Dr. Michael Byrne:

I thank the committee for the invitation to be part of this session. I will read a slightly abridged version of my written submission. In the decade following 2010, Ireland experienced a catastrophic collapse in housing supply, as well as a rapid expansion of the private rental sector. These two processes have interacted to exert enormous pressure on tenants. In what follows, I will begin by assessing the impact of this change and then discuss the future of the private rental sector.

The major trends within the private rental sector can be addressed under three headings, namely, residential instability, private rental sector affordability and wealth inequality. Data collected by Focus Ireland indicate that almost 70% of families presenting as homeless have come from the private rental sector and the majority of these have been evicted. Residential Tenancies Board, RTB, data indicate that notices of termination issued by landlords have increased by 58% in the first half of this year compared with the previous six months. More than half of these terminations are linked to sale of property. Beyond this, we do not have robust evidence on the prevalence of residential instability, that is, evictions and involuntary moves. Therefore, the qualitative research we have is of particular importance. I have conducted two qualitative studies in recent years examining the experiences of tenants in the private rental sector, both of which find that insecurity is a pervasive feature of the housing experience of many tenants, which is a finding echoed by international evidence.

Based on the evidence from Ireland and internationally, we can conclude that the expansion of the private rental sector is associated with the growth of residential instability as a significant feature of our housing system. In terms of affordability, rental inflation appears to have become a structural feature of our housing system. Economic and Social Research Institute, ESRI, research indicates that 16% of households had housing payment-to-income ratios greater than 30% in 2015-2016, but that this figure was double for private rental sector households.

Another piece of ESRI research published earlier this year found that the introduction of rent pressure zone, RPZ, legislation led to a moderation of annual rent increases within RPZ areas. However, rental inflation for new tenancies continues to be very high.

In the context of the affordability challenge, housing assistance payment, HAP, and other rent subsidies provide a crucial support for renters with as many as one third of tenants now in receipt of HAP or another subsidy. Nevertheless, the cost to the Exchequer has accelerated quickly and rent subsidies do little to address the issue of residential instability outlined above.

The decline of homeownership is also associated with a growth of wealth inequality. Another piece of ESRI research published last year shows that the share of aggregate net wealth in the bottom 50% of households fell from 12.2% in 1987 to 6.8% in 2018. The decline of homeownership is identified by that research as one of the main drivers of wealth inequality, echoing international research. Taking these three issues together, the evidence suggests that the expansion of the private rental sector in the context of wider challenges in the housing system has accelerated housing inequality significantly.

Turning to the future of the private rental sector, rather than focusing on fixing the issues in the private rental sector, our focus should be on fixing the housing system as a whole and repositioning the role of the private rental sector within that housing system. Building on this, I advocate three guiding principles for how we think about the future of the private rental sector, the first of which is supporting tenants. The evidence demonstrates that a large majority of tenants do not wish to remain in the private rental sector. Policy needs to support households to move on from a private rental sector that is often failing them.

Further research is required here but there are a number of avenues through which this might be pursued, such as stabilising house prices in general, supporting households in accessing mortgages and expanding social housing and cost rental housing. These measures will reduce the concentration of ownership of residential property, which has the potential to create a more equitable and stable housing system, to produce better outcomes in terms of affordability and security and to reduce the extent to which housing operates as an investment asset.

Second, tenants who remain within the private rental sector must be protected. All the Irish and international evidence show that security of tenure is the bedrock for everything else in the private rental sector. Without security, tenants cannot advocate for themselves, cannot create a stable home and continue to be at risk of homelessness. Moreover, even if the ongoing attempts to increase housing supply are successful, by the time they have an impact on most households many of the children currently growing up in the private rental sector will already be adults. It is simply not possible to protect tenants in the short term via the mechanism of supply. Finally, we need to protect the stock of private rental sector dwellings, particularly given current concerns around small-scale landlords leaving the sector. However, policy that aims to protect the stock of private rental sector properties should not undermine the previous two objectives, namely, widening access to the other tenures and protecting tenants.