Samizdata

“Dublin’s landlords would rather put their properties on Airbnb than rent to local families,” wails the strapline to an article by John Harris in the Guardian called “30,000 empty homes and nowhere to live: inside Dublin’s housing crisis”.

To give him credit John Harris has never been one to do all his reporting from a swivel chair in Kings Cross. He was one of the few Guardian writers to foresee a Leave victory in the EU referendum, having co-authored with John Domokos a well-regarded series of video and written reports from some of the most depressed parts of the UK. Now he is talking to people struggling to find somewhere to live in Dublin. Here is how he describes the situation:

For want of a flat with a secure tenancy, the two of them have lived here for almost two years, in what the Irish government calls a “hub”…

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I pay £95 for a single night’s stay (including a £43 “cleaning fee”), which highlights why whoever owns it has decided to rent it out in this way. The same move has been made by scores of other landlords: in August 2018, there were reckoned to be 3,165 entire properties listed on Airbnb in Dublin, compared with only 1,329 available for long-term rent.

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The city is smattered with key boxes for Airbnb apartments. A stock line among activists demanding action from the government gets to the heart of all this: in 21st-century Dublin, they say, homeless families stay in hotels, and tourists stay in houses.

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To make things even more difficult, her landlord then decided to sell up, which forced her to suddenly confront a private-rented housing market in which the monthly rent for anything similar was well over €1,500 (£1,300).

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I am sure this is all honestly reported. But I think Mr Harris might be failing to see what is in front of his nose. All else being equal, most landlords prefer long term tenants to short term ones. A nice steady sum arriving in the bank every month makes for an easy life – and for a relationship of mutual trust to grow between landlord and tenant. In contrast, short term lets carry many risks: that the tenants will not look after the place, having little incentive to do so; that they will get into arrears with the rent or skip without paying it, and, most obviously, that the property will sometimes be vacant and earning you no money.

When most of the landlords in a place are seen to flee the predictability of the long term market for the uncertainty of short term lets, or even more perversely for the sheer unrelenting work involved in “turning over” a property every few days for each new AirBnB customer, there is usually a two word explanation. I did not see those two words anywhere in Mr Harris’s article, though this sentence came close:

Central Dublin – along with 20 other areas of the country – is now classified as a “rent pressure zone”, which caps annual rent increases at 4%, but politicians and activists claim this gets nowhere near tackling the causes of skyrocketing housing costs.

The missing two words were, of course, “rent control”. I don’t know Dublin. I don’t know its housing laws. But as soon as I saw that line “For want of a flat with a secure tenancy” I knew that rent control was at the bottom of this story. And so it proved. It took me only a few keystrokes to find this report by Fiona Reddan in the Irish Times:

Will rent controls start to work in 2018?

That was written in January. It is now December. Judging from Mr Harris’s description, it looks like rent controls in Dublin “worked” exactly as rent controls usually do. If he had happened to read Ms Reddan’s prescient article from eleven months ago (I suppose it would be asking too much for him to have read Henry Hazlitt’s even more prescient words on rent control, written with reference to New York in 1961 but eerily applicable to Dublin in 2018), he might have had a somewhat better idea as to why the 4% cap on rent increases fails to tackle the causes of the crisis, as he sees it. Answer: it is one of the causes. Ms Reddan writes,

If you’re wondering why the much-vaunted rent controls, first introduced this time last year, are having so little impact on stalling price growth, consider this investor’s tale.

He had a house rented out close to Dublin that was bringing in €1,300 a month – far below the market rates, which were more than €1,800. Stymied by the rent controls, which limit rent increases to 4 per cent a year (and 2 per cent a year for tenancies in place before the end of 2016), when his tenants left he was looking only at marginal increases in his rent.

So what did he do? Sold this property and bought the one next door. Previously owner occupied, it wasn’t subject to rent controls, which meant that he could slap a new, higher rate of €1,900 on it. The difference in rent quickly covered his legal and stamp duty costs.