Rent Prices are Crazy

drumswan

The Spider wrote: »

Usual nonsense, them and us, there is no them and us, all these names canny's vi's etc like there was a big group that had regular meetings. :rolleyes:

I'd rather spend my money on fancy holidays than on my mortgage

Well if you did, you could probably go on living in your house for several years.

Everyone would rather spend their money on thing's they'd like to do rather than things they have to do.

We are discussing the factors driving up rents by 10 or 20% year on year, I assume you'd be happy to get on with paying an equivalent hike in your mortgage payments as just "something you have to do" yeah?

Anyway if you're worried that not enough money is going into the economy, have no fear, when your landlord increases the rent, it's highly likely that they're spending the money in the economy instead, so that's alright.

Or its going to service their massive debts, and in turn our banks massive debts, and leaving the country.

drumswan

Eldarion wrote: »

This might also be condescending to you as well but rent prices are what they are BECAUSE people would rather pay that amount than live elsewhere.

Of course, but there are factors affecting supply which are exacerbating the problem.

Your black hole analogy is without merit as well, it's not being sucked away to nothing, it's payment for a service and is subject to tax. The very basis of a functioning market.

Except the tax is going to service bank debt too.

Eldarion

drumswan wrote: »

We are discussing the factors driving up rents by 10 or 20% year on year, I assume you'd be happy to get on with paying an equivalent hike in your mortgage payments as just "something you have to do" yeah?

This is a very realistic prospect for someone with a large mortgage. A single point increase in the ECB interest rate could easily jump someone's monthly repayments by 10% or even 20%. Will you be wailing for them then?

drumswan

Eldarion wrote: »

This is a very realistic prospect for someone with a large mortgage. A single point increase in the ECB interest rate could easily jump someone's monthly repayments by 10% or even 20%. Will you be wailing for them then?

That would be a very real issue for them, I would not be inclined to come on the internet with the attitude telling them to suck it up - 'Everyone would rather spend their money on thing's they'd like to do rather than things they have to do.'

Out of interest when was the last 1% increase in the ECB rate?

The Spider

drumswan wrote: »

That would be a very real issue for them, I would not be inclined to come on the internet with the attitude telling them to suck it up

But why not? they'd have to suck it up, I know if there's an interest rate hike I'll have to pay more, I won't be whinging about it, that's to be expected with a mortgage, I'll just have to cut back somewhere else.

Just as rent price hikes are to be expected with renting, the laws of inflation should inform this at the very least?

drumswan

A 22% rise in rents in the capital over a three year period (14% in a single year!) are the signs of a serious problem with housing in the city and the consensus on the Accommodation & Property forum is "suck it up, nothing to see here, move on", is that it?

What nonsense, these swings are not "to be expected", they are completely abnormal and indicative of a dysfunctional market - something that needs to be tackled, not ignored because "shure normal people buy houses"

Zulu

We all know the market is dysfunctional. Now, so what? Whats your solution?

Cap rent? Well bollix to that, that's screwing people who've invested in property. It's my property, and if I can get someone to pay for it - good for me. "suck it up, nothing to see here, move on"

The Spider

drumswan wrote: »

A 22% rise in rents in the capital over a three year period (14% in a single year!) are the signs of a serious problem with housing in the city and the consensus on the Accommodation & Property forum is "suck it up, nothing to see here, move on", is that it?

What nonsense.

Well, yeah, the majority of people who work in New York can't live in Manhattan, supply and demand there's only so much space, so rents in Manhattan start at around 5 grand.

Everyone who works in London can't live in London and it has a giant mass of commuters.

Don't get me started on Paris.

I've used Capital cities, yes and before anyone jumps in and says Dublin is more like Manchester, size wise it is and if we were still part of the british empire you might even have a point.

Dublin is the Capital city of a sovereign country, it contains the vast majority of employment in the country, basically if you want a job outside of farming or a factory, you have to go to Dublin more or less (pharma being the exception)

All that is demand and the city is only so big, now unless the government supplies houses to everyone (they wont) landlords have every right to make as much from their asset as possible, that's how markets work.

People can obviously afford it because they're paying it.

RedPandaDan

Zulu wrote: »

We all know the market is dysfunctional. Now, so what? Whats your solution?

100% capital gains on increases in land value from rezoning.
Large property levy on unused property and land (say 20%).
Cap mortgages at 20-25 years.
Changes to planning, encouraging high-density, taller apartment blocks in the city centre.
Improved transport links to outside the city.

All the above would help increase supply and hopefully force prices down, but it'd take a few years before the effects would be noticeable.

RedPandaDan

The Spider wrote: »

People can obviously afford it because they're paying it.

While they can afford it, having to spend greater and greater percentages of income on accommodation will eventually mean they are less resilient against any shocks they have later (lose job, major illness, etc.).

I wouldn't use being able to afford it as an indicator of prices being ok. (Thats for both buyers and renters.)

The Spider

RedPandaDan wrote: »

100% capital gains on increases in land value from rezoning.
Large property levy on unused property and land (say 20%).
Cap mortgages at 20-25 years.
Changes to planning, encouraging high-density, taller apartment blocks in the city centre.
Improved transport links to outside the city.

All the above would help increase supply and hopefully force prices down, but it'd take a few years before the effects would be noticeable.

High density, I agree with, levy on unused property an land, I can see merit in.
Transport links outside the city definitely.

100% capital gains tax on rezoned land?, not a chance in hell, not how any market works, you're basically confiscating land from people, by taking any profit they can make because it's been rezoned and telling them if they don't use it they face a levy.

The Spider

RedPandaDan wrote: »

While they can afford it, having to spend greater and greater percentages of income on accommodation will eventually mean they are less resilient against any shocks they have later (lose job, major illness, etc.).

I wouldn't use being able to afford it as an indicator of prices being ok. (Thats for both buyers and renters.)

Again like I say, they can live in a commuter town and commute in, that's what people do in other countries and here believe it or not.

If you don't want to spend more of your income on rent, then move out to somewhere cheaper, however if you want the city lifestyle, well I'm afraid there's a price to be paid for that.

drumswan

The Spider wrote: »

All that is demand and the city is only so big, now unless the government supplies houses to everyone (they wont) landlords have every right to make as much from their asset as possible, that's how markets work.

Fantastic, is having almost 20% (and growing rapidly) of the entire mortgage loan stock in the country in arrears also "how markets work"? Presumably NAMA is "how markets work" too? Is AIB debt blanket mortgage debt forgiveness "how markets work"? Is a 950 euro rent allowance "how markets work"?

RedPandaDan

The Spider wrote: »

100% capital gains tax on rezoned land?, not a chance in hell, not how any market works, you're basically confiscating land from people, by taking any profit they can make because it's been rezoned and telling them if they don't use it they face a levy.

Its just 100% on the increase in price, not the total price.

The difference between a plot with planning permission and an identical plot next door without planning permission can be 10X the site value. Its artificial scarcity nonsense designed to give money to vested interests at the expense of everyone else.

The tax rate is currently at 80%, which is too low.

Say, I have a plot of land worth 10k without PP. If I get planning permission it is now worth 100k. I will sell it for the 100k because I want the 20% of the increase I get after tax (so I get 28k total). However, say the tax was 100%. Now the game changes, I'm going to sell it for the original 10k because there is no more incentive to selling at a higher price.

Say a developer plans to build and sell 4 houses on the plot. In the current system, the price has 25k in land costs per house. If the 100% tax was in place, the cost of land for each house is 2.5k. Best case, you have knocked 20k off the cost of a new house, so the house buyer has more money to spend in the economy. Worst case, the house price stays the same, and the developer pockets the 20k for each house. But even then, its rewarding productive work (house construction) over land hoarding and speculation.

It'd be unpopular but the current situation, where speculators are given huge windfalls at the discretion of the government, is arguably far worse. Its what has led to so much corruption in the planning processes.

The Spider

drumswan wrote: »

Fantastic, is having almost 20% (and growing rapidly) of the entire mortgage loan stock in the country in arrears also "how markets work"? Presumably NAMA is "how markets work" too? Is AIB debt blanket mortgage debt forgiveness "how markets work"? Is a 950 euro rent allowance "how markets work"?

And again you come back to mortgages, that has nothing to do with renters, renters only have to worry about can they afford the service they require in the location they want.

Is that how markets work? It's how this market works, so either play the game or get off the pitch.

Potatoeman

The Spider wrote: »

And again you come back to mortgages, that has nothing to do with renters, renters only have to worry about can they afford the service they require in the location they want.

Is that how markets work? It's how this market works, so either play the game or get off the pitch.

Your saying thats how the market works but ignoring the factors that are causing the market to work how it is now. NAMA is not how the market works. Our property market is a pyramid scheme and our government are hell bent on keeping it that way.

My point earlier was that we are going to repeat the same mistakes all over again and there is no incentive to be cautious.

Eldarion

There's no denying the market has been artificially skewed, but this shouldn't be laid at the feet of the blanket "Landlord Class". People are perfectly entitled to charge the market rent for their properties, arguments should be made against those skewing the market.

Mortgage holders and landlords didn't decide to allow €950+ RA, they didn't grant debt forgiveness, they didn't set up NAMA. They're just players in the game, they don't make the rules.

RedPandaDan

Eldarion wrote: »

There's no denying the market has been artificially skewed, but this shouldn't be laid at the feet of the blanket "Landlord Class". People are perfectly entitled to charge the market rent for their properties, arguments should be made against those skewing the market.

Very true. This total screwup is the fault of governments past and present.

drumswan

The Spider wrote: »

And again you come back to mortgages, that has nothing to do with renters

Hmmm, mortgages have nothing to do with renters. What would happen if the ~20% of mortgages in arrears were repossessed tomorrow and put on the market to rent? Can you think what would happen to rents? All these strands of the property market are interlinked.

Eldarion wrote:

There's no denying the market has been artificially skewed, but this shouldn't be laid at the feet of the blanket "Landlord Class". People are perfectly entitled to charge the market rent for their properties, arguments should be made against those skewing the market.

Agreed 100%. Also, the mismanagement of the property market just happens to be benefiting landlords now, five years ago it wasnt and in another five years who knows. Huge swings are good for nobody.

The Spider

drumswan wrote: »

Hmmm, mortgages have nothing to do with renters. What would happen if the ~20% of mortgages in arrears were repossessed tomorrow and put on the market to rent? Can you think what would happen to rents?

Absolute nonsense and wishing for something that won't happen, what would happen to diamond prices tomorrow if De Beers released millions of gems onto the market at once?

You see why De Beers wouldn't do that? well now apply that to property.

drumswan

It was a hypothetical to show how mortgage issues do reflect on the rental market, obviously.

The Spider wrote:

You see why De Beers wouldn't do that? well now apply that to property.

Yes, and what happens to the price of gems if 20% of all unpaid for gems are artificially kept of the market....

The Spider

drumswan wrote: »

Yes, and what happens to the price of gems if 20% of all unpaid for gems are artificially kept of the market....

Ha, I will concede that's a fair point!

Michael D Not Higgins

drumswan wrote: »

Hmmm, mortgages have nothing to do with renters. What would happen if the ~20% of mortgages in arrears were repossessed tomorrow and put on the market to rent? Can you think what would happen to rents? All these strands of the property market are interlinked.

What happens to all the people who are currently living in those 20%?

drumswan

Michael D Not Higgins wrote: »

What happens to all the people who are currently living in those 20%?

Obviously they will have to be rehoused, I see where you are going with this.

It seems to me its preferable to have those properties which are not being paid for released onto the market so those Spider has spoken of - the people who can actually afford to live in the desirable areas of Dublin can rent or buy those properties, instead of having people who cant or wont pay living there (or even renting them out in some cases!). Wheres the fairness in denying supply to the financially successful to the benefit of the financial failure? It should be those who are forced to restructure after taking on too much debt moving out to commuter towns, not those who are financially sound doing so as not to upset this idea of the Irish property being sacrosanct.

Everyones all for "the market" when asked if people should have the right to charge market rates for rent, and thats fair enough. But if we are going to let the market dictate, we cant allow people to retain properties they cannot afford.

Eldarion

You're not wrong. But it's 100% political suicide for any politician to even hint at turfing people out of "Da Family Home".

It's a situation without an easy solution.

murphaph

drumswan wrote: »

Its just that, and this might amaze you, people would rather spend their income on other things than exorbitant rent. Its just more cash which would be better used in the wider economy being sucked into the black hole that is our dysfunctional property sector.

The majority of the money still ends up in the wider economy. Your landlord spends it on things for himself, his family and his home presumably.

I do agree that our rental sector needs reform including some form of rent increase caps for SITTING tenants. New tenancies should be decided by the open market though.

RedPandaDan

Eldarion wrote: »

You're not wrong. But it's 100% political suicide for any politician to even hint at turfing people out of "Da Family Home".

Yup. Even when those two in the Killiney mansion had the ULA and everyone else protesting.

drumswan

murphaph wrote: »

The majority of the money still ends up in the wider economy. Your landlord spends it on things for himself, his family and his home presumably.

Assuming the rent even covers the mortgage of course. I wonder are there any reliable statistics on this?

Grandpa Hassan

murphaph wrote: »

The majority of the money still ends up in the wider economy. Your landlord spends it on things for himself, his family and his home presumably.

I would suggest that it all just goes back to the bank in most cases. The LL would spend it on the mortgage.

Zulu

RedPandaDan wrote: »

100% capital gains on increases in land value from rezoning.

Madness. No way.

Large property levy on unused property and land (say 20%).

Ok.

Cap mortgages at 20-25 years.

Good.

Changes to planning, encouraging high-density, taller apartment blocks in the city centre.

Very good.

Improved transport links to outside the city.

Extremely good.

All the above would help increase supply and hopefully force prices down, but it'd take a few years before the effects would be noticeable.

And i'd sign up to most of them to be honest. You've good ideas there (except 100% taxes)