Landlords - Increasing Rents to keep up with interest rates

monkey24

Hey,

Here is something that doesn't get a mention in all these debates about the current housing market. Landlords are sticking up their rent to cover the interest hikes. So who is actually getting affected by their repayments, its the people who can't afford houses themselves and have to rent. Yup the average joe gets screwed again.
Our Landlord just increased our rent by over 15% and then started complaining about his repayments. I know this has happened to a number of people.

m

mikemac

Rent is decided by supply and demand not by interest rates.

So if you can find the same accomadation for less rent then leave your landlord and go elsewhere.
Hopefully, he won't be able to find replacement tenants and lets hear him moan them.

It's tough having your rent raised but afaik, they can only do it once a year so at least that's something.

Edit: If there are hundreds of thousands of empty houses and apartments around the country then it's a pity they aren't on the rental market as at least that'd drive down rent.

Calina

Supply is slightly constrained at the moment. That being said, some of the rent being charged in some parts of Dublin beggars belief.

I was hoping that side of the bubble effect would have played itself out by now but evidentally not.

minicin

One of my friends was saying she heard on the radio at lunch that over one quarter of houses in Dublin are lying vacant as people cannot afford the large rents being charged, yet landlords are refusing to drop their rent!

I wonder how true it is?

Surely a landlord would prefer to get someone in quicker by dropping their rent rather then to have an empty house?

Electric

The rent that some people are looking for is mental! I saw one house on Daft that was looking for someone to pay €660 p.m. for just a room in the house! It was only a two bed in Cabra!!!

It sickens me to hear landlords whinge about their repayments. I recently moved out of a house. When I was leaving the landlord told me that he was putting up the rent to cover his repayments. Myself and 1 girl moved in about 6 months before the other 2 girls moved in and he told me that when the others were there a year he would be putting up their rent too! Two rental increases in one year!

The thing is that it was a very small 3 bed house. He had converted the dining room into another bedroom and don't get me started on the kitchen. When one of the girls told him that if he were putting up the rent then she would be looking for him to redecorate (it hadn't been decorated in at least 20 years) he totally ignored her. When she mentioned it again he kept going on about what a bargain the place was etc.

Landlords have gotten away with murder over the years! They rent out complete dumps and then find any excuse to up the rent. There should be legal requirements to keep rental properties to a high standard and limits to the amount of people you can squeeze into a place

minicin

I agree, but I often wonder is it just the landlords fault or is it letting agents trying to add a bit more onto the rent so they get a bigger cut (although I am not entirely sure how the letting agent thing works or how much they get for letting a property!)

I find if you deal directly with a landlord the rent is often cheaper then if you deal with a letting agent maybe thats just me though.

monkey24

My rent has increased to 740 pm now and the place we are in now isnt even that great. Its good location, seeing its Harolds Cross. But honestly unless you are in the higher end of the salary bracket Dublin isn't the place to be. The country screws you for every penny they can.
Hopefully there will be more possibilities to work abroad with other countries starting to develop. I am totally disillusioned with Dublin/Ireland.

Our landlord owns countless properties, why should i feel sorry for a multi million pound property tycoon when all he does is pass his interest hikes onto the tenant. There is no effect on them, again the person who can't afford to own a house gets screwed either way.

Electric

minicin wrote:

I agree, but I often wonder is it just the landlords fault or is it letting agents trying to add a bit more onto the rent so they get a bigger cut (although I am not entirely sure how the letting agent thing works or how much they get for letting a property!)

I find if you deal directly with a landlord the rent is often cheaper then if you deal with a letting agent maybe thats just me though.

There was no letting agency involved in this case. Most landlords are just looking for their money spinner to continue. They don't want to cut their profit margin. They own a house that not only pays for itself but makes a profit and they don't have to do anything to it, bar collect the rent.

The situation could be vastly improved if landlords were obliged to redecorate once a year and keep the house modern. There should also be a prohibition on turning rooms intended for other purposes into bedrooms to up the rent! And there should be at least minimum bathroom to tenant ratio ie 1 bathroom for 3 tenants, 2 bathrooms for 4 tenants kinda thing!

dochasach

minicin wrote:

One of my friends was saying she heard on the radio at lunch that over one quarter of houses in Dublin are lying vacant as people cannot afford the large rents being charged, yet landlords are refusing to drop their rent!

I wonder how true it is?

The vacancy rate across Ireland is about 1/6 but only about one in every 10 Dublin houses: http://www.ireland.com/newspaper/breaking/2007/0816/breaking56.htm

minicin wrote:

Surely a landlord would prefer to get someone in quicker by dropping their rent rather then to have an empty house?

No, when house prices were rising beyond reality, "landlords" could make (not earn) plenty of money without the mess of dealing with actual tenants. Now that prices have stopped and are falling, even real landlords are turfing out renters so they can quickly show and sell what appears to be a "new" home to potential buyers*. But in the end we won't need any of the rules suggested by Electric. It comes down to supply and demand. Wait 6 to 12 months and renters will have the upper hand:

http://daftwatch.atspace.com

Ireland took a 5 year vacation from economic reality, but in the end it always comes back to supply and demand.


*Buyer: [baɪər/bahy-er] (noun)The person or people who intend to purchase a home in Ireland. They were last seen queuing for houses in Adamstown in 2006, but are now thought to be extinct.

antoinolachtnai

It's all about supply and demand. If you don't like the place you're in or think it's too expensive, find somewhere better or cheaper.

We could impose a bunch of regulations and appoint loads of inspectors, but what good would it do really? Guess who would have to pay their wages.

SimpleSam06

antoinolachtnai wrote:

We could impose a bunch of regulations and appoint loads of inspectors, but what good would it do really? Guess who would have to pay their wages.

It would prevent abuse by landlords, which by all accounts is widespread, and protect said taxpayers in their place of residence.

Heres an idea actually, any thoughts on setting up a website to name and shame nasty landlords? I'm sure it would be booming in no time, once word got around, and might help people avoid making expensive mistakes.

miju

i doubt one exists for the simple reason that the site owners would be facing at least one new libel case every day

SimpleSam06

miju wrote:

i doubt one exists for the simple reason that the site owners would be facing at least one new libel case every day

But an absoloute defence against accusations of libel is truth. Its a pity, really, you can't even complain about abusive swine who without a doubt permeate society, without fear of being sued.

antoinolachtnai

SimpleSam06 wrote:

It would prevent abuse by landlords, which by all accounts is widespread, and protect said taxpayers in their place of residence.

By all accounts? You mean by some accounts. There are plenty of perfectly good landlords.

Inspections and preparations for inspections on a yearly basis would easily cost around 1200 euros per year per premises. This scheme would result in rents going up by 100 euros per unit.

If you aren't happy with your accommodation, get other accommodation. There's no one keeping you where you are.

Heres an idea actually, any thoughts on setting up a website to name and shame nasty landlords? I'm sure it would be booming in no time, once word got around, and might help people avoid making expensive mistakes.

What about a scheme to name and praise good landlords? That might be a more useful starting point for people trying to hire properties.

Antoin.

SimpleSam06

antoinolachtnai wrote:

By all accounts? You mean by some accounts. There are plenty of perfectly good landlords.

Yes, well to clarify what I was saying, there are many widespread accounts of bad landlords, not that all accounts were bad.

antoinolachtnai wrote:

Inspections and preparations for inspections on a yearly basis would easily cost around 1200 euros per year per premises. This scheme would result in rents going up by 100 euros per unit.

Why wouldn't it be paid through taxes like the rest of the civil service?

antoinolachtnai wrote:

If you aren't happy with your accommodation, get other accommodation. There's no one keeping you where you are.

Thats a very easy answer. I'd prefer not to let some bollox get away with it, in fairness.

antoinolachtnai wrote:

What about a scheme to name and praise good landlords? That might be a more useful starting point for people trying to hire properties.

Absoloutely. Rate your landlord. I Have a fiver here that says it gets more bad ratings than good, however.

antoinolachtnai

SimpleSam06 wrote:

Why wouldn't it be paid through taxes like the rest of the civil service?

The 'user pays' principle? It make sense to tie the payment of service to the use of it. That's the way the PRTB is funded, amongst many other things. It would also serve to encourage people to buy their own homes, so avoiding the charge.

Thats a very easy answer. I'd prefer not to let some bollox get away with it, in fairness.

But if you moved out, he wouldn't get away with it. Do you think landlords like rental voids?

SimpleSam06

antoinolachtnai wrote:

It make sense to tie the payment of service to the use of it. That's the way the PRTB is funded, amongst many other things. It would also serve to encourage people to buy their own homes, so avoiding the charge.

Theres a general attitude in Ireland that "if you don't like it, sleep in the streets". Perhaps its a holdover from the good old days. Housing is as much a basic neccessity as food or water, and adequate protections to those people who do not own a home, especially on the poorer end of the scale, are the government's responsibility. Until fairly recently the only protection you could get was to have a lease. Ireland has a long way to go to catch up to more modern states in this regard.

antoinolachtnai wrote:

But if you moved out, he wouldn't get away with it. Do you think landlords like rental voids?

Hold on a minute there, are you suggesting bad landlords should just be allowed to go on their way, ripping off students, immigrants, and anyone else unlucky enough to try out their residence?

You're not a landlord yourself by any chance?

ronbyrne2005

miju wrote:

i doubt one exists for the simple reason that the site owners would be facing at least one new libel case every day

Register and host site outside of EU?

miju

AFAIK this wont make any difference ronbyrne. just slightly trickier for them to track you down to slap a libel suit on you

SimpleSam06

Yes, even if you do host in Mongolia and pay them via western union with false details, the Irish courts can at the end of the day order Eircom or whoever it is sitting on the pipes to block that URL from being seen within Ireland. Or possibly run a complaint straight to ICANN for your false details. There are ways around that, like setting up a shell company there, but its a cat and mouse game that can't be won, really.

On the other hand, if you were to freely offer up the contact details of anyone who posted a review on the site, and leave it to the landlord to pursue their complaint with that individual, wouldn't that make it impossible to sue the site itself? You could put reviews in an "on hold due to legal action" box, not displaying the complaint but displaying the fact that the landlord is pursuing litigation against the complainant, which is a matter of public record in any case. Grey areas galore.

Of course, then people would be able to judge how good or bad a landlord is by the number of "on hold" boxes under his name. Its a fine line, especially when you have gobshites trying to stir trouble by complaining about perfectly good landlords, from an internet cafe somewhere.

At the end of the day, however, landlords are offering a service in exchange for money, so they should be subject to as much public review and/or criticism as any other business.

antoinolachtnai

But they are as subject to public review and criticism as any other business.

Hold on a minute there, are you suggesting bad landlords should just be allowed to go on their way, ripping off students, immigrants, and anyone else unlucky enough to try out their residence?

But they're not allowed. You can take them to the PRTB.

Raskolnikov

micmclo wrote:

Rent is decided by supply and demand not by interest rates.

Try living in the real world, mate.

SimpleSam06

antoinolachtnai wrote:

But they are as subject to public review and criticism as any other business.

Well then a website where people can review them will do no harm, will it?

antoinolachtnai wrote:

But they're not allowed. You can take them to the PRTB.

The problem with that idea is that you can only take them to the PRTB after they mess you around. Wouldn't it be better to know in advance so you can avoid the worst of them? I'd call it a winner for everyone.

miju

that is the real world Raskolnikov. when rates were rising rents weren't rising in line with them. however recently when supply dropped rental prices spiked quite a bit. you only have to look at daftwatch to see that

thesteve

I was just about to post this link... http://www.rateyoursolicitor.com/
to mention this site exists for solicitors so why not for landlords...
and now I get a 404....
It was operating for quite a while though, although its more dangerous to p!ss off a solicitor than a landlord

http://thepropertypin.com/forum/viewforum.php?f=18&sid=4d7b92bfc03a6cd7bad4c4f0cbbb4a76


The flatrate website is something along the lines of reviewing rental accommodation

miju

thesteve wrote:

It was operating for quite a while though, although its more dangerous to p!ss off a solicitor than a landlord

indeed as the owners found out when they ended up in court early this year / very late last year after some female solicitor had a go at them and won

Raskolnikov

miju wrote:

that is the real world Raskolnikov. when rates were rising rents weren't rising in line with them. however recently when supply dropped rental prices spiked quite a bit. you only have to look at daftwatch to see that

You cannot take a site like daftwatch as a measure of rental supply. It's a rapidly growing site so its figures are completely skewed.

If you think that interest rates don't affect rental costs, then you need to take elementary economics. Let me give you an example.

Consider a street where there are there are two landlords both trying to rent out a house each. One landlord got a mortgage to fund his house, the other inherited it and has no mortgage on it. An interest rate hike comes a long. The mortgaged landlord increases rent, the other landlord doesn't need to increase his rent. Basic laws of economics will tell you that demand falls for the mortgaged rental property and rises for wholly owned one.

Now, consider the next time the two landlords each have a property to rent out, again one rented, the other wholly owned. The mortgaged landlord will be forced to drop his price slightly because of lack of demand. However, the landlord who owns his property outright will feel because demand is so high, he can raise the cost of renting his property.

This process will continue until the market reaches convergence.

antoinolachtnai

Sure, the costs are going to be an issue. Obviously anything that adds to the cost of being a landlord is going to push up the rent. But the relationship is indirect.

Other indirect factors are just as important, maybe more so. For example, the high stamp duty applicable to landlords will increase their cost base. The tax break on mortgage interest relief offered to owner-occupiers also results in higher costs, as does the ending of stamp duty for first time buyers, because it means that landlords are in a weaker position in the marketplace.

miju

Raskolnikov wrote:

You cannot take a site like daftwatch as a measure of rental supply. It's a rapidly growing site so its figures are completely skewed.

They have an accetable error rate about 2% and judging from the actual reports from daft.ie it seems daft watch is fairly on the money

Raskolnikov wrote:

If you think that interest rates don't affect rental costs, then you need to take elementary economics. Let me give you an example.

Consider a street where there are there are two landlords both trying to rent out a house each. One landlord got a mortgage to fund his house, the other inherited it and has no mortgage on it. An interest rate hike comes a long. The mortgaged landlord increases rent, the other landlord doesn't need to increase his rent. Basic laws of economics will tell you that demand falls for the mortgaged rental property and rises for wholly owned one.

Now, consider the next time the two landlords each have a property to rent out, again one rented, the other wholly owned. The mortgaged landlord will be forced to drop his price slightly because of lack of demand. However, the landlord who owns his property outright will feel because demand is so high, he can raise the cost of renting his property.

This process will continue until the market reaches convergence.

sorry but that example is complete tosh. whether a landlord has a mortgage or not they will BOTH have rental rates at the maximum possible level to achieve the highest yield.

the fact that the vast majority of new buy to letters in the last year and a half have been subsiding their tenants in the sense they're rent is not covering the full mortgage on the property is a perfect example of how interest rates dont effect rental prices as much as you think.

its simpl supply and demand. supply goes down rental rates spike, supply goes up rental rates fall. we're seeing a similiar thing in the property sales market right now (though in saying that theres many other factors affecting that as well)

antoinolachtnai

yes, but what drives supply is availability of well-priced finance and properties, together with confidence in future capital growth.