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It is estimated that there are currently 10,442 student beds in
operation in Dublin, catering for just 13.2% of the student
population. At a national level, Ireland has 21 student
accommodation projects in the pipeline which could supply 7,181
beds by 2019. Of these, over 4,000 are under construction, 1,027
have planning permission and 1,957 are in the planning process.
However, the demand and supply dynamic in the student accommodation
sector is "likely to remain imbalanced for the foreseeable
future". As investors look to student accommodation as an
alternative asset class, there are a number of factors that need to
be considered before engaging in development.
1. Planning
Check your planning permission to ensure it allows for (i)
student accommodation and (ii) use of the property as short-term
holidays rentals outside of term time.
In order to maximise your investment, a property should yield a
rental income for every month of the year. As the rental income
generated from student lettings is limited to the academic term of
approximately eight months in each year, it makes financial sense
for an investor to seek to rent the accommodation as short-term
holiday rentals during the summer. This must be specifically set
out in the planning permission for the property.
The Planning and Development (Housing) and Residential
Tenancies Act 2016 (2016 Act)
The 2016 Act introduced, amongst other housing initiatives, a
fast-track planning process for student accommodation of 200 or
more beds. Where applicable, planning applications are to be made
directly to An Bord Pleanála. The fast-track planning
process will apply until 31 December 2019 or an extended period to
be determined by the Minister, but no later than 31 December
2021.
2. The Property Services (Regulation) Act 2011 (2011 Act)
The 2011 Act is the statutory framework which governs the
provision of property services by auctioneers, estate agents,
letting agents and managing agents in Ireland. The 2011 Act
established the Property Services Regulatory Authority (PSRA), the
main function of which is the licensing and regulation of property
service providers (PSPs). Subject to very limited exemptions, PSPs
in Ireland engaged in the provision of property services must be
licensed. It is a criminal offence for a person to provide a
property service without holding a licence. The person must be a
holder of a licence for the property service concerned. Developers
should be aware of the need for their provision of
"property management services" to comply with
the requirements of the 2011 Act.
3. Strategy
Developers and owners should, at an early stage, determine their
proposed strategy for the renting of beds in a student development
complex. Developers and owners can rent accommodation to tenants
directly or can enter into a rental arrangement with a college,
university or service provider who in turn will liaise with
students directly.
Student rental agreements typically fall within the parameters
of residential tenancies legislation in Ireland and in particular
the Residential Tenancies Act 2004. This means that students
after six months' occupation of a residential dwelling may
acquire tenancy renewal rights. There are also cost and
administrative red tape implications. This can have a significant
impact on an investor landlord's ability to freely deal with
its property. The risk can be avoided by engaging with a college or
university that falls outside the scope of the legislation for the
purpose of residential lettings.
4. Obligation to register student rentals
As a Landlord, you must register any residential letting
agreement with the Residential Tenancies Board (RTB). If you do not
register, then you will not be able to avail of the RTB's
dispute resolutions service and you may be prosecuted for failure
to comply with the Residential Tenancies Act. The cost of
registering a letting with the RTB is currently €90 per
letting registration provided the tenancy is registered within one
month after the commencement of the tenancy.
Conclusion
The student accommodation market in Ireland continues to perform
strongly for investors seeking a long-term investment option given
existing and future demand. While investors are attracted to the
sector and its proven resilience to economic downturns, the
practicalities and legal implications of this specialist real
estate sector must be considered carefully.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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