A slowdown in lettings at the upper end of the Dublin rental market means that some landlords are having to wait for weeks and even months for suitable tenants, according to rental agents. While demand is exceptionally strong at the lower to mid-level of the market, particularly for one-bed and two-bedroom apartments in the city centre renting at £600 to £800 per month and family homes for up to £1,000 - units that are available at £1,500 upwards are remaining unlet for longer periods of time.
"While a good, well-located two-bedroom apartment takes no more than a day or two to let at rates of £700 to £800 per month, expensive houses are staying on our books for four to six weeks and even longer," says Siobhan Kirwan of O'Dwyer Property Management.
The growth in expensive rental properties has been fuelled in recent years by rapid developments in the financial services, as well as by the arrival of major information technology companies.
However, investors who have bought property to let are pitching rents at a level to match current house prices, and, in some cases, their rents are just too high. Middle ranking executives coming into the country are frequently restricted to houses and apartments costing up to £1,000 per month.
Some agents also acknowledge that there has been a slowdown in the number of foreign executives moving to Dublin in recent weeks and this will inevitably lead to a glut of properties available to rent in the middle price range of the market.
"We are finding it slow to let in the £1,500-plus sector," says Siobhan Kirwan, who currently has four properties to let at £2,500 per month on her books. "In the past, we would have expected to let them within a matter of weeks, now it is turning into months," she says.
"The top end of the market is slower to let because there is a lot more available at that level than ever before," says Carina Warner, manager of lettings at Hooke & MacDonald. "There are a lot of luxury homes to let and they don't tend to move very quickly. Once you go over the £2,000 mark, things go very slowly indeed."
The number of investment properties has increased dramatically in the past three years and rental agents agree that this trend has led to a glut of upmarket properties available to let.
"Quality, luxury homes appeared on the lettings market for the first time in volume in the last three or four years. Now there are too many of them, in my opinion," says Siobhan Kirwan.
"A lot more people have got involved in the letting business because it has proved extremely lucrative," says Denis Kavanagh, who formerly ran Olivers letting agency and now heads up Gunne's letting division. "However, those who are buying expensive investment property are not getting a high rental yield at the moment. They are not covering what they have purchased," he says. "There is a limit to what people will pay to rent a property. If a couple can afford £850, they are generally on a fairly tight budget and will not go the extra £50 or £100." The problem is particularly evident in new housing schemes where a large number of units are owned by investors and come up for rent at the same time.
"In some of the newer apartment developers, there are 10 to 15 units to let at the same time. You either need to be cheaper or better to let your one," says Sherry FitzGerald director David Lewis, who heads up the company's lettings division. "I think a lot of landlords are being unrealistic about the rent they can command," says Siobhan Kirwan.
However, in a lot of cases they have bought an expensive property and they are not prepared to accept a lower rent. "You can appreciate if someone has paid £250,000 for an apartment and they are being told that it is worth £1,000 per month in rent, then that does not make economic sense to them. But that is the level it is worth. "If they compromise a little to meet the market then they will get a tenant," she says. "There are landlords who think that the market has gone wild rent-wise and that is not true. The properties that are sitting on books are those owned by landlords who won't be realistic."
According to Lisney's lettings manager, Joan Fogarty, who has over 200 properties on her books ranging from £700 per month upwards, the market is considerably slower once rents go above £1,200. About 10 of the properties on her books are to let at between £3,000 and £8,500 per month, and at that level, houses can take three or four months to let.
"Landlords hear that rents have gone up but that is only happening at the lower end of the market. It is hard to persuade them that increases are much slower at the upper end. Also, since capital values have gone up so much, they feel that rents should be following suit."
As the supply of expensive lets grows, so too are tenants' expectations. "Clients with this kind of money to spend are very particular about the services they are getting," says David Lewis. "People have to be prepared to put the effort in, particularly in-between lets. Landlords are understandably under pressure to get a tenant in fast but really they should be taking a week or 10 days to get their property looking its absolute best. It will stand to them in a better rent and perhaps in a faster letting time," he says.
Siobhan Kirwan agrees that tenants are becoming more choosey. "We have tenants who want to see eight to 10 properties before they will decide. Three years ago, we would have showed them one or two and that would have been it. Now, they are aware of the choice in the market, and they want to see what's available."
According to Hooke & MacDonald's Carina Warner, it is quite common for prospective tenants to want to see over half a dozen properties before they will commit to renting anything and this trend is particularly prevalent in the upper rent range.
However, while demand may be slow for expensive properties at present, it is thought it may well pick up towards the end of the year. With Citibank due to open its new European headquarters in the IFSC early next year, agents expect there will be a renewed demand for rental properties, particularly in the £1,000-plus price range.
