Some good news anyway! Rents still on the up!

m5ex9oqjawdg2i

The Spider wrote: »

To be honest that's a government issue, if a private individual puts their own money and takes the risk of a big loan to buy a place and then decides to rent it out, they're entitled to make as much money from that as the market will allow.

No private individual is obliged to to take on any one, it's their investment they can decide who lives in it.

It's up to the government to provide accommodation for those on assistance.

Rents are still pretty low, in 2002 I was paying 1270 a month for a two bed flat in a basement in Rathmines, inflation alone dictates that rents should be way higher.

What are you talking about? Absolute rubbish.

Rent is stupidly high.

zl1whqvjs75cdy

Is it just in the Dublin area that rent is increasing? Or countrywide? (Obviously excluding the back bogs of Cavan where there's no work)

The Spider

[QUOTE Rent is stupidly high.[/QUOTE]

Not compared to what it was, rent in dublin has always been high, there was never a time when it was low compare to what you earned.

khards

The rent ceiling has now been reached. After the crash rents undershot and have been catching up to the maximum level that people can afford.
The last year rents have risen whilst real wages have been starting to decline.
That is after you have been paid, taxed, paid for essential utilities there is less money to spend that there was in the past.
Inflation of fuel, groceries, motoring costs, road tax has been eating away at wages and disposable for years. From all the noise coming from renters, it looks like like this is hitting a crunch point where rents will only be able to rise in line with real wage increases, after all renters can only have X amount to pay as rent.

It is easy to see that rents are restricted by earnings, example single person earning 40k:
Gross Pay ~2400pcm
Income tax ~930pcm
Car costs ~100pcm
Fuel ~ 100pcm
Rent ~1000pcm
Food ~200pcm

Total = 2330

It can be clearly seen that in this example the tennant is already overstretched and the rent could only rise 70pcm before arrears and defaults occur.
The more tax increases and inflation increases the cost of fuel, food, commuting the less will be available for rent.

The outlook is not good for landlords, only wage rises and low inflation would save them. Even then as tax is a percentage of wages they would see little benefit for wage rises.

listermint

The Spider wrote: »

Again this is standard business practice, wherever you go. In the states you could declare yourself bankrupt and walk away, also mortgages are non recourse it's the system here that's flawed.

Regardless the renter has no risk, they are asked to pay for a service that's provided at market rate as that's the law. The landlord carries the burden of risk and in the past few years was probably putting a lot of money towards the rent as the rent achieved fell short of rent required.

This part in bold i suppose is the more hilarious part of your posts. What 'Market Rate' is that ?

The Market where my tax money is going into NAMA to hold your 'market rate' artificially high ?

Is that the market rate you refer to ? ROFL

The rent system and housing system in this country is fundamentally damaged to the core. Its broken, your so called market isnt a true reflection of anything when you have so many unfinished properties in a capital city of this size being either deliberately held off market or have no buyers for them on a scale that would suit the likes of NAMA to make a sale.

On top of this i also have my tax dollas going into funding private landlords for social housing which lets face it, is providing many many sub standard homes for top dollar.

Where is this so called legitimate market one would wonder?

murphaph

khards wrote: »

It is easy to see that rents are restricted by earnings, example single person earning 40k:
Take home ~2400pcm
Income tax ~930pcm
Car costs ~100pcm
Fuel ~ 100pcm
Rent ~1000pcm
Food ~200pcm

Total = 2330

Income tax on take home pay? Your tenant here has €930 more in his pocket than you thought...better than finding a fiver in there anyway!

Pawwed Rig

khards wrote: »

It is easy to see that rents are restricted by earnings, example single person earning 40k:
Take home ~2400pcm
Income tax ~930pcm
Car costs ~100pcm
Fuel ~ 100pcm
Rent ~1000pcm
Food ~200pcm

Total = 2330

I think you deducted tax twice here unless I have misunderstood
To correct based on your figures
Take home ~3,333pcm
Income tax ~930pcm
Car costs ~100pcm
Fuel ~ 100pcm
Rent ~1000pcm
Food ~200pcm

Total = 2330
Leaving €1,000 rather than €70

khards

Ok, I meant Gross pay, not take home pay. I thought that would be obvious from the fact that I said a 40k salary and that rents are not 1k more than they are now.

http://en.wikipedia.org/wiki/Law_of_rent

The Law of Rent

The Law of Rent states that the rent of a land site is equal to the economic advantage obtained by using the site in its most productive use, relative to the advantage obtained by using marginal (i.e., the best rent-free) land for the same purpose, given the same inputs of labor and capital[2]

Ricardian rent should not be confused with contract rent, which is the "actual payments tenants make for use of the properties of others." (Barlow 1986). Rather, the Law of Rent refers to the economic return that land should accrue for its use in production.

Being a political economist, Ricardo was not simply referring to land in terms of soil. He was primarily interested in the economic rent and locational value associated with private appropriation of any natural factor of production. The law of rent applies equally well to urban land and rural land, as it is a fundamental principle of economics.

Ricardo noticed that the bargaining power of laborers can never dip below the produce obtainable on the best available rent-free land, because whenever rent leaves them with less than they could get on that free land, they can simply move to the new location. The produce obtainable on the best available rent-free land is known as the margin of production. Since landlords have a monopoly over a given location, the only limiting factor for rent is the margin of production. Thus, rent is a differential between the productive capacity of the land and the margin of production.

Note that Ricardo's original formulation assumes that the best quality farm land would be the first to be cultivated, and that goods are sold in a competitive, single price market.
Wages

This law has a number of important implications, perhaps the most important being its implication for wages. The Law of Rent implies that wages bear no systematic relationship to the productivity of labor, and are instead determined solely by the productive capacity of marginal land,[3] as all production in excess of that amount will be appropriated by landowners in rent.

So you can conclude that if a tenant was taking home and extra €1000 per month that the money would be sucked up in rent, just like during the boom times.

Ray Palmer

listermint wrote: »

This part in bold i suppose is the more hilarious part of your posts. What 'Market Rate' is that ?

The Market where my tax money is going into NAMA to hold your 'market rate' artificially high ?

Is that the market rate you refer to ? ROFL

The rent system and housing system in this country is fundamentally damaged to the core. Its broken, your so called market isnt a true reflection of anything when you have so many unfinished properties in a capital city of this size being either deliberately held off market or have no buyers for them on a scale that would suit the likes of NAMA to make a sale.

On top of this i also have my tax dollas going into funding private landlords for social housing which lets face it, is providing many many sub standard homes for top dollar.

Where is this so called legitimate market one would wonder?

Nama doesn't have that much property in high rent areas (Dublin)

So that pretty much negates you claim of a completely broken market.

RA has gone up in Dublin as it was not an artificial floor for rent and tenants couldn't find places as a result.

Effectively what you are saying may apply in some areas in the country but not where rent is going up and demand is highest. In the areas that is may actually apply it is actually not effecting a lot of people.

murphaph

khards wrote: »

Ok, I meant Gross pay, not take home pay. I thought that would be obvious from the fact that I said a 40k salary and that rents are not 1k more than they are now

What? Your point was that a guy on 40k was basically at his "limit" wrt the amount of rent he can pay.

You made a mistake and that 40k guy actuall has ca. 1k more per month, so clearly using YOUR example, there is room for rents to increase, which you said there wasn't.

Ray Palmer

khards wrote: »

Ok, I meant Gross pay, not take home pay. I thought that would be obvious from the fact that I said a 40k salary and that rents are not 1k more than they are now.
.

40k/12=3333.33 would be gross pay
2400*12=28800 would be the yearly gross income if we used your figures.

You got it wrong.

khards

murphaph wrote: »

What? Your point was that a guy on 40k was basically at his "limit" wrt the amount of rent he can pay.

You made a mistake and that 40k guy actuall has ca. 1k more per month, so clearly using YOUR example, there is room for rents to increase, which you said there wasn't.

Please explain "there is room for rents to increase, which you said there wasn't" as you are not making sense.
I did say that there was room for a €70 increase per month, then any inflation of goods/services would effectively reduce the maximum rent.

The 40k buy is taking home around 2,333 of which 1k is rent and the rest in spent on essential living expenses. Where do you see the increases coming from?

khards

Ray Palmer wrote: »

40k/12=3333.33 would be gross pay
2400*12=28800 would be the yearly gross income if we used your figures.

You got it wrong.

You would need to deduct income tax to get the net monthly salary in order to make any type of affordability calculation.

murphaph

khards wrote: »

Please explain "there is room for rents to increase, which you said there wasn't" as you are not making sense.
I did say that there was room for a €70 increase per month, then any inflation of goods/services would effectively reduce the maximum rent.

The 40k buy is taking home around 2,333 of which 1k is rent and the rest in spent on essential living expenses. Where do you see the increases coming from?

The €930 income tax that he's already paid!

You made a mistake!

Ray Palmer

khards wrote: »

You would need to deduct income tax to get the net monthly salary in order to make any type of affordability calculation.

You don't know what "Gross Pay" and "Take Home Pay" means.

You have said you meant gross pay and that is why tax was deducted afterwards. The problem is you got the gross pay incorrect and used a figure of below 30k for your example of a 40k salary.

You didn't do your calculations correctly. You don't seem to understand the corrections people are pointing out.

khards

murphaph wrote: »

The €930 income tax that he's already paid!

You made a mistake!

You are saying that someone earning €40k, taking home about €2300 can afford a rent of €1,930 pcm

You could also make a more constructive statement rather than the childish "You made a mistake!".

khards

Ray Palmer wrote: »

You don't know what "Gross Pay" and "Take Home Pay" means.

You have said you meant gross pay and that is why tax was deducted afterwards. The problem is you got the gross pay incorrect and used a figure of below 30k for your example of a 40k salary.

You didn't do your calculations correctly. You don't seem to understand the corrections people are pointing out.

I fully understand what Gross pay and net pay are, that is why I went back and edited the post to correct the mistake.
The numbers are correct, it was that I has entered "Gross Pay" instead of "Net Pay" - can you understand that?

Zamboni

He made a balls of the numbers but his point is valid.
There is a host of other obligatory living costs that are not listed.

In saying that though, I don't see rents coming down too soon.
It could be three years for repo sales begin to affect both markets if there is any affect at all.
The private losses that should occur are continually being socialised through debt write downs using state owned banks as the vehicle.
Lots of well connected people are having their personal balance sheets rewritten.
The rest of the mugs will be left paying artificially high rents and artificially high house prices.

Business as usual folks.

listermint

Ray Palmer wrote: »

Nama doesn't have that much property in high rent areas (Dublin)

So that pretty much negates you claim of a completely broken market.

RA has gone up in Dublin as it was not an artificial floor for rent and tenants couldn't find places as a result.

Effectively what you are saying may apply in some areas in the country but not where rent is going up and demand is highest. In the areas that is may actually apply it is actually not effecting a lot of people.

There are Thousands of apartments across Dublin County Unfinished.

So Yes this distorts the market very effectively and negates nothing.


Onwards though for whatever it was you were saying....

Zamboni

Annual Salary 40k

Monthly Gross Pay 3330
Less 930 of income taxes
= Nett Pay 2400

Less
Car costs ~100pcm
Fuel ~ 100pcm
Rent ~1000pcm
Food ~200pcm

= €1,000 remaining disposable income

You've no way out khards but I appreciate the point you are trying to make.

The Spider

listermint wrote: »

There are Thousands of apartments across Dublin County Unfinished.

So Yes this distorts the market very effectively and negates nothing.


Onwards though for whatever it was you were saying....

Show examples of the thousands of apartments please?

This really is quite simple, for Dublin anyway, rents were falling now they're rising, lack of supply, if a landlord couldn't get the rent he would lower it, this isn't that difficult.

As for the NAMA point, why oh why do people think they're suddenly going to release all these apartments onto the market and depress rents and house prices?

You rent accomodation, you are paying for a service, if there are a limited amount of people providing the service, then prices will rise, and there can only be a limited amount of service providers because of the size of the city.

Ray Palmer

khards wrote: »

It is easy to see that rents are restricted by earnings, example single person earning 40k:
Gross Pay ~2400pcm
Income tax ~930pcm
Car costs ~100pcm
Fuel ~ 100pcm
Rent ~1000pcm
Food ~200pcm

Total = 2330

Gross pay on 40k is not 2400pcm it is net pay or take home. 40k/12=3333.33
You are incorrectly using the term to the extent you are still wrong. 3333.33 is gross monthly pay. The only logic conclusion is you don't know what gross pay means.

What your whole theory relies on is that the person will retain the same property as prices increase. They won't they will have to down grade to what is affordable for them the same way everybody else will. This is what happened last time there was a push on rental property.

listermint wrote: »

There are Thousands of apartments across Dublin County Unfinished.

So Yes this distorts the market very effectively and negates nothing.

Want to point to thousands with any reputable information or am I supposed to take your word for it.

StillWaters

Unless the demographics have changed hugely (must check CSO data) most single people do not live alone (excluding older people) They houseshare, so their rent would not be €1000pm. Apartment rent tends to be serviced by 2 people.

Of course this might change if people decide to continue to rent into their 30s.

Potatoeman

wrmwit wrote: »

Jaysus that's a lot of rent for a 1 bed. We live in a 1 bed too in D6 and paying €900. It's a lot but its a nice gaf. Our landlord called during the week and said he's putting the rent up €50 when our lease is up in August. We're not prepared to pay for it but looking at the rental market, especially in the D6 area, it looks like we don't have a choice. The rental market is tough and it's going to stay like that for a while.

Im renting a three bed house with a large back garden for 900. I moved from a two bed apartment a few years ago that was 950 with no garden. There are many overpriced properties people just need to shop around.
That said its getting to the stage that I would be be better off buying as Im paying someones mortgage for them.

The Spider

Potatoeman wrote: »

Im renting a three bed house with a large back garden for 900. I moved from a two bed apartment a few years ago that was 950 with no garden. There are many overpriced properties people just need to shop around.
That said its getting to the stage that I would be be better off buying as Im paying someones mortgage for them.

Are you living in Dublin city centre or closer, where was the apartment and where is the house?

Southside or Northside?

Potatoeman

The Spider wrote: »

Are you living in Dublin city centre or closer, where was the apartment and where is the house?

Southside or Northside?

Both Drumcondra. Apt was Jones road and the house is Dargleroad. The house is in a much nicer area. The apt was too close to Ballybough.

The Spider

Potatoeman wrote: »

Both Drumcondra. Apt was Jones road and the house is Dargleroad. The house is in a much nicer area. The apt was too close to Ballybough.

Ah very good, house is better no question, like I said previously I rented a two bed basement apartment in Rathmines around 2002-2003 for 1270 a month, but I also rented a 2 bed house with garden in Churchtown 2005-2009 for 1100 a month, house was way better, but it was cheaper.

So absolutely shop around you'll get better the further out you go in general.

Potatoeman

The Spider wrote: »

Ah very good, house is better no question, like I said previously I rented a two bed basement apartment in Rathmines around 2002-2003 for 1270 a month, but I also rented a 2 bed house with garden in Churchtown 2005-2009 for 1100 a month, house was way better, but it was cheaper.

So absolutely shop around you'll get better the further out you go in general.

There are loads of overpriced properties around. There is a one bed apt down the road from me for 700, totally overpriced for the size.
I had to move twice in the last six years as landlords refused to drop rents because there were better deals around. I think many people stayed where they were and missed out on better accomadation and cheaper rents.

EricPraline

Ray Palmer wrote: »

Nama doesn't have that much property in high rent areas (Dublin).

Pretty sure this isn't true. Large NAMA-controlled sites exist in Sandyford and Merrion Road D4.

A few years ago the numbers being mentioned were high and I presume the number has gone higher, as more developers have gone into receivership:

THE NATIONAL Asset Management Agency plans to seek tenants for some of its 8,000 apartments with a view to selling them as blocks to investors to help shift properties stuck on its books.

Brendan McDonagh, chief executive of Nama, said that most of the apartments were in Dublin.

NAMA is also involved in the proposed continuation of unfinished developments in the Dublin Docklands:

The National Asset Management Agency (NAMA) has confirmed that it has an interest in 70pc of development land in the Dublin Docklands area.
..
Even with much of the district developed, his agency has an interest in 22 hectares of development sites – making it the dominant landowner in the area.

Of course, as pointed out by other posters, this is never going to be released in one go. NAMA controlled properties are likely to be drip-fed to the rental sales markets over the next decade or more.

murphaph

How many NAMA units are habitable or near habitable? How many of those are in Dublin? What percentage of TOTAL housing stock does this cohort make up? I wager it's less than 1% of total Dublin stock that fits this profile.