How does social housing investment compare with being a traditional private landlord?

• Date: 08 June 2021
• Author: Fiona Reddan
• Published date: 08 June 2021
• Publication title: Irish Times (Dublin, Ireland)

Individual investors can do it too, by agreeing to a long-term lease with a local authority or approved housing body for between 10 and 25 years. And when you see the advantages of such an approach, the reason institutional funds are finding favour with the Irish market may also be evident.

As a relatively low risk income producing asset, social housing has also become increasingly popular with individual investors, who are looking for a home for their cash, their pension fund, or their approved retirement fund (ARF).

Below we take a look at how the new social housing model compares with being a traditional private landlord.

No rent rules With a social housing contract, rent rules don't apply. This means that increases - even in properties situated in rent pressure zones - can be in excess of those prescribed by the rules, which is set at 4 per cent a year.

Typically, rent reviews will take place every three to four years, and are linked to the Harmonised Index of Consumer Prices (HICP) Ireland. This is a measure of inflation in Ireland, and is slightly different to the Consumer Price Index, in that it excludes certain indicators, such as mortgage interest, home insurance, and it allows for comparison with other EU countries.

According to Dublin City Council, rent reviews under standard long-term leasing occur on the third anniversary of the commencement date of the lease and every third year thereafter. And the rent "can increase or decrease depending on the percentage change in the index".

There is also typically no break clause in such agreements.

No RTB registration If you're a private landlord, you must register each tenancy with the Residential Tenancy Board (RTB). This costs €90 per tenancy, with a late fee of €180. It is a legal requirement to do so and, in any case, it is...