Rental values have been steadily growing, with the annual rate reaching a healthy 10.5% last month . . .the fastest growth rate since 2002. Indicators are that, even with the recent drop in the stock market, property remains as solid an investment as the bricks and mortar it's built from.

According to the Sherry FitzGerald group, bouyant rental inflation over the past year was most notable in Dublin, followed by Cork, Galway and Limerick. Thirty seven percent of new homes and 20% of second-hand properties sold through the agency in 2006 were to investors. Anecdotal evidence for the first two months of this year shows strong rental growth for Dublin and Cork of upwards of 20%, says chief economist Marian Finnegan.

"A quality two-bed apartment in south Dublin which was letting for 1,300 in early January is now achieving approximately 1,600 per month, and this upward trend is mirrored in the city centre.

A typical two-bed apartment in a dockland location such as Hanover Quay now achieves 2,000, up from 1,700. At the higher end of the market, there is demand for large, four-bed family homes, with rents commanding upwards of 5,000 and even 7,000.

The upward trend in rents is mirrored in Cork, where a one-bed apartment can command 900 per month, up from 750 in early January. A two-bed now rents on average 1,200, up 250 from the beginning of the year. The two-bed apartment, well located, is the type of property most in demand from tenants."

As for which areas will achieve the best rents? Anywhere within a 15- or 20-minute walk of Dublin city centre will generate a decent rent, say agents involved in the lettings market.

The shiny new developments along the docklands area and the IFSC consistently perform well. The biggest jump in rents over the past 12 months, according to figures from the latest Daft. ie rental market report, were recorded in Dublin 2. Two-bed homes in Dublin 18 also garnered significant increases with rental figures of 1,574. That post code includes Sandyford, Stepaside, Kilternan and Carrickmines.

There is also good value towards the west of Dublin, according to Barry Finnegan, associate director with the lettings division of Sherry FitzGerald.

"As with any area, the investor should make sure that the property is very close to good transport links, as well as convenient to good shops.

Just as location is key when buying your own property, it's also crucial in the buy-to-let market. Consider areas along the Luas line, especially towards Dublin 8, and also along the Dart, and the Arrow rail link which takes in Ashtown and the Navan Road."

As tenants typically rent for a year before moving on, they are not interested in improvements in transport or facilities coming on board 12 months later . . . it's the areas that are convenient now that matter, adds Finnegan. If tenants tend to move on, is there any danger than the investor will be left with an empty property on their hands?

"The only people with empty properties are those that have set their rents too high. Vacancy is certainly not a problem for landlords just now, and in the best areas, something that comes up for rent in the morning will be snapped up by afternoon."

Key factors in the health of the rental market include the high inward migration, sustained levels of employment, tax-break properties, and maturing SSIAs, says Finnegan. And while there are signs that a significant number of investors took their money abroad last year, buying in the emerging markets in eastern Europe, the level of investment in the Irish market remains bouyant. Three-quarters of purchasers of new homes last year plan to hold on to their property for more than five years, and half for more than 10 years, according to the latest report from property website Daft. ie.

While there is not a typical investor profile as such, people entering the buy-to-let market tend to be those who have traded up at least once since buying their first home.

The phenomenon in the UK of first-time buyers unable to buy their first home and investing instead in buy-to-let . . . while remaining to live with their parents . . . is not an emerging trend here are yet.

However, Geoff Tucker, economist with agent Hooke & MacDonald, says the rental market can give a leg-up to first-time buyers here hoping to get on the property ladder.

"Our figures show that one in every four first-time buyers purchasing a new home last year planned to rent out a room. Assuming buyers rent out a spare room and claim mortgage interest relief, a couple could afford a two-bed property in north Dublin for about 1,000 per month, " says Tucker.

And despite the slowdown in the residential market overall, the average price growth of 5% in house prices for 2007 looks more sustainable than the unfeasibly high increases of the previous year.

"The prospect of a couple of years of single-digit growth rates in house prices is unlikely to deter investors from the private rented sector, which accounts for approximately one-in-nine private households nationally and one-infive in Dublin, " says Geoff Tucker.

Rights and obligations of landlords and tenants

TENANTS: YOUR RIGHTS

All tenants are entitled to a rent book detailing payments etc.

You're entitled to a minimum standard of accommodation which includes adequate heating, lighting, bathroom and cooking facilities.

The landlord can't enter your home without prior agreement, unless it's an absolute emergency like a burst pipe etc.

Tenants have the right to contact the landlord or their agent at any reasonable time regarding the rented property.

You're entitled to have friends stay overnight or for short periods unless you have agreed previously with the landlord that it's forbidden.

You're entitled to be reimbursed for any essential repairs you carry out on the property which are the landlord's responsibility.

You must receive notice to leave the property, ranging from a minimum of four weeks if you've lived there for less than six months, to at least 16 weeks if you've been there for four or more years.

TENANTS: YOUR OBLIGATIONS

You must pay your rent on time.

The property must be kept in good order.

Inform the landlord of all persons living on the property.

Allow the landlord access by prior agreement to carry out any repairs or maintenance.

Tenants must not create any nuisance for neighbours; eg, playing loud music at unreasonable hours, partying etc.

Comply with any special terms either verbal or written, in your tenancy agreement.

Give one month's notice before leaving, if you have lived in the property for over six months.

LANDLORDS: YOUR RIGHTS

You have the right to gain access to either inspect/repair the property, by prior agreement.

It's perfectly acceptable to make special requests from your tenants such as 'no pets' or 'no smoking' indoors etc, as long as this has been outlined in your tenancy agreement.

You have the right to expect full and prompt payment.

You have the right to expect your property to be kept in good condition, and to be reimbursed for any major damage.

If you decide to either sell, refurbish or retain the property for personal use, you have the right to request the tenant to leave, as long as you give them plenty of notice.

You have the right to request tenants to leave if their behaviour is anti-social.

LANDLORDS: YOUR OBLIGATIONS

You must ensure that the accommodation has sound roofing, flooring, ceilings and walls, and is in good repair and free from serious damp or rot.

Sinks must have hot and cold water.

A toilet with bath or shower must be provided as a minimum. In a house divided into flats, there must be one bathroom for every two units, unless they are bedsits occupied by one person, in which case there must be at least one bathroom for every four units/four people.

Heating must be provided and can include either an open fire with gas or electric.

All rooms must have adequate ventilation, and both natural and artificial light.

Common areas in any property must be in good condition, as must any outbuildings.

If you don't provide the minimum standard of accommodation, you can be fined up to 1,270 along with an extra 127 for every day that the offence continues.