Property company Savills has urged the Government to ease rental caps in the next budget to arrest a sharp decline in the completion of new properties available for rent.
The Government introduced a 4 per cent cap in 2016 on rental increases in designated rent pressure zones in a bid to protect tenants from soaring rents.Is it time to introduce a new Irish savings scheme with tax incentives?It said this has led to a decline in the development of new rental units, with private rented sector completions in Dublin set to decline by 68 per cent to 1,600 units in 2025, according to Savills’ own data.
Savills said investors typically have an exposure of 20 per cent of rental income that goes on operational costs. “In an inflationary environment where rents are capped at 2 per cent but costs are uncapped, costs will erode ever more into the revenue element,” it said. On labour shortages in the construction sector, Savills noted that 67,250 workers will be needed by 2025 to meet the annual target of 33,000 housing units delivered per year, with this figure rising to in excess of 82,300 by 2030.