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Will rent controls effect the general quality of rentals in the long run

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    #32
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,279 Mod ✭✭✭✭The_Conductor


    Claw Hammer wrote: »
    Everywhere rent controls have come in, they have been a disaster. Landlords are now throwing out perfectly good tenants and selling properties. Others are reluctant to invest and will be for years to come. Some letting agents are finding that their workload per letting has increased massively as a result oif all the legislation.
    The utter stupidity of it is mind boggling.

    Going rate for letting agents has increased to 12.5% of gross rental income- in recognition of this (i.e. the letting agents gets a straight 1/8 of all rental income). Its getting damn pricey being a landlord.


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    #33
    pxdf9i5cmoavkz
    Closed Accounts Posts: 827 ✭✭✭pxdf9i5cmoavkz


    jamesthepeach wrote: »
    Instead you should be stripping everything out and renting as close to unfurnished as possible.

    GOOD! FANTASTIC! HURRAH!

    This nonsense of furnished property needs to end asap. Ireland has to stop the trend of furnished property. If rent control is what it takes then I'm all for it.

    Most landlords now already purchase the absolute cheapest furniture and appliances for their rental property. Some use the furniture you see abandoned by the side of the road.

    A landlord should only be concerned about the structural integrity and upkeep of the property (Paint / Gas / Water / Pipes etc.. etc..). Nothing more, nothing less.

    The tenant is then freed from the stress of having to look after someone elses furniture and appliances. The tenant is also free to purchase the items they want to have and use.

    It affords great freedom to both parties and completely negates any fall out regarding furniture.

    As for your original question.

    Considering the broken state the rental market. I'd say yes, it will affect the general quality. But not in a good way.


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    #34
    testaccount123
    Registered Users Posts: 1,023 ✭✭✭testaccount123


    jamesthepeach wrote: »
    It's a chicken and egg situation.

    If a landlord can't get market rent due to rent control

    I really dont get this. Rents are at a historical high and have been rising hugely year on year yet we are supposed to believe landlords are all simultaneously renting well below market rates.

    Also, if renting well below market rates wasnt an issue for all these landlords before the rent controls came in why is it suddenly an issue for them now?

    I dont understand why if these landlords needed to increase the rent they didnt bother doing it while there were no restrictions on doing so?

    No doubt some landlords will use these controls as an excuse to spend less on the maintenance of their properties.


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    #35
    Graham
    Moderators, Society & Culture Moderators Posts: 17,642 Mod ✭✭✭✭Graham


    testaccount123 wrote: »
    I really dont get this. Rents are at a historical high and have been rising hugely year on year yet we are supposed to believe landlords are all simultaneously renting well below market rates.

    I didn't see any suggestion all landlords are renting below market rate.


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    #36
    testaccount123
    Registered Users Posts: 1,023 ✭✭✭testaccount123


    Graham wrote: »
    I didn't see any suggestion all landlords are renting below market rate.

    Its constantly suggested on here. Surely the issue only affects a tiny minority of landlords - those who didnt bother to keep their rents in line with market rates - making threads like this one redundant?

    We'd be better off discussing if rising costs will affect landlords ability to maintain their properties.


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    #37
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    testaccount123 wrote: »
    I really dont get this. Rents are at a historical high and have been rising hugely year on year yet we are supposed to believe landlords are all simultaneously renting well below market rates.

    Some LL's are, others are happy to keep doing so. Other's like myself are happy to keep doing it for the exisitng customer but wonder why the feck I should do it for the next customer, with whom, I have no existing relationship and my fellow LL's who, perhaps, have not been so compliant with various regualtions are allowed to charge the going rate. All this becuase the government can't sort out social housing.

    At the end of the day it's my investment - if the government was suggesting doing something like this to pensions there would be riots.
    testaccount123 wrote: »
    Also, if renting well below market rates wasnt an issue for all these landlords before the rent controls came in why is it suddenly an issue for them now?

    You're conflating market rate and profitable rate. It's now just about profitable to be a LL on an indivdual unit. It shouldn't really be a mystery why it's a problem to do this at a loss, and why you might be a bit ticked off that you could not be doing it at a profit but you're suddenly prevented from doing it.
    testaccount123 wrote: »
    I dont understand why if these landlords needed to increase the rent they didnt bother doing it while there were no restrictions on doing so?

    No doubt some landlords will use these controls as an excuse to spend less on the maintenance of their properties.

    The restrictions were preceded by other restrictions and the increases have really picked up while they have been coming into force. Others, like a Imentioned above, were happy to do it for our current tenants but don't see why we should be forced to do it for people we don't know from Adam.


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    #38
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    testaccount123 wrote: »
    Its constantly suggested on here. Surely the issue only affects a tiny minority of landlords - those who didnt bother to keep their rents in line with market rates - making threads like this one redundant?

    We'd be better off discussing if rising costs will affect landlords ability to maintain their properties.

    Surely we'd all be better off doing almost anything else than chatting on boards but there you go :pac:

    The point is though that it was a tiny number but the number is growing.


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    #39
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,279 Mod ✭✭✭✭The_Conductor


    The only fair manner of operating at a discount to market rates in an RPZ is if some sort of a passporting system, associated with the tenant rather than the property, were put into place- where a tenant's good history in the rental sector could be recognised and rewarded by subsequent landlords- but there would be no commensurate obligation to offer preferential terms to a tenant who could not show as desirable a history to a prospective landlord?

    Can't see that flying somehow.


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    #40
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    The other night I had to let my tenant know I was putting his rent up becuase of this RPZ - otherwise I would have left it alone. If I do leave it alone can I back date the increase? Kept menaing to ask - would prefer to leave it alone, they are fantastic tenants.


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    #41
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,279 Mod ✭✭✭✭The_Conductor


    Samuel T. Cogley wrote: »
    Surely we'd all be better off doing almost anything else than chatting on boards but there you go :pac:

    The point is though that it was a tiny number but the number is growing.

    Its not a tiny number though-

    There are over 700,000 living in rented accommodation in this country.
    There are 174,000 landlords in this country.
    36% of all landlords- are accidental landlords, who never intended on being a landlord in the first place. Over 14,000 of these- left the country during the downturn- letting their sole property to tenants.
    49% of all landlords (about 85,500 landlords) only own a single property.
    84% of all landlords (~145,000 landlords) own two or fewer properties.
    93.1% of all landlords (~162,000 landlords) own three or fewer properties.
    The average length of a residential tenancy in Ireland is- 3 years 9 months.
    Over 45% of pre-existing tenancies have not had their rent reviewed in the last 24 months....... National rent increases (according to the RTB) in the 24 month period is just over 16% (rate of increase is actually slowing)- however, as of Q4 2016- the absolute rent levels are still below the height of the boom (denoted as Q3 2007).

    The above is taken from a variety of sources- namely the RTB, the CSO, the Census Figures, Revenue figures- and a very interesting fact file on the Cooperative Housing website.

    In short- there are tens of thousands of landlords out there- who only have a single property- which is currently being let at to a tenant at least 15% below market rates- and if mean figures are used the average landlord, is - as much as 30% below market rates, letting to a tenant who is in year 4 of a Part IV tenancy, and is only a bit under 50% odds, whether they increased the rent at all since the start of the tenancy..........

    Its a whole lot of people actually.


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    #42
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    I stand corrected!


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    #43
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,279 Mod ✭✭✭✭The_Conductor


    Samuel T. Cogley wrote: »
    The other night I had to let my tenant know I was putting his rent up becuase of this RPZ - otherwise I would have left it alone. If I do leave it alone can I back date the increase? Kept menaing to ask - would prefer to leave it alone, they are fantastic tenants.

    Nope- and by mentioning it at all- regardless of whether or not you put it in writing- you have notified them of a 'review' and could find your hands tied for another 12 months, if you decide not to formally proceed with it. Of course, you're not obliged to charge the 4% per annum (or however much you're allowed charge, depending on when you last reviewed the rent)- if they are terrific tenants, I'd be inclined to leave good enough alone- and extremely loathe to notify the RTB of a formal review- however, if the price to be paid- is a new tenant is entitled to the goodwill generated by the old tenant- then, I'd forget about good will- and look at it purely as a business proposition.

    That said- most landlords- do believe in good will- however unfair it is that someone they have never met before in their life has the right to inherit the goodwill created by an excellent tenant..........

    Only way to guarantee a good future tenant- is to up the number of month's deposit required- and it cannot be used as rent (a-la the landlord in Christchurch in Dublin offering to let his apartment on a sliding scale- depending on how many months' deposit a tenant is willing to pay).


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    #44
    jamesthepeach
    Registered Users Posts: 992 ✭✭✭jamesthepeach


    If you haven't given a rent review in the last couple of years you are actually worse off waiting to start your increments at a future date.
    Plug it into the formula and see.


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    #45
    Fian
    Registered Users Posts: 2,188 ✭✭✭Fian


    jamesthepeach wrote: »
    If you haven't given a rent review in the last couple of years you are actually worse off waiting to start your increments at a future date.
    Plug it into the formula and see.

    absolutely - the first review under RPZ is based off 2% per annum, subsequent based off 4% per annum. This is on foot of an amendments which was inserted when it was pointed out that the first review for most people would be 8% - because of the 24 month freeze. In fact it would have been 9% for tenancies not previously reviewed - because it would have been 27/12 months at 4% per annum (allowing for the 90 days) - 2.25*4%.

    anyway the first review should be made at the first opportunity from a landlords perspective - on the first possible day.


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    #46
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,279 Mod ✭✭✭✭The_Conductor


    jamesthepeach wrote: »
    If you haven't given a rent review in the last couple of years you are actually worse off waiting to start your increments at a future date.
    Plug it into the formula and see.

    I know that- and you know that- but for a landlord who has had a tenant for the last 4-5 years. has had no issues with them whatsover- and would rather they stayed, than have an unknown quantity of a new tenant- with so many stories of tenants maliciously destroying properties- most of which don't even go to the RTB- as the landlords know its pointless- you can rapidly see why landlords let rent increases slide- often with the intention of bringing them up to market rates again if/when they get a new tenant- however, that rug has been pulled from under them...........

    Its a silly situation to put someone in- they'd rather not increase rent for a tenant- but they know it'll be held against them at a later date, if they don't. How is that fair on anyone?


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    #47
    4ensic15
    Banned (with Prison Access) Posts: 4,691 ✭✭✭4ensic15


    The_Conductor wrote: »
    I know that- and you know that- but for a landlord who has had a tenant for the last 4-5 years. has had no issues with them whatsover- and would rather they stayed, than have an unknown quantity of a new tenant- with so many stories of tenants maliciously destroying properties- most of which don't even go to the RTB- as the landlords know its pointless- you can rapidly see why landlords let rent increases slide- often with the intention of bringing them up to market rates again if/when they get a new tenant- however, that rug has been pulled from under them...........

    Its a silly situation to put someone in- they'd rather not increase rent for a tenant- but they know it'll be held against them at a later date, if they don't. How is that fair on anyone?

    The tenant won't be going anywhere. They won't get as good a deal from anyone else as the capped increase on their existing rent. If they look around they won't get better value. They will mutter and moan but they will get used to it. They won't cease being good tenants because of a rent increase.


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    #48
    Electric Sheep
    Registered Users Posts: 2,105 ✭✭✭Electric Sheep


    The general quality of rentals in Ireland is already abysmal, rent controls can't make it any worse.


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    #49
    Murrisk
    Closed Accounts Posts: 889 ✭✭✭Murrisk


    testaccount123 wrote: »
    I really dont get this. Rents are at a historical high and have been rising hugely year on year yet we are supposed to believe landlords are all simultaneously renting well below market rates.

    Also, if renting well below market rates wasnt an issue for all these landlords before the rent controls came in why is it suddenly an issue for them now?

    I dont understand why if these landlords needed to increase the rent they didnt bother doing it while there were no restrictions on doing so?

    No doubt some landlords will use these controls as an excuse to spend less on the maintenance of their properties.

    Agreed. It makes little sense.


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    #50
    Murrisk
    Closed Accounts Posts: 889 ✭✭✭Murrisk


    Samuel T. Cogley wrote: »
    You're conflating market rate and profitable rate.

    Surely profit isn't a given for any landlord? The rent is helping towards paying off the mortgage at the end of which the landlord will have an asset which they didn't need to fully meet the payments for themselves.


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    #51
    Graham
    Moderators, Society & Culture Moderators Posts: 17,642 Mod ✭✭✭✭Graham


    Murrisk wrote: »
    Surely profit isn't a given for any landlord? The rent is helping towards paying off the mortgage at the end of which the landlord will have an asset which they didn't need to fully meet the payments for themselves.

    Why should landlords not make a profit on assets like any other business?

    When you stay in a hotel, you're often contributing to the acquisition of the asset and the day-to-day profit.

    When you take a flight the airlines don't expect to just cover the cost of buying the planes.


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    #52
    riffmongous
    Moderators, Society & Culture Moderators Posts: 12,654 Mod ✭✭✭✭riffmongous


    Unfurnished is great for a professional where I live, rent is cheaper since you are not renting the appliances, contracts are longer (mine was 5 year minimum) and better controlled, and you can take everything with you to the next place


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    #53
    Murrisk
    Closed Accounts Posts: 889 ✭✭✭Murrisk


    Graham wrote: »
    Why should landlords not make a profit on assets like any other business?

    When you stay in a hotel, you're often contributing to the acquisition of the asset and the day-to-day profit.

    When you take a flight the airlines don't expect to just cover the cost of buying the planes.

    If a profit can be made, super, but it's not something that is remotely a guarantee for a landlord, especially over the life of the property. So it simply differs from other businesses that way. You can say that it shouldn't differ but there it is. For example, if a landlord has a property in a location with a glut of rental stock available or in an undesirable location, they can want profit all they want but with demand on the tenant's side, they likely won't get it. In that situation, they probably can't charge the amount required to profit. They're welcome to try but why would anyone pay over the odds for a property with similar cheaper ones in the vicinity?

    In other more desirable locations, a landlord probably will profit from their property but again, that's not a guarantee, and it could change in the future if, say, supply increases and rents drop. Even if measures were brought in to allow landlords to take home more of the income, there is no guarantee they will always profit from the property, however much they might want to. There are so many external factors than can affect how much they can charge in rent and how much they can charge can decide whether or not they profit.

    So I just don't understand why anyone would become a landlord in the expectation that they will always clear profit. Seems foolhardy. Saying landlords should profit is a nice thought but it's not something that can always happen. And saying that landlords should be able to charge enough to profit is as much a manipulation of the market as rent controls.


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    #54
    Graham
    Moderators, Society & Culture Moderators Posts: 17,642 Mod ✭✭✭✭Graham


    Murrisk wrote: »
    If a profit can be made, super, but it's not something that is remotely a guarantee for a landlord, especially over the life of the property. So it simply differs from other businesses that way.

    That's exactly the same as every other business. What makes you think it's different?

    It should make a profit. It might not always.


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    #55
    Murrisk
    Closed Accounts Posts: 889 ✭✭✭Murrisk


    Graham wrote: »
    That's exactly the same as every other business. What makes you think it's different?

    It should make a profit. It might not always.

    If a business doesn't make profit, it goes to the wall indeed. No business is guaranteed profit. All businesses are a risk and to me it seems like renting a property is riskier than most in this regard. I consider property to be something you'll be lucky to profit from. It's a much more passive interest than someone running a business as their day job. It's not a hands-on business. With other businesses, there is advertising, there is constant strategising on how maximise profit, there is deciding how to make the product you are selling attractive to buyers, there is a whole lot of elbow grease going into growing the business. Property rental is basically sitting on your arse, hoping that you can charge enough to clear profit, with a bit of maintenace work thrown in that doesn't come close to matching the work put into running an active business. It's the quintessential "easy money" endeavour which is why so many people got caught up buying investment property in the boom. To me, it's just another pension fund that you pay into and profitting is a nice side benefit.

    Potential renter: So, what's the rent?
    Landlord: €1200 per month
    PR: I've been offered two similar places for €300 a month less
    LL: OK, I need €1200 a month in order to clear profit after paying mortgage, expenses and tax. Interested?
    PR: Um... no?


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    #56
    Del2005
    Registered Users Posts: 18,940 ✭✭✭✭Del2005


    Murrisk wrote: »
    Surely profit isn't a given for any landlord? The rent is helping towards paying off the mortgage at the end of which the landlord will have an asset which they didn't need to fully meet the payments for themselves.

    What about the thousands of accidental land lords with massive negative equity and paying 50% of the rent in tax? A lot of these are topping up the mortgage and if the government finally gets its act together then they'll end up with a massive debt as the asset won't cover the mortgage, while renting somewhere else themselves!

    Profit should be a given for every business and being a landlord is a business. If they do not make a profit then they have nothing to reinvest into the business and the tenant will suffer in the long run.


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    #57
    Murrisk
    Closed Accounts Posts: 889 ✭✭✭Murrisk


    Del2005 wrote: »
    What about the thousands of accidental land lords with massive negative equity and paying 50% of the rent in tax? A lot of these are topping up the mortgage and if the government finally gets its act together then they'll end up with a massive debt as the asset won't cover the mortgage, while renting somewhere else themselves!

    Yes, that rightly sucks and taxation on rental income should be lower than it is, for sure. And if someone has to rent out their home and rent somewhere else themselves, they should be able to offset that when calculating the taxable income. But if even with lower tax and off-setting, a profit isn't made, I'm not sure what else can be done in that scenario. You can't expect a tenant to subsidise you.
    Del2005 wrote: »
    Profit should be a given for every business and being a landlord is a business. If they do not make a profit then they have nothing to reinvest into the business and the tenant will suffer in the long run.

    No tenant is going to pay higher rent than they need to to subsidise their landlord, just like all landlords should charge market rent and not subsidise their tenant. In a landlord's market, market rent should result in profit but in a market where the tenant has ample choice, it is much more difficult. What tenant would choose to pay high rent if cheaper options in equivalent properties are available? Profit simply isn't a given and to make it so would be to fix rents at an artificially high level. At the moment, rents are eye-watering, they need to go down from here, not up, by increasing supply.


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    #58
    jamesthepeach
    Registered Users Posts: 992 ✭✭✭jamesthepeach


    Property investment is exactly fly that, a businessyoubtry to stay in business and make a profit. During the bad times you swallow the losses in the anticipation that there will be good times and you can make a profit then.

    You can either invest in the knowledge that that extra investment will bring more in some money or you can cut costs.

    The government has taken away property investors ability to make a profit from the good times, so now landlords are going to go into cost cutting mode instead of investing in the business as investing in it is just dead money now. The only way to claw some back is to cut cost as much as possible now.

    Of course some will not even be able to break even now or will be totally pd of with the government interference and just get out altogether.

    Those holding on treading water so they could at least get out of negative equity may just give up now and get out anyway regardless of the amount of debt they owe.

    Those making a profit but rent controlled will not invest anymore and more likely cut costs to the bone.

    Nobody wins.

    The easy way to solve this would be to allow all landlords controlled below market rate to bring it up to market rate. Also do something about the problem that delinquent tenants can cost someone tens of thousands and be backed by the RTB while doing it.
    At least then some of those being treated unfairly would have a chance.


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    #59
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,279 Mod ✭✭✭✭The_Conductor


    Murrisk wrote: »
    Yes, that rightly sucks and taxation on rental income should be lower than it is, for sure. And if someone has to rent out their home and rent somewhere else themselves, they should be able to offset that when calculating the taxable income. But if even with lower tax and off-setting, a profit isn't made, I'm not sure what else can be done in that scenario. You can't expect a tenant to subsidise you.

    Just for a point of reference- the RTB currently state there are just under 37,000 landlords in this very position. Its quite a huge number- and somehow- the plight of this group- is being wholly ignored.

    I don't think anyone anywhere would disagree with the notion of allowing a person offset rental income against rental outgoings- and up to 2004- this was allowable (I have no idea why it was abolished, but it was........)

    No-one expects a tenant to 'subsidise' anyone else- a landlord is letting a property, however, as a business, and it should be viewed as such by both tenants and landlords. As where someone lives is such an emotive topic, however, there are various groups who it suits to try to and conflate landlords with some manner of devil worshiping or evilness- in lieu of their view of a socialism where no-one anywhere has to pay for anything they decide is a basic human want/need. Unfortunately, while the government has an obligation to house its citizens- it has devolved that obligation to the private sector. Most landlords that I know- would be overjoyed if the government got up off its arse and built social housing where social housing was needed- and allowed private landlords operate as private landlords, as opposed to some extension of the Housing agency.
    Murrisk wrote: »
    No tenant is going to pay higher rent than they need to to subsidise their landlord, just like all landlords should charge market rent and not subsidise their tenant. In a landlord's market, market rent should result in profit but in a market where the tenant has ample choice, it is much more difficult. What tenant would choose to pay high rent if cheaper options in equivalent properties are available? Profit simply isn't a given and to make it so would be to fix rents at an artificially high level. At the moment, rents are eye-watering, they need to go down from here, not up, by increasing supply.

    Here we go again with the 'tenant subsidising the landlord'.
    A tenant is renting an asset from a landlord (supposedly at market rates).
    Over 60% of all tenancies are at below market rates- and the RPZ legislation aims to keep it that way. The only subsidising happening here- is landlords subsidising tenants by letting at below market rates. For various reasons- many are quite happy to do this. In a similar manner- one tenant may ascribe a greater value to living in any given property- than another- swings and round-abouts, however, in neither case- is one party 'subsidising' the other party- they are allocating a limited resource (a property for the landlord, cold hard cash for the tenant)- in a manner that suits them- or that most closely fulfills their requirements.

    Letting a property is a business- and needs to be viewed as such by both tenants and landlords- once people deviate from this somewhat fundamental relationship- issues start to arise for both parties.

    As it stands- the regulatory environment has swung so far in favour of tenants- that it is hard to say there is a business relationship present- it is more the landlord fulfilling an obligation, under law, towards the tenant- whereas the tenant- while they may have reciprochal obligations- doesn't have to follow them- as the landlord has far more to loose than the tenant does. This isn't a business relationship- this is subsidisation- however, its in the opposite direction than that which you are suggesting.


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    #60
    murphaph
    Registered Users Posts: 19,018 ✭✭✭✭murphaph


    Samuel T. Cogley wrote: »
    The other night I had to let my tenant know I was putting his rent up becuase of this RPZ - otherwise I would have left it alone. If I do leave it alone can I back date the increase? Kept menaing to ask - would prefer to leave it alone, they are fantastic tenants.
    Don't even think about not increasing it. You don't know what stunt the government will pull on you next.


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    #61
    listermint
    Registered Users Posts: 33,790 ✭✭✭✭listermint


    Why bother fitting it out at all, sure the last tenant pays for the repaint any way such is the theft I had of the last deposit I paid where the place was left in better condition than I received it .

    The <mod snip: landlady> didn't care. Told us she would send it on and took 30%out. No word of that on the day.


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