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Dublin - Significant reduction in rents coming?

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    #902
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,278 Mod ✭✭✭✭The_Conductor


    brisan wrote: »
    Why would tenants want to dump RPZ restrictions
    In a falling market the market will set the price and in a rising market RPZ will keep rises to a minimum
    Many tenants will over the next few months negotiate a rent reduction
    If the landlord refuses he could be left minus 2 months rent ,EA fee for leasing the apartment ,renovation costs,and still only get what the previous tenant offered

    The whole point of RPZ restrictions was to tame rent rises in areas where the rent was rising by >7% per annum- limiting the increase to 4%.
    The legislation was also framed in such a way that RPZ regulations could only apply to an area for a maximum of 3 years. We're already over 3 years in many areas (including Dublin and Galway).

    In an era of falling rents (and despite what people are suggesting- I don't think you'll see large reductions in many areas- its going to be the lesser desirable areas that will see the falls), the RPZ legislation has outlived its purpose- and in any event, has also breached its time limitations (in the RTA).

    Seeing as it has no basis in law (once it goes over 3 years) and rents are stagnant or falling- it no longer serves a purpose in its current form.

    If you want RPZ zones- you're going to have to bring in fresh legislation- and in an era of tamed rents, you're also going to have to define a raison d'etre for it.

    The bigger issue than RPZ- is that the exodus of landlords from the sector is only speeding up- as there is a perception that prices have peaked (or are even on a downward trend) and many landlords are awaiting the elapse of current restrictions to reclaim properties and get them on the market.

    If you want to remove the ability of owners to sell their property- unfortunately-you're not going to address this in the RTA- you're probably going to need a constitutional referendum- an amendment to the RTA isn't going to cut it.

    We have an interesting time ahead of us in the Accommdation and Property sector- from a legislative perspective- however, people need to be cognisant of the law of unintended consequences. If you simply give in to Threshold and other advocacy groups- you won't have a rental sector- people will get out by whatever mechanisms are left at their disposal, and at whatever cost.

    Letting property is not a license to print money- nor is it a charmed existence for landlords- in the manner that Tenancy Advocacy groups like to wax lyrically about.


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    #903
    beauf
    Closed Accounts Posts: 22,651 ✭✭✭✭beauf


    The_Conductor wrote: »
    Why are Threshold allowed publish this drivel.
    I did my postgrad in Biometrics and Applied Statistics. If I used a sample like this- I'd have gotten tossed out of UCD in disgrace. Yet- they are a publicly funded body. Surely they should be held to account for using public funds to publish absolute drivel.

    A one sided media piece like this especially if it's anti LL is very common from not just from threshold, but across a plethora of organisations and groups and media.


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    #904
    Assetbacked
    Closed Accounts Posts: 2,969 ✭✭✭Assetbacked


    On the RPZ, for the institutional investors, 8% is typically a performance target per annum (a typical private equity hurdle, not just property related) so I found it convenient that 4% was the RPZ rent increase limit. It felt like the Department had been hoodwinked by the institutional lobbyists to enable an increase of 4% (or else (likely under the promise of delivering properties, which is nonsense as demand is soaring so there is little risk of building and not being able to rent out your apartment block). For me, if they were going to introduce a 4% increase, I think it should not have applied to new builds, they should not have been allowed to increase rent for the duration of the RPZ measures once they are first put to market.


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    #905
    brisan
    Registered Users Posts: 2,242 ✭✭✭brisan


    The_Conductor wrote: »
    The whole point of RPZ restrictions was to tame rent rises in areas where the rent was rising by >7% per annum- limiting the increase to 4%.
    The legislation was also framed in such a way that RPZ regulations could only apply to an area for a maximum of 3 years. We're already over 3 years in many areas (including Dublin and Galway).

    In an era of falling rents (and despite what people are suggesting- I don't think you'll see large reductions in many areas- its going to be the lesser desirable areas that will see the falls), the RPZ legislation has outlived its purpose- and in any event, has also breached its time limitations (in the RTA).

    Seeing as it has no basis in law (once it goes over 3 years) and rents are stagnant or falling- it no longer serves a purpose in its current form.

    If you want RPZ zones- you're going to have to bring in fresh legislation- and in an era of tamed rents, you're also going to have to define a raison d'etre for it.

    The bigger issue than RPZ- is that the exodus of landlords from the sector is only speeding up- as there is a perception that prices have peaked (or are even on a downward trend) and many landlords are awaiting the elapse of current restrictions to reclaim properties and get them on the market.

    If you want to remove the ability of owners to sell their property- unfortunately-you're not going to address this in the RTA- you're probably going to need a constitutional referendum- an amendment to the RTA isn't going to cut it.

    We have an interesting time ahead of us in the Accommdation and Property sector- from a legislative perspective- however, people need to be cognisant of the law of unintended consequences. If you simply give in to Threshold and other advocacy groups- you won't have a rental sector- people will get out by whatever mechanisms are left at their disposal, and at whatever cost.

    Letting property is not a license to print money- nor is it a charmed existence for landlords- in the manner that Tenancy Advocacy groups like to wax lyrically about.

    As I have said previously (and this is someone who has had rental properties in my own right and with brothers )the Landlords of today are paying for the sins of their predecessors.
    There are still bad landlords out there and unfortunately all landlords are getting tarred with the same brush


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    #906
    beauf
    Closed Accounts Posts: 22,651 ✭✭✭✭beauf


    The_Conductor wrote: »
    Presumably a tenant could trigger a rent review- using the same mechanisms as a landlord- seeking a reduction of a max of 4% per annum on a pro-rata basis. Tenants, of course, might prefer to argue that they shouldn't be restricted to a 4% reduction- however, thats a having your cake and eating it scenario. If you want to dump RPZ restrictions- you accept it applies across the board.

    Previous governments have proved they will implement knee jerk populist legislation in lieu of actually doing anything to fix the housing crisis. They will ignore international experience and repeat the same mistakes and policies that we know in advance won't work.

    So personally I think they could do anything, and they will expect LLs to carry the brunt of the costs. They could very easily drop the rents 5-10% across the board. They could extend the ban on evictions etc.

    If the coalition fails SF are waiting in the wings to decimate the private rental market.


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    #907
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,278 Mod ✭✭✭✭The_Conductor


    Assetbacked wrote: »
    On the RPZ, for the institutional investors, 8% is typically a performance target per annum (a typical private equity hurdle, not just property related) so I found it convenient that 4% was the RPZ rent increase limit. It felt like the Department had been hoodwinked by the institutional lobbyists to enable an increase of 4% (or else (likely under the promise of delivering properties, which is nonsense as demand is soaring so there is little risk of building and not being able to rent out your apartment block). For me, if they were going to introduce a 4% increase, I think it should not have applied to new builds, they should not have been allowed to increase rent for the duration of the RPZ measures once they are first put to market.

    For institutional investors- the 8% also encompasses increases in the value of their units (or in this instance- decreases). Its entirely foreseeable that institutional investors may divest of units- I suspect commercial units in the first instance, but I'd be surprised if residential units do not feature on their disposal lists in the next 24 months.

    There are some developments that people are just waiting for institutional investors to start selling- the number of prospective buyers on the side lines in some commuter towns (such as Maynooth for example) is staggering. Lots of people were frozen out of buying in their areas of choice- by institutional investors- and are just waiting.........


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    #908
    beauf
    Closed Accounts Posts: 22,651 ✭✭✭✭beauf


    brisan wrote: »
    As I have said previously (and this is someone who has had rental properties in my own right and with brothers )the Landlords of today are paying for the sins of their predecessors.
    There are still bad landlords out there and unfortunately all landlords are getting tarred with the same brush

    There have always been bad tenants and landlords and there always will. It's human nature.

    The problem is the lack of enforcement and proper housing strategy and corruption in planning and development.


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    #909
    beauf
    Closed Accounts Posts: 22,651 ✭✭✭✭beauf


    We don't know the scope of what Threshold asked them to do.

    This is worth a read.
    Housing market (in)stability and social rented housing: comparing Austria and Ireland during the global financial crisis
    1 Jun 2018Journal of Housing and the Built Environment33(2):227-245
    Norris M, Byrne M

    But there is a lot of focus on a very specific area.

    Simple fact remains, if you want to retain control of rents and ensure supply of social and affordable housing, you don't out source it to the private market. Then turn your back on it for 20yrs.


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    #910
    Yellow_Fern
    Registered Users Posts: 2,570 ✭✭✭Yellow_Fern


    beauf wrote: »
    We don't know the scope of what Threshold asked them to do.

    This is worth a read.



    But there is a lot of focus on a very specific area.

    Simple fact remains, if you want to retain control of rents and ensure supply of social and affordable housing, you don't out source it to the private market. Then turn your back on it for 20yrs.
    Building housing costs money and using the 1930-50s housing model would have meant less social welfare and less public services. There is no reason to think that if we had kept building many social houses that rent would be low. If we had, we would have still have enormous differences compared to Austria. Austria has enormous numbers of apartment stock, lower salaries, and Vienna is well within commuting difference of an east block country which causes downward pressure on prices.


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    #911
    cameramonkey
    Closed Accounts Posts: 3,220 ✭✭✭cameramonkey


    Ozark707 wrote: »
    I have noticed this a few times as well. I assume the quoted monthly price will be the 2545 from the outset (to comply with RPZ rules) but that the cut 250pm for 2-3 months. I would also venture that anyone looking now is bargaining on the asking price so you would probably be able to secure a reduction on the 2545 price.

    I know a landlord renting another property on that street , they told me they had to drop the monthly rent when they lost tenants but they didn't say how much that was. I would imagine abound 2000 a month .


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    #912
    beauf
    Closed Accounts Posts: 22,651 ✭✭✭✭beauf


    Yellow_Fern wrote: »
    Building housing costs money and using the 1930-50s housing model would have meant less social welfare and less public services. There is no reason to think that if we had kept building many social houses that rent would be low. If we had, we would have still have enormous differences compared to Austria. Austria has enormous numbers of apartment stock, lower salaries, and Vienna is well within commuting difference of an east block country which causes downward pressure on prices.

    No one's suggesting copying an old model. But we basically commoditised all housing including social housing, as did much of Europe. That and Govt policy effectively stripped Europe of social and affordable housing and associated rents. Countries that didn't do that to the same degrees had far greater stability in house and rent prices and retained far more social and affordable housing. There was less boom and bust. They didn't avoid it, but it was less extreme.


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    #913
    Yellow_Fern
    Registered Users Posts: 2,570 ✭✭✭Yellow_Fern


    beauf wrote: »
    No one's suggesting copying an old model. But we basically commoditised all housing including social housing, as did much of Europe. That and Govt policy effectively stripped Europe of social and affordable housing and associated rents. Countries that didn't do that to the same degrees had far greater stability in house and rent prices and retained far more social and affordable housing. There was less boom and bust. They didn't avoid it, but it was less extreme.

    My view is that those countries are just in a different stage of the business cycle.


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    #914
    beauf
    Closed Accounts Posts: 22,651 ✭✭✭✭beauf


    Yellow_Fern wrote: »
    My view is that those countries are just in a different stage of the business cycle.

    Thinking of all housing as a business cycle is kinda the point.


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    #915
    Smouse156
    Registered Users Posts: 529 ✭✭✭Smouse156


    Smouse156 wrote: »
    Elmfield apartments in Leopardstown had the rent dropped today:

    1-bed €1872 to €1822
    2-bed €2071 to €1977

    Had been keeping an eye on this place was was listed for nearly 5 months with no takers. The 3-bed was dropped last week but I don’t have exact numbers.

    Dropped again:

    1-bed €1822 to €1781 (5% Drop from €1872)
    2-bed €1977 to €1884 (9% drop from €2071)

    They are probably using those unrounded numbers so the EA’s can “pretend” they’re not dropping prices. FYI I used to live in Gallops estate and it’s 30 mins to St Stephens Green


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    #916
    PommieBast
    Registered Users Posts: 2,575 ✭✭✭PommieBast


    Smouse156 wrote: »
    1-bed €1822 to €1781 (5% Drop from €1872)
    2-bed €1977 to €1884 (9% drop from €2071)

    They are probably using those unrounded numbers so the EA’s can “pretend” they’re not dropping prices. FYI I used to live in Gallops estate and it’s 30 mins to St Stephens Green
    €1800 seems to be the starting point for 1-bed apartments in the city centre, so interest in 1-beds for that price that far out will be zero.


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    #917
    Gael23
    Registered Users Posts: 12,086 ✭✭✭✭Gael23


    If universities don’t bring students on campus in September rents are going to freefall


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    #918
    Smouse156
    Registered Users Posts: 529 ✭✭✭Smouse156


    PommieBast wrote: »
    €1800 seems to be the starting point for 1-bed apartments in the city centre, so interest in 1-beds for that price that far out will be zero.

    Agreed the price difference is also ridiculous! You would just pay the extra €100 for a 2-bed so I can’t see any takers for that 1-bed


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    #919
    Daddy Ireland
    Registered Users Posts: 52 ✭✭Daddy Ireland


    Gael23 wrote: »
    If universities don’t bring students on campus in September rents are going to freefall

    Is this likely to happen. UL today have first semester timetable up. Students are required to attend 3 weeks of first semester on site and remainder of time online. Then you have students who will want a UNI life and want desperately to be away from the parents. Will parents fork out though. Interesting times in the student rental market beckons .


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    #920
    Hubertj
    Registered Users Posts: 2,000 ✭✭✭Hubertj


    Daddy Ireland wrote: »
    Is this likely to happen. UL today have first semester timetable up. Students are required to attend 3 weeks of first semester on site and remainder of time online. Then you have students who will want a UNI life and want desperately to be away from the parents. Will parents fork out though. Interesting times in the student rental market beckons .

    https://www.irishtimes.com/news/education/ul-says-most-students-will-be-allowed-on-campus-for-just-one-week-each-month-1.4299487


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    #921
    Blut2
    Registered Users Posts: 2,907 ✭✭✭Blut2


    Daddy Ireland wrote: »
    Is this likely to happen. UL today have first semester timetable up. Students are required to attend 3 weeks of first semester on site and remainder of time online. Then you have students who will want a UNI life and want desperately to be away from the parents. Will parents fork out though. Interesting times in the student rental market beckons .

    Off the top of my head, as of over a month ago, Cambridge in the UK had already announced that next year will be entirely online. Manchester announced Semester 1 next year will be entirely online, Semester 2 tbc. In the US the entire California university system (500k students) also announced semester 1 will be online only - semester 2 tbc. And theres likely loads more too - these are just the ones that were mentioned in an FT article I read back then [1].

    So there are pretty decent odds Irish universities follow suit.

    I'm sure loads of students would love to live away from home anyway, even if they aren't attending uni. But I can't see them wanting (or being able to) to justify paying the massive rent and other living costs to do so. Theres not likely to be much Uni social life anyway if theres nothing happening on campus, and pubs and nightclubs are closed.

    [1]https://www.ft.com/content/65a1feb8-2eb6-44c3-815c-e05dfe9e1193


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    #922
    Hubertj
    Registered Users Posts: 2,000 ✭✭✭Hubertj


    Blut2 wrote: »
    Off the top of my head, as of over a month ago, Cambridge in the UK had already announced that next year will be entirely online. Manchester announced Semester 1 next year will be entirely online, Semester 2 tbc. In the US the entire California university system (500k students) also announced semester 1 will be online only - semester 2 tbc. And theres likely loads more too - these are just the ones that were mentioned in an FT article I read back then [1].

    So there are pretty decent odds Irish universities follow suit.

    I'm sure loads of students would love to live away from home anyway, even if they aren't attending uni. But I can't see them wanting (or being able to) to justify paying the massive rent and other living costs to do so. Theres not likely to be much Uni social life anyway if theres nothing happening on campus, and pubs and nightclubs are closed.

    [1]https://www.ft.com/content/65a1feb8-2eb6-44c3-815c-e05dfe9e1193

    I posted link to irishtimes article in previous post. It details plans for Irish colleges.


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    #923
    JamesMason
    Registered Users Posts: 152 ✭✭JamesMason


    Blut2 wrote: »
    Off the top of my head, as of over a month ago, Cambridge in the UK had already announced that next year will be entirely online. Manchester announced Semester 1 next year will be entirely online, Semester 2 tbc. In the US the entire California university system (500k students) also announced semester 1 will be online only - semester 2 tbc. And theres likely loads more too - these are just the ones that were mentioned in an FT article I read back then [1].

    So there are pretty decent odds Irish universities follow suit.

    I'm sure loads of students would love to live away from home anyway, even if they aren't attending uni. But I can't see them wanting (or being able to) to justify paying the massive rent and other living costs to do so. Theres not likely to be much Uni social life anyway if theres nothing happening on campus, and pubs and nightclubs are closed.

    [1]https://www.ft.com/content/65a1feb8-2eb6-44c3-815c-e05dfe9e1193
    Double whammy for those with properties lying empty from the collapse of summer Airbnb and winter student rentals. Ouch


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    #924
    Ozark707
    Registered Users Posts: 941 ✭✭✭Ozark707


    JamesMason wrote: »
    Double whammy for those with properties lying empty from the collapse of summer Airbnb and winter student rentals. Ouch

    Well that is the question, will (a) international students come here and pay the mega bucks when they will only be in lectures 50% of the time (b) if you are from Ireland will you now be more likely to live at home than say fork out 800 for a room when again you will not be in lectures that much?


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    #925
    Assetbacked
    Closed Accounts Posts: 2,969 ✭✭✭Assetbacked


    Gael23 wrote: »
    If universities don’t bring students on campus in September rents are going to freefall

    A lot of US universities going online for semester one, particularly with international students.

    On Ireland, for universities to be back in 7 weeks, social distancing needs to be gotten rid of as transport to university literally cannot happen. I think it should be, but judging by the pace of movement of our government, it won't. As such, students will be at home until after Christmas.

    Also noticed in the IT today, IDA expects 40% drop in FDI this year and in 2021. That will obviously impact growth and new jobs so hopefully good news for the rental market.

    https://www.irishtimes.com/business/economy/covid-19-ida-expects-40-drop-in-fdi-1.4299077?mode=amp

    Also, Bewley's landlord suing for rental arrears as the commercial property owner, fronted by Johnny Ronan, has its own obligations it needs to meet. This is where the risk to commercial property has largely been outsourced as a result of FG policy to get the foreign money into Ireland, that Bewley's property owner struggling won't have any impact on Irish people.

    https://www.irishtimes.com/business/commercial-property/bewley-s-landlord-brings-action-seeking-747-000-in-alleged-rent-arrears-1.4299292?mode=amp


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    #926
    awec
    Administrators Posts: 53,365 Admin ✭✭✭✭✭awec


    According to the Daft report today Dublin rents rose 0.5%, which is inconsequential so we may as well say that rents remained steady. However, supply rose 63% year-on-year. Sixty three percent.

    I find these numbers pretty incredible. For supply to rise so significantly and have no negative impact on rents is quite something. At a time when there's no students and no tourists, and people who can WFH are WFH.

    Is it because landlords aren't desperate yet? Mortgage payment breaks?

    Really interested to hear the theories on this one!


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    #927
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    awec wrote: »
    According to the Daft report today Dublin rents rose 0.5%, which is inconsequential so we may as well say that rents remained steady. However, supply rose 63% year-on-year. Sixty three percent.

    I find these numbers pretty incredible. For supply to rise so significantly and have no negative impact on rents is quite something. At a time when there's no students and no tourists, and people who can WFH are WFH.

    Is it because landlords aren't desperate yet? Mortgage payment breaks?

    Really interested to hear the theories on this one!

    How many of those were let?

    I'm seeing a lot of fingers in the ears from landlords expecting to just get the same amount.

    I don't think the market will see the covid effect for another 12-18 months personally.


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    #928
    Assetbacked
    Closed Accounts Posts: 2,969 ✭✭✭Assetbacked


    Look at the main thread, I posted yesterday morning about the Daft rental report. 0-10% reductions since November / December 2019 highs. For reference, rents in Dublin are back at what they were June 2017 - June 2018 but obviously with supply of rentals far outweighing demand currently.

    The year on year increase being such a low percentage is multiples below year on year increase in recent years. It's been swift and with the significant number of properties available it will be fairly significant by the end of the year. Beyond the end of the year, with supply showing no signs of decreasing, it could be a pretty dramatic correction.


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    #929
    beauf
    Closed Accounts Posts: 22,651 ✭✭✭✭beauf


    awec wrote: »
    According to the Daft report today Dublin rents rose 0.5%, which is inconsequential so we may as well say that rents remained steady. However, supply rose 63% year-on-year. Sixty three percent.

    I find these numbers pretty incredible. For supply to rise so significantly and have no negative impact on rents is quite something. At a time when there's no students and no tourists, and people who can WFH are WFH.

    Is it because landlords aren't desperate yet? Mortgage payment breaks?

    Really interested to hear the theories on this one!

    Context, there are around 350k rental properties in Ireland.
    . The danger, however, lies in the trap of thinking that these extra 3,000 homes on the market represent the solution to the housing shortage. 3,000 homes represents less than one month's demand of rental homes and - to the extent that it represents a shift from the short-term lettings market to the long-term rental one - is a one-off gain.

    Tenants who aren't paying rent, have no need to move.
    Landlords who can't raise rents, won't lower them.
    Landlords who want to sell, can't evict to sell.
    People said Landlords won't leave places empty. They do and are.
    People said AirBnB rentals coming on to the market would have drastic effect on rents and supply. Others said they aren't enough in the context of the overall numbers of rentals and the price point in the market.

    People said the market would collapse in a week, a month, 6 months, 12 months, 18 months. Even a broken clock will eventually be correct.

    The covid payments, mortgage breaks are putting everything on pause.


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    #930
    LJ12345
    Registered Users Posts: 122 ✭✭LJ12345


    It will be interesting as it plays out, Will it last though. We need to factor in so many things and I don’t know if we can even try to work out where the rental market is going until it unravels. I do wonder how many Irish might want to return after the trump/boris performance we’ve all been astounded by though. It might be one to watch.
    Assetbacked wrote: »
    Look at the main thread from earlier today, I posted this morning about the Daft rental report. 0-10% reductions since November / December 2019 highs. For reference, rents in Dublin are back at what they were June 2017 - June 2018 but obviously with supply of rentals far outweighing demand currently.

    The year on year increase being such a low percentage is multiples below year on year increase in recent years. It's been swift and with the significant number of properties available it will be fairly significant by the end of the year. Beyond the end of the year, with supply showing no signs of decreasing, it could be a pretty dramatic correction.


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    #931
    Claw Hammer
    Registered Users Posts: 6,160 ✭✭✭Claw Hammer


    A lot of landlords don't want to reduce rents because of being caught by the rent. Many are holding out until the autumn in the hope that the market will yield greater rents than now. Traditionally there was a slump in the summer followed by high demand in the autumn. Whether it happens this year are not remained to be seen.


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