Property agent Hooke & MacDonald announced Monday that it will no longer manage individual lettings because of the paperwork costs involved. The Residential Tenancies Act of 2004 has been recently amended by the Residential Tenancies Act of 2015 and the Planning and Development and Residential Tenancies Act of 2016, which extended rent pressure zones, made it harder to raise rents and increased the frequency of rent reviews and other bureaucratic procedures for private rented housing.
For a large property company like Hooke & MacDonald, the new regulations mean that managing single property lettings is no longer profitable. The company suffers from economies of scale, and only by managing entire apartment blocks and multiple lettings will it be cost efficient. For landlords renting a single property, this means not only being restricted by the regulations but also having to find a different company to represent them.
Hooke & MacDonald’s response reflects the consequences of the new regulations. In particular, regulation on rent pressure zones restrict the rise in rents in parts of the country where rents are the highest, such as in Dublin and Cork City. For example, parts of the Planning and Development and Residential Tenancies Act state that ‘the landlord may only raise the rent once every 12 months and the rent increase cannot exceed 4% per year’. Over the course of 2017, these zones will expand to cover more counties across the country.
When limitations such as rent pressure zones are put into place, shortages in the rental housing market are likely to occur. Landlords who cannot find a company to manage their property or are unwilling to accept the terms of new regulations may choose instead to sit on their property or put it up for sale. For renters, the consequences may be increased cost of search and inability to find a property in city centers. On the other hand, the winners of such governmental regulation are existing renters, who are protected from dramatic increases in rent.