Why a rental crisis now?

L1011

Marcusm wrote: »

I think you might need to consider this again; a company letting property and in receipt of Sch D Case V income subject to corporation tax is subject to the same computational provisions as an individual. This means that it is entitled to relief for interest on money borrowed for the purpose of the purchase, repair or improvement of the property but is still subject to the s97(2)(j) restriction to 75% of the interest costs arising in respect of residential property. No distinction is made between income tax and corporation tax for this purpose.

Hrm, I thought the restriction was specifically on domestic mortgages (which most corporate investigations wouldn't use) but the revenue interpretation agrees with yours and as a result I'm going to assume the TCA does too, which I can't dig up on a phone.

Still hugely less wrong than FrStone's witterings and claims that they had no relief available.

godtabh

_Kaiser_ wrote: »

As usual another bodge by the current Government that will only make the situation worse if the initial reactions here and elsewhere are any indication

But if your tenants have part 4 rights then they won't be obliged to sign a new lease when the current agreement expires anyway? Or has that been changed?

Part 4 still exists. Notice will be based on that.

I like my current tenants. I know them. There has been issues but there has always been an amicable solution.

They have looked after the place well and I was happy to charge a lower rent (had thousands of euro damage done by previous tenants so this is important to me) to keep them knowing my risk was low.

Darkest Horse

godtabh wrote: »

So this will be announced today.

http://www.breakingnews.ie/ireland/government-plan-to-tackle-rent-increases-agreed-704250.html

Looks like I have to give notice to my current tenants that rent is going up. I've no choice now because who knows what will happen in 2 years time. I also wont be renewing their lease when it is up again. Will only be offering 12 month lease going forward.

If you've increased rent in the last 12 months you now can't raise for the remainder of the two year period. Also, not renewing their lease won't achieve anything if they want to stay because you aren't allowed to just kick them out unless you're selling up or moving in yourself. Similarly, 12 month leases mean nothing I'm terms of rent hikes, the two year hike term supersedes the existence of any lease. What you can do is wait out their term and increase it in line with market rates when the two year term is up. Rent will have increased at an even higher rate than they currently are now so it'll be possible then.

FrStone

L1011 wrote: »

Hrm, I thought the restriction was specifically on domestic mortgages (which most corporate investigations wouldn't use) but the revenue interpretation agrees with yours and as a result I'm going to assume the TCA does too, which I can't dig up on a phone.

Still hugely less wrong than FrStone's witterings and claims that they had no relief available.

I just hope you aren't involved in tax on a professional basis.

CramCycle

quadrifoglio verde wrote: »

Rents will rise in the next two months at an unprecedented amount as a result of this. Landlords who ave good tenants who haven't increased the rent in the last 12 months will undoubtedly do so now, knowing that the rent can't be touched until November 2017

My landlord hasn't increased the rent for 4 years, I don't think she has any intention of doing it now. Her mortgage is paid, she is in a very good job, we are good tenants. The only thing she has had to do in the 4 years is replace the dishwasher which broke shortly after we moved in, I fitted it for her.

Some of won't have any change thankfully, its new tenants and students who will get screwed the hardest.

godtabh wrote: »

Looks like I have to give notice to my current tenants that rent is going up. I've no choice now because who knows what will happen in 2 years time. I also wont be renewing their lease when it is up again. Will only be offering 12 month lease going forward.

You don't have to, if circumstances change in two years, you could change it then, just saying. Not very business minded though not to do it as the marlet is surely going to jump quite a bit.

handlemaster wrote: »

Landlords would be well advised to increase to the market rate now before its to late. Again there will be no thanks for charging below market rate. The government are determined to screw the landlord to appease the public.

There is alot to be said for having good tenants who keep a house in order, if a mortgage is paid off, it is well worth charging slightly below the market rate for this security if it is established, obviously no point with new tenants though.

godtabh wrote: »

They have looked after the place well and I was happy to charge a lower rent (had thousands of euro damage done by previous tenants so this is important to me) to keep them knowing my risk was low.

Not sure why the need to change suddenly then.

This will be horrendous for the rental market, and was clearly poorly thought through.

godtabh

Darkest Horse wrote: »

If you've increased rent in the last 12 months you now can't raise for the remainder of the two year period. Also, not renewing their lease won't achieve anything if they want to stay because you aren't allowed to just kick them out unless you're selling up or moving in yourself. Similarly, 12 month leases mean nothing I'm terms of rent hikes, the two year hike term supersedes the existence of any lease. What you can do is wait out their term and increase it in line with market rates when the two year term is up. Rent will have increased at an even higher rate than they currently are now so it'll be possible then.

I haven't raised their rent in 2 years.

An family member wants to move it. The apartment needs to be renovated. I want to sell. I'd rather not pick one but maybe forced to do so.

I havent seen the bit in bold reported like that. Its been reported as a tenant can have a rent review every 2 years.

L1011

FrStone wrote: »

I just hope you aren't involved in tax on a professional basis.

I'm not. Still, your 'understanding' would cost you thousands in fines if you tried applying what you thought for private landlords and thousands in unneeded taxes for corporations.

If you are, I pity your clients.

godtabh wrote: »

I havent seen the bit in bold reported like that. Its been reported as a tenant can have a rent review every 2 years.

Its the same situation as it is now - you can offer 6, 3, 1 month leases at a time even but Part 4 rights exist regardless and rent review restrictions exist (at 1 year until now). If you get someone willing to sign a new lease every 3/6/whatever months it doesn't supersede their Part 4 rights, or allow constant rent increases.

Darkest Horse

godtabh wrote: »

I haven't raised their rent in 2 years.

An family member wants to move it. The apartment needs to be renovated. I want to sell. I'd rather not pick one but maybe forced to do so.

I havent seen the bit in bold reported like that. Its been reported as a tenant can have a rent review every 2 years.

Sure, it is confusing. My tenant only has a year long lease but he had rent increased at the last renewal in January this year. My understanding is that even though he'll be getting a new lease this January, I'm not allowed to increase the rent even though it's a new lease and I'm not getting market rate. Effectively, I'm caught in limbo by this new two year rule.

handlemaster

CramCycle wrote: »

My landlord hasn't increased the rent for 4 years, I don't think she has any intention of doing it now. Her mortgage is paid, she is in a very good job, we are good tenants. The only thing she has had to do in the 4 years is replace the dishwasher which broke shortly after we moved in, I fitted it for her.

Some of won't have any change thankfully, its new tenants and students who will get screwed the hardest.

You don't have to, if circumstances change in two years, you could change it then, just saying. Not very business minded though not to do it as the marlet is surely going to jump quite a bit.

There is alot to be said for having good tenants who keep a house in order, if a mortgage is paid off, it is well worth charging slightly below the market rate for this security if it is established, obviously no point with new tenants though.

Not sure why the need to change suddenly then.

This will be horrendous for the rental market, and was clearly poorly thought through.

Just because a landlord has good tenants doesnt mean they cant or shouldnt charge the full market rent.

Won't somebody think of the landlords!

Here's an idea, if it's all too much for you chaps why not sell up and let someone own the house they live in?

Deleted User

Deleted User wrote: »

Won't somebody think of the landlords!

Here's an idea, if it's all too much for you chaps why not sell up and let someone own the house they live in?

What about people like myself who want to rent?

I don't want to tie myself to a mortgage and a property for 25 years+.

I'm happy to pay a landlord for the usage of their house as my home.

Landlords play a very, very important part in the economy.

Del007

Does anyone know when these new rental announcements are likely to come into effect?

Deleted User

Deleted User wrote: »

What about people like myself who want to rent?

I don't want to tie myself to a mortgage and a property for 25 years+.

I'm happy to pay a landlord for the usage of their house as my home.

Landlords play a very, very important part in the economy.

Some people want to rent, sure. An awful lot of people who DO rent would prefer not to though.

Buy-to-let landlords add almost nothing to the economy - they don't build houses or add to supply, they simply play the market to maximise profit.

My point is that nothing would be lost if those complaining about these laws sold up and moved on. It isn't a behaviour the government should incentivise, in fact quite the opposite.

Deleted User

Deleted User wrote: »

Some people want to rent, sure. An awful lot of people who DO rent would prefer not to though.

That's fine. But you suggested that landlords should sell. I'd rather they didn't. I think a good rental stock is incredibly important for a multitude of reasons.

Deleted User wrote: »

Buy-to-let landlords add almost nothing to the economy - they don't build houses or add to supply, they simply play the market to maximise profit.

They add social flexibility and mobility. They offer us the ability to house and home people on a medium term basis who would not have come to the country / area otherwise. They offer incentives for builders to build as they demand properties that might otherwise not get built. Nobody would commission a builder to build a bedsit if they had the cash would they?

Deleted User wrote: »

My point is that nothing would be lost if those complaining about these laws sold up and moved on. It isn't a behaviour the government should incentivise, in fact quite the opposite.

All of that would be lost. All of it. The anchor that is a mortgage and a 25+ year commitment would be 'bestowed' by necessity on any and all that wished to live in a home if landlords did not exist.

godtabh

Deleted User wrote: »

Won't somebody think of the landlords!

Here's an idea, if it's all too much for you chaps why not sell up and let someone own the house they live in?

Its not to much but when the government interferes with the market on a whim to win votes the market will distort. Rents will raise shortly over the next 2-4 weeks. They will then level out for a short period and then rise again.

The_Conductor

Deleted User wrote: »

Buy-to-let landlords add almost nothing to the economy

They provide accommodation that by rights should be the responsibility of the public sector to provide- however, they have abdicated this responsibility to the private sector.

They pay significant amounts of tax to the exchequer.

They provide a service- not dissimilar to the shopkeeper who sells you a carton of milk.

Advocating buy-to-let landlords sell up and move on- is akin to suggesting we close all the corner shops- and tell everyone to go to a supermarket instead. Some may be happy with the suggestion- others not.

murphaph

Citroen2cv wrote: »

Until things change regarding where companies set up in Ireland, Dublin will continue with a rental crisis, a housing shortage, horrible traffic, and high childcare costs.

Or we could build up and provide the sort of public transport other cities like Dublin take for granted.

CramCycle

handlemaster wrote: »

Just because a landlord has good tenants doesnt mean they cant or shouldnt charge the full market rent.

I never said they had too, what I said was that no one is forcing their hand into increasing rent.

If it goes to once every two years, the landlord is not forced to do it today or tomorrow or ever, only if they want too.

They are fully entitled to increase it too whatever they want.

I was also pointing out the benefits of good tenants being retained through incentives such as stable rent, but that is at the landlords discretion.

The_Conductor

The_Conductor wrote: »

They provide accommodation that by rights should be the responsibility of the public sector to provide- however, they have abdicated this responsibility to the private sector.

They pay significant amounts of tax to the exchequer.

They provide a service- not dissimilar to the shopkeeper who sells you a carton of milk.

Advocating buy-to-let landlords sell up and move on- is akin to suggesting we close all the corner shops- and tell everyone to go to a supermarket instead. Some may be happy with the suggestion- others not.

buy-to-let landlords do NOT 'provide accommodation'. There's a clue in the name.

They take ownership of accommodation in order to profit from it by letting it out.

There has been a surge in buy-to-let in recent years, and it is absolutely a net negative for society. It drives prices upwards and leaves families who cannot afford to buy in insecure rental accommodation.

Obviously it is neither desirable nor practical to outlaw the practice, but I would tax capital gains punitively to get speculators out of the market and leave it to professional operations.

handlemaster

[Deleted User] wrote: »

buy-to-let landlords do NOT 'provide accommodation'. There's a clue in the name.

They take ownership of accommodation in order to profit from it by letting it out.

There has been a surge in buy-to-let in recent years, and it is absolutely a net negative for society. It drives prices upwards and leaves families who cannot afford to buy in insecure rental accommodation.

Obviously it is neither desirable nor practical to outlaw the practice, but I would tax capital gains punitively to get speculators out of the market and leave it to professional operations.

This is not true. BTL investors in the UK even with all the services and mortgage s open to them only attributed 7% of the total increase in house prices of 150% between 1996 and 2007.

Who are the "professionals" ? If not landlords.If capital gains tax was any higher it would as you desire stop investors investing. Where would the property come from for those who wish to rent and not buy ?

The_Conductor

Deleted User wrote: »

buy-to-let landlords do NOT 'provide accommodation'. There's a clue in the name.

You are splitting hairs. Buy-to-let landlords- provide a service- that service is the provision of accommodation. They do not do it out of the goodness of their hearts- of course not- and its bizarre that you are implying that somehow they should be doing so- at least that is the only interpretation I can take from your protest.

Deleted User wrote: »

They take ownership of accommodation in order to profit from it by letting it out.

They buy residential property to let it out.
Someone else buys commercial units and lets them to companies.
Someone else might buy a restaurant- and let it out to someone who wants to run a restaurant.

Landlords are service providers. The service they are supplying- in context- is the supply of residential accommodation to let.

Typical ROIs have to average in excess of 6% to encourage investors to buy at all- however, in an Irish context- given the punitive financial obligations- 8-9% is necessary. At the moment- even with rents the way they are- these sort of yields are not achievable- which is why landlords are getting out- there is no return in it for them. The supply of property on the market for sale in Dublin- is over 60% investment property at the moment- landlords are racing one another to the door. The flipside of that coin- is the supply of rental property is going to take a nose dive- which you say you don't want- however- using policy instruments to encourage landlords to the door- is going to do just that.

Deleted User wrote: »

There has been a surge in buy-to-let in recent years, and it is absolutely a net negative for society. It drives prices upwards and leaves families who cannot afford to buy in insecure rental accommodation.

The surge in buy-to-let landlords- occurred in the main- in the years immediately preceding the bust- with a much smaller cohort investing when perceived yields were sufficient to whet their enthusiasm. That surge- is a thing of the past- the net number of properties in the rental sector (according to PRTB statistics) is now falling in Dublin and surrounding counties- at an accelerating rate.

Further- your 'net negative for society'- is in actual fact a boon for society- in the form of taxes and charges levied on the residential letting sector. Buy-to-let landlords in some cases can pay up to 60% of gross rental income in tax. This is tax that benefits society.

Deleted User wrote: »

Obviously it is neither desirable nor practical to outlaw the practice, but I would tax capital gains punitively to get speculators out of the market and leave it to professional operations.

Capital gains are punitively taxed as is- as is the rental income itself.
Also- 'professional operations' can be far more ruthless than private landlords could ever dream of- if you imagine they are a panancea for the ills of the sector- I'm sorry- they are anything but.

godtabh

Link

Rent controls and other measures for rent certainty hurt the quality and quantity of housing supply and can lead to ghettoes as well as hurting social mobility, a top OECD economist has warned.

No one is going to listen to the experts when votes are at stake

OldieWilson

This govt has done a lot right, but this new law just smacks of pandering.
The way to solve this rental 'crisis' is clearly to reduce restrictions and rental income taxes on landlords.

This is not rocket science.

Villa05

godtabh wrote:

No one is going to listen to the experts when votes are at stake

Oddly enough everything negative in that report already exists in the irish market with a 100 odd years of no rent certainty.

The_Conductor

The biggest issues in an Irish context are- on the one hand- everyone thinks they have a god given right to own property- and they do not want to see themselves living in rented accommodation long term- despite the fact that they cannot afford to purchase property themselves. On the other-hand- landlords are portrayed as rich facist bogeymen with bags of money who are out to shaft tenants, the taxman- and society in general (I only have to look a few posts away to see this viewpoint).

There is a lack of mature thought on the situation.

We need people to sit down and assess where we currently are- in an unbiased, unpoliticised way. Once we have a reasonable and accurate situation report- we then need a series of choices spelt out to us. What are those choices. What are the pros and cons of the various choices. How will these choices affect Irish society in the future. Once we have a good and neutral report on what our options are- and only at that point- we need to decide what is best for Irish society in general (don't focus on those renting, or the landlords, or the Revenue Commissioners, or the local Authorities- look at what is best for Irish society as a whole).

Personally- I'd spell it out- put it to a ballot- and let the people decide- that way there would be no political back pedaling- it would simply be the wishes of the people that are being implemented- which certainly is not the case at the moment.

Unless we get out of this merry-go-round of pandering to the interests of special interest groups- we are never going to solve any problem.

The Irish approach- is to oil the squeeky wheel- and hope the electorate are fickle whenever a general election comes round- and the excesses of early in government's days- don't come back to haunt them..........

hytrogen

[Deleted User] wrote: »

Won't somebody think of the landlords!

Here's an idea, if it's all too much for you chaps why not sell up and let someone own the house they live in?

Why don't you make them an offer so?

aido79

Won't these new rules encourage landlords looking for new tenants charge the rent they would like to be getting in 12-24 months time rather than the rent they would be charging before these rules? Don't think this was very well thought out at all.

The_Conductor

aido79 wrote: »

Won't these new rules encourage landlords looking for new tenants charge the rent they would like to be getting in 12-24 months time rather than the rent they would be charging before these rules? Don't think this was very well thought out at all.

Of course they will- no sane landlord would behave in any other manner.
Its all politics though- and we have an election due- Alan Kelly can stand up in the Dáil and point at his achievement- and use it as a platform to try and get re-elected on........ Landlords are running to the door as-is- this is just going to speed up the stampede..........

robp

Villa05 wrote: »

Oddly enough everything negative in that report already exists in the irish market with a 100 odd years of no rent certainty.

Ghettoes and less than desired social mobility is a problem in all countries. Just because it occurs in the absence of rent controls does not mean rent controls cannot worsen these problems. Rent control has been tried before in Ireland between the 1940s to the 1980 with limited benefit. http://www.stephenkinsella.net/2015/06/08/we-tried-rent-controls-before-and-they-didnt-work/

There is a lot of academic evidence against rent controls. Two years is a short about of time so I don't see the rule having catastrophic results but if kept in the long term it will discourage house construction and mis-allocate resources.

4ensic15

One of the major factors driving out landlords is the difficulty of evicting non performing tenants. It is t6his nonsense which would costs little or nothing to sole which would encourage more landlords to stay in the market and which would encourage others to enter. There is talk about rent certainty for tenants
but what about rent certainty for landlords? Why are non paying tenants allowed linger? Why are they aided and abetted in committing crime by voluntary agencies?