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Will rent controls effect the general quality of rentals in the long run

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  • 04-05-2017 8:13am
    #1
    jamesthepeach
    Registered Users Posts: 992 ✭✭✭


    It's a chicken and egg situation.

    If a landlord can't get market rent due to rent control is he going to spend anything over the bare minimum in either getting a property ready for letting or on maintenance.

    For new lets to rent controlled properties which are below market rate I doubt people will be getting anything but the bare minimum when they rent a new place now too.

    And in non rent controlled properties watch them all get increased now just in case the landlords get screwed over if those properties get designated Rpz.

    I have spoken to a few different landlords effected by rent controls and this would seem to be the prevailing wisdom. Don't invest anymore money in a property that is already controlled at below market rate, because you have no way of getting that money invested back. In fact it will cost you more in the long run as now you are set to repair new items. Instead you should be stripping everything out and renting as close to unfurnished as possible. And for existing tenants just let them get on with it and do no painting etc that you would normally to to spruce it up every so often.

    Rent control is always bad for everyone in the long run. We all will lose.

    If a tenant pays below market rate it follows that when it all shakes out that they will be getting a below market rental.

    What do people think?

    Also what are the effects of rent control people have seen already?


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    #2
    myshirt
    Registered Users Posts: 5,245 ✭✭✭myshirt


    Landlords will always shop in bargaintown, rent controls or no rent controls.


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    #3
    Murrisk
    Closed Accounts Posts: 889 ✭✭✭Murrisk


    If supply was greater and market rate was much lower and within rent controls and therefore market rent was being achieved, would landlords be more likely to put money into their property? Because in their mind, market rent was reached, a box ticked?


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    #4
    Sleeper12
    Registered Users Posts: 16,917 ✭✭✭✭Sleeper12


    It already is effecting the quality of some.


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    #5
    Zapperzy
    Registered Users Posts: 2,524 ✭✭✭Zapperzy


    jamesthepeach wrote: »
    And in non rent controlled properties watch them all get increased now just in case the landlords get screwed over if those properties get designated Rpz.

    In my area average rents for an average house in 2014 was around 500-650pm, this gradually raised to 750/800pm towards the end of 2016, in the last few months this has raised to 1400pm. This is in a galway commuter town so by no means a city, galway city is now a RPZ, it's only a matter of time before it spreads to the commuter towns. As a tenant this is scary stuff.


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    #6
    jamesthepeach
    Registered Users Posts: 992 ✭✭✭jamesthepeach


    Murrisk wrote: »
    If supply was greater and market rate was much lower and within rent controls and therefore market rent was being achieved, would landlords be more likely to put money into their property? Because in their mind, market rent was reached, a box ticked?

    I would have normally kept it very well during a tenancy and then taken the opportunity between tenancues to make improvements, is new kitchen, bathroom, table, chairs, curtains, painting etc.
    Whatever was needed and a bit more to add to the rental value of it when the next tenants were viewing.

    No point anyone doing any of that now during or between tenacies because it won't effect the rental value at all. In fact the more you spruce it up and kitnit out the more to go wrong that you have to replace or fix now. And you won't make any of the cost of those things back off either ongoing tenants or new ones. Total waste of money.


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    #7
    wordofwarning
    Closed Accounts Posts: 697 ✭✭✭wordofwarning


    myshirt wrote: »
    Landlords will always shop in bargaintown, rent controls or no rent controls.

    So you think Kennedy Wilson or IRES charging €1300 for a 1 bed are shopping in Bargaintown?

    A lot of smart landlords, know that if you buy quality it lasts. A German made Bosch lasts twice as long as a cheap British machine for marginally more. The problem is a lot of tenants don't respect other people's property. Sure it is not their property, why respect it? I know it seems like a generalisation, but the amount of students I have seen wreck furniture is ridiculous. I know in a house where a tenant bought a nail gun and decided to test it on the backdoor

    There is little point spending €500-1000 on an amazing mattress, when tenants will wreck it. The amount of tenants, who either a) don't use a mattress protector or b) remove it is ridiculous. Some landlords have no choice but to buy €50 mattresses and dump them every year

    As much as tenants moan about the quality of rental furnishings. I would hazard about 95-98% of tenants would not be willing to furnish a place themselves. I know of a house that was gutted and refurbished to an ultra high standard, nice area and would be worth around €650k. They could not get anyone to rent it at €2,400 for months as it was unfurnished.

    Rent controls will affect the quality of housing. NYC rent controlled apartments are in bits as there is zero incentive for a landlord to keep them modern. If an apartment is rent controlled at 20% its market rate. There is no incentive for a landlord to paint it/put in new furniture as someone will take it


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    #8
    Lux23
    Registered Users Posts: 7,134 ✭✭✭Lux23


    The incentive might be to take care of your property so you can sell it on in later years. In the long run the only person suffering there is the landlord.


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    #9
    [Deleted User]
    Posts: 25,611 ✭✭✭✭ [Deleted User]


    wordofwarning wrote: »
    So you think Kennedy Wilson or IRES charging ?1300 for a 1 bed are shopping in Bargaintown?

    A lot of smart landlords, know that if you buy quality it lasts. A German made Bosch lasts twice as long as a cheap British machine for marginally more. The problem is a lot of tenants don't respect other people's property. Sure it is not their property, why respect it? I know it seems like a generalisation, but the amount of students I have seen wreck furniture is ridiculous. I know in a house where a tenant bought a nail gun and decided to test it on the backdoor

    There is little point spending ?500-1000 on an amazing mattress, when tenants will wreck it. The amount of tenants, who either a) don't use a mattress protector or b) remove it is ridiculous. Some landlords have no choice but to buy ?50 mattresses and dump them every year

    As much as tenants moan about the quality of rental furnishings. I would hazard about 95-98% of tenants would not be willing to furnish a place themselves. I know of a house that was gutted and refurbished to an ultra high standard, nice area and would be worth around ?650k. They could not get anyone to rent it at ?2,400 for months as it was unfurnished.

    Rent controls will affect the quality of housing. NYC rent controlled apartments are in bits as there is zero incentive for a landlord to keep them modern. If an apartment is rent controlled at 20% its market rate. There is no incentive for a landlord to paint it/put in new furniture as someone will take it
    Well equally who's gonna pay to furnish a house they could be kicked out of a year or two down the line and be stuck with a rake of furniture etc. that may not fit/go in the next place they go into?


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    #10
    jamesthepeach
    Registered Users Posts: 992 ✭✭✭jamesthepeach


    Lux23 wrote: »
    The incentive might be to take care of your property so you can sell it on in later years. In the long run the only person suffering there is the landlord.

    You do take care of the property. It's the furnishings and decor that will be neglected, not the plumbing. I would hazard that most places are decorated just before sale anyway, so nothing new there. It just won't be done between or during tenancies anymore.


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    #11
    jamesthepeach
    Registered Users Posts: 992 ✭✭✭jamesthepeach


    [Deleted User] wrote: »
    Well equally who's gonna pay to furnish a house they could be kicked out of a year or two down the line and be stuck with a rake of furniture etc. that may not fit/go in the next place they go into?

    Probably anyone who plans to rent a house below market value.
    Eg
    Unfurnished for rent controlled below market rate eg €800. Furnished for rent controlled at €1000.


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    #12
    Murrisk
    Closed Accounts Posts: 889 ✭✭✭Murrisk


    jamesthepeach wrote: »
    I would have normally kept it very well during a tenancy and then taken the opportunity between tenancues to make improvements, is new kitchen, bathroom, table, chairs, curtains, painting etc.
    Whatever was needed and a bit more to add to the rental value of it when the next tenants were viewing.

    No point anyone doing any of that now during or between tenacies because it won't effect the rental value at all. In fact the more you spruce it up and kitnit out the more to go wrong that you have to replace or fix now. And you won't make any of the cost of those things back off either ongoing tenants or new ones. Total waste of money.

    Right, but I don't see that as being linked to market rate. If market rate was much lower and you were getting market rate would it all then worth it? I don't see the link between work put into the property and the market rate. Either it's worth doing or it's not.


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    #13
    Graham
    Moderators, Society & Culture Moderators Posts: 17,642 Mod ✭✭✭✭Graham


    Murrisk wrote: »
    I don't see the link between work put into the property and the market rate. Either it's worth doing or it's not.

    Imagine you're a landlord and you have a house with a shabby but functional kitchen.

    Would you

    a) Spend 3,000 updating the kitchen to get 1,000/month in rent
    b) Spend nothing on the kitchen to get 1,000/month in rent


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    #14
    jamesthepeach
    Registered Users Posts: 992 ✭✭✭jamesthepeach


    Murrisk wrote: »
    Right, but I don't see that as being linked to market rate. If market rate was much lower and you were getting market rate would it all then worth it? I don't see the link between work put into the property and the market rate. Either it's worth doing or it's not.

    Say you were getting €800 for a property worth €1100 for the last couple of years because a you liked the tenant and b you are controlled anyway.

    Let's say the tenant is moving out next week.

    If you were to look for €1100 from the next tenant you would put a lot into it to attract that €1100 and hopefully attract a higher rent because you made it so attractive to renters.

    Well now no matter what you do to it you can't get more than €800 for it, so why bother doing anything. Anyone who rents it knows they are getting a €300 discount so they'll take it whatever state it is in. And you would have a queue down the road of takers at that and can take your pick.


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    #15
    mrslancaster
    Registered Users Posts: 1,783 ✭✭✭mrslancaster


    myshirt wrote: »
    Landlords will always shop in bargaintown, rent controls or no rent controls.


    many LL's furnished properties with good quality furniture and appliances.

    in future it looks like properties may be let with only the items required by regulation so basically unfurnished.

    this is the norm in most countries so it may be the tenants who are shopping in bargaintown, rent controls or not

    & IMO tenants in any new tenancy will have to pay at least 3 months deposit. it seems that its the good tenants & fair LL's that are being affected by the recent changes


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    #16
    Murrisk
    Closed Accounts Posts: 889 ✭✭✭Murrisk


    Graham wrote: »
    Imagine you're a landlord and you have a house with a shabby but functional kitchen.

    Would you

    a) Spend 3,000 updating the kitchen to get 1,000/month in rent
    b) Spend nothing on the kitchen to get 1,000/month in rent

    I think whatever the rental, don't splash out on furniture. Unless it's a luxury rents, there's no need. At some stage, supply will increase, market rent will drop and LLs will get the market rate. But that market rent will be lower than it is now. That's why I don't understand house upkeep in relation to market rate. Surely it's prudent to cost upkeep of the property based on an estimate of the lowest potential future market rent (which will obviously be somewhat guesswork). Not upkeeping because you can't charge the current sky-high market rent? Hmmm. At some stage it will be a tenant's market again. What happens to upkeep when there is a situation where the tenant is in a position to bargain you down?


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    #17
    jamesthepeach
    Registered Users Posts: 992 ✭✭✭jamesthepeach


    Murrisk wrote: »
    I think whatever the rental, don't splash out on furniture. Unless it's a luxury rents, there's no need. At some stage, supply will increase, market rent will drop and LLs will get the market rate. But that market rent will be lower than it is now. That's why I don't understand house upkeep in relation to market rate. Surely it's prudent to cost upkeep of the property based on an estimate of the lowest potential future market rent (which will obviously be somewhat guesswork). Not upkeeping because you can't charge the current sky-high market rent? Hmmm. At some stage it will be a tenant's market again. What happens to upkeep when there is a situation where the tenant is in a position to bargain you down?


    The tenants in the controlled properties will not be moving if they can help it. Landlords cannot make them move. All of the cheap controlled properties will be taken be these static tenants and there will be even less supply for people looking for a rental. The only new rentals will be new to the market and cost a fortune and there will be few of them. Prices will increase.

    The only thing that will bring prices down is an economic crash. Rent controls will only increase prices, unless you stay put forever in a nicely controlled property.


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    #18
    mrslancaster
    Registered Users Posts: 1,783 ✭✭✭mrslancaster


    Murrisk wrote: »
    I think whatever the rental, don't splash out on furniture. At some stage, supply will increase, market rent will drop and LLs will get the market rate. But that market rent will be lower than it is now. That's why I don't understand house upkeep in relation to market rate. Surely it's prudent to cost upkeep of the property based on an estimate of the lowest potential future market rent (which will obviously be somewhat guesswork). Not upkeeping because you can't charge the current sky-high market rent? Hmmm.

    afaik what is required is the repair & upkeep of the building & white goods. why would any LL furnish a property any more instead of just complying with regulations?

    what other service provides 'extras' above what is required without charging a premium for it? the Ryanair model comes to mind, no frills just basic & anything else the user pays for.

    if LL can't be paid for the service/goods supplied IMO they will stop providing it.

    I wonder how much the private rental market in rpz areas will have changed by this time next year??


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    #19
    Murrisk
    Closed Accounts Posts: 889 ✭✭✭Murrisk


    Personally, I don't expect a landlord to go above and beyond. Unfortunately for landlords in Ireland, furnished is the norm and will be hard to change. Not impossible though.

    My point really is that at the moment, rents are a bit on the preposterous side due to lack of supply. Remember that they rose hugely before the controls came in. They won't remain this high forever and for a long time were much lower than they are currently, even with the new controls. So why would a landlord be struggling now when from 2010-2013, rents were much lower?


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    #20
    mrslancaster
    Registered Users Posts: 1,783 ✭✭✭mrslancaster


    Murrisk wrote: »
    Personally, I don't expect a landlord to go above and beyond. Unfortunately for landlords in Ireland, furnished is the norm and will be hard to change. Not impossible though.

    My point really is that at the moment, rents are a bit on the preposterous side due to lack of supply. Remember that they rose hugely before the controls came in. They won't remain this high forever and for a long time were much lower than they are currently, even with the new controls. So why would a landlord be struggling now when from 2010-2013, rents were much lower?

    who said they weren't struggling before?

    unfurnished & much bigger bond is the way its heading IMO & that's not great for tenants


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    #21
    runawaybishop
    Registered Users Posts: 9,500 ✭✭✭runawaybishop


    Murrisk wrote: »
    Personally, I don't expect a landlord to go above and beyond. Unfortunately for landlords in Ireland, furnished is the norm and will be hard to change. Not impossible though.

    My point really is that at the moment, rents are a bit on the preposterous side due to lack of supply. Remember that they rose hugely before the controls came in. They won't remain this high forever and for a long time were much lower than they are currently, even with the new controls. So why would a landlord be struggling now when from 2010-2013, rents were much lower?

    They were struggling in 2010-12013 and a lot left the market. With rents being capped LLs can no longer gain back any previous losses and may still be operating at a loss, so they will exit the market in greater numbers. This rent cap and the previous 2 year review period were very shortsighted and basically populist nonsense.


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    #22
    rsynnott
    Registered Users Posts: 4,003 ✭✭✭rsynnott


    wordofwarning wrote: »
    So you think Kennedy Wilson or IRES charging €1300 for a 1 bed are shopping in Bargaintown?

    A lot of smart landlords, know that if you buy quality it lasts. A German made Bosch lasts twice as long as a cheap British machine for marginally more. The problem is a lot of tenants don't respect other people's property. Sure it is not their property, why respect it? I know it seems like a generalisation, but the amount of students I have seen wreck furniture is ridiculous. I know in a house where a tenant bought a nail gun and decided to test it on the backdoor

    Everywhere I ever rented had a cheap Indesit/Hotpoint washing machine. Predictably, these tended to break down (in one case it was broken when I moved in). Smart landlords may buy quality, but apparently smart landords are rare.


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    #23
    Graham
    Moderators, Society & Culture Moderators Posts: 17,642 Mod ✭✭✭✭Graham


    rsynnott wrote: »
    Everywhere I ever rented had a cheap Indesit/Hotpoint washing machine. Predictably, these tended to break down (in one case it was broken when I moved in). Smart landlords may buy quality, but apparently smart landords are rare.

    When you're faced with fitting a house with 4 or 5 appliances each costing 300 - 900 you too might decide it's appropriate to opt for the cheaper variations and stand to the repair/replacement costs.

    Initial purchases are likely to be depreciated over 8 years! Many landlords offset repairs/replacements in full in the year the costs arise.


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    #24
    Murrisk
    Closed Accounts Posts: 889 ✭✭✭Murrisk


    runawaybishop wrote: »
    They were struggling in 2010-12013 and a lot left the market. With rents being capped LLs can no longer gain back any previous losses and may still be operating at a loss, so they will exit the market in greater numbers. This rent cap and the previous 2 year review period were very shortsighted and basically populist nonsense.

    Aye, but rents are already eye-watering, how much higher could they go? As a short-term measure, controls were needed IMO. The rents some of my friends are paying for very average accommodation in not particularly great locations are shocking.


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    #25
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    There will be nothing long term about rent controls. They are IIRC time limited and any thing beyond the next 3 years or so will see the legislation challenged.


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    #26
    mrslancaster
    Registered Users Posts: 1,783 ✭✭✭mrslancaster


    rsynnott wrote: »
    Everywhere I ever rented had a cheap Indesit/Hotpoint washing machine. Predictably, these tended to break down (in one case it was broken when I moved in). Smart landlords may buy quality, but apparently smart landords are rare.


    well how nice it would be to have my home kitted out with top of the range appliances & furniture & then let someone else have the headache of replacing or repairing them when they break through careless usage...

    it would be great to be able to phone someone & have anything that's wrong sorted at no cost whether it was a smart or not so smart landlord..!

    people buying their own home & paying a huge mortgage do not have that luxury - they have high monthly bills & have to take care of all repairs or replacements as well.

    don't get me wrong , people make those decisions freely but it gets very annoying when tenants have this victim or 'poor me' attitude. its very one sided IMO & i' m sorry we just didn't rent in a controlled area, it seems it would be a much better option all round, no worries except pay the monthly rent when its due, happy days


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    #27
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,279 Mod ✭✭✭✭The_Conductor


    myshirt wrote: »
    Landlords will always shop in bargaintown, rent controls or no rent controls.

    Why bother going to Bargaintown?
    Just let a bare apartment/house (with the bare minimum of appliances, as specified under the Act), freshly paint it and specify it be returned in an identical manner- the same as in almost any other country.

    There is plenty of demand for unfurnished dwellings- and, it minimises the number of things that a tenant will go chasing a landlord over.

    If a tenant has to provide their own furniture and fixtures and fittings over and above the bare minimum- perhaps it might mean that far better care is taken of them- and the property as a whole?


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    #28
    Murrisk
    Closed Accounts Posts: 889 ✭✭✭Murrisk


    Also, in exchange for paying a mortgage and maintenance, you are paying towards an asset. A renter just gets use of the house. Surely you can see the difference?


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    #29
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    By the way...

    My Bargintown floor is still going strong after years and years so let's deal with the most important issue in this thread and not besmurch the good name of Ireland's (slightly pissed) answer to Ikea.


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    #30
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,279 Mod ✭✭✭✭The_Conductor


    Samuel T. Cogley wrote: »
    By the way...

    My Bargintown floor is still going strong after years and years so let's deal with the most important issue in this thread and not besmurch the good name of Ireland's (slightly pissed) answer to Ikea.

    In all fairness to Bargaintown- I've furniture from there (bookcases and bedside lockers) that have far outlasted their Ikea equivalents. Its cheap and cheerful- versus just 'cheap'......


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    #31
    Claw Hammer
    Registered Users Posts: 6,163 ✭✭✭Claw Hammer


    Everywhere rent controls have come in, they have been a disaster. Landlords are now throwing out perfectly good tenants and selling properties. Others are reluctant to invest and will be for years to come. Some letting agents are finding that their workload per letting has increased massively as a result oif all the legislation.
    The utter stupidity of it is mind boggling.


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