Dublin - Significant reduction in rents coming?

Ozark707 · 20-11-2020 2:56pm

Marius34 wrote: »

Ok, you discussing luxury high end apartments, would not be sure about it, as their projects may be so unique. I lived once in Amsterdam in corporate let luxury apartments, and it looked very empty. I don't know the reason, but it seems luxury rentals seems more empty.
I don't think there are high vacancy on regular REIT rental properties, below 3K mark.

I agree the vacancy rate would be less as you go cheaper but what is happening now is that places that were looking for north of 2.5k are now having to drop their price (substantially at times).

Here is an example. Started at 2.75k (pre-Covid) and now is 2.25k after two drops.

https://www.daft.ie/22010850

I am seeing now places in D4 that would probably been 2.5k pre-Covid sometimes in or around 2k. If the high end REIT's acknowledge that they can no longer get 3k for their apartments they will probably find that they will have to adjust substantially downwards the price. This will surely have a dampening effect on the rest of the market as well. But as has been pointed out they may be content to forego the cashflow.

brisan · 20-11-2020 2:58pm

PommieBast wrote: »

Until the RPZ came along my rent had never been increased. Then again the landlord then went complete opposite and even whinged about rounding of the rent calculation that made a difference of about €2.

The exception rather than the rule

PommieBast · 20-11-2020 3:07pm

brisan wrote: »

The exception rather than the rule

Even at the time I wondered that. By the time I was finally turfed out I was paying €1100 which was s good deal for a 40-45sqm (plus balcony) 1-bed in the city centre.

brisan · 20-11-2020 3:10pm

PommieBast wrote: »

Even at the time I wondered that. By the time I was finally turfed out I was paying €1100 which was s good deal for a 40-45sqm (plus balcony) 1-bed in the city centre.

Some landlords take their eye off the ball regarding headline or market rent
Once the rent is coming in on time and its paying the mortgage they do not bother as they have other priorities
However Rent control hits the news and they buck up and check things out
If you never got a rent increase you were lucky

JimmyVik · 20-11-2020 3:39pm

PommieBast wrote: »

Until the RPZ came along my rent had never been increased. Then again the landlord then went complete opposite and even whinged about rounding of the rent calculation that made a difference of about €2.

They punished those who werent increasing rent.
They made it so that a landlord who never increased rent would have felt they were an idiot for not doing so. And of course they were all going to look at their rents and do what they could not to get caught again.

NuMarvel · 20-11-2020 5:08pm

JimmyVik wrote: »

They punished those who werent increasing rent.
They made it so that a landlord who never increased rent would have felt they were an idiot for not doing so. And of course they were all going to look at their rents and do what they could not to get caught again.

How so? These landlords can still increase rents, just by no more than the equivalent of 4% per annum. That's hardly a punishment.

If all landlords had followed their example, then there wouldn't have been a need for RPZs in the first place.

Claw Hammer · 20-11-2020 5:14pm

NuMarvel wrote: »

How so? These landlords can still increase rents, just by no more than the equivalent of 4% per annum. That's hardly a punishment.

They were charging less than market rent, which may have been because they had a satisfactory tenant and expected to be able to charge market rent when the unit became vacant. Now they can't get market rent and the property will be rent locked at the lower rental figure if they wish to sell it. If they had kept pushing the rent up to the maximum possible before the RPZs they would be getting more rent and have a higher market value for their asset.
What's to like about it?

NuMarvel · 20-11-2020 5:50pm

Claw Hammer wrote: »

They were charging less than market rent, which may have been because they had a satisfactory tenant and expected to be able to charge market rent when the unit became vacant. Now they can't get market rent and the property will be rent locked at the lower rental figure if they wish to sell it. If they had kept pushing the rent up to the maximum possible before the RPZs they would be getting more rent and have a higher market value for their asset.
What's to like about it?

I'm sure it's undesirable, but not taking the opportunity to charge the same excessively high rent increases as other landlords can't in any way be regarded as a punishment. Particularly in a market where a place to live continues to be a highly sought after commodity.

Claw Hammer · 20-11-2020 5:54pm

NuMarvel wrote: »

I'm sure it's undesirable, but not taking the opportunity to charge the same excessively high rent increases as other landlords can't in any way be regarded as a punishment. Particularly in a market where a place to live continues to be a highly sought after commodity.

Not being allowed charge market rent or charge the same or similar to someone letting an identical property is a punishment particularly when they could have avoided it by jacking up the rent to the maximum at every opportunity.
What good is having a desirable property if neither the market rent nor the market price can be charged?

Graham · 20-11-2020 5:58pm

NuMarvel wrote: »

I'm sure it's undesirable, but not taking the opportunity to charge the same excessively high rent increases as other landlords can't in any way be regarded as a punishment. Particularly in a market where a place to live continues to be a highly sought after commodity.

You've charged your tenant 70% of market rent for the last 10 years. Thanks Mr Landlord. Your reward is never seeing market rent again.

whatnext · 20-11-2020 6:01pm

NuMarvel wrote: »

I'm sure it's undesirable, but not taking the opportunity to charge the same excessively high rent increases as other landlords can't in any way be regarded as a punishment. Particularly in a market where a place to live continues to be a highly sought after commodity.

Yes it can, when the associated risk have risen so sharply. The increasing inability to remove delinquent tenants is now a huge risk. An uninsurable risk at that.

NuMarvel · 20-11-2020 6:11pm

Claw Hammer wrote: »

Not being allowed charge market rent or charge the same or similar to someone letting an identical property is a punishment particularly when they could have avoided it by jacking up the rent to the maximum at every opportunity.
What good is having a desirable property if neither the market rent nor the market price can be charged?

Graham wrote: »

You've charged your tenant 70% of market rent for the last 10 years. Thanks Mr Landlord. Your reward is never seeing market rent again.

This is like saying 30kph speed limits are a punishment because you can't do 60kph through residential areas anymore.

If market rents were too high, then no longer being able to charge that level of rent isn't a punishment.

NuMarvel · 20-11-2020 6:27pm

whatnext wrote: »

Yes it can, when the associated risk have risen so sharply. The increasing inability to remove delinquent tenants is now a huge risk. An uninsurable risk at that.

I'm not doubting that the removal of non-paying tenants is a serious issue for landlords, but I'm honestly struggling to see how this means RPZs are a punishment. Wouldn't the former be an issue regardless of how or if RPZs operated?

Graham · 20-11-2020 6:30pm

NuMarvel wrote: »

This is like saying 30kph speed limits are a punishment because you can't do 60kph through residential areas anymore.

No it's really not like that.

I assume if you were getting paid 70% of the going rate for your job/profession, you wouldn't be happy to be told here's 4%, you never had it so you won't miss it.

NuMarvel · 20-11-2020 7:11pm

Graham wrote: »

No it's really not like that.

It's not identical, but it's close enough. 60kph in a residential zone isn't desirable, and neither are rent increases of 7% or more over a sustained period of time.

Graham wrote: »

I assume if you were getting paid 70% of the going rate for your job/profession, you wouldn't be happy to be told here's 4%, you never had it so you won't miss it.

If I had decided to accept 70% of the going rate, even though I could have charged the going rate at any time, and my ability to increase my rate was curtailed because, and only because, others had started making excessive demands, then I'd certainly be annoyed. At the greedy idiots who couldn't be happy with what they had. I wouldn't think the Government was punishing me.

Graham · 20-11-2020 7:17pm

NuMarvel wrote: »

If I had decided to accept 70% of the going rate, even though I could have charged the going rate at any time, and my ability to increase my rate was curtailed because, and only because, others had started making excessive demands

Of course your argument is predicated on the false assumption that rents are high due to excessive demands rather than acknowledging that rents are connected to (increasing) property prices.

It's exactly this kind of logic fail that's seeing small landlords leave the market to be replaced by REITs at the upper end of the price scale.

NuMarvel · 20-11-2020 7:30pm

Graham wrote: »

Of course your argument is predicated on the false assumption that rents are high due to excessive demands rather than acknowledging that rents are connected to (increasing) property prices.

It's exactly this kind of logic fail that's seeing small landlords leave the market to be replaced by REITs at the upper end of the price scale.

My argument is predicated on the fact that one of the factors that determine whether an area becomes an RPZ is that there have been rent increases of 7% or more over a certain period of time. There is no false assumption or logic fail there.

Dav010 · 20-11-2020 9:03pm

NuMarvel wrote: »

This is like saying 30kph speed limits are a punishment because you can't do 60kph through residential areas anymore.
.

No it isn’t. It’s like driving your car at 30kph and then being told that the max you will be able to drive for the next year is 31.2kph even though everyone else can continue to drive at 60kph if that is the limit for the area.

NuMarvel · 20-11-2020 9:27pm

Dav010 wrote: »

No it isn’t. It’s like driving your car at 30kph and then being told that the max you will be able to drive for the next year is 31.2kph even though everyone else can continue to drive at 60kph if that is the limit for the area.

What you're missing is that the limit only comes into effect if there are too many instances of reckless and dangerous driving. So chances are there were few, if any, drivers doing 30kph in the first place.

Dav010 · 20-11-2020 9:31pm

NuMarvel wrote: »

What you're missing is that the limit only comes into effect if there are too many instances of reckless and dangerous driving. So chances are there were few, if any, drivers doing 30kph in the first place.

You are stretching the analogy so thin it no longer makes sense.

NuMarvel · 20-11-2020 9:38pm

Dav010 wrote: »

You are stretching the analogy so thin it no longer makes sense.

Then you must not understand RPZ legislation very well, because I think my point is as clear as day.

alias no.9 · 20-11-2020 9:40pm

NuMarvel wrote: »

What you're missing is that the limit only comes into effect if there are too many instances of reckless and dangerous driving. So chances are there were few, if any, drivers doing 30kph in the first place.

If there are controls, they should be applied equitably rather saying well Johnny has been doing 110km/h past the school for years now so he's grand, leave him off but the next car that comes over the brow of the hill will get a ticket regardless of how fast they're going.

All tenancies are required to be registered so there is a record of monthly rents, all registered tenancies must have a valid BER which also records the floor area of the unit. How difficult would it be to compile that data into a benchmark rent for areas/regions on a €/SqM basis with adjustment for BER? Use that as the benchmark for any controls rather than rewarding the assholes who were taking the piss. Alternatively, scrap the controls and just change the tax system such that once you go over a certain threshold based on the benchmark, the tax rate steps up.

Dav010 · 20-11-2020 9:45pm

NuMarvel wrote: »

Then you must not understand RPZ legislation very well, because I think my point is as clear as day.

I understand the Legislation very well. I know that LLs who didn’t raise rent to market rate prior to its introduction were locked into small incremental rises thereafter which may be well below market rate therefore penalising them, I know that it has motivated LLs to ensure they increase rents yearly, I know that many are now concerned that dropping rent locks them into that rate going forward so rents are not falling in responce to new market conditions like they should, and I know that you should having chosen a better analogy.

NuMarvel · 20-11-2020 10:05pm

Dav010 wrote: »

I understand the Legislation very well. I know that LLs who didn’t raise rent to market rate prior to its introduction were locked into small incremental rises thereafter, I know that it has motivated LLs to ensure they increase rents yearly, I know that many are now concerned that dropping rent locks them into that rate going forward so rents are not falling in responce to new market conditions like they should, and I know that you should having chosen a better analogy.

LLs didn't need motivation to increase rents. That was clearly already happening. That's why these measures and those prior to them were introduced in the first place: rent, as a whole, were increasing at an excessive rate.

Excessive rent increases cause RPZs, not the other way around. If people don't want the latter, then the surest way to avoid them is to address the former.

Dav010 · 20-11-2020 10:19pm

NuMarvel wrote: »

LLs didn't need motivation to increase rents. That was clearly already happening. That's why these measures and those prior to them were introduced in the first place: rent, as a whole, were increasing at an excessive rate.

Excessive rent increases cause RPZs, not the other way around. If people don't want the latter, then the surest way to avoid them is to address the former.

They were increasing to market rate, supply and demand. You may feel that is excessive but that is how markets work. As a result, those LLs who weren’t renting at market rate were penalised for their tardiness or their goodwill toward good tenants. Landlordism isn’t a philanthropic pursuit, it is provision of a service for payment and should always be considered so.

Landlords often increased rents when there was a change of tenants, now they increase them like clockwork on a yearly basis. LLs realise that by lowering rents, they can increase only by rates set by RPZ regs, so they are choosing not to or leaving the market, neither of which benefit the tenants now nor in future when demand increases again.

NuMarvel · 20-11-2020 10:36pm

Dav010 wrote: »

They were increasing to market rate, supply and demand. You may feel that is excessive but that is how markets work. As a result, those LLs who weren’t renting at market rate were penalised for their tardiness or their goodwill toward good tenants.

Landlords often increased rents when there was a change of tenants, now they increase them like clockwork on a yearly basis.

The issue wasn't that LLs were increasing rents, the issue was the rate of increase they were applying. And most people would think that 7% or more per annum is an excessive rate of increase in the midst of a housing and homelessness crisis, regardless of the market forces, etc.

As for these LLs who supposedly weren't applying rent increases, there presumably weren't that many because the average increases at the time RPZs were first introduced was 7%. Which is a pity, because if there were more, there wouldn't have been a need for RPZs in the first place.

The Student · 20-11-2020 10:47pm

NuMarvel wrote: »

The issue wasn't that LLs were increasing rents, the issue was the rate of increase they were applying. And most people would think that 7% or more per annum is an excessive rate of increase in the midst of a housing and homelessness crisis, regardless of the market forces, etc.

As for these LLs who supposedly weren't applying rent increases, there presumably weren't that many because the average increases at the time RPZs were first introduced was 7%. Which is a pity, because if there were more, there wouldn't have been a need for RPZs in the first place.

You are ignoring the market principle. It's a business pure and simple. It never ceases to amaze me how people seem to think landlords have some moral obligation to house tenants at rates tenants think is appropriate.

When rents fell significantly post 2010 plenty of people were happy enough to say it's a business and the market decided the rent.

You cant have it both ways and expect any rational landlord not to react.

Dav010 · 20-11-2020 10:52pm

NuMarvel wrote: »

The issue wasn't that LLs were increasing rents, the issue was the rate of increase they were applying. And most people would think that 7% or more per annum is an excessive rate of increase in the midst of a housing and homelessness crisis, regardless of the market forces, etc.

As for these LLs who supposedly weren't applying rent increases, there presumably weren't that many because the average increases at the time RPZs were first introduced was 7%. Which is a pity, because if there were more, there wouldn't have been a need for RPZs in the first place.

It is not, nor has it ever been the responsibility of private landlords to provide affordable housing.

By introducing measures to limit the market when rents were rising, they have had the counterproductive effect of increasing the numbers of LLs leaving the market and stifling rent reductions as demand fell.

In any market, if you want prices to fall, you increase supply, not reduce it. If memory serves me correctly, I remember Matt Cooper saying on the Tonight show that in the year after the RPZ was introduced, the average increase in Dublin during that year was 14%, which was a huge increase that wasn’t supposed to happen and was linked to LLs getting the rents up before the new regs began to be enforced by the RTB.

Rents should be dropping like a stone, not just new lets, but across the board as demand has sharply declined, yet the latest Daft figures should a decline of .8% on the same period in 2019, that should not happen. But LLs would prefer to leave a flat empty or possibly give a free month or two in rent as some claim rather than reduce rent knowing that the max increase when demand rises, is 4% going forward.

NuMarvel · 20-11-2020 10:56pm

The Student wrote: »

You are ignoring the market principle. It's a business pure and simple. It never ceases to amaze me how people seem to think landlords have some moral obligation to house tenants at rates tenants think is appropriate.

When rents fell significantly post 2010 plenty of people were happy enough to say it's a business and the market decided the rent.

You cant have it both ways and expect any rational landlord not to react.

I'm not ignoring market principles; I completely understand them. I'm just not worshipping at their altar and putting them above everything else.

Dav010 · 20-11-2020 10:58pm

NuMarvel wrote: »

I'm not ignoring market principles; I completely understand them. I'm just not worshipping at their altar and putting them above everything else.

Your worship is not required, but your understanding would be appreciated.

Dublin - Significant reduction in rents coming?

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