Landlords - Increasing Rents to keep up with interest rates

monkey24

Hey,

Here is something that doesn't get a mention in all these debates about the current housing market. Landlords are sticking up their rent to cover the interest hikes. So who is actually getting affected by their repayments, its the people who can't afford houses themselves and have to rent. Yup the average joe gets screwed again.
Our Landlord just increased our rent by over 15% and then started complaining about his repayments. I know this has happened to a number of people.

m

mikemac

Rent is decided by supply and demand not by interest rates.

So if you can find the same accomadation for less rent then leave your landlord and go elsewhere.
Hopefully, he won't be able to find replacement tenants and lets hear him moan them.

It's tough having your rent raised but afaik, they can only do it once a year so at least that's something.

Edit: If there are hundreds of thousands of empty houses and apartments around the country then it's a pity they aren't on the rental market as at least that'd drive down rent.

Calina

Supply is slightly constrained at the moment. That being said, some of the rent being charged in some parts of Dublin beggars belief.

I was hoping that side of the bubble effect would have played itself out by now but evidentally not.

minicin

One of my friends was saying she heard on the radio at lunch that over one quarter of houses in Dublin are lying vacant as people cannot afford the large rents being charged, yet landlords are refusing to drop their rent!

I wonder how true it is?

Surely a landlord would prefer to get someone in quicker by dropping their rent rather then to have an empty house?

Electric

The rent that some people are looking for is mental! I saw one house on Daft that was looking for someone to pay €660 p.m. for just a room in the house! It was only a two bed in Cabra!!!

It sickens me to hear landlords whinge about their repayments. I recently moved out of a house. When I was leaving the landlord told me that he was putting up the rent to cover his repayments. Myself and 1 girl moved in about 6 months before the other 2 girls moved in and he told me that when the others were there a year he would be putting up their rent too! Two rental increases in one year!

The thing is that it was a very small 3 bed house. He had converted the dining room into another bedroom and don't get me started on the kitchen. When one of the girls told him that if he were putting up the rent then she would be looking for him to redecorate (it hadn't been decorated in at least 20 years) he totally ignored her. When she mentioned it again he kept going on about what a bargain the place was etc.

Landlords have gotten away with murder over the years! They rent out complete dumps and then find any excuse to up the rent. There should be legal requirements to keep rental properties to a high standard and limits to the amount of people you can squeeze into a place

minicin

I agree, but I often wonder is it just the landlords fault or is it letting agents trying to add a bit more onto the rent so they get a bigger cut (although I am not entirely sure how the letting agent thing works or how much they get for letting a property!)

I find if you deal directly with a landlord the rent is often cheaper then if you deal with a letting agent maybe thats just me though.

monkey24

My rent has increased to 740 pm now and the place we are in now isnt even that great. Its good location, seeing its Harolds Cross. But honestly unless you are in the higher end of the salary bracket Dublin isn't the place to be. The country screws you for every penny they can.
Hopefully there will be more possibilities to work abroad with other countries starting to develop. I am totally disillusioned with Dublin/Ireland.

Our landlord owns countless properties, why should i feel sorry for a multi million pound property tycoon when all he does is pass his interest hikes onto the tenant. There is no effect on them, again the person who can't afford to own a house gets screwed either way.

Electric

minicin wrote:

I agree, but I often wonder is it just the landlords fault or is it letting agents trying to add a bit more onto the rent so they get a bigger cut (although I am not entirely sure how the letting agent thing works or how much they get for letting a property!)

I find if you deal directly with a landlord the rent is often cheaper then if you deal with a letting agent maybe thats just me though.

There was no letting agency involved in this case. Most landlords are just looking for their money spinner to continue. They don't want to cut their profit margin. They own a house that not only pays for itself but makes a profit and they don't have to do anything to it, bar collect the rent.

The situation could be vastly improved if landlords were obliged to redecorate once a year and keep the house modern. There should also be a prohibition on turning rooms intended for other purposes into bedrooms to up the rent! And there should be at least minimum bathroom to tenant ratio ie 1 bathroom for 3 tenants, 2 bathrooms for 4 tenants kinda thing!

dochasach

minicin wrote:

One of my friends was saying she heard on the radio at lunch that over one quarter of houses in Dublin are lying vacant as people cannot afford the large rents being charged, yet landlords are refusing to drop their rent!

I wonder how true it is?

The vacancy rate across Ireland is about 1/6 but only about one in every 10 Dublin houses: http://www.ireland.com/newspaper/breaking/2007/0816/breaking56.htm

minicin wrote:

Surely a landlord would prefer to get someone in quicker by dropping their rent rather then to have an empty house?

No, when house prices were rising beyond reality, "landlords" could make (not earn) plenty of money without the mess of dealing with actual tenants. Now that prices have stopped and are falling, even real landlords are turfing out renters so they can quickly show and sell what appears to be a "new" home to potential buyers*. But in the end we won't need any of the rules suggested by Electric. It comes down to supply and demand. Wait 6 to 12 months and renters will have the upper hand:

http://daftwatch.atspace.com

Ireland took a 5 year vacation from economic reality, but in the end it always comes back to supply and demand.


*Buyer: [baɪər/bahy-er] (noun)The person or people who intend to purchase a home in Ireland. They were last seen queuing for houses in Adamstown in 2006, but are now thought to be extinct.

antoinolachtnai

It's all about supply and demand. If you don't like the place you're in or think it's too expensive, find somewhere better or cheaper.

We could impose a bunch of regulations and appoint loads of inspectors, but what good would it do really? Guess who would have to pay their wages.

SimpleSam06

antoinolachtnai wrote:

We could impose a bunch of regulations and appoint loads of inspectors, but what good would it do really? Guess who would have to pay their wages.

It would prevent abuse by landlords, which by all accounts is widespread, and protect said taxpayers in their place of residence.

Heres an idea actually, any thoughts on setting up a website to name and shame nasty landlords? I'm sure it would be booming in no time, once word got around, and might help people avoid making expensive mistakes.

miju

i doubt one exists for the simple reason that the site owners would be facing at least one new libel case every day

SimpleSam06

miju wrote:

i doubt one exists for the simple reason that the site owners would be facing at least one new libel case every day

But an absoloute defence against accusations of libel is truth. Its a pity, really, you can't even complain about abusive swine who without a doubt permeate society, without fear of being sued.

antoinolachtnai

SimpleSam06 wrote:

It would prevent abuse by landlords, which by all accounts is widespread, and protect said taxpayers in their place of residence.

By all accounts? You mean by some accounts. There are plenty of perfectly good landlords.

Inspections and preparations for inspections on a yearly basis would easily cost around 1200 euros per year per premises. This scheme would result in rents going up by 100 euros per unit.

If you aren't happy with your accommodation, get other accommodation. There's no one keeping you where you are.

Heres an idea actually, any thoughts on setting up a website to name and shame nasty landlords? I'm sure it would be booming in no time, once word got around, and might help people avoid making expensive mistakes.

What about a scheme to name and praise good landlords? That might be a more useful starting point for people trying to hire properties.

Antoin.

SimpleSam06

antoinolachtnai wrote:

By all accounts? You mean by some accounts. There are plenty of perfectly good landlords.

Yes, well to clarify what I was saying, there are many widespread accounts of bad landlords, not that all accounts were bad.

antoinolachtnai wrote:

Inspections and preparations for inspections on a yearly basis would easily cost around 1200 euros per year per premises. This scheme would result in rents going up by 100 euros per unit.

Why wouldn't it be paid through taxes like the rest of the civil service?

antoinolachtnai wrote:

If you aren't happy with your accommodation, get other accommodation. There's no one keeping you where you are.

Thats a very easy answer. I'd prefer not to let some bollox get away with it, in fairness.

antoinolachtnai wrote:

What about a scheme to name and praise good landlords? That might be a more useful starting point for people trying to hire properties.

Absoloutely. Rate your landlord. I Have a fiver here that says it gets more bad ratings than good, however.

antoinolachtnai

SimpleSam06 wrote:

Why wouldn't it be paid through taxes like the rest of the civil service?

The 'user pays' principle? It make sense to tie the payment of service to the use of it. That's the way the PRTB is funded, amongst many other things. It would also serve to encourage people to buy their own homes, so avoiding the charge.

Thats a very easy answer. I'd prefer not to let some bollox get away with it, in fairness.

But if you moved out, he wouldn't get away with it. Do you think landlords like rental voids?

SimpleSam06

antoinolachtnai wrote:

It make sense to tie the payment of service to the use of it. That's the way the PRTB is funded, amongst many other things. It would also serve to encourage people to buy their own homes, so avoiding the charge.

Theres a general attitude in Ireland that "if you don't like it, sleep in the streets". Perhaps its a holdover from the good old days. Housing is as much a basic neccessity as food or water, and adequate protections to those people who do not own a home, especially on the poorer end of the scale, are the government's responsibility. Until fairly recently the only protection you could get was to have a lease. Ireland has a long way to go to catch up to more modern states in this regard.

antoinolachtnai wrote:

But if you moved out, he wouldn't get away with it. Do you think landlords like rental voids?

Hold on a minute there, are you suggesting bad landlords should just be allowed to go on their way, ripping off students, immigrants, and anyone else unlucky enough to try out their residence?

You're not a landlord yourself by any chance?

ronbyrne2005

miju wrote:

i doubt one exists for the simple reason that the site owners would be facing at least one new libel case every day

Register and host site outside of EU?

miju

AFAIK this wont make any difference ronbyrne. just slightly trickier for them to track you down to slap a libel suit on you

SimpleSam06

Yes, even if you do host in Mongolia and pay them via western union with false details, the Irish courts can at the end of the day order Eircom or whoever it is sitting on the pipes to block that URL from being seen within Ireland. Or possibly run a complaint straight to ICANN for your false details. There are ways around that, like setting up a shell company there, but its a cat and mouse game that can't be won, really.

On the other hand, if you were to freely offer up the contact details of anyone who posted a review on the site, and leave it to the landlord to pursue their complaint with that individual, wouldn't that make it impossible to sue the site itself? You could put reviews in an "on hold due to legal action" box, not displaying the complaint but displaying the fact that the landlord is pursuing litigation against the complainant, which is a matter of public record in any case. Grey areas galore.

Of course, then people would be able to judge how good or bad a landlord is by the number of "on hold" boxes under his name. Its a fine line, especially when you have gobshites trying to stir trouble by complaining about perfectly good landlords, from an internet cafe somewhere.

At the end of the day, however, landlords are offering a service in exchange for money, so they should be subject to as much public review and/or criticism as any other business.

antoinolachtnai

But they are as subject to public review and criticism as any other business.

Hold on a minute there, are you suggesting bad landlords should just be allowed to go on their way, ripping off students, immigrants, and anyone else unlucky enough to try out their residence?

But they're not allowed. You can take them to the PRTB.

Raskolnikov

micmclo wrote:

Rent is decided by supply and demand not by interest rates.

Try living in the real world, mate.

SimpleSam06

antoinolachtnai wrote:

But they are as subject to public review and criticism as any other business.

Well then a website where people can review them will do no harm, will it?

antoinolachtnai wrote:

But they're not allowed. You can take them to the PRTB.

The problem with that idea is that you can only take them to the PRTB after they mess you around. Wouldn't it be better to know in advance so you can avoid the worst of them? I'd call it a winner for everyone.

miju

that is the real world Raskolnikov. when rates were rising rents weren't rising in line with them. however recently when supply dropped rental prices spiked quite a bit. you only have to look at daftwatch to see that

thesteve

I was just about to post this link... http://www.rateyoursolicitor.com/
to mention this site exists for solicitors so why not for landlords...
and now I get a 404....
It was operating for quite a while though, although its more dangerous to p!ss off a solicitor than a landlord

http://thepropertypin.com/forum/viewforum.php?f=18&sid=4d7b92bfc03a6cd7bad4c4f0cbbb4a76


The flatrate website is something along the lines of reviewing rental accommodation

miju

thesteve wrote:

It was operating for quite a while though, although its more dangerous to p!ss off a solicitor than a landlord

indeed as the owners found out when they ended up in court early this year / very late last year after some female solicitor had a go at them and won

Raskolnikov

miju wrote:

that is the real world Raskolnikov. when rates were rising rents weren't rising in line with them. however recently when supply dropped rental prices spiked quite a bit. you only have to look at daftwatch to see that

You cannot take a site like daftwatch as a measure of rental supply. It's a rapidly growing site so its figures are completely skewed.

If you think that interest rates don't affect rental costs, then you need to take elementary economics. Let me give you an example.

Consider a street where there are there are two landlords both trying to rent out a house each. One landlord got a mortgage to fund his house, the other inherited it and has no mortgage on it. An interest rate hike comes a long. The mortgaged landlord increases rent, the other landlord doesn't need to increase his rent. Basic laws of economics will tell you that demand falls for the mortgaged rental property and rises for wholly owned one.

Now, consider the next time the two landlords each have a property to rent out, again one rented, the other wholly owned. The mortgaged landlord will be forced to drop his price slightly because of lack of demand. However, the landlord who owns his property outright will feel because demand is so high, he can raise the cost of renting his property.

This process will continue until the market reaches convergence.

antoinolachtnai

Sure, the costs are going to be an issue. Obviously anything that adds to the cost of being a landlord is going to push up the rent. But the relationship is indirect.

Other indirect factors are just as important, maybe more so. For example, the high stamp duty applicable to landlords will increase their cost base. The tax break on mortgage interest relief offered to owner-occupiers also results in higher costs, as does the ending of stamp duty for first time buyers, because it means that landlords are in a weaker position in the marketplace.

miju

Raskolnikov wrote:

You cannot take a site like daftwatch as a measure of rental supply. It's a rapidly growing site so its figures are completely skewed.

They have an accetable error rate about 2% and judging from the actual reports from daft.ie it seems daft watch is fairly on the money

Raskolnikov wrote:

If you think that interest rates don't affect rental costs, then you need to take elementary economics. Let me give you an example.

Consider a street where there are there are two landlords both trying to rent out a house each. One landlord got a mortgage to fund his house, the other inherited it and has no mortgage on it. An interest rate hike comes a long. The mortgaged landlord increases rent, the other landlord doesn't need to increase his rent. Basic laws of economics will tell you that demand falls for the mortgaged rental property and rises for wholly owned one.

Now, consider the next time the two landlords each have a property to rent out, again one rented, the other wholly owned. The mortgaged landlord will be forced to drop his price slightly because of lack of demand. However, the landlord who owns his property outright will feel because demand is so high, he can raise the cost of renting his property.

This process will continue until the market reaches convergence.

sorry but that example is complete tosh. whether a landlord has a mortgage or not they will BOTH have rental rates at the maximum possible level to achieve the highest yield.

the fact that the vast majority of new buy to letters in the last year and a half have been subsiding their tenants in the sense they're rent is not covering the full mortgage on the property is a perfect example of how interest rates dont effect rental prices as much as you think.

its simpl supply and demand. supply goes down rental rates spike, supply goes up rental rates fall. we're seeing a similiar thing in the property sales market right now (though in saying that theres many other factors affecting that as well)

antoinolachtnai

yes, but what drives supply is availability of well-priced finance and properties, together with confidence in future capital growth.

SkepticOne

I've no doubt that some landlords will push up asking prices for rents in an attempt to compensate for higher interest rates. Figures for Q1 published by daft showed that asking prices were up considerably on the same period a year before. I think in the meantime some of them may have found that simply asking for more rent does not necessarily lead to greater profits. After all, as Miju points out, prices should already be set to maximise profits. Increasing them may only lead to longer vacancy rates thus decreasing returns.

antoinolachtnai points out that "what drives supply is availability of well-priced finance and properties, together with confidence in future capital growth", however the expectation of continual capital growth can also lead to properties being held empty simply for the purpose of capital appreciation, finding tenants not being worth the hassle. Once prices stop rising, these properties will end up either being dumped on the market or rented out for whatever rent can be got.

Raskolnikov

miju wrote:

They have an accetable error rate about 2% and judging from the actual reports from daft.ie it seems daft watch is fairly on the money

Daftwatch merely tallies the number of rental properties that are listed in Ireland that have been listed on the site. One reason why it's not accurate, is because the user base is constantly growing, you only need to view its history on Alexa to see that the number of visitors is increasing. Another reason why it's not an accurate measure of rental supply is because it isn't seasonly adjusted. Holidays, the college year and a number of other factors would cause fluctuations in supply.

Also, daft.ie are a vested interest in the property game, they will do anything to massage the figures to put the best possible spin on the property game. They tried this with the last daft report claiming YOY house price increases despite the fact that the market was in collapse for the last couple of months.

Raskolnikov

SkepticOne wrote:

I've no doubt that some landlords will push up asking prices for rents in an attempt to compensate for higher interest rates.

This will cause additional demand on the cheaper properties, causing those landlords without mortgages to increase rents.

See my previous post.

SkepticOne

Raskolnikov wrote:

This will cause additional demand on the cheaper properties, causing those landlords without mortgages to increase rents.

See my previous post.

I agree that rising interest rates will have an overall upward effect on asking prices. It will not increase overall demand but as you say shift some demand from expensive properties to the cheaper ones. Overall, taking into account increased vacency periods, I would expect no net increase in rents actually paid.

whizzbang

Deleted User wrote:

http://thepropertypin.com/forum/viewforum.php?f=18&sid=4d7b92bfc03a6cd7bad4c4f0cbbb4a76


The flatrate website is something along the lines of reviewing rental accommodation

www.flatrate.ie is more about rating developments than land lords. I'd rather not get sued for libel!

D'Peoples Voice

Raskolnikov wrote:

Daftwatch.........Another reason why it's not an accurate measure of rental supply is because it isn't seasonly adjusted.

I thought the same, when I looked at page 4 of 10
http://www.daft.ie/report/Daft-Rental-Report-August-2007.pdf
a massive vacancy caused by students being off for the summer would cause soft rents during the summer months
BUT, then why does this theory not work for 2002-2006

June 2002 index 110.1 July 2002 108.5 - a reasonable fall

June 2003 index 100.5 July 2003 100.4 - a miniscule fall

June 2004 index 95.8 July 2004 96.9 - an increase

June 2005 index 99.0 July 2005 99.9 - an increase

June 2006 index 105.8 July 2006 107.1 - an increase

yet

June 2007 index 123.6 July 2007 116.7 - a considerable fall

I wonder is it possible that rent-a-room schemes are finally having an impact on rents as Charlie McGreevy once predicted they might?

robd

D'Peoples Voice wrote:

I wonder is it possible that rent-a-room schemes are finally having an impact on rents as Charlie McGreevy once predicted they might?

I suspect, and I think it was mentioned in the Daft report, that there is price seal on what rent is achievable. There is only a certain amount that people can afford and/or willing to pay. After this they move out a little further or into rent at room etc.

Thus rent is far more aligned with wages than with interest rates or cost of housing.

Looking around the area I am, I can see properties that are overpriced by a €200 sitting there. Properties at or near to the avg seem to rent with ease.

There seems to be a problem with landlords at the moment. They leave properties up at the price they want for weeks and weeks, thus losing a month or 2's rent, rather than adjust the price based on interest. In other countries I have lived the rent was aggressively discounted the longer the place was sitting there. As soon as the place became vacant they were discounted. I wonder is this a sign that the Irish rental market hasn't quite matured yet?

Calina

The Irish rental market has no hope of maturing until there is some increased level of trust in it. I have my doubts.

The point is - in rental (as well as in sales I guess) people have an impression of what they are entitled to get. So if property A was getting 1500E six months ago it is very hard six months down the line to justify a discount to 1200E to yourself because it's "worth" 1500pcm.

I've noticed that even as supply is increasing in my locality (up approx 50% on the levels in January when rents started to go a little crazy), so too are rents. I think some of that is interest payment/cost driven. Of course, interest is tax deductible so it shouldn't really be going up to that extent...but asking rents certainly hare. Another thing I have noticed is an increase in rent being charged per week. In my opinion, this is not a sign of a rental market that is maturing, it is a sign of a rental market which is starting to explode.

Part of it is because the country is full of little landlords with one or two BTLs who have bought into the capital appreciation dream and who have no clue what they are doing. To regulate that kind of a market is a nightmare.

Currently I would say that despite all, the market is still weighted in favour of landlords, particularly given the leases which are prevalent, and the provisions of the 2004 rental legislation.

Rent is to a great extent driven by affordability, this is true. But it is not completely true. We have a disproportionate number of rent shares and horrifically expensive smaller units which are poorly designed. That's a planning issue at most. The net result is that affordability is squeezed. I can't afford to rent a house on my own - and I can't afford to rent an apartment on my own. So at the age of 34 - because I'm priced out of the purchase market by about 135000KE - and I am earning well over the band at which the higher tax band comes in - I am still sharing accommodation with strangers.

As rents get more expensive, rentshares will probably get more populous - more couples sharing and the associated social/personal issues that that will cause.

This is not evidence of a market which is maturing imo.

In other words, I think both the rental and sales markets are completely screwed at the moment.

robd

Hey Callina,

I worded my reply a little wrong what I should have said was "is this a sign that the Irish market is immature". My thinking is fairly aligned with your last post.

In other cities I've noticed that rent is very seasonal. Thus what you might get for a place in the Summer near the beach is far higher than you would get in the winter months. Thats just not the case here.

Inexperienced land lords is a big problem here. The BTL tax incentives such as Section 23 have a lot to answer for. I think the tax incentives should have been for institutional investors, such as pension funds. Thus whole complexes would have been owned by a company and administered properly.

Also, I wonder what's going on in the HSE Community Welfare Offices at the moment. The cheaper end of the market seems way out of kilter with what the max the HSE are prepared to pay. Also most of the places advertised on Daft, have a no rent allowance clause.

antoinolachtnai

The section 23 incentive is really only for people who own a number of other properties. It doesn't work for first-timers.

Calina

I'd be interested in a few more details on S23 - I have never taken too much notice of it but I know of a few places which are S23 and owner occupied...is there some special clause when the property is leasehold rather than freehold?

antoinolachtnai

Yes, you can buy a S23 as an owner-occupied property, and you get a tax break. But the tax break is smaller than what you would get if you bought it to let. This means that S23's are generally not good value for owner-occupiers.

robd

antoinolachtnai wrote:

The section 23 incentive is really only for people who own a number of other properties. It doesn't work for first-timers.

Yes thats true alright. It works by allowing individuals to write off the income from other properties against the finance cost of the section 23 property. Basically you can only write rental income off against the relief (not PAYE or self employed income).

In answer to Calina,

As you can also write interest on the loan used to buy a property it thus only works when you have rental income from another property that has non or small finance compared to income. Thus it suits old landlords.

See here (Section 8)

http://www.revenue.ie/leaflets/s23.pdf

The whole BTL did cause a big mess though. Also a lot of people were mis-sold or mis-bought Section 23 properties who didn't understand that (unless you live there) you can't write general income off against a Section 23 (or other relates schemes).

Allowing people to write off the cost of finance is a big problem. If this wasn't allowed by individuals then the BTL thing wouldn't be such a problem. The problem is that it encourages short term ownership and the market can get distorted by investors panicking and trying to sell or putting up rent when the shouldn't be (only allowed once per year).

It would be better IMO if Complexes were owned by Structured Funds where the rent rolled into the fund and the funds could be held tax free by pension funds or taxable at 23% on exit as per other such funds.

antoinolachtnai

Then you are headed into rental-only complexes. I don't know if this is a great idea. If you did this, you'd have to provide for it in the planning permission that only a certain proportion of blocks in an area could be owned by this type of structured funds. Otherwise you are just breeding social stratification.

This type of fund could also potentially knock the crap out of first-time buyers.

Calina

antoinolachtnai wrote:

Then you are headed into rental-only complexes. I don't know if this is a great idea. If you did this, you'd have to provide for it in the planning permission that only a certain proportion of blocks in an area could be owned by this type of structured funds. Otherwise you are just breeding social stratification.

This type of fund could also potentially knock the crap out of first-time buyers.

the issue would be less likely to arise if apartment blocks were built and designed properly. I'd be happy enough to rent indefinitely if the rental set up here wasn't so messy and if the accommodation built was utility based rather than short term profit based.

social stratification doesn't necessarily result - a lot of blocks in Germany, even rented by uhem, professionals, are held this way.

I think the problem is that we have a very myopic view of rental in Ireland and as a result, it tends to colour our opinion. The way the property market has developed in the absence of these blocks completely screwed FTBs anyway - and given the way it's going now, if they already own apartments in urban areas, they are screwed for a while. The only FTBs who are in any sort of a positive position right now are the ones sitting on a fence waiting and seeing who actually haven't bought yet.

The_Conductor

antoinolachtnai wrote:

Then you are headed into rental-only complexes. I don't know if this is a great idea. If you did this, you'd have to provide for it in the planning permission that only a certain proportion of blocks in an area could be owned by this type of structured funds. Otherwise you are just breeding social stratification.

This type of fund could also potentially knock the crap out of first-time buyers.

You already have defacto rental-only complexes all over the place- or complexes with very minimal numbers of owner occuppiers. Where I am at present over 80% of the units are btl units, with fewer than 1 in 6 owner occuppied.

I do agree with you regarding social stratification- where there are large numbers of rental units together you do tend to get a certain social class of immigrants/low income/health board tenants (a generalisation, but one that tends to hold true). Landlords for the most part don't care to invest large sums of money into keeping rental units in tip-top shape, they are more interested in the course of least resistance, paying as little as possible for the maximum possible return- they are investors after all, and its just normal business sense. So- you end up with groups of apartments/houses gradually getting run down, to the extent that no-one much wants them, or wants to live there, unless their options are limited to them.

I could start to list quite a long list of areas around Dublin that are already like this- its not difficult to start at Parnell Street and radiate outwards in an ever lengthening list.......

robd

I'm in the Calina camp on this one.

To suggest that social stratification (wow we're getting deep in Sociology) would result from having institutional owned apartment complexes suggest that you see renting as being an indication of being in the lower classes. Thanks. I completely disagree. There's nothing wrong with renting.

smcarricks argument may hold true for certain complexes but I believe that it's more a factor of location. The complex I live in has a large rental proportion too, but it's distinctly middle classed in a middle class area. Area's like the IFSC are largely professional too.

Also if a complex was completely owned by 1 owner then there would be an onus on upgrading and maintaining the complex to a standard necessary to maintain or grow rental income. Also, I believe the complexes would be built to a higher standard so that they would age better. In the current BTL model the builders interest finishes when they have built and sold the complexes so the don't really care about 5 years down the line let alone 20 or 30.

antoinolachtnai

Well, it seems to be social policy in Ireland to get people to live in their own home. The whole tax system is geared up to discourage buying to let and encourage homeowners. I am not saying that that is right, but that's how it is.

You are right, stratification isn't necessarily a result, but combining it with this worldview and system, it will end up that way.

robd

antoinolachtnai wrote:

Well, it seems to be social policy in Ireland to get people to live in their own home. The whole tax system is geared up to discourage buying to let and encourage homeowners. I am not saying that that is right, but that's how it is

I don't get you here. Do you mean "discourage letting". Investors can write the interest off on their mortgage against rental income so that's a huge tax break.

Calina

I think inertia has a lot to do with that and also that the rental market wasn't all that well regulated until people started winding up slightly longer term in rental than was historically the case in the state. If you wind up with a larger rental section, you'll find that there will be more moves - again - to look at regulating the sector into the future.

I think we could go a long way towards improving things if the PRTB was streamlined and rendered - somehow - more efficient. IE if people didn't have to wait 6 months for decisions and the like. Also, we don't tie in enough of our government databases. I know Revenue are getting much better at watching for non-tax compliant landlords but there is still a tendency to put the onus on tenants to police the landlords which is ultimately a cop out.

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also would add that even as things stand, BTL is overly supported on an individual basis which leads to the fragmented rental market we have. This has led to a mess in the FTB market for example.

There is a tendency to look at things too simply I think. We need professional landlords, the kinds who have a lot of houses and make a serious business out of this. What we have are a lot of BTLs with one or two properties max. I'm of the opinion that we need to encourage people to make a business of it and discourage the part-timers who see it as their pension - not because it's not a pension, but because it's damaging to the rental sector as a whole. I've always advocated a sliding tax scale for rental properties - ie, the more you have, the less tax you pay on rental income but with a hefty, hefty penalty for continued lack of occupation.

The problem with this is there would be complete outcry if you implemented it and anyway, any changes to the rental market in the short term will cause an implosion and sky rocketing rents as people aim for the exits (and, while we're at it, a total collapse in property sales). It's not going to happen except, possibly, incrementally and over time.