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How do we actually fix the rental market?

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    #152
    brisan
    Registered Users Posts: 2,242 ✭✭✭brisan


    Fol20 wrote: »
    So how do you attract new ll then?

    If rent is far below market rent. How can a new ll invest it while they wait 10years to get it up to the market rate of 2020 let alone what it would be at in 2030. In a normal industry, it’s a free market and the business will charge what the people are willing to pay and this can act as a big disincentive for current and future ll.

    Buy a previously unrented property and charge market rent (real market rent ,not his idea of market rent ) from day 1


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    #153
    beauf
    Closed Accounts Posts: 22,651 ✭✭✭✭beauf


    brisan wrote: »
    Buy a previously unrented property and charge market rent (real market rent ,not his idea of market rent ) from day 1

    What do you mean by real market rent...
    The market rate (or "going rate") for goods or services is the usual price charged for them in a free market. If demand goes up, manufacturers and laborers will tend to respond by increasing the price they require, thus setting a higher market rate. When demand falls, market rates also tend to fall

    I suspect what people want is not "real" market rent. But artificially capped rent.

    Ironically REITs and professional LLs, are all about max income and profit.
    A real estate investment trust (REIT) is a company that owns, operates, or finances income-producing properties.

    REITs generate a steady income stream for investors but offer little in the way of capital appreciation


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    #154
    Fol20
    Registered Users Posts: 3,624 ✭✭✭Fol20


    brisan wrote: »
    Change the laws
    Run it the same as European models
    But that puts more obligations on landlords and tenants
    And landlords already give out about the regs and some don’t follow the ones that are there

    Change what laws?
    Please outline what the European model is in your eyes?

    Eviction, interest rates and market interference are very different in Eu and each Eu country is different as well. There is no “Eu model”


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    #155
    JimmyVik
    Registered Users Posts: 5,367 ✭✭✭JimmyVik


    brisan wrote: »
    You do it by putting down a large deposit and not the bare minimum
    I agree a proper landlord will not expect a property to wash its face ,many landlords will though.


    So you have to invest a hefty amount up front to make it wash it face :)
    All youve done its washed its face in advance with a sh1t load of cash.
    Thats not washing its face at all.


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    #156
    Fol20
    Registered Users Posts: 3,624 ✭✭✭Fol20


    brisan wrote: »
    If you honestly think that the rental income should cover the mortgage the tax and other associated costs that you are living in cloud cuckoo land
    The profit is in 20 years time when you have an appreciating asset that you only paid 30-50% of the cost price
    A tenant should not be expected to cover all your costs leaving you with a cost free asset at the end
    It’s not how the rental market should work and it’s thinking like that that has the market the way it is

    Please tell us one country where its in a functioning market where the ll has negative cashflow and is happy to take money out of other investments on a monthly basis to pay for the rental balance.


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    #157
    JimmyVik
    Registered Users Posts: 5,367 ✭✭✭JimmyVik


    DubCount wrote: »
    Its such a sad reality that Irish Residential Property is not the only place to put your money. People can put their money in foreign property, shares, gold, government bonds or whatever else they want to.

    If you make rules which discourages people to invest in Irish Residential Property, you cant be surprised that they put their money elsewhere. Its their absolute right to bitch about the rules or explain their investment choices (whichever you prefer) and vote with their feet.

    If you want more supply, then you need to encourage people with money to put that money where you want them to. Otherwise, the state can make up the supply - which they cant afford.

    Buying a property as an investment is a long term game, but if there are easier ways to make money, why would anyone choose this method of making money. If you were offered a job with better terms and conditions and better pay, would you stay in your current job just as a "social good"?




    Problem is now that if they did give landlords favourable treatment to encourage them back into the market they wouldnt come.
    They will all be thinking - "yeah, they'll get me in this year and then haul me over the coals with legislation next year."


    If anyone decided not to invest this year, or got out in the last few years I dont think anything is going to change their minds to go back in at this point. Its just too changeable. As you rightly say, there are other places to invest your money.


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    #158
    Fol20
    Registered Users Posts: 3,624 ✭✭✭Fol20


    Greentopia wrote: »
    I found renting in Sweden far more affordable

    Would you be happy to pay circa 17pc more in tax per year to have this benefit? (This includes home owners and renters btw) so if you own your own home, you still need to pay for the mortgage and pay that extra amount in tax.


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    #159
    JimmyVik
    Registered Users Posts: 5,367 ✭✭✭JimmyVik


    Greentopia wrote: »
    It's not perfect because there are high numbers on waiting lists and shortages of new builds, especially in the major cities, but from a tenants perspective I found renting in Sweden far more affordable and the quality of apartments on offer far and above what you find in this country. Everything from build quality (highest in the world) to utilities for each renter: lock up storage rooms, communal laundry facilities, bicycle storage, children play areas... all as standard.

    So have local authorities set up limited companies to build and supply apartments with long term rentals, built for family living and rent controlled. Set up Tenant Rent Unions that will negotiate rents on behalf of their members with the housing companies and set rents yearly.
    https://www.sverigesallmannytta.se/in-english/public-housing-in-sweden/

    Of course we'd never do this here because this is Ireland where private developers and the market is allowed run riot, but that's my opinion anyway based on my experience.

    Ideally I'd have the state build and supply far more mixed development quality housing, and expand co-housing options also.




    Just out of curiosity what you you pay in tax in Sweden if you earned say


    €25000


    €35000


    €45000


    €55000


    And how much would a landord pay on profits?


    OR how much is property tax?


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    #160
    Elite Genetics
    Banned (with Prison Access) Posts: 105 ✭✭Elite Genetics


    Move to another country, nothing will change here in a long time.


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    #161
    JimmyVik
    Registered Users Posts: 5,367 ✭✭✭JimmyVik


    Fol20 wrote: »
    So how do you attract new ll then?

    If rent is far below market rent. How can a new ll invest it while they wait 10years to get it up to the market rate of 2020 let alone what it would be at in 2030. In a normal industry, it’s a free market and the business will charge what the people are willing to pay and this can act as a big disincentive for current and future ll.


    Its worse than that.
    While he is waiting 10 years for it to get to market rent, some new legislation comes in every year or so, most likely ensuring he never gets to market rate so is always making a loss. Chance of that is HIGH in Ireland.


    If you have money and want to invest in property invest it in property in a different country.


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    #162
    Fol20
    Registered Users Posts: 3,624 ✭✭✭Fol20


    Peregrinus wrote: »
    If it's happening extensively, that indicates market inefficiency, because it shouldn't be. It should obviously cost less to rent a property than it does to buy it outright and, if it normally or frequently costs the same or more, then rents are too high which means the market isn't working properly. So you need to look to imperfections in the market to see why this is happening.

    As you point out, it's a matter of supply and demand. If there's a scarcity of housing then both purchase costs and rental costs will go up, but if rental costs are going up more than purchase costs, and especially if they are sustained at a level above the cost of purchasing, that's not accounted for by just the scarcity of housing, and you need to look for other factors to account for it.

    It could be, as some have suggested, tenant-friendly legislation driving landlords out of the market. But others have pointed to countries where the legislation is more tenant-friendly, and yet the rental market seems to work better there. Maybe the Irish legislation needs to be tenant-friendly, but in different ways.

    But the problem could be on the supply side; we have a lot of small landlords - people with just one or two properties to let - who may not have the liquid capital needed to manage the risks and volatility of the business they are in, and so seek to pass those risks to the tenant. (If there's a high proportion of landlords who think that net rent covering mortgage is normal and is to be expected, that's a strong indication that landlords have an unrealistic appreciation of the business they're in.)

    Possibly one of the things we need is a regulatory climate that encourages landlording on a commercial scale, and which therefore facilitates more professional landlording? Just a thought.

    And, yeah, an improved supply of public housing is definitely an issue. It's notoriously slow and difficult to evict a non-paying tenant in Ireland and part of the reason is (a) a high proportion of non-paying tenants are not paying because they don't have the money, and (b) if evicted and therefore homeless it becomes a public responsibility to house them and therefore (c) the state has an incentive to defer, delay or impede their eviction or, at the very least, not to adopt measures that would make it easier. If we had a better-resourced and more resilient public housing system that problem would be greatly alleviated.

    The only reason rents are so high right now is down to supply and demand which is basic economics.

    Private individuals should not be expected to use morality to help the good of the people. Its a business transaction and they should be allowed try and get as much as the market will bear without being looked on negatively. Yes its greedy but i dont understand why people make this out to be a negative given its an INVESTMENT.

    Legislation is causing supply to decrease. Less supply with the same demand equates to higher rents for the remaining properties. The government need to look into existing legislation to see why it is negatively affecting both LL and tenants alike and implement legislation that is fair to both sides that will not impact supply - Please tell me one piece of legislation over the past 10 years that positively impacted the rental market for tenants or LL. Some may say the RPZ but i beg to differ given the fact this will cause further declines in stock thus causing rent to go up for new tenants.


    Good point on why the government are impeding evictions.


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    #163
    Idbatterim
    Registered Users Posts: 17,851 ✭✭✭✭Idbatterim


    "Supply and demand, supply and demand"...why would " the market" flood us with supply, decreasing their profits?!


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    #164
    Fol20
    Registered Users Posts: 3,624 ✭✭✭Fol20


    brisan wrote: »
    If that is the attitude of the landlord he is in the wrong game
    He would be better off with a 3 story 8 bedroom house with 6 bunkbeds in every room

    Why are you fixated on slumlords and bedsit type accommodation?


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    #165
    Dav010
    Registered Users Posts: 14,293 ✭✭✭✭Dav010


    Idbatterim wrote: »
    "Supply and demand, supply and demand"...why would " the market" flood us with supply, decreasing their profits?!

    At a guess, because developers make more money when selling at a time when demand is high, and in theory, investors should be more attracted to a rental market with high rents.


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    #166
    JimmyVik
    Registered Users Posts: 5,367 ✭✭✭JimmyVik


    Idbatterim wrote: »
    "Supply and demand, supply and demand"...why would " the market" flood us with supply, decreasing their profits?!


    I cant wait to see the threads full of people who cant find a rental next year or the year after.


    Once this covid craic is over things will go back to normal very fast.
    All the people coming back to Dublin, Students returning, people all looking for accommodation. landlords after not having rent for nearly a year deciding to just sell up and gtfo.


    Its going to be carnage.


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    #167
    Fol20
    Registered Users Posts: 3,624 ✭✭✭Fol20


    brisan wrote: »
    Agree to all of that and especially the bit in bold
    Too many landlords get into the market to make a quick profit expecting all their capital and running costs to be paid
    One poster even compared it to the rental car market
    Its landlords not knowing what they are getting into plus bad legislation and poor enforcement that are the main issues

    Yes the car rental was an off the cuff example. Can you name any industry where it is cheaper to rent than to own something over the space of 30 years?

    The pros and cons to rent vs ownership are very different and you pay appropriately for the benefits of both.

    LL are wide open to the risk involved when they enter the market. They expect rental prices to go up and down over the lifetime of ownership and they do their best to do the figures and mitigate against any foreseeable issues.


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    #168
    Fol20
    Registered Users Posts: 3,624 ✭✭✭Fol20


    brisan wrote: »
    Buy a previously unrented property and charge market rent (real market rent ,not his idea of market rent ) from day 1

    You said you left the market yourself as you had better opportunities.Why should anyone else enter the market if there are better opportunities elsewhere. Your philosophy seems deeply flawed here as you are completely happy for existing ll to leave the market and you cant provide any actual solution to encourage the rental stock to increase.

    What is the different between "real market rent" and "market rent", i have never heard this term before?

    Ok so what happens the rental property that is below market rent, i guess this can only be sold to an owner occupier which again decreases the rental supply. I think you see where im going with this....


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    #169
    brisan
    Registered Users Posts: 2,242 ✭✭✭brisan


    JimmyVik wrote: »
    So you have to invest a hefty amount up front to make it wash it face :)
    All youve done its washed its face in advance with a sh1t load of cash.
    Thats not washing its face at all.

    I never said a rental property should wash its face
    I said if you wanted it to wash its face you have to put a large deposit down and lower the mortgage
    That's the problem
    A lot of landlords are under the impression that a BTL bought with a minimum deposit should pay for itself ,and that is not the way a long term investment should work


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    #170
    brisan
    Registered Users Posts: 2,242 ✭✭✭brisan


    Fol20 wrote: »
    You said you left the market yourself as you had better opportunities.Why should anyone else enter the market if there are better opportunities elsewhere. Your philosophy seems deeply flawed here as you are completely happy for existing ll to leave the market and you cant provide any actual solution to encourage the rental stock to increase.

    What is the different between "real market rent" and "market rent", i have never heard this term before?

    Ok so what happens the rental property that is below market rent, i guess this can only be sold to an owner occupier which again decreases the rental supply. I think you see where im going with this....

    If someone finds a better opportunity than by all means move out of the rental market into that
    No one is forced to be a landlord
    Real market rent is what the market will pay not what the investor thinks it should pay


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    #171
    brisan
    Registered Users Posts: 2,242 ✭✭✭brisan


    Fol20 wrote: »
    Why are you fixated on slumlords and bedsit type accommodation?

    Because if you want a monthly income after expenses from a rental that's about the only way to get it


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    #172
    brisan
    Registered Users Posts: 2,242 ✭✭✭brisan


    Fol20 wrote: »
    Yes the car rental was an off the cuff example. Can you name any industry where it is cheaper to rent than to own something over the space of 30 years?

    The pros and cons to rent vs ownership are very different and you pay appropriately for the benefits of both.

    LL are wide open to the risk involved when they enter the market. They expect rental prices to go up and down over the lifetime of ownership and they do their best to do the figures and mitigate against any foreseeable issues.

    A lot only expect rents to go up .hence the RPZ


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    #173
    brisan
    Registered Users Posts: 2,242 ✭✭✭brisan


    Fol20 wrote: »
    You said you left the market yourself as you had better opportunities.Why should anyone else enter the market if there are better opportunities elsewhere. Your philosophy seems deeply flawed here as you are completely happy for existing ll to leave the market and you cant provide any actual solution to encourage the rental stock to increase.

    What is the different between "real market rent" and "market rent", i have never heard this term before?

    Ok so what happens the rental property that is below market rent, i guess this can only be sold to an owner occupier which again decreases the rental supply. I think you see where im going with this....

    If the rental is at below market rate who is to blame
    The tenant or the landlord


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    #174
    Fol20
    Registered Users Posts: 3,624 ✭✭✭Fol20


    brisan wrote: »
    If someone finds a better opportunity than by all means move out of the rental market into that
    No one is forced to be a landlord
    Real market rent is what the market will pay not what the investor thinks it should pay

    Ok so i agree that ll should leave if they have better opportunities(which they are already doing)

    So what are you suggesting to increase supply as all you seem to be saying is that if ll dont like it, they can leave.

    So real market rent is market rent....Not sure why your even mentioning this as LL would love to double rent if they could but it will always be set at market rate at any moment in time unless outside forces force the ll to undercut themself. You seem to be deflecting from answering any of the hard questions around this issue and putting your head in the sand hoping for the issue to fix itself without offering any solutions.


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    #175
    brisan
    Registered Users Posts: 2,242 ✭✭✭brisan


    Fol20 wrote: »
    Ok so i agree that ll should leave if they have better opportunities(which they are already doing)

    So what are you suggesting to increase supply as all you seem to be saying is that if ll dont like it, they can leave.

    So real market rent is market rent....Not sure why your even mentioning this as LL would love to double rent if they could but it will always be set at market rate at any moment in time unless outside forces force the ll to undercut themself. You seem to be deflecting from answering any of the hard questions around this issue and putting your head in the sand hoping for the issue to fix itself without offering any solutions.

    I never once said it would increase supply


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    #176
    brisan
    Registered Users Posts: 2,242 ✭✭✭brisan


    Fol20 wrote: »
    Ok so i agree that ll should leave if they have better opportunities(which they are already doing)

    So what are you suggesting to increase supply as all you seem to be saying is that if ll dont like it, they can leave.

    So real market rent is market rent....Not sure why your even mentioning this as LL would love to double rent if they could but it will always be set at market rate at any moment in time unless outside forces force the ll to undercut themself. You seem to be deflecting from answering any of the hard questions around this issue and putting your head in the sand hoping for the issue to fix itself without offering any solutions.

    Solutions professional landlords who know wht they are doing ,know and go by the rules
    landlords who accept its a long term investment and not a quick handy way to make money
    Gt them into the market and it will fix itself over time
    Professional landlords will not have to be as heavily regulated and bad tenants can then be evicted quickly and effectively ,which seems to be the main gripe


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    #177
    Fol20
    Registered Users Posts: 3,624 ✭✭✭Fol20


    brisan wrote: »
    I never said a rental property should wash its face
    I said if you wanted it to wash its face you have to put a large deposit down and lower the mortgage
    That's the problem
    A lot of landlords are under the impression that a BTL bought with a minimum deposit should pay for itself ,and that is not the way a long term investment should work

    Dont forget that a minimum deposit is 30pc. So lets say you get a 2 bed apt in dublin for 350k. Thats a deposit of 105k, dont minimise the cost on capital as thats a substantial amount of up front money disregarding all other costs you will need to incur. Capital is a major barrier to entry so it is different to other investments you can move money into.

    Please give me an an example of any country in the world where rent doesnt cover all bills?


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    #178
    Fol20
    Registered Users Posts: 3,624 ✭✭✭Fol20


    brisan wrote: »
    A lot only expect rents to go up .hence the RPZ

    Rents do tend to go up at a minimum with inflation but the supply and demand is the biggest factor here as what we saw during 2008 to 2014.


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    #179
    Browney7
    Registered Users Posts: 3,100 ✭✭✭Browney7


    Dav010 wrote: »
    Now that vaccination plans are being rolled out, building completions are way behind and commencements have dropped significantly this year, property prices and rents are expected to increase again in 2021.

    https://www.google.ie/amp/s/amp.rte.ie/amp/1183015/

    https://www.google.ie/amp/s/www.irishtimes.com/business/personal-finance/fiona-reddan-who-d-be-a-first-time-buyer-in-2021-1.4431161%3fmode=amp

    Institutional landlords continue to buy blocks, reducing stock for sale. This is what people called for, professional landlords, so at least some are happy.

    The REITs building or buying blocks is going to lead to the provision of social housing by the back door at an immense cost to the state.

    The state aren't going to buy the property upfront or assemble the apartments in a block one by one. The REIT will. They will then charge fairly hefty rents equating to a 5 or 6% gross rental yield (2 grand a month for a 400k 2 bed apartment for example). They may or may not fill with private tenants but will keep the price high and let it idle if they have to and just sit on it because the Beneficial owner (DB, Realis, Canadian pension funds would have to pay to hold euro cash - no opportunity cost to hold a vacant property)

    The state, who's housing list is getting bigger, will wave it's hands and say "there's nothing we can do and we've tried building or buying nothing ourselves" and become a hostage of sorts to the REITs.

    The REITs will have units with no one in them, the state has a list of people with no property. Hey presto, let's do a deal at 90 to 95% of "market rent" (set at a very high initial level) for 20 years on the enhanced leasing/HAP deal. Will get spun as the state gets houses at a discount to market.

    In 20 years when the state has forked over 1900 a month for 20 years (with likely increases in that time), they have to find somewhere else for the incumbent tenants or else roll over the contract again or cross the fingers and pray that the tenants have sufficient income to disqualify them from social housing, instead of just borrowing the 400k at below 1% over 20 years.

    What is actually happening is the taxpayer gets screwed long term storing up a rental timebomb to go with the pension one ticking away nicely in a cupboard in Leinster house.


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    #180
    Fol20
    Registered Users Posts: 3,624 ✭✭✭Fol20


    brisan wrote: »
    If the rental is at below market rate who is to blame
    The tenant or the landlord

    Your deflecting again, answer the question..

    The tenant isnt at fault. The ll is at fault for not being greedy enough along with the government not implementing good legislation and just putting a band aid over a band aid to fix the issue.


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    #181
    brisan
    Registered Users Posts: 2,242 ✭✭✭brisan


    Fol20 wrote: »
    Dont forget that a minimum deposit is 30pc. So lets say you get a 2 bed apt in dublin for 350k. Thats a deposit of 105k, dont minimise the cost on capital as thats a substantial amount of up front money disregarding all other costs you will need to incur. Capital is a major barrier to entry so it is different to other investments you can move money into.

    Please give me an an example of any country in the world where rent doesnt cover all bills?

    Why would you spend 350k on a 2 bed apartment when you can buy a 3 bed house for the same money and get better returns
    Or buy a 2 bed for 250k and get slightly smaller returns


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