Media: Dublin rents fall 1.5% between Jan and March 2017

The_Conductor

Source: https://www.rte.ie/news/business/2017/0614/882821-dublin-rents-fall-1-5-between-january-and-march-rtb/


In short- rents nationally are continuing to rise.
The fall in Dublin rents- is being led by lower rental rates for apartments
Dublin residential rents are currently 8% above their previous high set in Q4 2007.

Not really sure what to make of the figures- or whether its the RPZ which has called a halt to the Dublin market- however, if it is- how come there isn't a commensurate halt in Cork, Galway and other RPZ'ed areas?

Selik

If Dublin rents fall for a few consecutive months does that not mean that Dublin falls outside RPZ again?

jamesthepeach

Selik wrote: »

If Dublin rents fall for a few consecutive months does that not mean that Dublin falls outside RPZ again?

I'd have thought if they don't rise by 7% for a few quarters that's the end of the RPZ in Dublin.
I may be wrong.

DiscoStu

The cynic in me smells cartel like behaviour. Even with the controls in place there is no reason why these rates should drop. The demand has not lowered any reasonable degree and at best the increases should be tracking the maximum allowable under the RPZ rules. I expect this is an effort to remove the RPZ before another round of gouging.

Michael D Not Higgins

According to the legislation, the RPZ is in place for a maximum of 3 years. In order to remove it early, the Housing Agency needs to produce a report taking into account the market and changes since the RPZ was put in place. The Minister would then need to revoke the RPZ order for that area.

Presumably, any report from the Housing Agency would identify the still present housing shortage and not recommend removing the RPZ early.

wordofwarning

DiscoStu wrote: »

The cynic in me smells cartel like behaviour. I expect this is an effort to remove the RPZ before another round of gouging.

It is the cynic in you. I am curious how tens of thousands of landlords got together to form a cartel to fix rents and it has not been leaked to the press yet. Would you agree? Do you know with a cartel, there is a massive incentive to cheat being part of it. There is even a bigger incentive to cheat when a cartel consists of tens of thousands of landlords instead of 3/4 companies.

There is zero chance of a cartel

zl1whqvjs75cdy

I'd like to see drafts latest report on this. All of the anecdotal evidence I've seen says rents are still on the up.

Didn't know that the rpz has a three year lifetime. Judging by how terribly the government are doing at handling the housing shortage id imagine this will be extended. Else it will be armageddon for new tenants. How they will ever wind it up actually seems like trouble now that I think of it.

DubCount

It was a surprising stat. Possible explanations may be:

1) There continues to be rent inflation for new lettings, but the proportion of renewals in Dublin is higher than other parts of the country, so the RPZ is having a greater impact on Dublin v other RPZ areas.

2) The levels of rent in Dublin are so high, that the excess demand is being addressed by people renting outside Dublin and commuting, or adding more occupants to existing housing stocks etc., rather than additional rent inflation.

3) Government action to increase supply is starting to work in Dublin ...... OK - thats a long shot

Anyway, I dont see much sign of new letting adverts showing fall off in prince in the Dublin area.

Michael D Not Higgins

donkeyoaty0099 wrote: »

I'd like to see drafts latest report on this. All of the anecdotal evidence I've seen says rents are still on the up.

Didn't know that the rpz has a three year lifetime. Judging by how terribly the government are doing at handling the housing shortage id imagine this will be extended. Else it will be armageddon for new tenants. How they will ever wind it up actually seems like trouble now that I think of it.

Daft report has 1-2% increase quarter to quarter in Dublin. Compare that to all of last year where it was about 4% per quarter.

This differs to the RTB figures as it only takes new advertised rents into account.

LirW

Those numbers mean very little because it only takes new advertised rents into account but also there is no context on how many properties we're talking about. The supply is very very little, it's not said if this was mainly studios or 3 bedroom apartments, neither does it say a word about location. Also a good number of landlords decided to sell up. Everyone who is able to tries to stay put in the current place rather than getting into a sh*tfight with around 200 other prospect tenants.

This report says pretty much nothing beside giving the government a shoulder pat for doing such a good job on the RPZ. Rents won't go down anytime soon and we also don't know when the thousands of rentals in Cherrywood will be finished and for how much they're going to go. Call me again when there are hundreds of new apartments overnight in Dublin.

jamesthepeach

Makes you think though. Rents won't be going up in Dublin any more than 4%.
By definition that's rpz criteria over in 3 more quarters. Unless somehow landlords manage to increase by more than 7% en mass.

LirW

Leave the rent, increase as much as you can annually or sell. This is a pretty bad deal. I don't wanna know how this is going to be once RPZ rules are abolished.
It all comes down to the supply. Where there's very little, there's very little to advertise. And if it was just a few hundred in the quarter, that doesn't say anything really, because there are still thousands of people looking for accommodation to find something, and this is usually still very expensive.

Michael D Not Higgins

jamesthepeach wrote: »

Makes you think though. Rents won't be going up in Dublin any more than 4%.
By definition that's rpz criteria over in 3 more quarters. Unless somehow landlords manage to increase by more than 7% en mass.

That's not how the RPZ works. The Housing Agency has to present a report to the Minister taking into account the market and changes since the start in order for the Minister to revoke the RPZ order.

Browney7

Michael D Not Higgins wrote: »

That's not how the RPZ works. The Housing Agency has to present a report to the Minister taking into account the market and changes since the start in order for the Minister to revoke the RPZ order.

The quality of the average property might have fallen in this data - city centre 2 bed apartments gone to air bnb maybe and newly filled properties not as good and not commanding as high a rent being my guess..... I'd say not one person's rent has gone down.

rossmores

Rtb can say anything they want here it will toe the govvie line I would trust the daft report more
I had a place 4 rent 2 month ago 1100 emails the selected tenant is outside of the rtb short let a pharma company pays their rent they are on a 6 month contract when finish they go back to their country .
The new regs and possibly more to come has encouraged a grey market I have moved to short term lets in the city center dealing with companies who acquire the units for staff.

Peregrinus

Browney7 wrote: »

The quality of the average property might have fallen in this data - city centre 2 bed apartments gone to air bnb maybe and newly filled properties not as good and not commanding as high a rent being my guess..... I'd say not one person's rent has gone down.

Average rents going down doesn't necessarily (or usually) mean that any person's rent has gone down.

If a property of a certain size, standard, location, etc being newly let today is getting a lower rent than a similar property would have got three or six months ago, that's all that's needed. That doesn't that the person who actually rented three or six months ago sees any fall in their rent - they don't. Nor does the person who rents today necessarily perceive rents to be falling; he wasn't looking for a property three or six months ago, so he doesn't necessarily notice that the rent he has to pay is slightly lower now than it was then.

The_Conductor

rossmores wrote: »

Rtb can say anything they want here it will toe the govvie line I would trust the daft report more
I had a place 4 rent 2 month ago 1100 emails the selected tenant is outside of the rtb short let a pharma company pays their rent they are on a 6 month contract when finish they go back to their country .
The new regs and possibly more to come has encouraged a grey market I have moved to short term lets in the city center dealing with companies who acquire the units for staff.

First off- its 'government' not govie or any derivative thereof.

The RTB is an independent body, setup under statute, funded by landlord fees, for the purpose of implementing the Residential Tenancy Act (as amended). It is not beholden to the government, and despite the irrefutable fact that its funded by landlord fees- it most certainly is not beholden to them either.

The RTB catalogue actual rents paid.
The DAFT report registers rent sought (there is no indication of whether it was achieved or not, or whether some other deal was made with a prospective landlord).

Without thinking particularly hard- I could name 4 large multinationals in the greater Dublin area- who are actively seeking accommodation on behalf of staff (and student interns in one case). In all cases- they are coming up with a package for landlords- including a deep clean at the finish of each tenancy- and 3 months deposit upfront- and using this benefit to negotiate a far lower headline rent from landlords. In one instance in the development I'm living in- an apartment unit which was let for 1,800 is now being let for 1250- but with a much larger deposit- and a deep clean paid for by the tenant from a named company.

Landlords are happy with these arrangements- as they are less likely to be left with a horror story that many of them have read in the media.

Some of the larger estate agents- are actively approaching landlords with offers such as these- acting as intermediaries for companies who are having difficulty sourcing approrpriate accommodation for staff.

Landlords are taking a pragmatic approach- and going for what are quality lettings- rather than simply taking top dollar from prospective tenants. Having a large company as the leesor- is also a form of security most landlords are more than willing to put a pricetag on.

An increasing number of letting feature arrangements such as these. The RTB report is capturing these in its databases- and accurately reporting on them- however- their database is not capturing size of deposits paid- or other considerations, such as a tenant paid deep clean, that are becoming more and more normal.

Saying the DAFT report has more credence than the RTB report- is comparing apples with pineapples- sure, they're both fruit and have the word 'apple' in their name- however, there they diverge.

It is entirely foreseeable that the Dublin arrangements- which more closely mirror those on the continent and in many US cities- will over time spread outwards- and become more normal.

Plenty of tenants would be happy with a far lower headline rent level- but 3-4 (or even 6) month's deposit- and a deepclean on the end of the tenancy. Plenty wouldn't. However, there is absolutely nothing to stop a landlord specifying these things- and there is nothing discriminatory under the act to allow for this.

jamesthepeach

Funny you should say that.
Turns out that one company has block booked the apartment that I had on airbnb between august 2017 and march 2018.
The agent called me yesterday to confirm that I was ok accepting that. Of course I am.
They asked for it to be changed do that they will handle the cleaning and I won't charge them a cleaning fee every two weeks or whatever the agent was suggesting. And a request to do it outside of airbnb from january, with a possible extension for the rest of 2018, to be discussed.
Also they will change the occupier as they see fit and asked for a discount of 10%. It still works out at well over a years rent that I could charge under RTB rules but over 8 months instead. And then possibly another years worth of rent in the next 8 months after that. So it's all fine with me.
I just have to find out how the payment works and some more small details and I'm happy for it to go through today.

Lux23

DiscoStu wrote: »

The cynic in me smells cartel like behaviour. Even with the controls in place there is no reason why these rates should drop. The demand has not lowered any reasonable degree and at best the increases should be tracking the maximum allowable under the RPZ rules. I expect this is an effort to remove the RPZ before another round of gouging.

I don't think landlords are coordinated enough to manage something like that.

The_Conductor

Lux23 wrote: »

I don't think landlords are coordinated enough to manage something like that.

They're not coordinated in the least- the organisation which was supposedly advocating on behalf of landlords- the IPOA- was deemed by the Minister to be a cartel- and shutup. Its sole press release attacking the new SI- was withdrawn. There is thus no representative body for landlords- and absolutely no coordination whatsoever.

pilly

rossmores wrote: »

Rtb can say anything they want here it will toe the govvie line I would trust the daft report more
I had a place 4 rent 2 month ago 1100 emails the selected tenant is outside of the rtb short let a pharma company pays their rent they are on a 6 month contract when finish they go back to their country .
The new regs and possibly more to come has encouraged a grey market I have moved to short term lets in the city center dealing with companies who acquire the units for staff.

Exactly what I was thinking. Given that this report was released by RTB I'd imagine it's more down to LL's going off book given the shortage in supply.

Browney7

The_Conductor wrote: »

They're not coordinated in the least- the organisation which was supposedly advocating on behalf of landlords- the IPOA- was deemed by the Minister to be a cartel- and shutup. Its sole press release attacking the new SI- was withdrawn. There is thus no representative body for landlords- and absolutely no coordination whatsoever.

Was the cartel like behaviour warning related to them suggesting extra charges to be charged to tenants and potential ways of skirting around legislation.

Car insurers got a similar rap for continually talking up premiums

The_Conductor

Browney7 wrote: »

Was the cartel like behaviour warning related to them suggesting extra charges to be charged to tenants and potential ways of skirting around legislation.

Car insurers got a similar rap for continually talking up premiums

Sort of.
Essentially- they put out a press release on the 16th December 2016- discussing the (then) 5 new new RPZ areas - and discussing a raft of charges that could be applied directly to tenants (such as bin charges, car park fees etc etc) to try and recoup some of the perceived inequities for landlords who were letting property at artificially low prices.

The CCPC (what an awful acronym- its the old Competition Authority's new name)- stated that IPOA members were not permitted to go ahead with their planned levying of new fees/charges- as detailed in the press release.

It was suggested there was a possible infringement in the original press release particularly relating to Section 4 of the Competition Act 2002.

The infringement was never ruled upon- as the IPOA put out a new statement, wholly retracting the original press release- in their words, 'so as to ensure they continue to be viewed as a responsible representative body for landlords'.

Gormless would be more applicable, than responsible- in my opinion- I'd love to see the whole shebang tested in court.

The original press release went as follows:

Property Owners are now contemplating their strategy for the future. Hardpressed Landlords who are the victims of the newest onslaught on the sector, will be reacting to Government Policy. Following a recent meeting with Members, IPOA outline some of the items that Property Owners are seriously considering:-

1. Withdrawal from State Sponsored rental schemes.
2. Implementing a payment for keys at handover (non-refundable).
3. Service charges
4. Registration fees
5. Car parking fees
6. Letting agent costs
7. Documentation preparation costs
8. Call-out and key replacement costs
9. Sinking fund contributions
10. LPT Contributions
11. Compensation in full for damage above normal wear and tear
12. Barring Orders for anti-social behaviour

Stephen Faughnan, IPOA Chairman, outlines the difficulties Property Owners are facing with the reintroduction of Rent Control (DECLARED UNCONSTITUTIONAL IN 1981/82), and reintroduction of indefinite leases, both of which were responsible for the dereliction of properties countrywide, as property owners could not get sufficient income to maintain their properties. The measures being introduced as so severe that rents will not cover costs and devaluation of property will be significant, all adding to the exit of the Investor. It is notable that Government and those demanding change are oblivious to the huge burden that all these measures will have on the Tenants and the loss of supply in the rental sector.

Looking at it- some of the items at 1-12 above, are easily defensible, others not so easily defensible, and some completely without any reason/foundation.

Publishing the press release in this form- was waving a red flag to a bull- and it should have been obvious it would be viewed as such. Refusing to supply spokespeople to the media to discuss the press release when requested to do so- and letting phones go to voicemail in the office (and not for the first time!!!) was the straw which broke the camel's back.

If these items all came up at IPOA meetings (and I'm not suggesting they didn't)- the logical thing to do- would be to look at them individually- decide which related to the new measures- and write a measured repudiation of the new measures. Copying and pasting the minutes of an IPOA meeting- was stupid, reactionary, incendiary, and ultimately, had to be wholly retracted- which means, despite the IPOA's contention that it is the representative body for Irish landlords- it is nothing of the sort.

As it stands- I would argue Irish landords are disorganised, and do not have a representative organisation to voice their interests.

I suspect one, or more, of the vulture funds will eventually challenge the government in court over the various measures- and I also suspect the RPZs and other restrictions- will be quietly dropped- if not on court challenge- it'll be once residential dwelling completion figures creep over the 20k per annum mark again- possibly within the life of the current government.