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Rents 15% lower for existing tenants – ESRI

Research from the Economic and Social Research Institute (ESRI) shows that existing tenants across the country are paying just over 15% less rent than new tenants.

The study, funded by the Residential Tenancies Board (RTB) compared tenancies that started between April and September 2022 with existing tenancies of at least one year in duration.

The institute said that rents paid by existing or sitting tenants were lower across the country, though there were big variations in the differences across areas and property types.

Nationally, new tenancies paid €1,517 a month, compared with €1,303 for existing tenancies – a difference of 16.4% a month.

Similar properties

When the ESRI compared costs for similar properties, rents for existing tenants were 15.2% lower, with the gap outside Dublin higher, at 17.3%. The difference in Dublin was 13.4%, falling to 12.5% in the Greater Dublin Area (GDA), which excludes Dublin.

In Dublin, more than one in five existing tenancies are above €2,000 a month, compared with nearly two-fifths of new tenancies.

The largest gaps between the rents paid by sitting and new tenants are found in the north-west, west and parts of the midlands, with smaller gaps in the east of the country.

The ESRI says that these findings are likely to reflect the rapid rental inflation in new tenancies observed in more rural and less traditional rental markets in recent quarters, as well as less frequent turnover of properties in many of these areas.

One-bedroom gaps higher

The research finds that larger properties see the greatest differences between the rents paid by sitting and new tenants, especially in the cities of Waterford, Limerick and Galway cities.

The ESRI points out, however, that this is not the case in Kerry, Westmeath and Mayo, where the gaps between the prices paid by new and sitting tenants are highest for one-bedroom properties and are generally decreasing in property size.

“This may indicate a particular shortage of smaller properties relative to demand in these areas,” it says.

The study shows that one-bedroom properties make up a higher share of new tenancies compared with existing ones (22% and 17%, respectively).

Three-bedroom tenancies and those in non-urban areas make up a lower share of new tenancies compared with existing ones.

Pressure points

The ESRI says that this indicates that smaller properties and those in more urban areas turn over more frequently, and are therefore over-represented in new tenancy measures.

“With almost one-fifth of Irish households renting from a private landlord, these data are crucial for understanding the sector as a whole,” said one of the report’s authors Dr Rachel Slaymaker.

“Observing large differences between existing and new tenancy rents can help to identify particular pressure points in the market,” she added.