Dr. Ronan Lyons:

I thank the committee for the opportunity to speak on the topic of the short-term lettings segment and its impact on the wider housing market. This is in the context of perhaps one of the most important items of business for the Government, namely, housing and the increasingly acute shortage of housing around the country and particularly in Dublin and the major cities. In considering solutions for that overall problem, we must think about the scale of any solution and the costs and benefits associated with a proposed solution.

In that regard I wish to make three main points in this part of the proceedings. First, we must distinguish between regulatory and taxation issues and supply and demand issues when considering the short-term lettings market. Second, there is a role for short-term lettings in respect of tourist demand. Third, and this is perhaps the main point, there is the scale of short-term lettings relative to the scale of the problem with the shortage of housing.

On the first point, as I note in my prepared submission we often read horror stories about short-term lettings, particularly for those residents nearby, with regard to noise, anti-social behaviour or unsocial hours. These are genuine bad experiences faced by those residents. They are not necessarily related to the challenge we are trying to address here, which is the shortage of housing. Instead, they are about the regulation of that segment. If one converts a full-time residence into full-time, short-term letting accommodation, for example, one might be in breach of management company rules or, and I understand an example of this happened in the Dublin City Council area recently, in breach of planning in terms of change of use. Where those rules exist, they must be enforced. If there are gaps in the rules and they are not protecting people, obviously we must introduce rules that give the protection that is missing.

Any connection between those kinds of rules and the wider housing market, in terms of the lack of supply, is certainly not the intent behind such rules. It is about making sure the rules are followed and are complete.

The taxation of income generated by short-term lettings is a related issue that crops up often in the popular media. I understand that Airbnb, for example, gives information to the Revenue Commissioners on a regular basis who in turn ensure tax compliance. If one changed the tax burden and singled out the segment for particular treatment, the supply of short-term lettings would be affected. The design of the tax system and its broad principles should not be done in a way to have a particular effect on the reallocation of housing or real estate across different segments of the market.

I shall make a slightly broader point on the importance of demand. I am a demand fundamentalist because I think all demand is good. It is a good thing if somebody wants to spend time in Ireland. We should facilitate people if they want to live here or visit and if they would rather not leave, as has been the case for many individuals in recent years. When thinking about suitable regulations for short-term lettings, we should remember that the market is important as it caters for a person or tourist who has a particular price point or income level and for people who wish to remain here for longer than a hotel stay. A short-term let is an important option for people who wish to spend three or four weeks in this country. The distinction has become somewhat blurred in recent years due to a lack of hotel accommodation but the situation is being rectified. There has been a 40% increase in the stock of hotel rooms being built in Dublin so there will be less pressure on the segment. The addition of new hotel beds does not mean there is no role for short-term lettings into the future. Short-term lets cater for a particular price point. Dublin and other cities should not just be tourist destinations for the wealthy. The cities should be accessible to anyone who has the means to afford the cost of flights and suitable accommodation.

The main point I wish to make relates to the relative scale of the short-term letting segment and the shortage of accommodation throughout the country. I know that the committee will hear from Airbnb later. It may have the specific numbers. However, in terms of what members have heard and what I have heard, for the size of the full-time short-term lettings segment in Dublin, one rarely hears of a number larger than 3,000. Typically, most numbers one sees for short-term lets in full-time dwellings or residences are much smaller than 3,000. If one looks online using a sufficiently distant date into the future, one would get a few hundred in Dublin. To put the figures in perspective, if there are fewer than 4,500 rental listings in Dublin in any given month, then rents in the city will rise. That is the rough rule of thumb that we have seen over the past ten or 12 years. The Dublin rental market needs approximately 4,500 listings every month. Even if it were possible to commandeer the entire stock of properties in short-term lettings, one would only meet two to three weeks of rental demand. We are talking about different scales in the context of any proposed solutions. There is also the scale of the problem to consider.

I recommend that the committee and the Legislature consider using vacant homes. The vacancy rate in the Dublin City Council area is close to 10% and excludes over-the-shop vacancies that are not often classified as residences. That is about the twice the vacancy rate one would expect in a healthy housing system and it means that there are between 15,000 and 20,000 unnecessarily vacant properties in the capital. That would be the more fruitful area to look in terms of tackling the scale of the shortage of housing.

To conclude, I shall outline the scale of housing need. People will have heard various numbers on how many homes should be built on a yearly basis. I shall add my own number. It is based on my understanding of all of the different components of housing demand, including market, non-market, obsolescence, existing housing stock falling out of use, changing demographics in terms of household size, the natural increase in population and net migration. If I add in all of those components of demand, I cannot come up with a number smaller than 40,000 a year. Realistically, it would be closer to 50,000 a year. In Dublin, that would translate to between 15,000 and 20,000 units a year. The vacant stock is a potential quick win of about a year's worth of demand. It probably would not all come on stream overnight but it is a potentially quicker win as it takes longer to build housing supply. The primary focus needs to be on such stock. There may be issues with short-term lettings. In terms of what one could do, even if one could commandeer everything, it would be small relative to the scale of the challenge.

I look forward to the wider discussion and I thank the committee for the opportunity to present to it today.