Do you think that tenants are ready for Property Tax-inspired rent increases?

nxbyveromdwjpg

gurramok wrote: »

They're all doing it at the same time using the loophole, do you not realise this? All tenants should refuse to pay the tax as well and play hard ball. Its about time this country had a powerful tenants association like in France to fight for tenants rights.

Loophole?!

It doesnt matter if it's a property tax or if its the price of dog food goes up. They can charge what they like. This is a new expense. They can increase the rent with the market if they want.

Why can you not get this?

gurramok

sunnysoutheast wrote: »

Yes, yes and yes. Up to a limit set by the maximum market rent for the property.

Tenants are free to move. Landlords are free to make a decision to charge less than the market rent to retain a good tenant.

There is no cartel and no loophole. Tenants have far too many rights as it is.

nm wrote: »

Loophole?!

It doesnt matter if it's a property tax or if its the price of dog food goes up. They can charge what they like. This is a new expense. They can increase the rent with the market if they want.

Why can you not get this?

And tenants can refuse that rise in rent aka ownership tax.

So from July 1st 2013 onwards, there will be no across the board hikes in rent asked by landlords quoting "the rising market rate". Nice optimism there, no cartel indeed :rolleyes:

rubberdiddies

gurramok wrote: »

And tenants can refuse that rise in rent aka ownership tax.

So from July 1st 2013 onwards, there will be no across the board hikes in rent asked by landlords quoting "the rising market rate". Nice optimism there, no cartel indeed :rolleyes:

if there is then so be it. but no, landlords aren't all getting together to decide to increase the price on July 1st.

wikipedia wrote:

A cartel is a formal agreement among competing firms. It is a formal organization where there is a small number of sellers and usually involve homogeneous products. Cartel members may agree on such matters as price fixing, total industry output, market shares, allocation of customers, allocation of territories, bid rigging, establishment of common sales agencies, and the division of profits or combination of these. The aim of such collusion (also called the cartel agreement) is to increase individual members' profits by reducing competition.

you really need to understand though that a LL is allowed to increase the rent at the end of a tenancy. As such, I will be doing so. Other LL's will be doing so too. Some will not be doing so.

If you don't want to rent my place then that's your perogative.
My property, my risk. Can't see the argument here tbh.

You've answered the OPs question in that you aren't ready for Property Tax inspired increases. and that's fair enough. Sure your LL might not even be considering increasing the rent.

djimi

gurramok wrote: »

They're all doing it at the same time using the loophole, do you not realise this? All tenants should refuse to pay the tax as well and play hard ball. Its about time this country had a powerful tenants association like in France to fight for tenants rights.

Would you stop and listen to how ridiculous you sound with talk of loopholes and landlord cartells...

The tenancy act says that a landlord is entitled to review the rent once in a calendar year. If there is room to increase the rent then the landlord is absolutely legally within their rights to do so, and they do not have to explain to a tenant why. There need be no mention of passing on taxes/charges or whatever; most tenants in their right mind will realise and accept that such charges are part of the makeup of their rental price.

In no other industry would the seller be expected to personally absorb an increase in costs; in virtually any other case the increase would be passed on to the customer. I have absolutely no idea why you think that landlords should be any different.

murphaph

gurramok wrote: »

In that case, where does the buck stop?

If LL's mortgages go up, should tenants pay the extra cost?

If the 2nd property tax goes up from 200quid, should tenants pay the extra cost?

If the management fees go up, should tenants pay the extra cost?

No, yes and yes.

These are real costs associated with housing in Ireland. Mortgages are an individual thing, that may only affect some landlords. Property taxation and things like management fees are simply out of the landlord's control and are going to be passed on, and rightly so.

Landlord's are not there to simply "suck up" the increasing costs (outside their control). Tenants have to pay their share of government taxes on accommodation.

murphaph

gurramok wrote: »

As said earlier, the rent review is a loophole that LL's acting as a cartel are going to exploit as a front for passing the property tax onto the tenant. Is it right or even morally right? Hell no. Its an ownership tax, not an occupancy tax.

The tenants also have a right to repudiate such a rise which is under the guise of 'a rising market rate' which will be set by a cartel of LL's raising the price across the board at pretty much the same time. As said earlier, its down to each individual LL as to whether its worth his/her financial cost to mess with a good tenant, the wiser ones would not as tenants ain't stupid.

There's no cartel. This is conspiracy theory stuff. There are 16 odd thousand properties to rent on daft right now. You think there's even the possibility of organising a cartel? Go to Irish Landlord.com....one of the quietest websites around. Hardly a sign of landlords furiously organising themselves to "rip off" tenants.

Tenants can repudiate all they like, blame the government...they are the ones imposing new taxes on accommodation, driving up the cost of said accommodation, rather than tackling the waste in government spending first.

sunnysoutheast

murphaph wrote: »

No, yes and yes.

These are real costs associated with housing in Ireland. Mortgages are an individual thing, that may only affect some landlords. Property taxation and things like management fees are simply out of the landlord's control and are going to be passed on, and rightly so.

Landlord's are not there to simply "suck up" the increasing costs (outside their control). Tenants have to pay their share of government taxes on accommodation.

I disagree with the first "no". The cost of finance is a valid pricing factor for the cost of providing any service, which is what landlords are doing.

When/if interest rates start to rise rents will too.

murphaph

sunnysoutheast wrote: »

I disagree with the first "no". The cost of finance is a valid pricing factor for the cost of providing any service, which is what landlords are doing.

When/if interest rates start to rise rents will too.

Fair enough. I don't believe interest rate swings should be allowed to be passed on (let's be honest: we don't reduce the rent when interest rates go down) mid tenancy.

What a landlord wishes to charge for a new tenancy is entirely his own business though.

You wouldn't be allowed to increase the rent in Germany because interest rates went up.

I think we should adopt something close to the German system lock, stock and barrel. Irish tenants think they have it awful, but compared to German tenants they have very few responsibilities (and most of the rights). I'd like more certainty in the system, even if that means max rent increases and max rents per m² in a given area....so long as a deviant tenant can be evicted in a timely manner.

How would Irish tenants feel about completely repainting a property before they vacated it, leaving it exactly as they found it?

Sorry, bit of a ramble there, but my point is that costs beyond the landlord's control (finance is within his control, strictly speaking...he doesn't have to borrow to buy that property in the first place) such as government taxes and local authority rates should not even be part of the "rent". In Germany you pay rent + "side costs". Rent is fixed, but the "side costs" can and so vary and the tenant gets either a refund (rare) ore a bill for the shortfall at the end of the year (more common!). I favour this type of system tbh. we could then more easily move to unfurnished rentals (much less hassle and the tenants have their own stuff, which makes the place more like a home).

OMD

murphaph wrote: »

Fair enough. I don't believe interest rate swings should be allowed to be passed on (let's be honest: we don't reduce the rent when interest rates go down) mid tenancy.

What a landlord wishes to charge for a new tenancy is entirely his own business though.

You wouldn't be allowed to increase the rent in Germany because interest rates went up.

No one is talking about changing the rent mid agreement only when a new lease is being signed. You cannot change the rent mid tenancy unless tenants & landlord both agree.

djimi

The thing is that the way the law is in this country a landlord is entitled to reevaluate the rent once a year (usually at the end of a fixed term lease). Provided they are not trying to unfairly raise the rent above market rental prices, there is nothing to stop them looking for an increase. They dont have to justify the breakdown of the rental price to a tenant, so if there are any increased costs, be it new/increased taxes or charges or an increase in mortgage interest, they can build this into the rent increase in the yearly rent review if they so wish.

Of course, the tenant has the right to refuse such an increase and vacate the property, and as such the landlord much make a call as to whether or not it is worth losing a good tenant and have a possible vacant period all for the sake of a small increase in the rental price, but that is a seperate issue, and not a legal one.

Pkiernan

I for one, will be increasing the rent next year.

I am allowed to by law, and my property is currently rented 6% below the market rate.

I am considering a 3% increase, approximately half of what the property tax will be costing me. I will raise it agin by 3% the year after.

My tenant is free to move on and find another place if he doesn't agree with the rent increase.

I see a few posters saying that they will move if their LL increases their rent. It is a lot of hassle to up and move over €15 (50 cent a day). It'll be interesting to see what happens as time goes on.

sunnysoutheast

murphaph wrote: »

Fair enough. I don't believe interest rate swings should be allowed to be passed on (let's be honest: we don't reduce the rent when interest rates go down) mid tenancy.

Think we're at cross-purposes here, I meant at the periodic rent review or on re-letting. The local market will decide whether the landlord is able to pass on any increased costs - it would be a different answer for a decent flat in D4 vs. an estate house in the midlands, for example.

I've just checked, and the lease agreement we have states
"3.4 To pay promptly to the authorities or to whomever they are due, local authority, refuse charges and outgoings (including gas, water, electricity, cable television and telephone if any, relating to the property) including any which are imposed after the date of this Agreement (even if of a novel nature) and to pay the total cost of any reconnection fee relating to the supply of gas, water, electricity, cable television and telephone if the same is disconnected or the operating company changed."

I think the way this will pan out is that any "landlord addressed" charges - NPPR, land value tax, etc. - will be reflected in increased rental prices over the next few years depending on the local market. Any charges for local services should be borne by the consumer of the services (i.e. the tenant) as per the UK model.

I agree with you that there are deficiencies in the Irish rental "system", there should be a deposit protection scheme and a fast-track system for eviction for non-payment of rent rather than the current farce where a tenant can live for months or years rent-free. Equally, there should be strict and timely enforcement of building regulations and property standards to drive out the rogue landlords.

sunnysoutheast

Pkiernan wrote: »

I for one, will be increasing the rent next year.

I am allowed to by law, and my property is currently rented 6% below the market rate.

I am considering a 3% increase, approximately half of what the property tax will be costing me. I will raise it agin by 3% the year after.

My tenant is free to move on and find another place if he doesn't agree with the rent increase.

I see a few posters saying that they will move if their LL increases their rent. It is a lot of hassle to up and move over €15 (50 cent a day). It'll be interesting to see what happens as time goes on.

How did you establish the "market rate"?

gerryo777

Baralis1 wrote: »

Absolutely not! Property tax is as it's named, a tax on the property and should be paid by the property owner. Why should it be passed on? If my landlord tried passing it on, I'd be out the door. Plenty more places to rent.

And plenty more landlords will be increasing rents to cover it.
Do you not think, as a renter, that you should pay your way and pay for some of the services you use that the LA's provide?
After all the HHC/property tax is ringfenced for the LA's, isn't it?

The_Conductor

Totally ignoring the Property tax- surely the imposition of the Universal Social Charge on Gross Rental Income- is of far more concern to landlords? Its likely to be 2-3 times higher a charge, than the Property tax will, for the next few years- unless something changes. The fact that you could be loosing a significant amount of money on a tenancy- is irrelevant- you still have to shell out your 10% of gross rental income as some sort of solidarity tax. Solidarity my arse........

murphaph

USC is already due on gross rent (minus non-capital allowances, like 75% mortgage interest, insurance etc.) and has been since introduced. The USC will not be due on the "real" gross rent received, just gross rent received minus non-capital allowances. Up until now it has allowed landlords under section 23 etc. to "shield" their gross income from USC, but that will change. It is of no concern to landlords who do not avail of any "tax sheltering" schemes like s.23.

Do you mean PRSI for PAYE taxpayers? (currently PAYE taxpayers with rental income are exempt on PRSI on their rental income. Landlords with no PAYE income are and have always been liable to class S PRSI on their rental income of course)

MMAGirl

Any landlord that I know are now writing in the extra xharges like taxes, PRTB into the rent.
They are changing leases to read something like this (if taxes charges and levies came to €30 per month).

Rent (ex taxes, charges, levies): €720.00

Government Levies: €30.00

Rent (ex taxes, charges, levies): €750.00


Apartment rent was €750 before lease amendment, and is €750 after lease amendment, but now landlord has separated taxes from rent for accounting purposes. Tenant is paying them.

But no effect on the tenant.


Basically they are doing a Ryanair and are just collecting the rent for the govt.
So the amount of taxes and charges paid are technically paid by the tenant and are deducted from the rent receivable, with the result that the landlord pays less tax.

murphaph

MMAGirl wrote: »

So the amount of taxes and charges paid are technically paid by the tenant and are deducted from the rent receivable, with the result that the landlord pays less tax.

It remains to be seen if Revenue (actually the various Finance Acts) will allow this sort of accounting however.

djimi

murphaph wrote: »

It remains to be seen if Revenue (actually the various Finance Acts) will allow this sort of accounting however.

How are they going to stop them? As is stands my rent is €750, and I have no clue (or care for that matter) how that figure is made up. If the landlord decides at the end of the year to up the rent to €800 (which is still below market rental price) then they owe me no explination as to why. Ill know why they are doing it, but its not something that they have to write into the lease or explain to me in full.

mikemac1

murphaph wrote: »

How would Irish tenants feel about completely repainting a property before they vacated it, leaving it exactly as they found it?

Does that happen in Germany?

I'd call it wear & tear.

I've rented this current place three years.
Does need a lick of paint but that's for the landlord to do when I move out.

Just a general expense and I think they may be something they can do with tax over these expenses, I'm not sure

In Germany does a tenant have to repaint the place? Even after a 12 month stay?
Seems strange to me but then I only know the Irish way

MMAGirl

murphaph wrote: »

It remains to be seen if Revenue (actually the various Finance Acts) will allow this sort of accounting however.

There is no law against it. It is collecting the taxes owed to the govt as taxes and charges rather than as income from the lnadlord. Some people I know have contacted revenue about it and revenue wont give an answer, probably because its completely reasonable and they have no argument against it. The solution is to do this until they are specifically told not to. And tbh I dont see anything wrong with it. They are legitimate business expenses that can be passed on to the customer. There is no profit made on them.

If they arent treated like legitimate expenses then the cost of doing business increases even more and in the end rent will increase to cover it.

Villa05

OMD wrote: »

If the aim of the tax is to help people keep their head when buying, then surely stamp duty should have been better. Property tax will average eventually at about €1500-2000 I would have thought. Why do you believe this is a better than being charged an upfront fee of up to 9% of the properties value?

1. Stamp duty did not apply to FTB's
2. Stamp duty was used as a tool to push prices up.
i.e. Stamp duty kicked in at the value of 250k, then in budget ceiling was raised to 300k, this pushed the 249 priced house up to 299
3. The stamp duty was borrowed with the mortgage lessening the effect. The property tax is reoccurring and actual cash out of your pocket. psychological. Read the buying in 2012 thread for more of an understanding of this.
4. The more you pay for the house the more you are taxed. This will have a downward pressure on price. This is good for the economy as the less one pays for their house, the less the pressure on wage increases. This will make the economy more competitive. This is critical for an open export led economy such as Irelands

mikemac1

Are the 100 property tax and the 200 second home charge allowable for tax deductions?

So landlords follow the lease you wrote MMAGirl, the tenant pays and the landlord claims a deduction?

Seems dodgy if that goes on

Tenant pays the full whack and the landlord is claiming against it

http://www.irishlandlord.com/forum/showthread.php?t=2498
The boys here are all claiming

MMAGirl

mikemac1 wrote: »

Are the 100 property tax and the 200 second home charge allowable for tax deductions?

So landlords follow the lease you wrote MMAGirl, the tenant pays and the landlord claims a deduction?

Seems dodgy if that goes on

Tenant pays the full whack and the landlord is claiming against it

http://www.irishlandlord.com/forum/showthread.php?t=2498
The boys here are all claiming

They arent allowed as deductions.
If they follow the way I outlined they are not claiming any deduction.
They are separating it from the rent receivable. Making a clear distinction between them and the rent collected.
They are actually just reducing the rent.
The landlord is not claiming anything. They are just subtracting the extra taxes, levies and charges (lets just call them all what they are - taxes) from the rent they received, because this money all goes straight to revenue and not into the landlords income.

Currently the landlord is paying taxes on income he is not making.
In this way the tax gets paid, but the landlords income is seperate and he pays the tax due on this.
Any other way and its costs the landlord more money so he will pass these charges on as soon as the market will hold it.

Villa05

murphaph wrote: »

I think you're making the classic mistake of believing that all landlords are rolling in money. Many are scraping by, subsidising the rental property mortgage with their own wages, and any additional costs will put them over the edge. I'm not in that situation myself, but I know people who are.

Those people should be pushed over the edge and foreclosed on (pardon my frankness). This is what happens in any other normal economy. They clearly paid too much for the asset and the market no longer supports that price.

This process allows the landlord to exit an unsustainable situation and allows house prices to fall to reflect the current situation.

Continuing as we are at present results in zombie banks and a stalled falling economy

OMD

Villa05 wrote: »

Those people should be pushed over the edge and foreclosed on (pardon my frankness). This is what happens in any other normal economy. They clearly paid too much for the asset and the market no longer supports that price.

This process allows the landlord to exit an unsustainable situation and allows house prices to fall to reflect the current situation.

Continuing as we are at present results in zombie banks and a stalled falling economy

Dont be ridiculous. People who are paying their mortgages should be foreclosed on? This happens in no normal economy.

OMD

Villa05 wrote: »

1. Stamp duty did not apply to FTB's
2. Stamp duty was used as a tool to push prices up.
i.e. Stamp duty kicked in at the value of 250k, then in budget ceiling was raised to 300k, this pushed the 249 priced house up to 299
3. The stamp duty was borrowed with the mortgage lessening the effect. The property tax is reoccurring and actual cash out of your pocket. psychological. Read the buying in 2012 thread for more of an understanding of this.
4. The more you pay for the house the more you are taxed. This will have a downward pressure on price. This is good for the economy as the less one pays for their house, the less the pressure on wage increases. This will make the economy more competitive. This is critical for an open export led economy such as Irelands

Stamp duty was not borrowed as part of the mortgage in the enormous majority of cases.
Stamp duty did not push up prices. Your argument on this makes no sense. You are saying stamp duty kept prices down except when it was increased.
We will have to disagree on the psychological effects of very large lump sum up front or smallere amount over an extended period

murphaph

djimi wrote: »

How are they going to stop them?

Revenue would simply write to you to inform you that (for example) the gross payment received from the tenant is taxable, regardless of what it says in the lease.

It hasn't happened yet (that I know of) because this sort of clever (but IMO perfectly fair) accounting is a new thing, created by the raft of new charges being brought in. We'll find out within a year or 2 if Revenue are happy about it. I'd love it if they were.

murphaph

mikemac1 wrote: »

Does that happen in Germany?

Yes. That's the norm here. Perhaps not a full repaint after a 12 month stay, but any marks on the walls would need painting over by the tenant. Longer stays would typically require a repaint (back to brilliant white walls and ceiling, which is how most properties are let).

mikemac1

No allowance for fair wear & tear?

Sure rent somewhere a few years and you'll end up buying new carpets for the landlord even if you were the model tenant