Rents are set far below reasonable returns-on-investment.
The European University Institute (EUI) calculates that to make a 5% return on investment, a developer would need to set rents 70% higher than allowed by the Rent Tribunal. Rents in all dwellings must match rents for alternative, comparable dwellings, based on size and ‘attractiveness’, primarily rents in low-rent municipal houses. Rents are little influenced by location, so that metropolitan units are specially underpriced. The system is enforced by Rent Tribunals.
