Anti Eviction Bill

Fian

This Bill passed second stage today. It was initiated by People before profit and opposed by the Government, but it was passed at second stage. It is not law - it still needs to pass committee stage and report stage in teh Dail and all three stages in the Oireachtas before it would be sent to the president for signature into law (or for an article 26 reference if he decided to do so.)

https://data.oireachtas.ie/ie/oireachtas/bill/2018/131/eng/initiated/b13118d.pdf



The long title describes the purposes:

Bill entitled an Act to amend the Residential Tenancies Act 2004 to provide for the greater security of tenure by extending tenancy rights for those with a licence to reside in student specific accommodation; by the inclusion of receivers and lenders that have taken possession of properties in the definition of a landlord, by the extension of notice periods for termination of a new tenancies; by making all tenancies over two months Part 4 tenancies; by making Part 4 tenancies of indefinite duration; by removing sale of property as a ground for terminating a tenancy, by providing for compensation where a tenancy is terminated on the ground that the dwelling is required by the landlord or a relative of the landlord for their own occupation; by removing renovation and refurbishment as a ground for termination of a tenancy; and by the extension of notice periods for new rents and for the termination of tenancies.

If enacted it would require compensation of 6 months rent to be paid by the landlord to the tenant if the landlord wanted the property for his own use or for his/her family. It would also commence part IV tenancies after 2 months and make them indefinite.

there is a long way to go between second stage and enactment though.

Moonjet

Is there anything in the legislation about banning evictions of people into homelessness? Can't see anything about that actually in the proposed text. Thought I read it on another site.

Amendment of section 34 and 56 of Act of 2004 - to abolish sale of a property as a ground
for terminating a tenancy

So landlords won't be allowed sell their own property now?

Fian

Moonjet wrote: »

So landlords won't be allowed sell their own property now?

If it is enacted - which it is not - it would prevent eviction with sitting tenants. New purchaser would be required to pay 6 months rent to the tenants if they wanted to evict them to live there themselves.

New purchasers would not be given a mortgage to purchase a property without vacant possession so it would be very difficult to sell with sitting tenants - would require a cash buyer mortgage free. Obviously this would significantly impact sale price.

Though tbh if this were the law I can't see why anyone would buy a home for themselves rather than rent - you would get all the security of tenure that owners have by renting. If they can find anyone willing to rent to them.

Personally I expect this will be dramatically amended before it is enacted, if it is enacted. Because as it stands it would dramatically dis-incentivise investment in rental property or construction of property.

Fian

Fian wrote: »

If it is enacted - which it is not - it would prevent eviction with sitting tenants. New purchaser would be required to pay 6 months rent to the tenants if they wanted to evict them to live there themselves.

I thought you were messing about this part:

The Act of 2004 is amended in paragraph 4 of the Table to section 34 by the insertion after “his or her family” of “and has paid the tenant an amount equivalent to six months’ rent in respect of the tenancy as compensation for the termination of the tenancy”.

Wow. Crazy increases in the notice periods also.

Ginger83

3 words......will never happen.

hmmm

Going to be a lot of money to be made if you make a nuisance of yourself as a tenant.

Another bill which will reduce supply.

Andycap8

Fian wrote: »

Though tbh if this were the law I can't see why anyone would buy a home for themselves rather than rent - you would get all the security of tenure that owners have by renting. If they can find anyone willing to rent to them.

They'd have to buy as there would be no new rental property.

The_Conductor

It would actually be good if this was enacted, in some respects- as it just might be the straw that breaks the camel's back for REITs and other institutional investors- who might bite the bullet and challenge the constitutionality of such legislation.

The only reason the current RPZ legislation hasn't been challenged- is because it has a defined end-date. If property rights are further diluted- which this will surely do- a) there is zero incentive to operate in the Irish market, b) there is zero incentive on the part of a tenant to pay their rent, c) there is zero incentive to ever build new rental properties- esp. apartments in city centre locations, d) there is zero incentive to actually obey the law- as I suspect some landlords would see a conviction under an unjust law- as a badge of honour.

Its entirely counter productive in its current form- and while other legislation in this sector has skirted dangerously close to constitutional guaranteed property rights- this doesn't even bother with skirting around them- it runs completely and utterly roughshod over them.

seamus

Moonjet wrote: »

So landlords won't be allowed sell their own property now?

Of course they would. They would sell the property with sitting tenants.

Banks will give mortgages for buying a property with sitting tenants. They just choose not to because landlords can evict.

It's a bit of a silly clause, asking price will just be the original price minus the compensation cost.

Old diesel

Is the way forward to put forward counter proposals to make it attractive for landlords to CHOOSE to keep tenants on.

The problem is that no matter what the background story - putting your tenant at risk of homeless so your son can move in doesn't look great at all.

And that gives ammunition to the likes of the proposed legislation as per the OP.

The propovals are poorly thought out but it's also important to understand why someone thought let's do this (put these proposals forward)

Andycap8

RETIS and institutional investors would be not be selling individual units - "so the notice of termination to facilitate a sale" would likely not be an issue for them. They'd be selling in large blocks to other institutional investors. This legislation only really affects small landlords who own single units or a handful of units in an individual development.

q85dw7osi4lebg

Not a hope it'll happen thank God.

The_Conductor

seamus wrote: »

Of course they would. They would sell the property with sitting tenants.

Banks will give mortgages for buying a property with sitting tenants. They just choose not to because landlords can evict.

It's a bit of a silly clause, asking price will just be the original price minus the compensation cost.

Banks choose not to give mortgages for properties with sitting tenants- because of how difficult it is to evict sitting tenants- even if they decide to stop paying their rent. The most expeditious manner of lawfully evicting a tenant who has stopped paying rent- even if they don't bother turning up to defend themselves (at all)- still takes a minimum of 8 months- and if they decide to plead a case (and promptly ignore any undertakings they give)- it can still take between 2 and 3 years.

The RTB guarantee to give landlords an initial hearing where tenants stop paying their rent- within 6 weeks of a complaint being made by the landlord. However, this is only the initial hearing. The actual process- providing everything goes according to plan- still takes 8-9 months- it has not been sped up at all.

I don't see how this proposal makes one iota of difference to mortgage lenders who are still going to see a sitting tenant as toxic to any property transaction. Sure- why bother offering a tenant 6 months rent- when they can live there rent-free for 2 years plus before you can finally get rid of them? Its not in a tenant's interest to take the 6 months and run- its in their interest to milk the situation for as long as possible (and this is what is currently happening according to the RTB- its the single largest percentage of complaints they are currently dealing with).

Its a nutty proposal- unless your specific aim is to remove the 86% of landlords with 1 or 2 properties- from the equation as quickly as possible- in which case, its actually a brilliant idea.

TheChizler

The_Conductor wrote: »

Banks choose not to give mortgages for properties with sitting tenants-

Maybe if tenancies can no longer be terminated when selling banks will relax their rules on that? At the moment they have the luxury of insisting on vacant possession, if this part of the bill passes and they don't want to suffer a hit to the number of mortgages on the books they'll have to compromise.

Mike3549

I know banks wont give mortgage for ppr with sitting tennant, but what about buy-to-let?

4ensic15

TheChizler wrote: »

Maybe if tenancies can no longer be terminated when selling banks will relax their rules on that? At the moment they have the luxury of insisting on vacant possession, if this part of the bill passes and they don't want to suffer a hit to the number of mortgages on the books they'll have to compromise.

Why would the banks relax their rules? A tenant in occupation causes potential title issues. The banks are taking a chance lending on property. They try to minimise the risk. Why take on added risk?

Andycap8

seamus wrote: »

Of course they would. They would sell the property with sitting tenants.

Banks will give mortgages for buying a property with sitting tenants. They just choose not to because landlords can evict.

It's a bit of a silly clause, asking price will just be the original price minus the compensation cost.

That's debatable. It means your only buyer pool is investors - and by invetors its the BTL market as institutional investors aren't buying single units. It removes the owner-occupier market as potential purchasers. Theoretically, it lowers potential demand which should lower sales prices (so the existing landlord/seller looses out).

I say theoretically, as I'm not convinced there is a large pool of owner-occupier buyers for apartments which are mostly rented. More than half of all apartments in the country are rented (56% per the 2016 census). And while the total # of apartment & bedsits (de minimis #) increased 11% bewteen 2011 & 2016 census, total owner-occupiers actually decreased 8%. So, while owner occupiers might be removed from the potential buyer pool, they seem not be wanting to buy apartments anyway.

Hack12

Banks will not lend for investment properties if this is allowed and if they do the interest rates would be huge. This is more risky than sub-prime lending!!!!!

Part of the reason mortgage rates are so high in Ireland as it is is because it takes so long to evict someone who is in default with there mortgage. The banks charge on the overall risk and this puts the risk to high for some. Also remember the majority of banks are only starting to come back into lending on rental properties and this will have them running.

Andycap8

Hack12 wrote: »

Banks will not lend for investment properties if this is allowed and if they do the interest rates would be huge. This is more risky than sub-prime lending!!!!!

Part of the reason mortgage rates are so high in Ireland as it is is because it takes so long to evict someone who is in default with there mortgage. The banks charge on the overall risk and this puts the risk to high for some. Also remember the majority of banks are only starting to come back into lending on rental properties and this will have them running.

Why on earth would a bank not lend to a BTL investor when the proposed property has a sitting tenant? Having a sitting tenant for an investor & lender is the ideal situation as there is no opening void period.

4ensic15

Andycap8 wrote: »

Why on earth would a bank not lend to a BTL investor when the proposed property has a sitting tenant? Having a sitting tenant for an investor & lender is the ideal situation as there is no opening void period.

The investor is stuck with the contract made with the sitting tenant. The references may be out of date. the tenant may claim some type of rights or agreement exists after the sale has closed. I have seen situations where a person who dealt with a tenant died and the spouse of the dead landlord took over and the tenant claimed that various matters have been agreed with the dead spouse.
Having vacant possession and sourcing one's own tenants is the only sane way to go unless there is a large discount on the price.

Hack12

Andycap8 wrote:

Why on earth would a bank not lend to a BTL investor when the proposed property has a sitting tenant? Having a sitting tenant for an investor & lender is the ideal situation as there is no opening void period.

The issue is that you are assuming all tenants are good and also this gives more rights of residence aka harder to repossess. The bank would prefer to cut it's losses and sell, not become landlords as it is not their business.

Remember the property is security based on the default of the loan they can repossess and sell.... now they won't be able to sell or sell at a reduced cost aka the risk is higher so higher mortgage rates which will make it inequitable for landlords. This is the worst taught through legislation in a long time.

Andycap8

4ensic15 wrote: »

The investor is stuck with the contract made with the sitting tenant. The references may be out of date. the tenant may claim some type of rights or agreement exists after the sale has closed. I have seen situations where a person who dealt with a tenant died and the spouse of the dead landlord took over and the tenant claimed that various matters have been agreed with the dead spouse.
Having vacant possession and sourcing one's own tenants is the only sane way to go unless there is a large discount on the price.

Exactly

This would most likely simply benchmark down the resale values of existing rented properties.

Similar to any commercial property, what the investor will be buying is the lease albeit with potential break clauses. And the same way a Bank will lend for commercial property against the lease, they would similarly lend against a residential lease/yield. They might reduce their LTVs or something but the concept is the same.

there are no additional rights the tenant can claim. Seemingly the rent amount would be the only item which would be covered in the lease and then everything else would be covered by regulations. There is no need to discuss any breaks or lease tenures etc as they'd no longer be possible. The worse state an existing lease is in (poorly documented or with errors or omissions etc) then the lower the value of the lease and the lower the resale value of the "property".

Andycap8

Hack12 wrote: »

The issue is that you are assuming all tenants are good and also this gives more rights of residence aka harder to repossess. The bank would prefer to cut it's losses and sell, not become landlords as it is not their business.

Remember the property is security based on the default of the loan they can repossess and sell.... now they won't be able to sell or sell at a reduced cost aka the risk is higher so higher mortgage rates which will make it inequitable for landlords. This is the worst taught through legislation in a long time.

I'm not assuming all tenants are good. Failure to pay or damage to the property would still be a breach of the lease and you could evict them (I am assuming they didn't change that) even if that does take over a year.

But the practical security for a BTL loan is the right to appoint a receiver to (i) collect rent, and (ii) to sell the property. It is not the right to repossess with vacant possession. The fact receiver's tend to sell with vacant possession is because that is cleaner and makes the property available to owner occupiers. And the receivers rely on the existing law (same as a landlord) to evict sitting tenants to sell with vacant possession. Banks would simply lend less on lower BTL valuations.

Fol20

seamus wrote: »

Of course they would. They would sell the property with sitting tenants.

Banks will give mortgages for buying a property with sitting tenants. They just choose not to because landlords can evict.

It's a bit of a silly clause, asking price will just be the original price minus the compensation cost.

So basically, it costs the ll thousands to sell his OWN house has he has to pay the tenants off basically. Thats if the tenants will move on time orelse you try and sell with tenants in situ however that market would be tiny. You know that sounds completely unfair,one sides and well over the top

Fol20

TheChizler wrote: »

Maybe if tenancies can no longer be terminated when selling banks will relax their rules on that? At the moment they have the luxury of insisting on vacant possession, if this part of the bill passes and they don't want to suffer a hit to the number of mortgages on the books they'll have to compromise.

Renters do not own the property. The landlord does. Tenants can give a ll one days notice and face no consequences. A ll had to get a mortgage that can bankrupt some if not laid. The ll has all the risks yet you want to give more power to a tenant that doesnt own the house

TheChizler

Fol20 wrote: »

Renters do not own the property. The landlord does. Tenants can give a ll one days notice and face no consequences. A ll had to get a mortgage that can bankrupt some if not laid. The ll has all the risks yet you want to give more power to a tenant that doesnt own the house

I don't know how you got any of that from my post.

garhjw

It’s disgraceful that this type of nonsense takes up time in the Dail. I expect nothing less from the communists. This will never see the light of day. As others have said, it would make properties unsellable plunging many properties into negative equity and causing hardship on property owners. Truly pathetic and further attempts by the communists to demonise landlords.

GGTrek

The_Conductor wrote: »

Its a nutty proposal- unless your specific aim is to remove the 86% of landlords with 1 or 2 properties- from the equation as quickly as possible- in which case, its actually a brilliant idea.

This is what the hard left and SF want, they do not want landlords, full stop. Thank god I am selling everything.

1874

GGTrek wrote: »

This is what the hard left and SF want, they do not want landlords, full stop. Thank god I am selling everything.

Im so glad Im out of it all, you wouldnt think this stuff could get through, but I would not put it past them. I think only reasonable increases in rent or if a new tenancy, to within market value and reasonable standards, but it has been made impossible for a landlord/investor to put money back into a property to improve it and over a short time increased the risk significantly while doing nothing about delinquent tenants.
I think rents are crazy, but the Govt could do something if they werent taking such a large cut temselves.
All this tells me is that there are no new properties on the horizon in the near future or even out in the distance, its got to be an effort to incentivise/force small landlords to either get out now or force them to stay once its in place as you wont be able to sell. I dont know what they are doing about REITs, it seems they can avail of the benefit of not paying any tax.

GGTrek

I shall give the lefties in this thread (I can see the usual ones) a clear view of what will happen if this bill is approved:

(1) a massive eviction of tenants (good or bad) since no owner will accept being expropriated by the state without compensation (a wet dream of the communists proposing the bill). The vast majority of current investors will evict with current rules (sale or part 4 ending) before bill is enacted and then sell to owner occupiers or keep properties empty (more valuable than rented).

(2) The private rental market in Ireland will simply almost disappear except for a few crazy/outlaws investors. It would be like it was in the UK or Ireland in the 70s, no private rental market except rent a room or student accommodation, state had to provide the vast majority of the rented accommodation through council houses at a cost that will break any budget nowadays.

(3) There would be almost no further small property transactions in BTL if such bill is enacted, since no sane investor would put a single cent in Irish BTL property, of course property prices will go down fo the investors, but they will recoup part of their investment if selling to owner occupiers, while for renters it will just be hell, even current ones.

Venezuela has a similar regulation to the one proposed by the commies in this bill (after all they are their comrades!), guess what: there is no legal private rental market anymore, the little that is left is completely outside the law and enforced in the most brutal manner by private "militia" or "security".

Given the fact that it is a private members bill, it will now go to commitee where its constitutionality will be checked and then it will (probably) not see the light of day on the other side (in any case a private members bill takes a good year before coming out of the committee). It shows how toxic the political situation has become in Ireland (scoring political points on the skin of people) and how populist FF abstained again even though in the debate they opposed the bill (most of the time they are thinking about electoral gains whatever the consequences!)

I do agree that big investors buying blocks in cash will not be affected too much as long as other "ideas" like rent reductions by law (already provided by some commies in the Dáil) or rent freezes get approved. However this bill could affect more than 80% of current BTL and the effect of supply would be enormous.

Hack12

Andycap8 wrote:

But the practical security for a BTL loan is the right to appoint a receiver to (i) collect rent, and (ii) to sell the property. It is not the right to repossess with vacant possession. The fact receiver's tend to sell with vacant possession is because that is cleaner and makes the property available to owner occupiers. And the receivers rely on the existing law (same as a landlord) to evict sitting tenants to sell with vacant possession. Banks would simply lend less on lower BTL valuations.

The security of any mortgage is the property not what you have said. Collect rent etc is a landlords/estate agents role. Yes they may lend on lower BTL valuations but then you're possibly making people insolvent overnight. It's half arsed communist logic which never has and never will work.

The best thing that can be done to the market is to leave it alone. Investors need stability as do the banks to feel secure to lend and this type of nonsense will push investors away.

Andycap8 wrote:

I'm not assuming all tenants are good. Failure to pay or damage to the property would still be a breach of the lease and you could evict them (I am assuming they didn't change that) even if that does take over a year.

Good luck getting them out..... maybe after 6 months you will be lucky... If they are that way inclined you can be guaranteed the property is in bad condition.