Dublin - Significant reduction in rents coming?

L1011 · 04-06-2021 2:02pm

Claw Hammer wrote: »

Before the rent caps there were cases about market rent in which the Board stated it would require expert evidence in finding a market rent,

Can you actually provide these rather than just saying they exist without evidence?

mrslancaster · 04-06-2021 9:37pm

Blut2 wrote: »

Its also very unlikely that someone in a €350k apartment would be renting it by themselves. So that €18.75 a month increase would likely be split between two or even three people. So even in this rare exception case, and even if the entire cost was passed along to the tenant, you'd be looking at under a tenner a month per person increase.

Can the LPT be passed on to tenants?

Dav010 · 04-06-2021 9:40pm

mrslancaster wrote: »

Can the LPT be passed on to tenants?

No. Tenant is only liable in exceptional circumstance.

https://www.revenue.ie/en/property/local-property-tax/who-is-liable-for-lpt-and-or-household-charge/are-tenants-liable.aspx

Landlord pays.

Ray Palmer · 05-06-2021 2:41pm

Dav010 wrote: »

No. Tenant is only liable in exceptional circumstance.

https://www.revenue.ie/en/property/local-property-tax/who-is-liable-for-lpt-and-or-household-charge/are-tenants-liable.aspx

Landlord pays.

Landlords can increase rent and will take into consideration increases in LPT. That means it is passed on at some point. RPZ is temporary and has to end as it will eventually be breaking the constitution. Any and every costs eventually is paid by the tenant.

yagan · 05-06-2021 3:03pm

Ray Palmer wrote: »

Landlords can increase rent and will take into consideration increases in LPT. That means it is passed on at some point. RPZ is temporary and has to end as it will eventually be breaking the constitution. Any and every costs eventually is paid by the tenant.

The tenant doesn't compensate the landlord if rents fall.

L1011 · 05-06-2021 6:39pm

Ray Palmer wrote: »

as it will eventually be breaking the constitution.

A constitutional amendment to allow rent control would pass in a heartbeat; and the next Government makeup is very likely to do such a thing if they feel they need to.

Don't pin your hopes on it ending for that reason. The fact that its made a 4% increase default is more likely to see it changed, and towards a more conventional rent control system.

mrslancaster · 05-06-2021 7:56pm

L1011 wrote: »

A constitutional amendment to allow rent control would pass in a heartbeat; and the next Government makeup is very likely to do such a thing if they feel they need to.

Don't pin your hopes on it ending for that reason. The fact that its made a 4% increase default is more likely to see it changed, and towards a more conventional rent control system.

Interested in how a conventional rent control system works - is it very different to the rpz?

The_Conductor · 05-06-2021 8:40pm

mrslancaster wrote: »

Interested in how a conventional rent control system works - is it very different to the rpz?

It depends- and it would entail fairly significant dilution of property rights in the constitution were it to go ahead. Keep in mind that some of the classical rent control situations- such as Berlin- which the SDP and SF have been very vocal about- was recently overturned as unconstitutional in Germany.

The current RPZ system snuck in the backdoor as a temporary measure, and even that is questionable- but it hasn't been challenged. If people were of a mind to bring significantly more tenant centric legislation in- it would involve a fundamental diminution of property rights for everyone.

It may very well end up being the classical 'Be careful what you wish for, you just might get it', situation..........

People would be wise to research any possible unintended consequences that might arise.

whatnext · 07-06-2021 12:27pm

The thing that the cheerleaders for rent controls fail to realise is that due to their existence the potential rent achievable on a property is now intrinsically linked to the property’s value.
This means the starting base rent of a property brought to the market will have a over bearing impact on the value of the property on disposal.
Secondly, upward rent reviews are in essence mandatory from a business perspective to maintain the value of the property.
I’m saying this as someone who has been a landlord for over 20 years. I had never raised the rent on a sitting tenant in all those years until the changes in legislation. I have 2 identical apartments in the same development. One is worth about 125k less than the other in investment terms because of the passing rents.
It’s only a matter of time before the banks start using achievable rent for valuation purposes on properties for owner occupier mortgages and this is when things will get even more interesting.

Jmc25 · 07-06-2021 12:54pm

I would imagine the average person in Ireland, be they a homeowner or tenant, are broadly supportive of RPZ measures and a majority of people would be supportive of rent controls being tightened.

Of course there have been unintended consequences and would be further unintended consequences if they were tightened but I think people who don't own more than one property (and that is most people in the country) would rather see something being done - and the consequences dealt with as they arise - than nothing.

And I'm not advocating myself for anything to be kept in place/tightened - ultimately supply is the only way out of this - but I do think public opinion is very much at odds with some of the views here.

Graham · 07-06-2021 1:23pm

Jmc25 wrote: »

I would imagine the average person in Ireland, be they a homeowner or tenant, are broadly supportive of RPZ measures and a majority of people would be supportive of rent controls being tightened.

I suspect you are right about the support.

I'm also fairly certain the average person hasn't a notion about the likely unintended consequences.

Claw Hammer · 07-06-2021 3:38pm

Jmc25 wrote: »

I would imagine the average person in Ireland, be they a homeowner or tenant, are broadly supportive of RPZ measures and a majority of people would be supportive of rent controls being tightened.

Of course there have been unintended consequences and would be further unintended consequences if they were tightened but I think people who don't own more than one property (and that is most people in the country) would rather see something being done - and the consequences dealt with as they arise - than nothing.

And I'm not advocating myself for anything to be kept in place/tightened - ultimately supply is the only way out of this - but I do think public opinion is very much at odds with some of the views here.

Public opinion is irrelevant to rent controls. There is public demand for housing at all levels. It is a matter for a competent government to deal with it. Rent controls may be popular but they have had the effect of creating a two-tier class of renters. Those who benefit from lower than market rent and those who have had their rent forced up beyond what it would have been had there not been rent control. Furthermore councils have been paying very high rents for privately built units because rent controls have forced the prices of new units up.
All rent controls do is introduce distortion and ultimately they don't work.

Jmc25 · 07-06-2021 3:52pm

Claw Hammer wrote: »

Public opinion is irrelevant to rent controls. There is public demand for housing at all levels. It is a matter for a competent government to deal with it. Rent controls may be popular but they have had the effect of creating a two-tier class of renters. Those who benefit from lower than market rent and those who have had their rent forced up beyond what it would have been had there not been rent control. Furthermore councils have been paying very high rents for privately built units because rent controls have forced the prices of new units up.
All rent controls do is introduce distortion and ultimately they don't work.

Given the pressure the Government are under on housing I'd say public opinion is very relevant to rent controls, as it is to most high profile political issues.

Again, I'm not disputing that there have been unintended consequences, or that it has created two classes of tenants, or that it has penalised the wrong landlords.

I wouldnt agree though that they simply don't work - they've slowed down the increases in rent for sure - but ultimately we need more houses and that's the real issue here.

If more houses are built then rents with fall, which would ultimately be worse for landlords in general than the continuation or even expansion of the RPZ. I would argue that the RPZ was the bare minimum to Government at the time could do to satisfy the public that they were "doing something". Again, highlighting the importance of public opinion in these things.

Claw Hammer · 07-06-2021 3:54pm

Jmc25 wrote: »

I wouldnt agree though that they simply don't work - they've slowed down the increases in rent for sure - but ultimately we need more houses and that's the real issue here.

.

They slowed down some rent increases for a time but since there were no controls on new rentals these were forced up. In the pandemic rents didn't fall as much because of rent controls.

Ozark707 · 07-06-2021 3:58pm

Jmc25 wrote: »

I wouldnt agree though that they simply don't work - they've slowed down the increases in rent for sure - but ultimately we need more houses and that's the real issue here.

If more houses are built then rents with fall,

Well I think we have seen that even with the huge increase in supply of new units the owners can set unrealistic rents and thus remain empty for years on end. If FG weren't so disconnected from this reality they would have addressed this before the last election as it was obvious to anyone who bothered their a*** to look what was going on. Now they are talking about an empties tax, well good luck with that delivering reductions in rent before the next election.

Claw Hammer · 07-06-2021 4:00pm

Jmc25 wrote: »

If more houses are built then rents with fall, which would ultimately be worse for landlords in general than the continuation or even expansion of the RPZ. I would argue that the RPZ was the bare minimum to Government at the time could do to satisfy the public that they were "doing something". Again, highlighting the importance of public opinion in these things.

If more house are built and are allowed remain empty, what will happen rents? The RPZs might have been an attempt to be seen to be doing something but they needed to have been accompanied by actually doing something so they could be abolished. The current situation is a dog's dinner. The rent controls have backfired. many landlords left the market because of them. many properties are allowed lie idle because of them. Many planning permissions have been overturned on Judicial Review meaning supply is constrained. This weekend the newspapers are reporting high sales of houses in holiday areas, many to people who will use them as holiday homes.
RPZs are a load of cobblers and the sooner they go the way Guinness Light, the better.

Jmc25 · 07-06-2021 6:44pm

Claw Hammer wrote: »

If more house are built and are allowed remain empty, what will happen rents? The RPZs might have been an attempt to be seen to be doing something but they needed to have been accompanied by actually doing something so they could be abolished. The current situation is a dog's dinner. The rent controls have backfired. many landlords left the market because of them. many properties are allowed lie idle because of them. Many planning permissions have been overturned on Judicial Review meaning supply is constrained. This weekend the newspapers are reporting high sales of houses in holiday areas, many to people who will use them as holiday homes.
RPZs are a load of cobblers and the sooner they go the way Guinness Light, the better.

I think ultimately no matter what way you look at it or what your view of RPZ, the issue is there aren't enough properties to buy or rent at the moment. RPZ was the usual tinkering around the edges, yet the tone of some posts here would have you believe that they were more radical than they actually are (which is not at all in my opinion).

I agree re some new apartments in Dublin being left empty and it will be interesting to see how long that continues and will the funds who own them end up having to drop their rent anyway, thus defeating the entire purpose of leaving them vacant in the first place. And also whether such a drop in rents if it happens will be beneficial to the overall market in Dublin.

I don't know the ins and outs but I think part of the reason for avoiding writing down the headline rent is to maintain the value of the apartments on paper, so it's not solely due to RPZ either.

Claw Hammer · 08-06-2021 3:43pm

Jmc25 wrote: »

I don't know the ins and outs .

This is the problem. You are proposing solutions to a problem you don't understand.

Ace2007 · 08-06-2021 4:02pm

whatnext wrote: »

The thing that the cheerleaders for rent controls fail to realise is that due to their existence the potential rent achievable on a property is now intrinsically linked to the property’s value.
This means the starting base rent of a property brought to the market will have a over bearing impact on the value of the property on disposal.
Secondly, upward rent reviews are in essence mandatory from a business perspective to maintain the value of the property.
I’m saying this as someone who has been a landlord for over 20 years. I had never raised the rent on a sitting tenant in all those years until the changes in legislation. I have 2 identical apartments in the same development. One is worth about 125k less than the other in investment terms because of the passing rents.
It’s only a matter of time before the banks start using achievable rent for valuation purposes on properties for owner occupier mortgages and this is when things will get even more interesting.

That's not true - if you put these two identical apartments up for sale - they should sell for the same amount all else being equal. The new owner can charge the market rent. This idea that the value of the property is linked to the rent implies that that there is one rental yield available and that's it. I've seen yields of 3%, 5% 8% and in some case 10%+.

Claw Hammer · 08-06-2021 4:05pm

Ace2007 wrote: »

That's not true - if you put these two identical apartments up for sale - they should sell for the same amount all else being equal. The new owner can charge the market rent. This idea that the value of the property is linked to the rent implies that that there is one rental yield available and that's it. I've seen yields of 3%, 5% 8% and in some case 10%+.

Not correct. The apartments are rent capped at the last rent achieved. They have to be out of the rental market for 2 years before market rent can be charged. Rent capped properties effectively have to be sold to owner occupiers. Investors have to buy former owner occupied properties if they want to charge market rent.

Ace2007 · 08-06-2021 4:13pm

Claw Hammer wrote: »

Not correct. The apartments are rent capped at the last rent achieved. They have to be out of the rental market for 2 years before market rent can be charged. Rent capped properties effectively have to be sold to owner occupiers. Investors have to buy former owner occupied properties if they want to charge market rent.

And where can one find out what the last rent was? I have an apartment and give notice, tenant moves out - i sell said apartment, how does new owner know how much the previous rent was for?

Just the same way that if I go to rent an apartment now I have no idea what the last tenant paid, so how do i know it it's the same price or within the guidelines?

Claw Hammer · 08-06-2021 4:17pm

Ace2007 wrote: »

And where can one find out what the last rent was? I have an apartment and give notice, tenant moves out - i sell said apartment, how does new owner know how much the previous rent was for?

Just the same way that if I go to rent an apartment now I have no idea what the last tenant paid, so how do i know it it's the same price or within the guidelines?

The new owner had better enquire before committing. It will be no defence if he is found to have overcharged the new tenant.
Rents have to be declared to the RTB. There will be a record of registration. If you rent an apartment you may find out after moving in what the old rent was. Your are supposed to be told by the landlord in any event. The old tenant may turn up looking for mail etc.

houseyhouse · 08-06-2021 4:20pm

Ace2007 wrote: »

And where can one find out what the last rent was? I have an apartment and give notice, tenant moves out - i sell said apartment, how does new owner know how much the previous rent was for?

Just the same way that if I go to rent an apartment now I have no idea what the last tenant paid, so how do i know it it's the same price or within the guidelines?

I bought a house since the RPZs came in. It had been a rental and our solicitor was able to tell us what the previous rent for it was. I presume she got this information from the RTB but we hadn't requested it, she just offered it in case we had been planning on renting it out. As it happens the rent was pretty low for the area so we suspect that's why it got sold.

Jmc25 · 08-06-2021 4:45pm

Claw Hammer wrote: »

This is the problem. You are proposing solutions to a problem you don't understand.

I haven't proposed any solutions other than suggesting that more housing needs to be built, which few people would disagree with.

My original point was that there's public support for rent controls and public perception will be an important consideration for the Government in deciding whether to retain or expand rent controls and how to deal with the housing issue in general.

Ace2007 · 08-06-2021 5:08pm

houseyhouse wrote: »

I bought a house since the RPZs came in. It had been a rental and our solicitor was able to tell us what the previous rent for it was. I presume she got this information from the RTB but we hadn't requested it, she just offered it in case we had been planning on renting it out. As it happens the rent was pretty low for the area so we suspect that's why it got sold.

Where you told in advance that it was a rental, I've seen plenty of house for sale that were rentals and it doesn't state anywhere that they were rentals.

The point still stands though, just because your getting a low rental doesn't mean it affects the house valuation when it comes to selling it. Is someone buying their forever home going to care if the rental yield is 5% or 10% p.a.? If an investor is purchasing the home, they may not buy it if the yield doesn't meet their appetite.

houseyhouse · 08-06-2021 5:34pm

Ace2007 wrote: »

Where you told in advance that it was a rental, I've seen plenty of house for sale that were rentals and it doesn't state anywhere that they were rentals.

The point still stands though, just because your getting a low rental doesn't mean it affects the house valuation when it comes to selling it. Is someone buying their forever home going to care if the rental yield is 5% or 10% p.a.? If an investor is purchasing the home, they may not buy it if the yield doesn't meet their appetite.

The EA didn't tell us if that's what you mean but we could have guessed from the furniture/decor. The solicitor told us during the paperwork stage. We hadn't enquired as we were not planning to rent it out. I have never bought a property with the intention of letting but if I was, it would be foolish of me not to enquire if it had been a rental and what the rent was given the current legislation. In our case we bought a house in a mature area so there was plenty of interest from people like us who wanted it as a home. In the case of a property in a development that is mostly rentals, I would imagine it could have an impact on the price. Not every property is going to appeal to people looking for a 'forever home'.

whatnext · 08-06-2021 5:35pm

Ace2007 wrote: »

That's not true - if you put these two identical apartments up for sale - they should sell for the same amount all else being equal. The new owner can charge the market rent. This idea that the value of the property is linked to the rent implies that that there is one rental yield available and that's it. I've seen yields of 3%, 5% 8% and in some case 10%+.

Your post encapsulates the single biggest problem the market faces. ie people stating as fact things that a blatantly untrue. And this isn’t just a pop at your post. There are “celebrity economists” and populist politicians guilty of releasing far more damaging sound bites in the hope of either raising their profile or creating a social media storm.

Jmc25 · 08-06-2021 5:38pm

Ace2007 wrote: »

And where can one find out what the last rent was? I have an apartment and give notice, tenant moves out - i sell said apartment, how does new owner know how much the previous rent was for?

The RTB keep record I think. I know of someone selling who went sale agreed with an an investor and had it fall through when the below market rent came to light through the legal process with the solicitors. Cost them over a thousand in legal fees so best option for anyone selling is to disclose it through the estate agent as obviously a buyers solicitor can request the information.

Probably not so much of an issue in the current market but it probably could potentially affect the value just by virtue of narrowing the pool of buyers interested.

mrslancaster · 08-06-2021 5:55pm

Jmc25 wrote: »

The RTB keep record I think. I know of someone selling who went sale agreed with an an investor and had it fall through when the below market rent came to light through the legal process with the solicitors. Cost them over a thousand in legal fees so best option for anyone selling is to disclose it through the estate agent as obviously a buyers solicitor can request the information.

Probably not so much of an issue in the current market but it probably could potentially affect the value just by virtue of narrowing the pool of buyers interested.

How can the rtb disclose that information to a solicitor on behalf of a buyer. Does the RTB not have to keep gdpr rules?

Jmc25 · 08-06-2021 6:19pm

mrslancaster wrote: »

How can the rtb disclose that information to a solicitor on behalf of a buyer. Does the RTB not have to keep gdpr rules?

I'm getting into guesswork here but I would assume that the buyers requests the info through their solicitor and the vendors solicitor discloses it with evidence from the RTB.

Same as with property tax, revenue isn't disclosing the info to the buyer directly, it's the vendor's solicitor giving the info on behalf of the vendor and providing proof in the form of a statement from revenue. If the vendor was to refuse to disclose it then it's game over for the sale.

Dublin - Significant reduction in rents coming?

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