Published: Wednesday, 24th February, 2010 5:00pm

Rents are up but it's still hard times for landlords

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You may have heard the news that rents went up one per cent across the country in January. One percent is such a small statistic that you have to take into account of the inevitable margin of error that is factored into all survey results.

Nevertheless, this increase, the first in two years, might be a signal that the supply and demand imbalance in the apartment market is finally rebalancing, or it could also just be, as suggested by Daft.ie economist (Daft having produced the survey) Ronan Lyons that the creation of NAMA has resulted in developers withholding properties from the market to try and drive prices up to offset the NAMA debt restructuring, or where NAMA isn't involved to simply drive prices up both for tenants and potential purchasers.

The national average rent now stands at €765, almost 25% below peak levels seen in early 2008. During 2009, Dublin rents fell almost 19%; in Cork Limerick and Waterford cities by 16%, while Galway rents fell by 11%. Elsewhere in the country, rents fell by an average of 15%.

Over the past two years, reports Daft.ie the number of properties available to rent has increased from an average of 6,000 at any one time, to over 23,000 in just 2009. In February 2010 that number has fallen to 19,000 - a drop of 20%.

Landlords

For landlords, especially the thousands of amateur ones who hoped that their apartment or house purchase would provide them with a retirement pension some day, any kind of respite from falling rents will be welcome.

Far too many bought their properties at inflated prices, but hoping that they would benefit from rising capital values, were prepared to subsidise their tenants by paying some of their own income towards the total mortgage payments and expenses that were not being met by the rent they charged.

This loss has never been fully determined, but must run into many millions a year: every extra €200 a month that the buy-to-let investor pays, multiplied by the thousands of occupied and unoccupied properties built at the peak of the market amounts to a very large sum indeed.

The levelling out of rents - assuming this Daft.ie report isn't just a once-off event - might give a few landlords an opportunity to review their properties and see what they could do to actually income this year and reduce their shortfall.