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Media: Landlords call for an end to 'Illegal Rent Control'

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  • 17-06-2017 2:51pm
    #1
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,279 Mod ✭✭✭✭


    Story from the Journal here: http://www.thejournal.ie/landlords-rent-3446205-Jun2017/

    Background- rent control was ruled on 1981/1982 and found to be unconstitutional. The current measures are technically, in breach of the 1982 Supreme Court Ruling- however, the former Minister for Housing (Simon Coveney in relation to the RPZs and Alan Kelly in relation to rent review legislation) stated that as these were temporary measures, as opposed to a permanent change in legislation- that they would be allowed stand in the short term.

    Obviously this suits the government- whose refusal to implement policies to bring large numbers of local authority and council units on stream- while simultaneously incentivising local authorities to divest of their current housing stock- has been to the fore in causing much of the anguish that many tenants face.

    See also: Public Consultation on 'Rent Predictability Measures'


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    #2
    4ensic15
    Banned (with Prison Access) Posts: 4,691 ✭✭✭4ensic15


    The_Conductor wrote: »
    Story from the Journal here: http://www.thejournal.ie/landlords-rent-3446205-Jun2017/

    Background- rent control was ruled on 1981/1982 and found to be unconstitutional. '[/URL]

    Rent control as it then existed and was proposed was found to be unconstitutional. Rent Control per se was not found to be unconstitutional. In fact, the landlord and Tenant Act of 1982 brought in a scheme of rent control which exists to this day The IPOA has not casued a challenge to be made to the current measures so it is just huffing and puffing from them to be describing rent caps as "illegal".


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    #3
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,279 Mod ✭✭✭✭The_Conductor


    4ensic15 wrote: »
    Rent control as it then existed and was proposed was found to be unconstitutional. Rent Control per se was not found to be unconstitutional. In fact, the landlord and Tenant Act of 1982 brought in a scheme of rent control which exists to this day The IPOA has not casued a challenge to be made to the current measures so it is just huffing and puffing from them to be describing rent caps as "illegal".

    Thats all well and good- however, the fact of the matter is the current system (both RPZ and also notification system)- has stepped far beyond the bounds of the 1982 system.

    It hasn't been challenged though- I'd argue a challenge would at very least provide clarity- however, it hasn't happened thus far.


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    #4
    murphaph
    Registered Users Posts: 19,018 ✭✭✭✭murphaph


    The challenge will come from one of the deep pocketed REITs. Then the cheerleaders of running the small landlords out will regret it.

    If it's found to be unconstitutional it will be impossible to get that changed in a referendum as most Irish adults own property.


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    #5
    4ensic15
    Banned (with Prison Access) Posts: 4,691 ✭✭✭4ensic15


    murphaph wrote: »
    The challenge will come from one of the deep pocketed REITs. Then the cheerleaders of running the small landlords out will regret it.

    If it's found to be unconstitutional it will be impossible to get that changed in a referendum as most Irish adults own property.

    The REITs had an input into the current system. They will not challenge it. they are much less affected than the schmucks who let tenants stay on a below market rent.


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    #6
    4ensic15
    Banned (with Prison Access) Posts: 4,691 ✭✭✭4ensic15


    The_Conductor wrote: »
    Thats all well and good- however, the fact of the matter is the current system (both RPZ and also notification system)- has stepped far beyond the bounds of the 1982 system.

    It hasn't been challenged though- I'd argue a challenge would at very least provide clarity- however, it hasn't happened thus far.

    The 1982 syatem hasn't been changed. All that has happened is another class of dwellings has been brought into a different system. Something you'd argue is not the same as a a finding of unconstitutionality. There is a presumption of constitutionality and until it is successfully challenged, it is the law.


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    #7
    murphaph
    Registered Users Posts: 19,018 ✭✭✭✭murphaph


    4ensic15 wrote: »
    The REITs had an input into the current system. They will not challenge it. they are much less affected than the schmucks who let tenants stay on a below market rent.
    This is naïve. Once REITs control all the rented housing one of them will challenge the constitutionality of RPZs because if they can get rent control declared unconstitutional they'll be free in perpetuity to raise rents at will.

    To a small landlord a high court or supreme court challenge is impossible. To a large REIT it's worth a punt!


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    #8
    4ensic15
    Banned (with Prison Access) Posts: 4,691 ✭✭✭4ensic15


    murphaph wrote: »
    This is naïve. Once REITs control all the rented housing one of them will challenge the constitutionality of RPZs because if they can get rent control declared unconstitutional they'll be free in perpetuity to raise rents at will.

    To a small landlord a high court or supreme court challenge is impossible. To a large REIT it's worth a punt!

    The REITs will never control all of the rental market. When they want to change the system the will tell the minister to change it. This will cause a surge in their share prices and they will sell off the portfolios to the fools they got them from in the first place.


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    #9
    murphaph
    Registered Users Posts: 19,018 ✭✭✭✭murphaph


    4ensic15 wrote: »
    The REITs will never control all of the rental market. When they want to change the system the will tell the minister to change it. This will cause a surge in their share prices and they will sell off the portfolios to the fools they got them from in the first place.
    Ok you can see into the future. Hard to argue with your crystal ball.


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    #10
    4ensic15
    Banned (with Prison Access) Posts: 4,691 ✭✭✭4ensic15


    murphaph wrote: »
    Ok you can see into the future. Hard to argue with your crystal ball.

    Oh, the irony!


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    #11
    LuckyLloyd
    Registered Users Posts: 36,158 ✭✭✭✭LuckyLloyd


    I don't see how the ability to increase the rent on a property over five years by 20% (compounded) is a dreadful imposition tbh.


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    #12
    Yourself isit
    Closed Accounts Posts: 3,257 ✭✭✭Yourself isit


    murphaph wrote: »
    Ok you can see into the future. Hard to argue with your crystal ball.

    He has no more of a crystal ball than you. Who originally claimed to know the future.


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    #13
    Westwood
    Registered Users Posts: 535 ✭✭✭Westwood


    My landlord issued us with termination of lease. He could only have put it up by €50. Now hes evicting us and renovating the house and will be back on the market for €800 more in the coming months. This is happening across these rent pressure zones and is actually making this x 10 times worse.


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    #14
    wordofwarning
    Closed Accounts Posts: 697 ✭✭✭wordofwarning


    4ensic15 wrote: »
    The REITs will never control all of the rental market.

    They are certainly market makers in a lot of the City. If you wanted a luxury 2 bedroom apartment in Dublin 2/4, you will likely only be able to rent from an REIT. They own a sizeable amount of the rental housing stock in Dublin. They don't care about outside of Dublin. Not even the commerical REITs like Green have a desire to have commerical properties outside of Dublin
    4ensic15 wrote: »
    When they want to change the system the will tell the minister to change it. This will cause a surge in their share prices and they will sell off the portfolios to the fools they got them from in the first place.

    REITs and vulture funds have discovered in this strong economy, that the Government is now willing to give them the two fingers. Look at all the lobbying on section 110 companies and the Government ignored their opinion.

    REITs are in it for the long haul. Irish property was the bargain of the decade. If REITs sell up, there is few investment opportunities like Ireland out there at the moment. Plus if they closed their operations, there is a board, CEOs etc all without a handy job. The fact they are taking their management in house, shows they are in it in for the long haul

    FYI who is going to lend to a broke developer to buy 500 apartments etc in Grand Canal Square? Come on


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    #15
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    LuckyLloyd wrote: »
    I don't see how the ability to increase the rent on a property over five years by 20% (compounded) is a dreadful imposition tbh.

    It is a massive imposition though, its dictating to a private business what they can charge for their product. Do you think it would fly in nearly any other business? Do you think a garage would stand for being told you can't sell cars for above a certain price or a supermarket told they had to sell beef for a certain price regardless of their costs etc etc. The market should set the price be that an increase or decrease.


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    #16
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    LuckyLloyd wrote: »
    I don't see how the ability to increase the rent on a property over five years by 20% (compounded) is a dreadful imposition tbh.

    It is a massive imposition though, its dictating to a private business what they can charge for their product. Do you think it would fly in newrly any other business? Do you think a garage would stand for being told you can't sell cars for above a certain price etc. The market should set the price be that an increase or decrease.

    When rents were falling nobody has any sympathy for LLs and now that the market has improved vastly and they have the opportunity to maximise income by increasing rents as much as the market will bare, they are suddenly prevented from doing so.


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    #17
    murphaph
    Registered Users Posts: 19,018 ✭✭✭✭murphaph


    It is only a question of time before the constitutionality of rent control measures are tested. The sums involved are too big for institutional landlords to ignore.

    A 5 year old could tell you as much.

    The old set up may never have seen a challenge as no one landlord would have the cash. The new set up changes all that.

    It would be all their Christmases coming at once for a REIT to get rent control measures declared unconstitutional. They have the money and the incentive that small independent landlords do/did not have.

    Brave new world and all that.


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    #18
    lucernarian
    Registered Users Posts: 9,235 ✭✭✭lucernarian


    Alia Melodic Self-sufficient wrote: »
    It is a massive imposition though, its dictating to a private business what they can charge for their product. Do you think it would fly in nearly any other business? Do you think a garage would stand for being told you can't sell cars for above a certain price or a supermarket told they had to sell beef for a certain price regardless of their costs etc etc. The market should set the price be that an increase or decrease.
    What a silly comparison. Cars are by no means comparable , as luxury items, to housing and homes for people. Not only that, the motor industry lobby got a free ride at taxpayers' expense with the scrappage scheme and rules and taxation encouraging perfectly-driveable but old cars to be scrapped, while public transport in this country was let go to the dogs during the recession.


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    #19
    murphaph
    Registered Users Posts: 19,018 ✭✭✭✭murphaph


    LuckyLloyd wrote: »
    I don't see how the ability to increase the rent on a property over five years by 20% (compounded) is a dreadful imposition tbh.
    To be honest I have no beef with rent controls for sitting tenants but I have a major problem with rent controls on property carrying over from tenancy to tenancy and it was fundamentally unfair that when the legislation came in at Xmas it trapped a decent LL doing a favour to a tenant on s below market rent into being forced to base all future rent increases off this below market rate.

    The very least that should have happened was to allow all LLs to set rents at current market rates before introduction of any caps on increases. It was and is not equitable the way it was done.


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    #20
    sondagefaux
    Registered Users Posts: 1,443 ✭✭✭sondagefaux


    Alia Melodic Self-sufficient wrote: »
    It is a massive imposition though, its dictating to a private business what they can charge for their product. Do you think it would fly in newrly any other business? Do you think a garage would stand for being told you can't sell cars for above a certain price etc. The market should set the price be that an increase or decrease.

    When rents were falling nobody has any sympathy for LLs and now that the market has improved vastly and they have the opportunity to maximise income by increasing rents as much as the market will bare, they are suddenly prevented from doing so.

    The state had the legal power to set maximum prices for a whole range of goods and services until 2007.

    The powers were last used in 2000 to set the maximum price for certain drinks sold in pubs, hotels and restaurants.

    https://books.google.co.uk/books?id=EIvFWptwb0QC&pg=PA347&lpg=PA347&dq=ireland+price+controls&source=bl&ots=vTvSzWkglR&sig=rB2OdUmz8l-A52N8ELbMSrU8EJY&hl=en&sa=X&ved=0ahUKEwjVsJLkr8fUAhXlKsAKHS9lDfc4FBDoAQhPMAk#v=onepage&q=ireland%20price%20controls&f=false

    And here's the reason why the prices of certain drinks were controlled by the state in 2000:

    https://books.google.co.uk/books?id=GW5uDQAAQBAJ&pg=PT134&lpg=PT134&dq=ireland+hotel+drink+prices+2000&source=bl&ots=YKIM47MRsN&sig=U6_hSu9arP5_XOG94Xo8sNuabh0&hl=en&sa=X&ved=0ahUKEwiw5IjSsMfUAhWOF8AKHeyFDuo4ChDoAQgpMAI#v=onepage&q=ireland%20hotel%20drink%20prices%202000&f=false


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    #21
    GGTrek
    Registered Users Posts: 834 ✭✭✭GGTrek


    murphaph wrote: »
    It is only a question of time before the constitutionality of rent control measures are tested. The sums involved are too big for institutional landlords to ignore.

    A 5 year old could tell you as much.

    The old set up may never have seen a challenge as no one landlord would have the cash. The new set up changes all that.

    It would be all their Christmases coming at once for a REIT to get rent control measures declared unconstitutional. They have the money and the incentive that small independent landlords do/did not have.

    Brave new world and all that.
    REITs will not do it because they have too much to loose tax-wise to challenge directly the govvie.

    It will be like in 1981, a group of pi..ed off small-medium landlords with nothing to loose apart from the legal fees (tax is awful already and cannot worsen for this class of landlords). Split the cost of the legal challenge: spending the paltry sum of 1k per landlord is worth doing given the upside. Landlords would all be interested parties so in theory they can all finance the legal fees (the legal experts can correct me on this), it is a financing issue more than a legal issue.

    I still believe the best test case would be to present a landlord which due to new legislation has been forced to rent at 40-50% below market rate and compare with nearby equivalent properties (especially for a new tenancy), take the case to RTB and then ask for judicial review against RTB based on constitutional grounds at the High Court (this is where the financing problem comes in). Hard facts will "shine through" and show the botched, hurried up job Coveney and his pals did in December 2016 and the distortions and unjust compensations they created (even better to do it on a luxury apartment so no social BS is mixed with the case). I believe that presented it in such way it would be a strong case.

    The temporary BS would probably not fly since 5 years freeze will not be considered temporary, even if the judiciary could consider it fine, opinion could be requested to High Court or Supreme Court that the temporary provision cannot be extended anymore and force the hand of the govvie in 2019 to stop meddling and perform their job and help build houses instead of trying to show they are doing something for their short term political advantage. In addition it would finally send a strong signal to the govvie that all further meddling they are already planning will be challenged and things will get nasty from now on.

    As other post is saying the IPOA is just huffing and puffing, since in my opinion its directors have probably personal conflicts of interest. I came to the conclusion that the IPOA is just run for the benefit of its staff and directors (very much like other NGOs).


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    #22
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    lucernarian wrote: »
    What a silly comparison. Cars are by no means comparable , as luxury items, to housing and homes for people. Not only that, the motor industry lobby got a free ride at taxpayers' expense with the scrappage scheme and rules and taxation encouraging perfectly-driveable but old cars to be scrapped, while public transport in this country was let go to the dogs during the recession.

    Privately rented accommodation should be treated as a commodity like any other thing. It's a business and pricing should be set by what people are willing to pay. Council housing is obviously different.


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    #23
    Claw Hammer
    Registered Users Posts: 6,163 ✭✭✭Claw Hammer


    GGTrek wrote: »
    REITs will not do it because they have too much to loose tax-wise to challenge directly the govvie.

    It will be like in 1981, a group of pi..ed off small-medium landlords with nothing to loose apart from the legal fees (tax is awful already and cannot worsen for this class of landlords). Split the cost of the legal challenge: spending the paltry sum of 1k per landlord is worth doing given the upside. Landlords would all be interested parties so in theory they can all finance the legal fees (the legal experts can correct me on this), it is a financing issue more than a legal issue.

    I still believe the best test case would be to present a landlord which due to new legislation has been forced to rent at 40-50% below market rate and compare with nearby equivalent properties (especially for a new tenancy), take the case to RTB and then ask for judicial review against RTB based on constitutional grounds at the High Court (this is where the financing problem comes in). Hard facts will "shine through" and show the botched, hurried up job Coveney and his pals did in December 2016 and the distortions and unjust compensations they created (even better to do it on a luxury apartment so no social BS is mixed with the case). I believe that presented it in such way it would be a strong case.

    The temporary BS would probably not fly since 5 years freeze will not be considered temporary, even if the judiciary could consider it fine, opinion could be requested to High Court or Supreme Court that the temporary provision cannot be extended anymore and force the hand of the govvie in 2019 to stop meddling and perform their job and help build houses instead of trying to show they are doing something for their short term political advantage. In addition it would finally send a strong signal to the govvie that all further meddling they are already planning will be challenged and things will get nasty from now on.

    As other post is saying the IPOA is just huffing and puffing, since in my opinion its directors have probably personal conflicts of interest. I came to the conclusion that the IPOA is just run for the benefit of its staff and directors (very much like other NGOs).

    There is no need to go near the RTB or Judicial Review. All that is needed is a plenary action by an affected landlord. The minister had meetings with the big operators before these measures came into force. Their rents are up at the maximum anyway and a move which breaks the hearts of the minnow operators is just fine the the big operators.


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    #24
    LuckyLloyd
    Registered Users Posts: 36,158 ✭✭✭✭LuckyLloyd


    Alia Melodic Self-sufficient wrote: »
    Privately rented accommodation should be treated as a commodity like any other thing. It's a business and pricing should be set by what people are willing to pay. Council housing is obviously different.

    Many people disagree with you, and the political consensus at present takes a different view. The ability to source accommodation is a fundamental underpinning driver for the economy. As a consequence, competing interests / requirements may trump the private interests of property owners. It's ultimately a commodity that is uniquely vulnerable to the needs of society as a whole.


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    #25
    Yourself isit
    Closed Accounts Posts: 3,257 ✭✭✭Yourself isit


    Alia Melodic Self-sufficient wrote: »
    It is a massive imposition though, its dictating to a private business what they can charge for their product. Do you think it would fly in nearly any other business? Do you think a garage would stand for being told you can't sell cars for above a certain price or a supermarket told they had to sell beef for a certain price regardless of their costs etc etc. The market should set the price be that an increase or decrease.

    Hotel prices are set at a maximum. There are price controls in lots of industries.

    And the market has a floor because of government intervention in rent.


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    #26
    murphaph
    Registered Users Posts: 19,018 ✭✭✭✭murphaph


    Yourself isit wrote: »
    Hotel prices are set at a maximum. There are price controls in lots of industries.

    And the market has a floor because of government intervention in rent.
    It's a long time since RS floored rents in the cities and as small LLs are driven out there will soon be no rentals available outside cities.

    @GGtrek...fair point wrt taxation but the government has shot itself in the foot before so would not rule out a change to tax code (driven by Finance) that removes any incentive a REIT has to keep schtum. Then a challenge is as good as guaranteed.


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    #27
    DubCount
    Registered Users Posts: 1,068 ✭✭✭DubCount


    LuckyLloyd wrote: »
    Many people disagree with you, and the political consensus at present takes a different view. The ability to source accommodation is a fundamental underpinning driver for the economy. As a consequence, competing interests / requirements may trump the private interests of property owners. It's ultimately a commodity that is uniquely vulnerable to the needs of society as a whole.

    Opinions of society and political consensus will not change the current proposition being offered to landlords.

    If the state wants price control on a sliced pan, they don't say Brennans - you can charge €2 for your sliced pan, but Pat The Baker - you can only charge €1 because you had a sale on when we introduced the price controls. The current price control regime is fundamentally unfair as it levies different landlords with different controls.

    The incentive to stay in the business is less than 4% p.a. price increases (its 4% over the first 2 years of the RPZ and 0% for 2 years after RPZ finishes) regardless of the gap between the actual rent price and the market rent price. There is no account taken of what actual cost inflation is. There is no account taken of potential returns from other uses of a landlords capital.

    What has been done to address the risks of overholding and non-payment of rent? What has been done to address the levels of tax paid by small landlords? What has been done to help accidental landlords who rent as well as act as a landlord?

    The political classes may not wish to help the landlords lot, but don't complain when landlords switch to AirBnB or sell up and exit the business. There is a severe lack of supply in the market, and the current rent control regime only makes that worse.


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    #28
    the_syco
    Registered Users Posts: 37,295 ✭✭✭✭the_syco


    LuckyLloyd wrote: »
    I don't see how the ability to increase the rent on a property over five years by 20% (compounded) is a dreadful imposition tbh.
    In the past, if a landlord wanted to offer less than market rate, he could do so, as they'd be able to increase it now. However, if anyone has done this, they're now screwed, as they can't up the rent much should the current tenant leave.

    Thus, going forward, landlords won't keep the rent low if you're a good tenant.
    DubCount wrote: »
    What has been done to address the risks of overholding and non-payment of rent? What has been done to address the levels of tax paid by small landlords? What has been done to help accidental landlords who rent as well as act as a landlord?

    The political classes may not wish to help the landlords lot, but don't complain when landlords switch to AirBnB or sell up and exit the business. There is a severe lack of supply in the market, and the current rent control regime only makes that worse.
    Agreed. Shortly there won't be any private LL's offering houses to people on RS, and a REIT will cram as many people on RS into a flat complex as legally possible. Which will mean limited options to anyone that needs anything bigger than a two bed.


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    #29
    murphaph
    Registered Users Posts: 19,018 ✭✭✭✭murphaph


    There won't even be many LLs offering houses to anyone. REITs are not going to touch houses or apartments outside major population centres. Families lucky enough to live in those population centres better hope the REITs start building 3 and 4 bed apartments or get used to a very tight squeeze.

    The current diversity in the rental stock will be eliminated as small independent LLs sell up.


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    #30
    4ensic15
    Banned (with Prison Access) Posts: 4,691 ✭✭✭4ensic15


    DubCount wrote: »
    Opinions of society and political consensus will not change the current proposition being offered to landlords.

    If the state wants price control on a sliced pan, they don't say Brennans - you can charge €2 for your sliced pan, but Pat The Baker - you can only charge €1 because you had a sale on when we introduced the price controls. .

    Up to a few years ago each pub had its own prices set by the government. One pub could charge more than another. There was a prices commission and inspectors were employed to go around checking. LLs are just going to have to accept that they are hated by all but non landlords. The begrudgers will not be satisfied until the Poor Law returns and the workhouses are filled with former landlords with their mouths stained green from eating grass.


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    #31
    Lux23
    Registered Users Posts: 7,134 ✭✭✭Lux23


    4ensic15 wrote: »
    Up to a few years ago each pub had its own prices set by the government. One pub could charge more than another. There was a prices commission and inspectors were employed to go around checking. LLs are just going to have to accept that they are hated by all but non landlords. The begrudgers will not be satisfied until the Poor Law returns and the workhouses are filled with former landlords with their mouths stained green from eating grass.

    Are you for real?


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