Rent to be linked to inflation

handlemaster

http://m.independent.ie/business/personal-finance/property-mortgages/cost-of-renting-will-be-linked-to-inflation-31268699.html

Rent increases are set to be linked to inflation. There will be alot of rent hikes I think before this cimes in. In particular by those landlords who are offfering accomadation below market rate.

galljga1

Quote from article:
"The news will come as a huge relief to tens of thousands of struggling households who are now facing rent bills not seen since the peak of the boom."

Relief, my ar$e. Every landlord in the country will hike up rent as much as possible before these measures come into effect. Boom levels will seem generous in comparison.

tharmor

Agree...rentals are insane nowadays... big queues everywhere....ppl have no choice but to pay...

tharmor

Wait till june end when old rule mortgage approvals run out...rents will break all previous records...it will be total madness !!

handlemaster

tharmor wrote: »

Wait till june end when old rule mortgage approvals run out...rents will break all previous records...it will be total madness !!

I dont think that will make much difference

Fol20

Why do the government have to interfere so much in the property market. Market price should be set at what people are willing to pay. Not what inflation is.. If people can't afford a house near their friends or family. Tough luck. You will have to live maybe a 5-10 min drive away.

If they want to go to European way/commercial way, everything landlords do should be expensible, evictions should be quick and a 10year lease should be set in stone where a tenant is liable for the entire amount and not just oh it's too expensive for a landlord to peruse us some will just walk way a whenever we want. It's a two way street yet all I see is the government protecting tenants at the detriment to landlords. Unless this is properly implement and landlords actually get protect and actual benefits(doubtful), all I see is more and more landlords leaving the rental market as its already not a very profitable business. Thus decreasing the supply even more. Only in Ireland!!!

The_Conductor

Fol20 wrote: »

If people can't afford a house near their friends or family. Tough luck. You will have to live maybe a 5-10 min drive away.

5-10 minutes away?
Really?
As opposed to on the other side of the country- which is what those of us who actually manage to find jobs have to do?
5-10 minutes- I actually choked on my coffee reading that. That would be idyllic- I have siblings (4) living abroad- and my father is 3 hours away. We have zero family support on the other side. Over half our net income goes on childcare- and the rest on the mortgage. And people expect to live 5-10 minutes away from their families? Unless of course you were being sarcastic.......

the_syco

handlemaster wrote: »

http://m.independent.ie/business/personal-finance/property-mortgages/cost-of-renting-will-be-linked-to-inflation-31268699.html

SO much wrong with that article!

jester77

They have rental tables here which rental prices are based on. Every area has a value and the rental price is based on the square meter * this value. I don't see any logic in the Irish system, it's nearly impossible to get a price per square meter value on property.

handlemaster

jester77 wrote: »

They have rental tables here which rental prices are based on. Every area has a value and the rental price is based on the square meter * this value. I don't see any logic in the Irish system, it's nearly impossible to get a price per square meter value on property.

Can you post what you have for Dublin ?

matrim

jester77 wrote: »

They have rental tables here which rental prices are based on. Every area has a value and the rental price is based on the square meter * this value. I don't see any logic in the Irish system, it's nearly impossible to get a price per square meter value on property.

Does that take into account the quality of the place?

The_Conductor

matrim wrote: »

Does that take into account the quality of the place?

There are two apartments- both 3 beds- next door to one another, in a development in Galway city. One rents for 850 Euro per month. The other- 1500 per month. The 1500 per month one- has under floor heating, marble tiled floors throughout, a wetroom downstairs, a/c, is piped in all rooms for gigabit internet, has a 60" plasma tv with video conferencing facilities etc etc etc. The next door neighbour has a standard 3 bed apartment- perfectly nice- but not done up like this. Both apartments are let and tenanted, and have been continuously for a number of years.

There has to be cognisance of the exceptional standards some properties are in- which command higher rents- simply putting a price per m3 on property- is a cop out.

In addition- the property tax paid on these two- identically sized units- are 2 bands apart from one another.

jester77

matrim wrote: »

Does that take into account the quality of the place?

Here is the table for Hamburg. The quality of apartments for a particular area is fairly consistent, there is a range that would account for differences. Plus apartments come empty, so there is not exactly much difference in terms of quality anyway. For example, Altbau (old style apartments) are the most popular. They would all come in a building with no elevator, apartments would all have wooden floors and they would all have tiny bathrooms.

The_Conductor

Irish properties- are not standardised- though there is a very good argument for standardising them....... There is also an overwhelming argument for letting them unfurnished......... Simply prescribing a range in the manner that is being proposed- is not going to work.

Aside from anything else- renting has always been viewed on a short term basis in this country. What happens when a property is relet? Do market forces apply at that stage- and any subsequent increases only have the 'inflation' brake applied to them?

In an Irish context- until such time as all the other vagaries of the rental market are ironed out- specifying a table like this- is a pipe dream..........

the_syco

handlemaster wrote: »

http://m.independent.ie/business/personal-finance/property-mortgages/cost-of-renting-will-be-linked-to-inflation-31268699.html

But the rent package set to be unveiled by Environment Minister Alan Kelly will also include incentives for landlords who agree to enter into long-term 'continental-style' leases with their tenants. "At the heart of this is preventing people from falling into rent traps," said a Coalition source.

I can see landlords leaving the game unless the government cops on and gives them the ability to evict tenants quickly lawfully, I can see the rent controls causing the rental market to shrink.

The_Conductor

handlemaster wrote: »

typical 1000 per month rent received . How much do you think is profit ?

On average- in the rental sector in Ireland- its probably 8-9% of gross rental income- so you'd be looking at a 'profit' of perhaps 80-90 Euro per month- on a thousand Euro monthly rental income.

This hides a multitude of sins though- most spectacularly- mortgage interest- where there is a perverse incentive not to repay mortgage debt- because if you do- you loose mortgage interest as an allowable cost before determination of taxable income.

The Economist magazine recently had an article on just this (not focusing specifically on the Irish residential market- but on interest on debt being an allowable cost).

Essentially- all industries need to be treated in a similar manner- and that is why rental income is being mortgage interest as a deductible cost. In reality- in the modern world, where companies and corporations are abusing their tax obligations- pushing additional costs on private individuals- there is no reason that anyone should be rewarded by governments, for loading up on debts.

If you want to borrow money- fine- do it- but don't expect the taxpayer to fund it for you. Landlords deserve to be treated in an identical manner to any other business- and not picked on over any other category of taxpayer- however, no taxpayer should be mollycoddled in this manner.....

Just because a landlord has a rental income of a thousand Euro per month on a unit- does not mean he is making any profit at all. It all depends on his costs- which could be significant- its no business of a tenant what his (or her) landlord's costs may be- and its also deeply wrong of them to assume that just because they are paying X amount of rent- that its 'profit' or that they are owed any relationship with their landlord other than a purely business relationship for the provision of a service- akin to any other,,,,,,,,

Fol20

The_Conductor wrote: »

5-10 minutes away?
Really?
As opposed to on the other side of the country- which is what those of us who actually manage to find jobs have to do?
5-10 minutes- I actually choked on my coffee reading that. That would be idyllic- I have siblings (4) living abroad- and my father is 3 hours away. We have zero family support on the other side. Over half our net income goes on childcare- and the rest on the mortgage. And people expect to live 5-10 minutes away from their families? Unless of course you were being sarcastic.......

I didn't literally mean 5-10minutes. Most people in Ireland feel entitled to live near friends and family and it's tough to realise that times have changed so you have to adapt and select a place suitable to your finances. In other countries it's quite normal to drive for 1hr to work. Why can we not accept the same if we cannot afford to live closer to work due to cost of property?

Beta Canis Majoris

the_syco wrote: »

I can see landlords leaving the game unless the government cops on and gives them the ability to evict tenants quickly lawfully, I can see the rent controls causing the rental market to shrink.

Agreed, in the past few months I have heard a number of landlords on the radio (liveline for example), internet forums, etc who have tenants not paying rent for years on end. Tenants are only beginning to wake up and realize now they can just stop paying the rent and it will be extremely difficult for the landlord to evict, for at least 2-3 years in some cases to go through all the arrears letters/notice of termination/PRTB/district court nonsense. The current legislation sides heavily with the tenant. The chances of the rent arrears ever being recovered are slim to none also.

This is fraud in my opinion and should be prosecuted as such with serious jail terms. If I defrauded someone of €10,000 by credit card theft or similar I would expect a jail sentence. As it stands tenants have very little to lose, and a lot to gain, by not paying their rent. I blame the system more though, like anything if it's open to abuse it will be abused. If there's faults and loopholes, close them off.

jimmycrackcorm

The government is afraid to do anything about tenants not paying their rent and abusing the system because of the connotations associated with historical evictions. It's the same for mortgage repossessions.

There should be a tenant registry so that landlords could be aware of tenants prior payment history and tenants would therefore be aware of any consequences of overholding.

handlemaster

jimmycrackcorm wrote: »

The government is afraid to do anything about tenants not paying their rent and abusing the system because of the connotations associated with historical evictions. It's the same for mortgage repossessions.

There should be a tenant registry so that landlords could be aware of tenants prior payment history and tenants would therefore be aware of any consequences of overholding.

i think that fear of the historical evictions is BS. The governments of passed and present are just reactionary not actionary . only when a preceived consensus on something a raises do we get change with these governments

Idbatterim

I didn't literally mean 5-10minutes. Most people in Ireland feel entitled to live near friends and family and it's tough to realise that times have changed so you have to adapt and select a place suitable to your finances. In other countries it's quite normal to drive for 1hr to work. Why can we not accept the same if we cannot afford to live closer to work due to cost of property?

here is another crazy idea, Dublin gets a proper transport infrastructure, unlike the 3rd world one that we have now. The pathetic village like developments going up in the docklands are forced to go up hugely in scale. Apartment developments become viable long term options for families, i.e well built, decent sized living spaces and possibly also a second family room etc...

Ok, we may not be able to live in the house we want, but at least we could choose to live in a certain area OR spend hours a day commuting...

I am 31 and currently apartment sharing, I simply will not pay the going rate for a decent 1 bed in a decent area, i.e. minimum E1300... The studios here are crap. I was looking at options in Leeds, over there you can rent compact 1 bed apartments for for E650-700, yeah they are a good bit smaller than a 1 bed here, but at least you have your own space and can save some money... There was an article in the independent the other day, about some stupid law, that says any new apartments have to be dual aspect. People cant afford to put a roof over their head or are paying a huge percentage of their income on rent, and they think my biggest concern is having a dual aspect apartment?! LOL

handlemaster

Idbatterim wrote: »

here is another crazy idea, Dublin gets a proper transport infrastructure, unlike the 3rd world one that we have now. The pathetic village like developments going up in the docklands are forced to go up hugely in scale. Apartment developments become viable long term options for families, i.e well built, decent sized living spaces and possibly also a second family room etc...

Ok, we may not be able to live in the house we want, but at least we could choose to live in a certain area OR spend hours a day commuting...

I am 31 and currently apartment sharing, I simply will not pay the going rate for a decent 1 bed in a decent area, i.e. minimum E1300... The studios here are crap. I was looking at options in Leeds, over there you can rent compact 1 bed apartments for for E650-700, yeah they are a good bit smaller than a 1 bed here, but at least you have your own space and can save some money... There was an article in the independent the other day, about some stupid law, that says any new apartments have to be dual aspect. People cant afford to put a roof over their head or are paying a huge percentage of their income on rent, and they think my biggest concern is having a dual aspect apartment?! LOL

You could compare apartments down the country in ireland also. Its a capital city jobs are a pentu what do you expect. London paris etc same

The_Conductor

Idbatterim wrote: »

People cant afford to put a roof over their head or are paying a huge percentage of their income on rent, and they think my biggest concern is having a dual aspect apartment?! LOL

I actually thought someone was taking the piss when I read that- talk about a complete disconnect from reality........ We have problems here. A dual aspect apartment- can be an issue- after the long and serious list of far more urgent and critical matters are dealt with. Dual aspect- pah......

Idbatterim

You could compare apartments down the country in ireland also. Its a capital city jobs are a pentu what do you expect. London paris etc same

of course, but we are talking primarily about Dublin, the cost of housing outside of Dublin is laughable in comparison... Paris and London have fantastic transport networks and allow high density development in appropriate areas (they are global cities), so they are two large factors, that Dublin doesnt currently have...

a Large part of the large and relentless private and public sector salary increases during the boom via bench-marking was to compensate for the run away property price increases, that wont be happening again to anywhere near the same extent, so all I can see if people being squeezed more and more....

Idbatterim

I actually thought someone was taking the piss when I read that- talk about a complete disconnect from reality........ We have problems here. A dual aspect apartment- can be an issue- after the long and serious list of far more urgent and critical matters are dealt with. Dual aspect- pah......

Its far from a joke unfortunately, an extract from the below link, the article is worth a read...

http://www.independent.ie/business/commercial-property/new-offices-are-being-built-but-where-are-we-going-to-house-the-people-who-will-work-in-them-31094568.html

What haven't been addressed, and show no sign of being addressed, are the over the top design regulations from Dublin City Council and the knock on effect they have had on apartment building in the capital.
The aim of the Dublin City Council regulations is commendable. Nobody wants slum flats being built. But requirements such as "dual aspect" style of construction are absurd.
This isn't about building homes for families, or even first time buyers.
This is about building high quality rental accomodation close to major employers, especially in areas such as the Dublin Docklands.
For example, take a (fictional) 25 year old Frenchman, who has moved to Dublin to work for Google for a few years.
He is single, works long hours, and when he is not working, tends to be out socialising. He likes to live close to work so he can walk or cycle his commute. Most of the time he is in his apartment he is sleeping, showering, or eating. He doesn't have a TV. If he is watching something, he is streaming it on his laptop.
The large, dual aspect apartment he is renting means nothing to him, except that it takes a sizeable chunk of his salary every month.
He would happily move into a smaller, cheaper, single aspect, apartment if it was available.
The above example is fictional, but it is representative of the problem with dual aspect regulations.

this repeats my point, I want somewhere that isnt going to break the bank and preferably I dont have to share, if that means foregoing my dual aspect balcony, well boo hoo :rolleyes:

James esq

jimmycrackcorm wrote: »

The government is afraid to do anything about tenants not paying their rent and abusing the system because of the connotations associated with historical evictions. It's the same for mortgage repossessions.

There should be a tenant registry so that landlords could be aware of tenants prior payment history and tenants would therefore be aware of any consequences of overholding.

The PRTB site shows the outcomes of all disputes and is in effect a registry of those (landlords tenants) who held money.

The_Conductor

James esq wrote: »

The PRTB site shows the outcomes of all disputes and is in effect a registry of those (landlords tenants) who held money.

Unfortunately- the PRTB have taken down dispute notices for numerous tenants and Landlords- who had findings made against them- on the grounds that it brought their names into disrepute.

If it was a definitive list- which people couldn't have cases removed from- wonderful. Its not though.......

James esq

the_syco wrote: »

I can see landlords leaving the game unless the government cops on and gives them the ability to evict tenants quickly lawfully, I can see the rent controls causing the rental market to shrink.

Landlords are already moving away as soon as they can, most landlords where the have survived are broke. Where they are making on one place they are losing in several other places. They are lucky to get the interest repayments as rent.

Say for a house bought for €200k ( interest is 8,000 at 4%) in 2006 you would be lucky to get €600 a month for the place which is now worth €100K. so the loss is €800, then there is the USC ( this varies with how much the landlord grosses )say 10% a further €720 loss. Then the cost of maintaining and repairing at least €2000.

There is no money in renting everyone left standing is getting out most can't because of the negative equity.

castle2012

I'm in total agreement as I was a landlord until last month . I sold up an got out . The last 4-5 years have been pure heartache. Extra taxs and charges , tenants not paying there rent on time . I found myself going without to make sure everyone was paid . So glad to be out of it . And I don't blame any landlord for getting out as there is no reward s only hassle

The_Conductor

James esq wrote: »

There is no money in renting everyone left standing is getting out most can't because of the negative equity.

And those who were prudent and paid down their mortgages, are letting their PPRs, or those who inherited property- are being hung out to dry- as they have limited costs against which to offset income before determination of taxable income- in many cases up to 65% of rental income is going straight to the Revenue Commissioners and other arms of state- and thats presuming you don't have overstaying tenants who you can't evict.

Tenants have discovered the 2004 Act- despite all it says- has no teeth- and the PRTB are appalling at enforcing it, or any adjudications they themselves make.

The legal framework for letting property in the country- is like Swiss cheese- and anyone who tries to say otherwise- just hasn't been burnt yet....... (yet, being the operative word).

Cuddlesworth

The_Conductor wrote: »

Tenants have discovered the 2004 Act- despite all it says- has no teeth- and the PRTB are appalling at enforcing it, or any adjudications they themselves make.

I think its important to point out here, the PRTB don't enforce anything. They are a not a court. At the moment they are simply a badly done red tape exercise in futility badly weighed towards the tenant. The only thing they have managed to do is give a incentive for the deposit to be returned promptly(which in itself is ridiculously common).

The PRTB should be the sole path for all disputes and enforcement. The district court should not have to be involved for anything.
It should be retaining deposits in escrow(use the interest to fund the service), the landlord in no circumstances should be holding onto this.
It should be retaining a database of all tenants and landlords. Each should receive a unique number, in which all previous judgments or applications for judgement are listed. Including photos for tenants and landlords. This should be accessible by both landlords and tenants.
Eviction from start(late rent) to finish(sheriff at the door) should take no longer then a month. Evictions should also include lost income recuperation.

This would stop a large number of defunct practices currently in the industry.

Landlords would not be able to retain deposits.
Landlords would not be able to make up ridiculous charges on end of tenancy(eg cleaning).
Tenants would not be able to trash and run without some consequence.

The_Conductor wrote: »

The legal framework for letting property in the country- is like Swiss cheese- and anyone who tries to say otherwise- just hasn't been burnt yet....... (yet, being the operative word).

I regularly try to inform people on this forum that you shouldn't invest in property if you can't afford the risk of 20k+ in damages with no income for at least a year. Its pretty much ignored or passed off by a number of small time landlords who claim its a rare occurrence. I don't believe it's a rare as they like to think. Our society at this point sees owning property as guaranteed wealth. The irony is that as long as the majority hold that belief, it remains true.