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Rent caps and mortgages.

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  • 16-12-2016 11:57am
    #1
    realitykeeper
    Registered Users Posts: 4,138 ✭✭✭


    The minister Simon Coveney is presently considering rent caps of some description in Cork and Dublin. One suggestion I have heard is they may limit rent rises to 4% annually. The problem with this from a landlords perspective is risk.

    From the tenants point of view it will allow the landlords too much scope to raise rents given the zero interest rate times we live in. But, if such an offer is available, they should grab it - especially if the agreement is long term.

    From the landlords perspective, committing to limiting rent increases to 4% is (or should be) unacceptably risky. The reason it is risky is because 2017 is likely to be the year when interest rates and inflation begin to skyrocket.

    Landlords (and others) who are on tracker and variable mortgages could do worse than consider switching to a fixed mortgage around the middle of 2017.

    The Bank of International Settlements have warned banks to start restricting fixed mortgages from 2018 in order to move the risk to the borrower but I think 2017 will be the year to switch mortgages. If the danger becomes obvious, it will be too late to switch because fixed mortgages will become prohibitive.


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    #2
    raah!
    Registered Users Posts: 2,629 ✭✭✭raah!


    Is it not the case that landlords are already making absurd profits due to how the market is?

    Restrictions on increases will only prevent the maintenance of an already too high profit margin.

    If it was profitable to rent a given property in 2012 for 500 a month, letting this same property now for 800 a month or more will be exorbitantly profitable for those land lords for many years to come irrespective of any caps.

    This is how it seems to me, but I haven't looked at the numbers. Is there anywhere I can look or read to discern the truth about this "risk" for the landlords? I would like to see the numbers worked through for a given house. That is I would like to see the cost of a house, how much needs to be paid in a mortgage, what the rent is etc.

    At the moment I can't understand how given the increases in renting prices of up to 25% (an example from a house I was renting) landlords can complain about inflation rates or paying their mortgages. To me this seems like unbridled and repulsive greed on their part. The sort of greed that should be constrained by the government when it pertains to something that people need to survive.

    Having said that, I have not gone through fully the numbers for a particular house.


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    #3
    Zulu
    Registered Users Posts: 10,965 ✭✭✭✭Zulu


    Yeah limiting the profit any given business can make in line with populist political agendas is a fantastic idea.

    What could possibly go wrong.

    Fu*king clowns we have running this circus.


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    #4
    Nody
    Moderators, Category Moderators, Arts Moderators, Business & Finance Moderators, Entertainment Moderators, Society & Culture Moderators Posts: 18,260 CMod ✭✭✭✭Nody


    It will go down NY style; if average rent is higher than 4%? Refuse renewal. If the average rent is less than 4%? Set the rate to what ever you agree. This will do nothing in reality but politicians think it will make them look good doing it.


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    #5
    FreudianSlippers
    Registered Users Posts: 20,397 ✭✭✭✭FreudianSlippers


    Increased supply would fix this problem very quickly IMO.

    We need significant amounts of apartments both social/lower priced and mid-to-high end in the city centre. Not everyone wants/needs to live in a house or wants to share with a bunch of other people.

    Getting people out of house-shares and into appropriate apartments combined with a tax incentive to convert homes back into single-family-units frees up the next tier down of homes... and so on...

    Tax property owners on unbuilt/derelict land inside the canals and require all new developments to have 15% social/affordable housing in each new development.

    I'm telling you that rents and house prices will regulate and even decrease by 2020.


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    #6
    K-9
    Registered Users Posts: 43,311 ✭✭✭✭K-9


    Well if somebody bought in 06 or 07 with a 100% mortgage they probably aren't making that much money on it, even now.

    Newer entrants who bought in the last 5 or 6 years should have a profitable investment on their hands.

    Mad Men's Don Draper : What you call love was invented by guys like me, to sell nylons.



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    #7
    Nody
    Moderators, Category Moderators, Arts Moderators, Business & Finance Moderators, Entertainment Moderators, Society & Culture Moderators Posts: 18,260 CMod ✭✭✭✭Nody


    FreudianSlippers wrote: »
    Increased supply would fix this problem very quickly IMO.
    Which could be done by opening up the rules about heights in Dublin to build skyscrapers...
    We need significant amounts of apartments both social/lower priced and mid-to-high end in the city centre. Not everyone wants/needs to live in a house or wants to share with a bunch of other people.
    With over half the cost of a house sitting outside actual building costs it makes no sense to make cheap apartments; what's needed is to lower the actual non build related costs and tie in specific cuts with building smaller cheaper apartments to a lower standard than today for it to actually make sense. But if the material difference is 50k between building a luxury apartment to be sold for 300k or a cheap apartment you can sell for 150k you'd be stupid to build the second type and this ties back to the non building material etc. related costs once again inc. permissions.
    Tax property owners on unbuilt/derelict land inside the canals and require all new developments to have 15% social/affordable housing in each new development.
    To narrow window; extend the higher houses out and add luas lines out in the suburbs and suddenly commuting can be done and people don't all need to live in the 1km area around the city. Cut out cars in the city to force people to commute with appropriate infrastructure in place if need be to get those luas lines going on the roads already in place.


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    #8
    FreudianSlippers
    Registered Users Posts: 20,397 ✭✭✭✭FreudianSlippers


    Nody wrote: »
    Which could be done by opening up the rules about heights in Dublin to build skyscrapers...
    Agreed - I agree to an extent with height restrictions in the Georgian core; but Docklands/IFSC should have a minimum height of 70m.
    With over half the cost of a house sitting outside actual building costs it makes no sense to make cheap apartments; what's needed is to lower the actual non build related costs and tie in specific cuts with building smaller cheaper apartments to a lower standard than today for it to actually make sense. But if the material difference is 50k between building a luxury apartment to be sold for 300k or a cheap apartment you can sell for 150k you'd be stupid to build the second type and this ties back to the non building material etc. related costs once again inc. permissions.
    Agreed; I meant "affordable" rather than cheap and if we can build high quality for lower costs by whatever safe and lawful measures then we should do so.


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