Rental cost-where will it stop?

Shannonsurfer101

Most days I open daft to view property’s for sale and rent just out of interest within 20km of my locality. As we all know all aspects of property have skyrocketed.

My question is more related to the rental market, one standard 3 bed was advertised this morning for 2200. To me that is absolute ‘Greed’. Now if that house was to be sold it would struggle to hit 250k.

Here is a simple solution, rent sound be linked to the property’s LPT value.

In no way should rent be more than the cost of a min 20 year mortgage.

Yes owners should make a profit, but this needs to be tackled.

zell12

Caller, housing is a capital asset used to store and accumulate wealth.

goldenhoarde

https://www.boards.ie/discussion/2058332635/rental-cost-where-will-it-stop

For the majority of landlords with just 1 property probably 40/50% gets taken in tax.

Also it's market driven given the shortages and also the fact your starting rent can only increase by 4% if in rent pressure really precludes people from renting a property at a lower rate as that will be the starting rent going forward.

It's going to require radical changes as lack of affordable accommodation will possibly make FDI less attractive to companies. The CEO etc won't have problems with €3k plus rents but will they attract staff at the lowest levels?

Dymo

Landlords treat rentals as a business because it is a business. They are trying to maximise profits. Fortunately it's not landlords or real estate agents that decide on the final price a property is sold or rented at, it's the rent pressure zones limits or the current market value.

rent sound be linked to the property’s LPT value.

You're putting hundred of thousands of properties at the same rental value, and not every property is the same.

I'm not a landlord and probably never will be and it's easy to say this needs to be tackled but how, tax breaks for renters, long term leases

RichardAnd

What you're describing is a price control. These things have been tried time and time again for centuries, and they never work. A commodity's price is governed by demand and supply, nothing else. Rents are high because there are too many people and too few properties. Until that changes, they will remain high.

Even if the state were to put a law in place (and it has with RPZs), someone will still be willing to pay more for a rental than someone else, and that will exert more force to push prices up.

Rent controls are a coward's way to put on a show of trying to address an issue that requires serious and controversial action.

thebiglad

You cannot simply compare the rental to a mortgage cost - a house owner has to pay property insurance, tax various maintenance and in the case of 'private' estates or Apartment buildings, an annual service fee.

When you rent you pay the rent and your utilities (which are also unavoidable as a homeowner) and, that's it - the boiler breaks, call the LL, electrics/plumbing issues, call the LL - there is a slight premium to be paid to cover that and, the LL wants to make some profit on top.

Sure rental is expensive but why do people always compare a rental price to the mortgage cost of a similar property - it's apples and cats.

Ray Palmer

OP

What you are suggesting here is landlords rent out to only ever make a profit on selling the house while subsidizing the rent for the tenant and ignoring costs. Simple question is why anyone would do that?

Gael23

I think the tipping point will be when companies start moving out of Dub,in because they can’t recruit staff due to housing costs

Shannonsurfer101

Of course supply is crippling the sector, but just because people are willing to pay more (due to desperation) does not mean extortion should take hold.

We need to remember, by having a larger percentage of a persons income consumed by rent it’s less disposable income for local shops, restaurants etc.

RichardAnd I agree with the majority of your post bar the ‘price control’ comment. It does work if implemented correctly. Just a quick example, I’m a food produce, who receives European funding just like 99% of Europe. This funding model maintains stability in the food sector by allowing all food producers meet the highly regulated sector. It we followed the supply and demand model without government intervention our basic food commodities would increase 3 fold.

Would people shrug there shoulders and say that’s just the way the world is and accept it or would there be action taken.

Rental values have to be linked to a measurable component and not just demand, be that asset value. A person should not take pride in creating a profit due to under supply of our most basic needs in shelter.

Shannonsurfer101

Hi Ray,

What I’m putting up for discussion is maintaining stability in the market. I fully understand the added costs on landlords when leasing but also on perspective home buyers/owners. All I’m pointing out is I feel the threshold between profit and greed have been crossed.

Fol20

Shannon, a few questions for you?

1.If you are working in your job and you see you can get an extra 20pc for your work, would you happily stay in your current job or would you seek more money?

>you consider the above greedy to do so or just normal human behaviour

>When you look at ll, would you not say they are doing the same thing given they are trying be as profitable as they can?

2.You want to limit the amount ll can charge but there is no mention of costs ll incur. I have seen a major increase in landlord costs over the past 3 years and even though rents have gone up. i have made the lowest net amount in the past 15 years with the highest gross revenue recorded for me so far.

>RTB have increased their costs.

>PRSI tax increased my bill by 4pc

>RTB and Council inspections have costed me several thousand for several items that were not an issue. EG period inspection reports costing 500e plus whatever else they find when there is no recorded issues to date. Replacing extractor fans with timed extractor fans when the existing setup was showing no signs of mould and the existing setup was intentionally changed by me in the past to prevent mould(that solved it) but didnt comply with their tick box exercise.

>Cost of labour has sky rocketed for every small job, part that needs to be bought etc.

>Marketing costs in daft have increased 4x in the past 3 years.

>Most importantly, interest rates for me have increased nearly 50pc

3.Imagine all of the above happening where you were making a tidy profit a few years ago and now potentially having to dip into your own day job to pay for the excess to cover everything. Couple this where all these costs have come onboard and you can only increase the rent by maybe 50quid while you know you could get an extra 1k if you were allowed set it to market rent.

4.You want price controls in place to make it more sustainable. How do you encourage investors to stay in the market or heaven forbid encourage investors to enter the market in the current setup as that is the crux of it. Right now i would have made more cashflow last year if i put my equity of my property into a bunch of dividend paying stocks vs me having the highly focused risk in a single property potentially with tenants not paying, major jobs coming up etc. Investors will always think about where their money is best served so how can you get away from this given the current situation we are in.

5.Even with your food produce setup, the government are giving grants, subsidising costs, giving direct money and blocking outside parties such as meat from South america from competing against you. What have ll really been given, 600e extra is peanuts when you might have an asset worth half a mill. Likewise competing again pension funds from foreign countries that pay 0pc tax in ireland doesnt seem like a fair comparison vs mom and pop ll.

6.Ll cannot be expected to subsidise the industry, renting should cost more than ownership as there is pros and cons to both own and renting. Depending on where you are at in your own life, renting and owning will suit at different period.

The only way to make this sustainable is to remove price controls tbh. In a normal functioning economy, if a sector is receiving super profits, more competitors will enter but due to price controls and the highly regulated sector preventing the supplier from charging for all of these increased regulation and decreased supply, no one is entering and more are leaving. Everyone you talk to will probably deter you from becoming a ll but youd think if it was so good, they would be encouraging you, you gotta ask yourself why this is the case. Removing RPZ will have short term pain for the renters but in the long run, supply and demand will rebalance and would lead to more supply of rental stock.

Flinty997

https://www.boards.ie/discussion/comment/121653808#Comment_121653808

https://www.boards.ie/discussion/comment/121653954#Comment_121653954

Who should supply housing, and who (and what) sets the cost?

Think of the scenario's of supply and demand.

Ray Palmer

https://www.boards.ie/discussion/comment/121653954#Comment_121653954

I pointed out why it won't work and asked you one question which you didn't answer so I am not seeing a discussion from your side. Answer the question

DubCount

This comes down to a matter of outlook on what the private rental market is.

If it is a business, then it should be free to set whatever rents a LL wants. A LL who sets a rent above what anyone will pay will have an empty property and anyone who feels there are big profits to be made can buy a property and join the market. A tenant who feels they are paying too much can move to a lower cost option. When I go to Tesco, there is nobody telling them how much to charge for their food. If I think its too expensive, I'll go to Lidl etc.

If it is a social service, it should be provided by the state and not the private sector at all. The Government decides what is fair and Joe Taxpayer pays for any shortfall.

You cant have it both ways.

As for "Greed". Why is it only Landlords who are accused of greed? Do you protect outside a petrol station when the price of petrol goes up? Do you complain that a software engineer who has a high market demand for his labour asks his employer for a 20% payrise ?

Padre_Pio

https://www.boards.ie/discussion/comment/121653699#Comment_121653699

Yep, or MNCs start building their own staff accommodations.

Flinty997

Companies providing accommodation and subsidising same is normal. Used to know a few people who got this working in America.

Many years ago working in Europe we used company provided accommodation. It was spartan and basic. It would never pass Irish regulations today.

Del2005

https://www.boards.ie/discussion/comment/121655085#Comment_121655085

Unless they are a property company they won't and I doubt even property companies will. With our current laws what happens when an employee renting leaves, are they a tenant or licencee? Tieing accommodation to your employer, licencee, is a massive issue.

There's a housing crisis in nearly all the developed countries. We've far from unique.

Gael23

https://www.boards.ie/discussion/comment/121655134#Comment_121655134

My grandparents got housing from the ESB in 1969, it was a development of 50 houses for staff. Then some years later the option came up to buy them, which was nice because it developed as a community where everyone knew each other. Obviously with the passage of half a century a good number have died and houses were bought and sold

Shannonsurfer101

Fol20, you are probably in the minority as one of the honest LL’s who comply with all the regulations and paperwork. Atm it’s the Wild West out there, ppl are afraid to even question their landlords are they registered with the RTB in relation to claiming the tax credit.

The RPZ’s are creating a two tier renting valuation, which you could be caught in going by your post. I’m fully agreeable in scraping, as there is no logic in having two similar properties rented at different values due to when you leased the property.

My opinion is bring fairness to the table, rent should be based on the property value. The LL’s with one property and play by the rules are not the problem. It’s the coyboys not declaring 2/3 of their rental income on numerous properties. They are the ppl not leaving the market as it’s a cash cow.

To answer the first question of course I would accept 20% increase in my profession, but if I were to invest in rental property I would not take satisfaction in increasing my assets to the detriment of a family's ability to purchase a home based on the chronic housing shortage

Shannonsurfer101

Ray, could you rephrase the question again.

jface187

The government go on about cost rental like its a solution. 25 per cent of sky high rent is still too much for most people.

herbalplants

The way I see it is, a lower rent could be achieved but lowering tax on rental income. Simple. You forget taxman takes more than the landlord and does absolutely nothing for the money it cashes in. Where does all this tax goes? There should be a tracker that show what are these money used for??

From the money landlord makes, most of it goes on costs and dealing with hassle.

If they brought in a reduction in the tax paid that needs to be passed onto renters... Presto you will have lower rents. Yet, I struggle to understand where is all the tax money spend on, it is hardly on the standard of our living. I am not a landlord by the way.

Flinty997

https://www.boards.ie/discussion/comment/121656564#Comment_121656564

Why are you ok with not investing in rentals, at a time of chronic rental shortage.

downtheroad

https://www.boards.ie/discussion/comment/121656660#Comment_121656660

If you reduce tax on rental income tomorrow the landlord will not reduce their rates, they will just pocket the difference for themselves.

If you go out tomorrow and work a 2nd job you pay tax at the marginal rate. There is no reason that additional income from rental income should be taxed differently.

The taxman takes a percentage of the rental profits. The landlord can write all sorts of expenses and costs off against the rental income to reduce his taxable income.

Flinty997

https://www.boards.ie/discussion/comment/121656660#Comment_121656660

Outsourcing, contracting is almost always more expensive than proving a service in house.

The govt outsourced all this long ago. To save money in the short term. So the LLs could carry most of the cost when it goes bad.

Going well isn't it.

Shannonsurfer101

There are 1000’s of family’s and single ppl out there that need the security of a roof over their heads, who would prefer to own their home. Atm in ireland renters are not being serviced with long term rental viability. Why would I go out to bid up an already over inflated asset just because I have the means to access credit. Maybe our money would be better served in promoting more ppl in construction and providing them pensions on par with the civil service

J_1980

https://www.boards.ie/discussion/comment/121656756#Comment_121656756

Yes RTE, HSE and NHS in UK…. Government is super efficient at running businesses….

People forget why social housing was largely sold off not only here but also in Germany (Berlin sold off 10’s of thousands alone) - because it was an insanely inefficient, financial black hole.

Flinty997

https://www.boards.ie/discussion/comment/121656777#Comment_121656777

People who can buy a home are mostly better off than those who rent. So you're saying you'd prioritise those who are better off. Doesn't seem very fair.

Flinty997

https://www.boards.ie/discussion/comment/121656804#Comment_121656804

I didn't realise Sky and Private Medicine were budget friendly and free.

Well we've replaced one insanely inefficient housing black hole, with an even bigger back hole vastly more inefficient. Well done.

Shannonsurfer101

Don’t worry the government are already doing a fantastic job in creating extreme wealth class division. As jface187 highlighted above current rental prices are already too high. More manageable rents would help ppl on lower incomes to save a deposit for a starter home if that was their choice. Flinty If you had access to funding would you bid against that person on a lower income hoping to buy?

Flinty997

https://www.boards.ie/discussion/comment/121656897#Comment_121656897

Lack of supply is the main issue.

If not going to invest in rentals, there will be even less supply. Rents will just keep going up.

Which was the question you started the thread with.

Seems now you could care less about rentals. It's about getting help to buy a house.