The policy of capping residential rents to slow runaway housing costs has choked the supply of properties, the country’s top private landlord said today, as the Government considers introducing an alternative system of reference rents.
Taoiseach Micheál Martin said earlier this month the Government would study a proposal from a government-appointed Housing Commission for a new system that would tie rent increases to the rates charged for comparable properties in the same area.
Eddie Byrne, CEO of Irish Residential Properties REIT, which owns about 4,000 homes in Dublin and Cork, welcomed the Government’s efforts for reforms that could boost the supply of rental properties while also protecting renters.
But Eddie Byrne told Reuters he wanted to see further details about the proposal as “not a lot of clarity around what reference rents actually means and how they would be implemented”.
So-called rent pressure zones were introduced in 2016 to cap rent increases at a maximum of 2% a year, but the current legislation is due to expire at the end of 2025.
The potential changes are part of a broader Government push to boost private sector construction and attract more private capital after investment in the rental sector dropped sharply in the last three years as interest rates increased.
That contributed to a 24% fall in the number of apartments built in Ireland last year, pushing the Government further away from its target of overseeing 50,000 new homes a year to 2030 to meet demand. Just 30,330 were completed last year.
“If you look at construction that’s happening today of apartments, almost none of it is private rental apartments, and anything that is going to be delivered in the next few months was started two or three years ago,” Mr Byrne said.
“After that, there is nothing else that’s going to be delivered,” he added.
Irish Residential Properties REIT earlier reported higher like for like revenues and earnings for 2024 and said its portfolio by the end of the year had a total value of €1.232 billion.
The company said its portfolio was effectively fully occupied at 99.4% during the year, which it said reflects the continued strong underlying demand for high quality rental properties in Dublin.
I-RES REIT reported earnings growth of 1.4% for the year with adjusted EPRA earnings of €28.9m, up marginally from the figure of €28.5m posted in 2023.
It posted like-for-like revenue growth of 1.7% for the year, while its reported revenue fell by 2.9% to €85.3m due to the impact of the sale of 66 units as part of its ongoing “asset recycling programme” and the disposal of about 5% of the portfolio in the second half of 2023.
The company said it completed the disposal of 41 units in total in 2024 as part of its previously announced target of 315 units across a three to five year period, selling 21 individual units achieving sales premiums on average of about 25% and a further 20 units in line with book value through a bulk sale.
It also completed the bulk sale of a further 25 units outside of the 315-unit programme, also in line with book values, which took the total number of units disposed of to 66 in 2024.
Disposals completed during the year generated total gross proceeds of about €19m and a €1.6m gain compared to book value.
I-RES REIT said it expects to complete the disposal of at least a further 50 units in 2025, at an average sales premium of between 15% and 20%, generating total gross proceeds of about €18m
As at 31 December 2024, the company had 13 units in a sales process which it expects to complete in the coming months.
In today’s results statement, CEO Eddie Byrne said that 2024 had been a year of solid progress for I-RES.
“Following the conclusion of our strategic review in August, we delivered improvements across key performance metrics, including achieving earnings growth in 2024,” he said.
“Our ongoing asset recycling programme remains a key value driver, delivering strong sales premiums, improving portfolio composition, and providing us with excess capital to deploy against our menu of accretive growth options, including through the share buyback programme which we intend to launch shortly,” he said.
“Looking ahead, our clear focus is to maximise value for shareholders through the implementation of our strategic initiatives,” the CEO said.
“We will also continue to engage constructively and consistently with Government as it reviews the rental regulations. As an Irish longterm investor with permanent capital at our disposal, we are uniquely positioned to navigate the evolving market landscape and deliver sustainable growth into the future,” he added.
