Once seen as the preserve of students or those who hadn’t quite grown up, the rental sector is attracting a whole new demographic since the implosion of the property market
FROM YOUNG families to established professionals, renting can mean living in the suburb you love with the flexibility to move should work or your children’s schooling demand it. Exhortations that rent is dead money ring hollow to those enjoying the perks of a plum neighbourhood, minus the shackles of a mortgage.
“It’s the ideal compromise for us right now,” says David O’Connell of the home he and his wife Cora McGreevy rent in the leafy suburb of Glasnevin. “Renting is just a more attractive option for us at the moment.”
The couple bought an apartment in the sought-after Addison Hall development in Glasnevin in 2004, the year they married. Both were first-time buyers. But following the births of daughter Evie and son Harry, the family needed more space. Always intending to keep their apartment as a long-term investment, they’ve decided to hang tough, renting it out while also renting a home that better matches their needs.
“The primary reason we’re renting it out is because we wouldn’t be able to gain the price we bought for it. It’s about 55 to 60 per cent down on what we paid for it,” says O’Connell of the apartment.
However, it is in a sought-after location where prices may ultimately recover and, with savings earning little interest in the bank, the couple decided to refinance the mortgage, paying off a chunk of the capital sum with a view to keeping the property long term.
But they aren’t keen to lock themselves into another mortgage just yet.
“Renting is a more attractive option for us because of the uncertainty over house prices and whether they are going to drop further . . . and secondly do we really want to have the burden of a second mortgage?”
Both are working – David as sales and marketing director with a hotel group and Cora as a doctor – and they knew and liked Glasnevin and it was convenient for work.
But looking for a three- to four-bedroom house with a large garden and parking was difficult, as family-sized rental properties in the area were in short supply.
The figures support this. The 2011 census recorded 475,000 renting households in the State, a sharp increase of 175,000 on 2006. And with Government policy to reduce incentives for homeowner-occupation, making it equally attractive for householders to rent as to buy, the move towards renting is set to gather pace. But can the sector cope?
“Housing policy is going to funnel people into the rental market, but the problem is the rental market isn’t ready for it,” says Lorcan Sirr, a lecturer in housing studies at DIT.
Sirr is calling for greater professionalism in what he describes as a “very amateur” sector where most properties are not ideal for the increasing number of families wanting to rent long term.
Estate agent Eoin O’Toole of Lisney in Drumcondra also sees an increase in the number of families wanting to rent. “You’re dealing with people who have a lot more ties locally and it’s a less transient experience for them. They are staying beyond the standard 12 months; they are committed to an area. We find that landlords have tenants staying for a longer time.”
While calling for more security of tenure for renters, Sirr says we also need to attract more professional landlords to the sector. That means permitting them to build high-density, purpose-built long-term rental developments.
Regulation of rent, though likely to raise the hackles of some landlords, can also be to their advantage, says Sirr. He cites New York as an example of where it works.
Looking to the UK, he advises that we adopt their tenant deposit retention scheme, where an independent body and not the landlord holds a deposit. Any interest earned is used to fund the administration of the account. In Paris, meanwhile, rental units are inspected by authorities to ensure their quality.
In the long term, O’Connell and his family would like to buy a house in the suburb, but they are not ready to do so just yet.
“The positive with renting is that you are not tied up with a second mortgage and all that comes with that.”
While their rent is “a bit more” than the mortgage on their apartment, the rent they receive from their apartment, rented to another professional couple, covers its mortgage.
The convenience of renting was further brought home to them when on two occasions while on holiday an issue arose with the house: the first time it suffered a leak and the second time there was a sewage problem. “We were just able to make a phone call to the landlord. If an issue comes up, it’s someone else’s problem.”
Across the city, another couple in their late 30s is also enjoying the benefits of renting.
“There is still a period of instability in terms of house prices. I’m not convinced it’s the right time to buy yet,” says a Sandymount resident, who because of his work in the banking sector asked not to be named.
“With the Spanish bailout confirmed and uncertainty still around what’s going to happen in Greece, I can’t see how it can be viewed as a good time to buy.”
But the couple’s decision to rent is not really about assuming a holding pattern until the time is right to buy. “We made the decision about three years ago, to find somewhere we liked and rent on a long-term basis.”
They now rent a 1950s three-bed house with a garden that is close to the beach and the city centre.
The flexibility is a plus. “We can move at a month’s notice if we decide to . . . I could end up working with a different client in a different location and want to base myself closer to where I work so that flexibility is very important.”
He stresses their decision to rent is not a financial one. They can afford to buy but they don’t want to. “We don’t want to be locked in. We like the flexibility and at the moment I certainly think it’s cheaper to rent.
“I know people talk about it being money down the drain, but we know exactly what our outgoings are. We’ve got nothing hanging over our heads. In terms of day-to-day stress, it’s a much better way to live.”
He says their decision often draws furrowed brows from those who still think renting is for mugs. “In other countries this is the norm. You might even pass a lease down to your children . . . there is a bizarre kind of need to own a property here, but [with a mortgage], you actually don’t own it anyway.”
“My gut instinct is that there is a culture shift going on in terms of renting,” says Lorcan Sirr. “People have seen the problems with the property market and they are looking for rentals, but they come back depressed. The cultural shift is happening but the problem is there is nowhere for that shift to go.”
