment market. In the main, the report acknowledges the activity of such firms as a positive development and points to emerging evidence that they are a driving force behind a significant increase in the supply of new apartments in Dublin. As Minister, I welcome their much-needed delivery of high-quality, high-density and well-located rental units.
The report highlights that there may be a risk that such firms could scale up over time to develop monopolistic or oligopolistic pricing power. However, the report also notes that there is currently a diverse range of landlords and property types in the rental market. In 2017, approximately 310,000 private rented tenancies were registered with the Residential Tenancies Board, RTB, and 86% of landlords owned just one or two rental properties.
In fact, 70% owned just one property. Furthermore, the Department of Finance report focuses exclusively on apartments for analysis and comparators, whereas the market consists of both apartments and houses.
Part 3 of the Residential Tenancies Act prescribes the legal procedures for the setting and review of rents. Section 19 prohibits the setting of a rent above the market rent. Essentially, the amount of the rent payable is agreed between the landlord and tenant, cognisant of local rents for similar dwellings. These provisions are kept under ongoing review by my Department.