Rundale

Author’s photo of Rockpoint development, dithered to reduce file size.

Fiadh Tubridy

In an email exchange with the authors of this article last year, Pat Farrell, former Fianna Fáil senator and CEO of Irish Institutional Property, the representative body for corporate landlords in Ireland, wrote that, “[T]he members I represent are corporate landlords and the quality of stock would be top quartile [for energy efficiency] in terms of the sector as a whole given most was purpose built within the last decade or so”.

Farrell’s email reflects the influential idea, frequently repeated in government and industry publications, that institutional investors provide better quality housing than their smaller scale counterparts and that they have an important role to play in meeting retrofitting targets and contributing to the decarbonisation of the residential rental sector. This idea has been given additional legitimacy by recent reports from the ESRI and the Housing Agency which suggest that corporate landlords have the required capital to invest in energy efficiency and are also well positioned to take advantage of long term returns arising from such initiatives. It is a highly consequential argument given that it was one of the justifications for the controversial new Rent Pressure Zone (RPZ) legislation introduced in March, which is likely to lead to steep rent increases across the private rental sector.

The RPZ legislation is far from the first example of the state aiming to encourage institutional investment in the private rental sector (PRS) or to create market incentives for investment in energy efficiency and decarbonisation. Interrogating the outcomes of those previous interventions is important in understanding the likely outcome of the recent RPZ legislation and, more generally, of relying on corporate landlords to decarbonise the housing system.

Over the past 15 years the state has taken an active role in encouraging the financialisation of housing through facilitating the involvement of financial institutions, such as private equity funds, in the residential rental market. Important steps in this process include legislation to facilitate the establishment of Real Estate Investment Trusts (REITs) in 2013 and bulk sales of distressed sales of properties to institutional investors through the National Asset Management Agency (NAMA). The key objective of these measures was to attract investment and restart the property market after the financial crisis. However, a further rationale put forward by government has been that institutional investors and corporate landlords contribute to the ‘professionalisation’ of the private rental sector and provide better standards to tenants.

In relation to energy efficiency, one measure that has been discussed since the early 2010s is the idea of minimum energy efficiency standards for private rented properties. The 2011 Affordable Energy Strategy stated that the government would “introduce and progressively increase minimum thermal efficiency standards for properties offered for rent” by 2020. This has been restated in a variety of further climate and housing policies including the 2021 Climate Action Plan which committed to the introduction of a minimum BER for private rental properties by 2025. However there has been no action to implement this proposal and it was quietly dropped from the government’s most recent housing policy document ‘Delivering Homes, Building Communities’.

In the absence of such forms of direct regulation, the state defaulted to providing market incentives and creating a framework whereby investors could profit through improved energy efficiency. Under the Rent Pressure Zone (RPZ) system established in 2016, exemptions to rent increase limits were granted in the case of a substantial change in the nature of the accommodation’, including instances where a BER rating is significantly improved. This has been welcomed by some industry-friendly observers as ensuring landlords can ensure a return on investments in energy efficiency improvements. Others, such as Threshold, have raised concerns that these exceptions may lead to reduced affordability. However, the available evidence suggests low uptake of these exemptions, which corresponds with evidence of limited retrofitting activity across the PRS as a whole.

What has been the result of these twin policy agendas, namely promoting institutional investment and creating market incentives for retrofitting? Most notably, there has been dramatic growth in the proportion of properties controlled by corporate and large landlords. Landlords with more than 100 registered tenancies now own 29% of residential rental properties in Dublin and throughout the country there are 136 landlords with more than 100 registered tenancies.

When it comes to energy efficiency, despite Pat Farrell’s claims, the evidence is much less clear. Contrary to his argument about purpose built rental accommodation, the majority of large corporate landlords in Ireland have entered the market through buying existing properties, including many built in the early 2000s prior to the introduction of more stringent energy efficiency standards. While there is data available from the CSO from 2021 about average energy ratings for different forms of rental tenure, including the corporate landlord sector, this only covers properties new to the market, meaning it is skewed in favour of new builds and those with higher energy ratings (ESRI).

As part of the EPA-funded Just Housing project, we set out to find out about conditions and energy efficiency in the corporate landlord sector, including how retrofitting does (or doesn’t) fit into the investment strategies of industry players. We carried out in-depth research to investigate the investment strategies of three major corporate landlords, IRES REIT, LRC Group and Orange Capital Partners, and the implications of these investment strategies for tenants, including through a tenant survey. What this data shows contrasts starkly with government and industry narratives about high standards and sustainability.

Orange Capital Partners has built its business model on a partnership with another major institutional investor, Bain Capital, whereby the latter bought up dilapidated bedsits, evicted sitting tenants and renovated the properties, before selling the majority of their stock to OCP to be rented out at premium rates. The data we’ve collected shows that, despite this ‘renoviction’ based investment strategy, energy ratings for OCP properties are generally very poor. The vast majority of OCP tenant who responded to our survey stated that they experienced difficulties keeping their homes warm in winter and a significant proportion highlighted issues such as mould and single glazed windows causing draughts and condensation. Despite this, the average rent for an OCP property increased by 96% between 2016 and the present, while the average Dublin increase was 69%.

LRC Group has an alternative investment strategy based around minimal investment in maintenance and maximal rent increases between tenancies. Similar to OCP, average energy ratings for their properties are well below that for the PRS as a whole, and both records of RTB disputes and results from our tenant survey show very severe maintenance problems including tenants being left without heating as well as chronic dampness and mould. Meanwhile LRC have a well-documented record of taking advantage of a loophole whereby, upon the expiry of a Part 4 tenancy, tenants can be evicted without their landlord needing to provide a reason, and then exploiting gaps in enforcement of RPZ legislation by adding illegal service charges to the contracts of new tenants. Using this strategy they have managed to increase the average rent for their properties by an astonishing 144% between 2016 and the present, over twice the Dublin average.

Finally IRES, Ireland’s largest corporate landlord, presents an alternative case of conditions which, while far from ideal, are markedly better than those faced by tenants of LRC and OCP. Corresponding with their status as a publicly listed company, they place greater emphasis on compliance with Environmental, Social and Governance (ESG) metrics than either OCP or LRC and the average energy ratings for properties compare favourably with the average for the PRS. Although it is important to note that their relatively better energy efficiency record is the result of a strategy of selling off underperforming properties rather than actual investment in retrofitting. According to company records, over the 13 years they have been operating in the Irish market, they have undertaken retrofits of only three of their more than 3500 properties, an abysmal rate of progress towards decarbonisation.

In contrast to LRC and OCP, average rents for IRES properties have grown by only 29% since 2016, illustrating the disconnect between conditions, energy efficiency and profitability in the corporate landlord sector. IRES’ low rate of rental revenue growth led to a shareholder revolt and ultimately to the adoption of a new business strategy of which one key aspect was to be “working constructively with stakeholders, including government, to push for positive change in the Irish residential regulation system”.

This was manifest in an intense lobbying campaign both directly by IRES and by Irish Institutional Property, spearheaded by Pat Farrell, for a relaxation of rent controls, culminating in the new RPZ legislation introduced in March of this year which was bitterly opposed by opposition parties and tenant organisations such as CATU. As stated above, one key argument put forward by lobbyists and the government is the idea that the previous 2% limit on rent increases disincentivised investment in maintenance and energy efficiency, and that reforms were needed to support decarbonisation.

It is, however, important to interrogate this argument in the context of the findings about the investment strategies of OCP and LRC outlined above. Both of these examples show companies finding ways to circumvent the RPZ regulations which existed prior to March 2026 with minimal investment in significantly upgrading their portfolios. The new RPZ legislation creates further opportunities of this type, for example through incentivising landlords to carry out so-called constructive evictions by neglecting maintenance or harassing tenants into leaving ‘voluntarily’ after which rents could be reset to ‘market rate’. Recent media coverage has highlighted that IRES has begun trying to restrict the addition of new tenants to existing leases, claiming that tenants must sign a new contract with rents at the market rate.

Several key points can be gleaned from all this. Overall, state efforts to attract institutional investment through creating a friendly regulatory have been ‘successful’ on their own terms, although the wider outcomes, such as evictions and out-of-control rent increases, have evidently been disastrous for tenants. Secondly, the state has relied exclusively on market incentives as the means to promote decarbonisation by creating a framework whereby landlords can profit from improving the energy efficiency ratings of their stock, most recently through the new RPZ legislation. In the past this has been a complete failure given that, instead of investing in their portfolios, corporate landlords have taken advantage of a friendly regulatory regime to reap enormous profits without any need to invest in meaningfully improving conditions for their tenants. All available evidence suggests that the new RPZ legislation is certain to continue this trend.