EXTENDING rent pressure zones to cover all of County Limerick was the “nail in the coffin” for many landlords choosing to leave the market, according to one Limerick auctioneer.
Pat Dooley, of REA Dooley in Limerick, said that rent pressure zones are one of the major factors in the current wave of landlords selling their rental homes and exiting the market.
This comes as Real Estate Alliance (REA) have published their annual report on the market in the past year.
The survey found that six in 10 sales in Limerick City in 2023 involved landlords selling their rental properties and leaving the market, with four sales in 10 in the county being fleeing landlords.
Speaking to the Limerick Post, Mr Dooley said that taxation of landlords and the wider implementation of rent pressure zones (RPZs) are the main causes of the mass market exit.
“You have a couple of different factors, taxation is one, the landlord that makes up the bulk of the rental market in Limerick or throughout the country is a landlord that has one or two houses – they make up about 80 per cent of the market,” Mr Dooley said.
“Those type of landlords are being taxed almost half their rental income every month, so that’s quite surmountable.
“Another major factor, which is a very unfair system, is rent pressure zones.”
“If you have two three-bedroom semis in the same estate and one has been let out at €700 a month, and the tenant leaves and you have to fill it up, the landlord can only look for two per cent more than the actual current rent,” he posited.
“If that was a first letting … it could be making more than twice that amount, it could make €1,500 or €1,600 per month, so that’s a very unfair system. And that’s a big reason, especially in the county as well. While landlords were saying they’d give another go at rental, it’s the nail in the coffin for them,” Mr Dooley said.
Interest rate increases, according to Mr Dooley, are another big factor in landlords choosing to leave the market, with numerous interest rate increases set to be enacted throughout 2023.
However what will look like bad news for renters, with so many landlords fleeing the market, may spell good news for those looking to buy their own homes.
REA’s annual survey found that the average price for a three-bedroom semi-detached home in Limerick was €290,000, with prices predicted to rise by a further five per cent in the coming year.
Despite the latest Daft.ie Irish House Price report showing that Limerick had a nine per cent increase in property prices, the highest in the country, Mr Dooley claims there is still value for money to be had for buyers.
“We came from a very affordable level. I think the national average was around €320,000 and we were well below that at €270,000, so we’re coming from a very low base in terms of price inflation, we’re coming from a much lower base than Dublin and our other counterparts in Cork, Galway, and Waterford,” he concluded.
According to REA Dooley’s report, issued earlier this week, the actual selling price of an average three-bed semi-detached house across across the country rose by 1 per cent in the final quarter of last year to €304,259, representing an annual national increase of 4.3 per cent.
