RPZ 3-year expiry

3DataModem

Apologies if this is a dumb question (I searched but could not find this discussed definitively)

As far as I can see the first batch of RPZs (Dublin City, DLR, Fingal, South Dublin County Council, Cork City Council) were applied on 24/12/2016.

My reading of the rules seems to suggest that after 24th Dec 2019 it goes back to the 'old' rules (i.e. landlord can set rent up to market rate as long as last rent review was over a year ago and review is executed lawfully)

It also seems to suggest that this 3 year period cannot be extended within the legislation... so will we see a lot of tenants getting big increases in 2020?

Cuddlesworth

RPZ isn't going anywhere for that very reason, at best it would take a decade to phase out.

3DataModem

I agree that would seem to be the normal approach(!)

However in this case, the current legislation does not seem allow for an extension past the 3 years for a specific zone.

So unless the legislation changes this year, from 2020 in Dublin (for example) it's back to being a free-for-all?

L1011

The legislation will be changed basically.

Do it too often and I could see a large landlord testing its constitutionality - probably not a REIT as their tax provisions could easily be changed in effective retaliation.

Subutai

It's an open question. They cannot under the current legislation be extended, you're correct there. They could, however, be redesignated if they still reach the qualifying criteria. A number of local electoral areas in Dublin would currently meet those criteria, and even if nothing changes will probably be redesignated right away - Howth-Malahide, Dún Laoghaire, Ballymun, Cabra-Finglas, North Inner City, Clontarf, Beaumont-Donaghmede.

Whether there'll be a lag between expiry and redesignation isn't clear.

Due to the lack of clarity, it's highly unlikely that the Oireachtas won't step in. The easiest option would be for them to simply extend the time limits. A more clever, and in my view more likely, scenario is for them to say that they've learned a lot about the RPZ legislation through its operation and so will amend it to reflect this learning. Changing the number of quarters an increase is needed for, and the granularity of the data (LEAs are problematic in many places) would have broad support in the Dáil.

I don't expect a lot of kite flying, whatever they do. They'll want to avoid what happened last time when Alan Kelly spoke before he was ready to act.

rightmove

Subutai wrote: »

It's an open question. They cannot under the current legislation be extended, you're correct there. They could, however, be redesignated if they still reach the qualifying criteria. A number of local electoral areas in Dublin would currently meet those criteria, and even if nothing changes will probably be redesignated right away - Howth-Malahide, Dún Laoghaire, Ballymun, Cabra-Finglas, North Inner City, Clontarf, Beaumont-Donaghmede.

Whether there'll be a lag between expiry and redesignation isn't clear.

Due to the lack of clarity, it's highly unlikely that the Oireachtas won't step in. The easiest option would be for them to simply extend the time limits. A more clever, and in my view more likely, scenario is for them to say that they've learned a lot about the RPZ legislation through its operation and so will amend it to reflect this learning. Changing the number of quarters an increase is needed for, and the granularity of the data (LEAs are problematic in many places) would have broad support in the Dáil.

I don't expect a lot of kite flying, whatever they do. They'll want to avoid what happened last time when Alan Kelly spoke before he was ready to act.

What about all the ll below market rate...the nice lls who didn't fleece tenants originally . This law is totally unfair

Subutai

rightmove wrote: »

What about all the ll below market rate...the nice lls who didn't fleece tenants originally . This law is totally unfair

That's pretty separate from what was asked.

The perception of fairness, however, obviously goes both ways. Lots of tenants would point out that a rate was set that the landlord was clearly happy with at the time, and since then he's allowed increases well in excess of the CPI or wage increases. Not having immorally fleeced people in the past is great, but not great as an argument for being permitted to do so now.

rightmove

Subutai wrote: »

That's pretty separate from what was asked.

The perception of fairness, however, obviously goes both ways

Not if ll are locked at 50% below market rate

DubCount

RPZ is fundamentally unfair. Its unfair that 2 tenants in identical properties could be subject to vastly different maximum rents, just because of an accident of history. It was supposed to be a temporary measure to allow extra supply to come online before allowing normal market conditions apply after supply increased to match demand. The supply has not arrived, and RPZ's are not going to be allowed to just expire at the end of the year. Expect whatever legislation it takes to be waived through the Dail with the backing of government and opposition. RPZ's will still be in play for many years to come - they might never go away. Temporary measures, especially popular ones, have a history of lasting forever.

Subutai

rightmove wrote: »

Not if ll are locked at 50% below market rate

Fairness and unfairness does not necessarily have anything to do with the market. That is particularly the case in times of crisis, as an extreme example from the history of this country makes clear:


"I cannot make up my mind entirely about the merchants. I know all the difficulties that arise when you begin to interfere with trade, but it is difficult to persuade a starving population that one class should be permitted to make 50 per cent profit by the sale of provisions whilst they are dying in want of these"

-John William Ponsonby, 4th Earl of Bessborough, then Lord Lieutenant of Ireland, writing to the British Prime Minister in 1847.

1874

rightmove wrote: »

Not if ll are locked at 50% below market rate

No offence, I can see how it was possible to get locked in at that kind of rate, but that proves one thing, that person should not have been a landlord, they were probably clueless about their obligations and tenants rights, they hamstrung themselves as if they had paid attention they would have known that letting below market rate is not a good idea, that much below is madness, because it means they will never get rid of that tenant before, now, near impossible, good tenants can become bad tenants quickly, all you'd have to do is charge them a fraction more than the great rate you were giving them and they might not like that even if they can afford it.
I once offered advice to someone I knew letting an apartment, that they should up the rent or better still move the tenant as they likely wouldnt tolerate such an increase, said the tenants were good, wouldnt listen, I think she is now stuck with them and cannot increase the rent even if a new tenant were to move in, the only option left is to sell.

DubCount wrote: »

RPZ is fundamentally unfair. Its unfair that 2 tenants in identical properties could be subject to vastly different maximum rents, just because of an accident of history. It was supposed to be a temporary measure to allow extra supply to come online before allowing normal market conditions apply after supply increased to match demand. The supply has not arrived, and RPZ's are not going to be allowed to just expire at the end of the year. Expect whatever legislation it takes to be waived through the Dail with the backing of government and opposition. RPZ's will still be in play for many years to come - they might never go away. Temporary measures, especially popular ones, have a history of lasting forever.

Temporary measures, even unpopular ones, have a history of lasting forever. (USC)

beauf

Subutai wrote: »

That's pretty separate from what was asked.

The perception of fairness, however, obviously goes both ways. Lots of tenants would point out that a rate was set that the landlord was clearly happy with at the time, and since then he's allowed increases well in excess of the CPI or wage increases. Not having immorally fleeced people in the past is great, but not great as an argument for being permitted to do so now.

They would prefer if those LL left the market and sell the property most likely to those who will live in the property, thus removing it from the rental market.

End of problem.

I can't see RPZ being removed.

https://www.irishtimes.com/business/personal-finance/rental-market-dysfunction-set-to-continue-through-2019-1.3735706
https://www.rte.ie/news/2018/1213/1016879-rent_index/

Subutai

beauf wrote: »

They would prefer if those LL left the market and sell the property most likely to those who will live in the property, thus removing it from the rental market.

End of problem.

I can't see RPZ being removed.

https://www.irishtimes.com/business/personal-finance/rental-market-dysfunction-set-to-continue-through-2019-1.3735706
https://www.rte.ie/news/2018/1213/1016879-rent_index/

For the family who move in it is the end of the problem. For those kicked out it is somewhat immaterial whether that is because they could not afford to buy or because they could not afford a rent increase. The effect is the same.

beauf

Subutai wrote: »

...For those kicked out it is somewhat immaterial whether that is because they could not afford to buy or because they could not afford a rent increase. The effect is the same...

Immaterial? People seem to forget how this is all connected. It reduces supply of rental property which increases demand and thus rent.

Don't worry though the Govt is on track....

https://www.independent.ie/irish-news/news/government-behind-target-for-social-housing-builds-this-year-new-report-37619577.html

1874

Subutai wrote: »

For the family who move in it is the end of the problem. For those kicked out it is somewhat immaterial whether that is because they could not afford to buy or because they could not afford a rent increase. The effect is the same.

Well, it would be expected a renter should have to move if the owner was to sell, for someone to sell their property thats being rented, then a tenant would have to be evicted, not really kicked out, but legitimately moved.

Cant have it so that a landlord should make a profit, or even be able to recover an agreed amount or simply not be put through the ringer if they have to deal with delinquent tenants. The only option left for them is to get out, which I consider it is the direction smalltime landlords are being pushed to. Being a small time landlord doesnt mean they are bad landlords (some are, could be many, but Id say many are only expecting a fair return for their valuable property, many to simply repay only a fraction of the mortgage and costs and hopefully over the life of it, build up some equity themselves).
They cant be responsible for where the tenant goes to, its the policies of the state that have led to housing shortages, and housing cost increases, and now by an extension of previous policies, tenants are being moved on, in favour of someone that can buy, Ive no doubt they are being stung (but its not by the landlord, its the state thats doing it. They have my sympathies if they cant afford to buy (its my opinion it should be a reasonable thing for most people to have the ability to start on the ladder somewhere if they have some means of their own).

Subutai

beauf wrote: »

Immaterial? People seem to forget how this is all connected. It reduces supply of rental property which increases demand and thus rent.

Don't worry though the Govt is on track....

https://www.independent.ie/irish-news/news/government-behind-target-for-social-housing-builds-this-year-new-report-37619577.html

From the tenants perspective it is immaterial.

Owner occupiers moving in reduces rental supply, but also rental demand. Those moving in are usually exiting the rental market.

1874 wrote: »

Well, it would be expected a renter should have to move if the owner was to sell, for someone to sell their property thats being rented, then a tenant would have to be evicted, not really kicked out, but legitimately moved.

That's not the legal position in a number of other European jurisdictions.

rightmove

1874 wrote: »

No offence, I can see how it was possible to get locked in at that kind of rate, but that proves one thing, that person should not have been a landlord,


Temporary measures, even unpopular ones, have a history of lasting forever. (USC)

Totally disagree _ Laws should be fair_ but laws and justice don't seem to overlap when they should

beauf

Subutai wrote: »

From the tenants perspective it is immaterial.
Owner occupiers moving in reduces rental supply, but also rental demand. Those moving in are usually exiting the rental market. ....

Only if the population is static. Instead its increasing.

net inward migration for Ireland in 2018 the highest level of net inward migration since 2008.

Also people tend to share rentals not so much when they buy their own place.

Subutai

beauf wrote: »

Only if the population is static. Instead its increasing.



Also people tend to share rentals not so much when they buy their own place.

Keeping existing rentals over converting them to owner occupier makes no difference to the rising population.

Reducing overcrowding is important, especially given the pretty serious adverse effects it has on the lives of those living in it, not least arresting their development.


I am not by the way in favour of rent controls. I am however also not in favour of disingenuous arguments about their effect.

1874

rightmove wrote: »

Totally disagree _ Laws should be fair_ but laws and justice don't seem to overlap when they should

Maybe I was being a bit harsh then, I agree that laws should be fair, I think USC was unfair but probably necessary, but its still around, I dont know if its still needed, probably to prop up the incompetent Irish State.I think I saw what was likely coming down the road and I dont claim to have predicted how bad it would get, but I started planning on getting out of renting after it started with the first limits on rent increases prior to imposing rpzs.

I think its wrong that someone could get caught like that, but being a landlord now in Ireland, you need to be on your toes, I think its completely wrong that the state imposed harsh conditions on landlords regarding increases and in fact I think they encouraged increases up to the max where it was possible probably even outside rpzs and they discouraged new investors.
How the State has shown they are willing to move the goalposts has put people off investing, so they force them to stay invested, they seem to want them to sell up but limit their options too, its a $hitty system and it is screwed up.

Its hard to see what the solution would be now as I think its like a train, its moving and difficult to stop.
Id say at least not limiting someone if they sold a property to a new investor who IMO should not be tied to the same rent and should be allowed set it to market rent, on that basis it would be better to allow someone to increase to market rate, even in stages.

Subutai wrote: »

From the tenants perspective it is immaterial.

Owner occupiers moving in reduces rental supply, but also rental demand. Those moving in are usually exiting the rental market.

That's not the legal position in a number of other European jurisdictions.

And? so we apply all of European jurisdictions policies, there are problems in rentals in Berlin and Stockholm too,

You seem to be suggesting that landlords should not be allowed sell? whats the purpose of a landlord/investor? if its not viable should they be forced to prop up the States poor housing policies or the outcome of that and just take the financial hit on the chin? you seem to not want to allow people to get out if they see fit? the property will go to someone, either a new owner occupier or an investor.
Interfering or limiting that will cause bigger problems in housing.

By the investor taking the financial burden of providing a rental property, that removes the burden from the state in providing that completely now, I would think that affects a states balance sheets, I dont know the ins and outs, but they arent fronting the money in the present. The state in turn pays piecemeal for an asset they dont want to (for political will/tax reasons) or cant provide (because they cant source the funds).
If the process of issuing parcels of land to build on was more central and just managed by councils rather than being decided on by councils then some national policy of providing housing for all could have been implemented, this did not happen or so poorly that we have a complete joke of a system that had housing built on flood plains, in unsuitable locations or on unsuitable materials for foundations, and in some cases seemingly with a lack of regard for fire regulations. Id say it is probably even too late to go back, we had a chance and now we're in some other stage, where the state is foisting responsibility on private landlords to provide for social housing.

Subutai

1874 wrote: »

You seem to be suggesting that landlords should not be allowed sell?

I'm not, and can't see how you made that logical jump tbh.

beauf

1874 wrote: »

No offence, I can see how it was possible to get locked in at that kind of rate, but that proves one thing, that person should not have been a landlord, they were probably clueless about their obligations and tenants rights, they hamstrung themselves as if they had paid attention they would have known that letting below market rate is not a good idea, that much below is madness, because it means they will never get rid of that tenant before, now, near impossible, good tenants can become bad tenants quickly, all you'd have to do is charge them a fraction more than the great rate you were giving them and they might not like that even if they can afford it.
I once offered advice to someone I knew letting an apartment, that they should up the rent or better still move the tenant as they likely wouldnt tolerate such an increase, said the tenants were good, wouldnt listen, I think she is now stuck with them and cannot increase the rent even if a new tenant were to move in, the only option left is to sell....

You're missing another side of this. If LL have had problem tenants in the past, they might see the value of lower return in exchange for stability. So many opted to a stable reliable tenant. usually upping the rent when the tenant moved on. They've got caught out with these rules, because they were backdated. The final means of escape, selling out, is likely to be closed off also.

IMO, its no accident that RPZ favours new properties and those with more than one property. it favours big business and drives up rents. Thus investment.

1874

Subutai wrote: »

I'm not, and can't see how you made that logical jump tbh.

How I made that jump? well you quoted me as below, It seemed to suggest that a renter shouldnt have to move, if you're referring to a rental being sold with tenants in situ in Europe, well thats not the case here really, the only alternative to something that is not the case here is that you dont want to allow them to sell. Banks generally want vacant possession, its not relevant to here now, maybe the future, that said, I think it limits that a person selling an asset they own should be allowed sell it to who they see fit, thats usually the highest bidder, they could be limited in that selling only to an investor, or if there were no investors available or a new investor wanted to bring in their own tenants, you did say it like there are no problems in renting in mainland Europe, when thats not the case.
Neither is it that selling with tenants in situ is a situation here yet.
Basically its foisting the responsibility and problems associated with providing housing onto private individuals, this was not always the case and there is no reason why private individuals should be responsible for providing housing in the main. On top of that there is little incentive to do so as there are so little supports to dealing with problem/non paying tenants, its ridiculously slow and biased.


I welcome improvements to renting in Ireland, I was a legitimate landlord but the improvements were distinctly one sided and being a legitimate good landlord was full of problems and hassles dealing with tenants who were not always good. If people can see what they are getting into without having the goalposts moved around, then maybe there will still be private landlords left, otherwise renting is going to be dealt with by big businesses, I dont think that tenants will benefit in that, as it is already possible to see that meddling has not stopped rent increases, it likely caused them and it does nothing to deal with slum landlords or scum tenants.

Subutai wrote: »

From the tenants perspective it is immaterial.

Owner occupiers moving in reduces rental supply, but also rental demand. Those moving in are usually exiting the rental market.

Originally Posted by 1874
Well, it would be expected a renter should have to move if the owner was to sell, for someone to sell their property thats being rented, then a tenant would have to be evicted, not really kicked out, but legitimately moved.

That's not the legal position in a number of other European jurisdictions.

Subutai

1874 wrote: »

well thats not the case here really, the only alternative to something that is not the case here is that you dont want to allow them to sell.

Why, if I were advocating a change, would I advocate a more restrictive change over one which is in use in comparable jurisdictions?

The fact is that it is this security of tenure issue that is behind the drive to remove small landlords and increase the proportion of the rental market in the hands of larger professional landlords. Currently the 3 main s 34 exceptions mean that there is no true security of tenure for tenants. Any tenant, no matter how well they keep their covenants, or how much rent they pay, how many increases they agree to, or how many things they fix without compensation or bothering the landlord, etc., can find a notice of termination in their letterbox the next morning. This fact also makes any other protections for tenants meaningless, as they cannot risk enforcing them.

While that possibility of eviction while honoring your end of the bargain exists there cannot be a sustainable rental sector in this country. While small landlords dominate the market, the exceptions for sale or reoccupation cannot realistically be removed.

beauf

Subutai wrote: »

Keeping existing rentals over converting them to owner occupier makes no difference to the rising population.

Reducing overcrowding is important, especially given the pretty serious adverse effects it has on the lives of those living in it, not least arresting their development.

I am not by the way in favour of rent controls. I am however also not in favour of disingenuous arguments about their effect.

Sharing is not overcrowding. Obvious agenda with that leap.

Don't have to argue about rent controls.
If they worked this thread and many others wouldn't exist.
The numbers speak for themselves.

Subutai

beauf wrote: »

Sharing is not overcrowding. Obvious agenda with that leap.

Don't have to argue about rent controls.
If they worked this thread and many others wouldn't exist.
The numbers speak for themselves.

Not at all, the market shows there is overcrowding - if not as defined in legislation then as defined by people themselves.

There is a huge incentive to rent out a room in your house, for instance, through the rent a room scheme. Yet, as you say, owner occupiers by and large choose not to avail of this when they purchase. When renting, and therefore unable to make this choice, couples in their 30s will have other people occupy the house with them. The fact that they don't continue this type of living arrangement, despite a strong financial incentive to do so, demonstrates that they, at least, considered their previous situation overcrowded.

beauf

Subutai wrote: »

.... Currently the 3 main s 34 exceptions mean that there is no true security of tenure for tenants. ...

That works both ways, if the tenant leaves early the LL has no security either. There is no practical means of recovering that loss. Likewise if a property is locked into a low rent, and the tenant has to remain in situ, then that property is devalued in the eyes of an investor. That's a quantifiable loss to the LL.
Considering those risks, and all the others with no protection, its makes it less attractive to rent out property. In fact they will leave the market before any such limitations. They've been burnt before with the RPZ.

This could be ignored except for that fact we relay on the investors to provide supply. We have crisis in supply.

3DataModem

I have mixed feelings about the RPZ, but changing legislation to extend it at less than a years notice is dealing a lot of landlords a bad card.

Ultimately some rent controls and stability will help (I'm all for a move to long term tenancys) but this cut and paste stuff will need to stop.

I submitted a suggestion some time ago of increasing tax breaks for landlords based on tenant tenure (e.g. 25% of interest deductible in Y1 increasing to 100% from year 4) as an incentive for landlords to seek longer-term tenants and value low turnover, but that would also cause frictional problems.

beauf

Subutai wrote: »

Not at all, the market shows there is overcrowding - if not as defined in legislation then as defined by people themselves.

There is a huge incentive to rent out a room in your house, for instance, through the rent a room scheme. Yet, as you say, owner occupiers by and large choose not to avail of this when they purchase. When renting, and therefore unable to make this choice, couples in their 30s will have other people occupy the house with them. The fact that they don't continue this type of living arrangement, despite a strong financial incentive to do so, demonstrates that they, at least, considered their previous situation overcrowded.

Same with families. People move out get a place on their own.

What you are saying is all sharing is overcrowding. :eek:

There is a legal definition.
http://www.irishstatutebook.ie/eli/1966/act/21/section/63/enacted/en/html

beauf

3DataModem wrote: »

I have mixed feelings about the RPZ, but changing legislation to extend it at less than a years notice is dealing a lot of landlords a bad card.

Ultimately some rent controls and stability will help (I'm all for a move to long term tenancys) but this cut and paste stuff will need to stop.

I submitted a suggestion some time ago of increasing tax breaks for landlords based on tenant tenure (e.g. 25% of interest deductible in Y1 increasing to 100% from year 4) as an incentive for landlords to seek longer-term tenants and value low turnover, but that would also cause frictional problems.

In fact policy is penalising LL for long term tenancies, and encouraging short term.

One hand doing the opposite of the other.

1874

Subutai wrote: »

Why, if I were advocating a change, would I advocate a more restrictive change over one which is in use in comparable jurisdictions?

The fact is that it is this security of tenure issue that is behind the drive to remove small landlords and increase the proportion of the rental market in the hands of larger professional landlords. Currently the 3 main s 34 exceptions mean that there is no true security of tenure for tenants. Any tenant, no matter how well they keep their covenants, or how much rent they pay, how many increases they agree to, or how many things they fix without compensation or bothering the landlord, etc., can find a notice of termination in their letterbox the next morning. This fact also makes any other protections for tenants meaningless, as they cannot risk enforcing them.

While that possibility of eviction while honoring your end of the bargain exists there cannot be a sustainable rental sector in this country. While small landlords dominate the market, the exceptions for sale or reoccupation cannot realistically be removed.

I dont know what change you'd advocate? many people who have taken a certain stance will be anti anything that improves the lot of a landlord, regardless if the knock on effect is an improvement for tenants.
The only real reason a tenant should receive notification to terminate a tenancy is where they have failed to keep their obligations and where a landlord wishes to sell legitimately. I think something should be sorted regarding market rates if someone is below it, but if a landlord was required to sell with tenants in situ then any new landlord should have the option of charging them market rate or such a place would never sell. It would be an incentive to sell with tenants in situ but I think the option to commit to that should be for the seller and possibly the new buyer if they are happy with the tenants record. A seller may be limited in just selling to investors, why should that be allowed?




How much that would affect existing tenancies would be limited as I dont think most rented properties change hands frequently or just dont remain as rented once sold.
As for other reasons to end tenancies, I think most landlords would be all for longer term tenancies if they could apply market rate and if they could extend based on a tenants cooperation and commitment to their own obligations, and dealing with delinquent tenants, so no breaches such as the kind that causes problems, like routine delays in rent, failure to pay rent, continual damage or wear and tear beyond normal, additional people beyond those agreed to upon signing the lease or anti social behaviour whats bad for a bad tenant is good for a good tenant.