Irish Property Market chat II - *read mod note post #1 before posting*

6 year limit if true is just buying time.

Unless the state can do a massive ramp up of social and affordable rent building in next 6 years, there will be absolute chaos once all rents in the state can be raised in 6 years time. Mass defaults/evictions of tenants whose income will almost certainly not have grown enough to keep up. Especially when they could be seeing 2% increase pa. for each of the 6 years up to that point.

RPZ was and is a scam to keep rate inflation down at the cost of private citizens. I made it so the landlords who were nice to tenants by not raising rent were punished and cannot get market rates ever. The removal of the rate passing on to new tenants is the minimum that should be changed. While you say inflation was 0% costs to landlords went up at the same time brought in by the government such as RTB, tax increase while insurance and maintenance costs increased. The government also cut HAP and told tenants to break leases. This meant that many landlords were paying more into the property than they planned while facing negative equity. The government told the people that the landlords wouldn't put up rents due to extra charges brought in by the government and made that happen via RTZ and also making HAP refusal illegal. It was deeply unfair and still an issue for landlords. Certainly doesn't make one trust the government.

Inflation is a terrible gauge to use as it doesn't relate to the cost of property being rented.

There are not enough builders to construct the housing and materials are much more expensive. We are not the only ones with a housing crisis

Rent controls have never worked anywhere in the world. We are no different. Rent controls drive down quality (why increase quality if you cant increase price), reduce supply (LLs who cant increase rents to market levels more likely to leave), and increase rents for new properties (nobody leaves their low rent property, and the reduced supply increases price for new entrants).

Like everywhere in the housing market, Ireland needs more supply. This is especially true of the private rented sector where rent controls and pushing in social housing clients and upping already squeezed demand. A review of RPZs was always going to be needed at some point, so its good that this is finally happening.

Allowing reset of rents to market level at the end of the tenancy is a good move IMHO, but should be accompanied with heavier fines for illegal evictions to avoid tenants being evicted to bring in higher paying rents.

The 2% vs inflation piece makes little difference.

I'm disappointed that tenancies which are currently well below market rents were not addressed. This is likely to be a continuing sell up incentive for existing LLs.

I'm also disappointed that there is nothing being done to address non-paying and overholding tenants. This does more to discourage Buy to let than everything else put together.

Finally, it is refreshing to think this might be the last tinkering by the state in this market. There seems to be new legislation every few months. Nothing kills investment like uncertainty.

Good points.

I am not sure how the plan is going to stimulate investment in new builds, when the cap is still being retained under the guise of inflation, rather than just a fixed 2% cap.

It is going to amount to more or less the same thing and the cap will still be there.

Wrong. You needed 3 examples similar to your own property not just in the local area. The reason they wanted to have rents held artificially low was for the reports not really for people. There is no putting the rent up to what they like it is the market rate.

I gave you a clear example of how it is unfair and how it is impossible to catch rent up to the market rates due to existing rules. You are ignoring the facts because your goal is that tenants gets cheap rent that you don't subsidise but other do. Of course you like it because it costs you nothing.

My example shows a 100% increase would be justified and the tenant got a benefit at the cost of a private citizen. If you sell a house and pay CGT then die the inheriting person then pays tax again but not if you keep the property as it is only taxed once at inheritance. Many landlords are elderly and that is on their mind. Are you willing to give the government more tax? Property investment have many restrictions and limitation of liquidity that must be taken into account of when considering value and risk.

Whilst your general point may be correct, as we can now see, interfering with rents is fantastic for current renters but it sells out the next generation to come after them.

Fewer apartments built. Less supply. Higher rents for new builds. The 60 year old who’s rent would increase 50% today is more visible and vocal than the dozen 15 year olds who’ll have to live at home until they’re 30 because the apartments they might have lived in will never be built.

It’s like a lot of things in Irish politics. In the short term it’s always easier to sell out the next generation to appease the current voting one. Cheap rents sounds cool. But eventually the pain of interference becomes too much and must be fixed.

I agree this is realistically the only way out. I would also like to see some level of taking our medicine as a blank cheque from the government to fix all problems will create massive rental inflation.

If 70 year old Mary can no longer afford her 3 bed in Blackrock (and you can be sure she will be in the Irish times), so be it, she will have to find something smaller or in a less desireable area. We have to drop the pretense that policies can solve everyone’s problems. It’s about sensible compromises and balancing interests of the population (current and future)

‘Building more homes’ is anything but easy. Ask pretty much any first world country who are almost all building less than us.

Also, your statement in of itself is a contradiction.
1. We need to build more apartments.

2. Whilst we wait for 1 to happen, let’s implement some policies which make apartment development far less attractive.

3. Shocked when 1 doesn’t actually happen.

The changes being put forward by the Govy to remove rent caps feels like a massive gamble.

While I agree that rent control is not a solution, the idea that removing rent caps is some panacea is also wildly idealistic.

Investors build apartments if the yield is good enough. You can improve yield by either raising market rents, or decreasing cost to build.

Market rents are borne by workers, and there is a hard limit on how high rents can actually go before people simply cannot pay anymore. Not to mention all the 2nd order effects of high rents: less disposable income, less eating out and drinking, lower attendance at events, lower spend on luxuries. All of this is very bad news for the economy. Rents paid to investment funds are money extracted from the Irish economy. A neccesary evil but not a good thing.

The better option for lower rents, increased supply and more disposable income in renters pockets, is to decrease the cost to build. Land prices are massively elastic and add large sums to cost of delivery of new housing. A new class of punitive CGT on undeveloped land should be brought in to discourage price gouging on development land. At the end of the day, sitting on development land adds no actual value, the planning department rezoning adds the value, the speculator should not be the one to benefit.

The very clear example I gave you was for the same property. You want to change everything around to suit your narrative.

Still can't put up the rent to what ever you like no matter how many times you repeat it. You are making up a belief having never actually been through the process where as I have. They took "similar" property very seriously and didn't allow what you are claiming.

There will be less rentals and worse property occupancy if there is no money to be made in renting. There were 4 rentals near me that sold in the last 5 years. The occupancy rate went down as a result as at least 3 adults lived in each (4 in some) and replaced with a couple and in fairness one couple also had a child. That is 13 adults replaced with 8 adults and 1 child. That makes 5 more people looking for rentals and there are 4 less on the market. Sold most likely because or RPZ restrictions. Those 5 people will have to pay rent and it will most likely be more expensive. Unintended consequences of cheap rent hoisted on a private landlord. You just aren't a big picture kind of person and have not thought out your ideas. You will always return to tenants should have cheap rent and don't really cares who pays once it is not you.

A rather disengeious comment in era of record employment where many of those that perform hard work are paid amongst the lowest salaries, insufficient to cover basic costs, particularly accommodation.

We create systems that reward speculators not hard work. We've been here before. We know how it ends

Could you report that to the PRTB?

Yes there was a previous proposal for that to be removed but in the end it seems it will be tied to inflation. New rules will kick in on the 1st of March next year so should be plenty of time for landlords to jack up rents in non-rpz areas before then

Does this in any way incentivise things positively? This will surely further discourage landlords from staying in the market, and discourage new builds being established (ECB project inflation to be <2% next year)