Ireland's biggest landlord: 'Dublin rents are at breaking point'

Hollister11

http://www.independent.ie/business/personal-finance/property-mortgages/irelands-biggest-landlord-dublin-rents-are-at-breaking-point-34721256.html

Apartment rents are reaching "the limits of sustainability" around Dublin, the biggest private landlord in the country has warned.
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IRES Reit chief executive David Ehrlich told the Irish Independent that he had never seen a market like that in Ireland, which has had such an extreme imbalance between supply and demand.
It represents one of the starkest descriptions of the housing crisis by an industry figure to date.

IRES Reit controls 2,087 homes in the country, mostly around the capital.
The Dublin-listed firm is backed by Canada's CapReit, which owns nearly 50,000 apartments in that country.

Most IRES shareholders are overseas investment firms.

Interesting article, but no person or company should be aloud control 2000+ homes in a country. Far enough 100 or so, but 2000 that alone can allow them to control some segment of the market.

The_Conductor

They're the biggest landlord- other REITs are the second and third largest.
Of course they have pricing power.
Its a bit rich stating they want stability at current prices- current prices are an anamoly- not a 'norm'.

Hollister11

The_Conductor wrote: »

They're the biggest landlord- other REITs are the second and third largest.
Of course they have pricing power.
Its a bit rich stating they want stability at current prices- current prices are an anamoly- not a 'norm'.

The thing is, they won't reduce there rents, and the market is going to change for the better anytime soon. It could be noth 3 years, before 3 start seeing reductions in rent.

One solution is to build high rise buildings in the cities. Not huge building New York style, but another 3/4 stories.

zarker

High rise buildings is the way to go IMO.

Idbatterim

High rise buildings is the way to go IMO.

going higher, yes. But this to me is one of the massive issues effecting cost... A quote from David Erlich IRES Reit CE...

"The apartments we own in Dublin are very different to what you see in the rental market around North America and Europe.

"If we wanted to build an apartment block in Canada, we would tend to build a large, rectangular building, which would have corridors not unlike a hotel.
"Depending on the size of the block we would have two or four lifts in one shaft. Here, with regulations around dual aspect, sizing and the ratio of lifts to apartments, that is not possible.

"Most apartments in Dublin were built to be sold. There aren't many properties that are specifically for renting, and there is a difference between a rental property and a property that will be sold.

"If you offered someone a dual-aspect apartment or a lower rent, the vast majority would take the lower rent," he said.

Yes he is right, I absolutely would take the lower rent and if people dont like these new apartments, dont move into them, end of! there are hundreds of thousands of other properties in Dublin!

Funny how noise in apartments, which I have found horrendous before, doesnt seem to be on the planners agenda! No literally all that matters is floor space, light and an over the top amount of lifts!

I no longer want these clowns who are hugely responsible for the current crisis, to be making decisions, even if well intentioned, because you can be damn sure not one of those making decisions, is effected directly by this crisis!

I would love to know what the cost would be, with say canadian standards v ours, just how big the savings would be...

KomradeBishop

There is a serious lack of social housing being built at the moment:



We also have AirBnB massively distorting the rental market, effectively converting what should be long-term-rentals available to locals, into short-term rentals for tourists (so over the Summer, the rental situation is going to become Very Very Bad indeed).

Property developers and landlords also seem to have a disproportionate influence over government, as does the tech industry i.e. AirBnB are very heavy lobbyists - they are going to do (and are doing) everything they can to block fixing this problem, because there is an extraordinary amount of profit to be gained from making the property/rental market even worse.

What we need, is a massive boost in spending on social housing, and we need to ban AirBnB - then we need to replace the Property Tax with a Land Tax, to discinventivise developers holding on to idle land in and around Dublin (there is absolutely loads of idle land, suitable for development), and get property built on it.


Property developers are actively trying to prevent government from building social housing - e.g. they have taken government to EU courts, to block NAMA from developing social housing - and we have developers using sneaky land-rezoning deals (notably, the rezoning of church land a while back), to try and steal away what should be public land, for lucrative property development (a big chunk is going to be taken out of St. Annes park this year - due to this kind of sneaky rezoning).

I firmly believe government is working against the general populations interests here, and is well cozied up to powerful lobbying interests, who stand to benefit from the dysfunctional property/rental market - I think things are going to get a lot lot worse, until people wise up, look at this countries history of corrupt property-industry political connections, and realize things are the same as they ever were - and start putting a hell of a lot more pressure on politicians/government.

TheDoc

It's hardly a surprise, Ireland, especially the main cities, is arriving at a point where a lot of other countries have been for years. As said in the quote above, in Ireland apartments are built to sell, not to let longterm.

Its so multifaceted, with terrible planning, silly rules about building height etc. But one of the core issues is that as a nation, we feel we are entitled to buy a house. Look at the state of things at the moment. People who made horrendous and reckless financial decisions being painted as victims or some shadowy bank or bondholder. They are a tool for Politicians to win easy support, blaming everyone bu the people involved. We have efforts going in to try just about every option under the sun to help people who have effectively defaulted, keep their homes. Our archaic bankruptcy legislation hardly helps.

But Ireland needs, culturally, to start moving to the understanding that owning a home is not an entitlement, its a very nice privilege, provided for through hard work, prudent financial decisions and savings, and being prudent financially longterm.

Looks like my generation and the ones behind me are going to be the drivers in this. Unfortuantely, it takes a very long time to do, and a very long time to achieve. Nothing will be done overnight.

Unfortunately at the moment, with so much pressure being placed on Government, due to people having a feeling they are entitled to own a home, regardless of the impact, I fear the Government will intiate some outragous decision or mess, that will have massively negative impacts, but in the short term win points.

TheDoc

Also I don't understand the push and disparity being portrayed about social housing. Accepting as a start of point that none are being built, I know no one, who are currently in the renting market, where social housing is the answer.

Again as there is so many parts to this issue, social housing is just one. I don't know how to take it, but sometimes you can only form a view based on the firsthand information. And social housing not being built, is a part of it. How big I'm not so sure, but the problem with the narrative of this issue, is too many areas are lobbying for their own segment, in isolation, and trying to portray that as being the #1 issue.

Social housing being built is doing nothing for young couples and family, and even at this point middle aged families, who are operating in a sporadic and erratic private rental market.

Idbatterim

It's hardly a surprise, Ireland, especially the main cities, is arriving at a point where a lot of other countries have been for years. As said in the quote above, in Ireland apartments are built to sell, not to let longterm.

yes but why just accept this as being the case? its fairly easy to remedy!

Alf Veedersane

zarker wrote: »

High rise buildings is the way to go IMO.

I only caught a bit of Lorcan Sirr on the radio on Sunday but he was saying that it wasn't just a case of building higher but making better use of the space in the building. I think he was advocating the lift/stairs outside as you would see on the social housing blocks because the area taken up by lift shafts was a poorer use of space.

I didn't get to hear much but I found that interesting nonetheless.

murphaph

Landlords have zero influence with government. Sure mortgage interest relief was lowered to 75% a few years ago. It's a nightmare getting non payiing tenants out. It's just not true that landlords have the ear of government.

The_Conductor

KomradeBishop - you're right- there is a serious lack of social housing being constructed at the moment- however, rather than focusing on this inalienable fact- the issue is overall- construction has fallen off a cliff. Counter-intuitively- social housing- as a percentage of overall housing construction- has never been better represented. This is primarily because funding is available to construct social housing- whereas funding for other development types- is on such onerous terms (interest rates >15%) that developers, for all intents and purposes, are frozen out of the market.

The construction of social housing has different constraints associated with it- that are unique to the sector- notably the manner in which the public sector recruitment embargo over the last decade decimated the means of local authorities to actually run construction projects (in general). There was over 800m ringfenced for social housing in 2015- less than 140m of this has been spent (and of this- a sizeable majority of it related to the purchase of pre-existing housing stock- rather than the construction of new residential property- aka it did absolutely nothing to alleviate the shortage of accommodation in general.

There are some common and some unique factors associated with the various property strings and markets.

Barely Hedged

KomradeBishop wrote: »

There is a serious lack of social housing being built at the moment:



We also have AirBnB massively distorting the rental market, effectively converting what should be long-term-rentals available to locals, into short-term rentals for tourists (so over the Summer, the rental situation is going to become Very Very Bad indeed).

Property developers and landlords also seem to have a disproportionate influence over government, as does the tech industry i.e. AirBnB are very heavy lobbyists - they are going to do (and are doing) everything they can to block fixing this problem, because there is an extraordinary amount of profit to be gained from making the property/rental market even worse.

What we need, is a massive boost in spending on social housing, and we need to ban AirBnB - then we need to replace the Property Tax with a Land Tax, to discinventivise developers holding on to idle land in and around Dublin (there is absolutely loads of idle land, suitable for development), and get property built on it.


Property developers are actively trying to prevent government from building social housing - e.g. they have taken government to EU courts, to block NAMA from developing social housing - and we have developers using sneaky land-rezoning deals (notably, the rezoning of church land a while back), to try and steal away what should be public land, for lucrative property development (a big chunk is going to be taken out of St. Annes park this year - due to this kind of sneaky rezoning).

I firmly believe government is working against the general populations interests here, and is well cozied up to powerful lobbying interests, who stand to benefit from the dysfunctional property/rental market - I think things are going to get a lot lot worse, until people wise up, look at this countries history of corrupt property-industry political connections, and realize things are the same as they ever were - and start putting a hell of a lot more pressure on politicians/government.

Ban Air BnB? How will this solve the medium term rental market? What proportion of Air BnB rentals currently on their website would ever be intended for anything other than short term rental? Closing the short term rental market is not an answer. It's a valid and functioning part of the rental market.

Build more social housing. Is this building properties using taxes from, amongst other groups, people who can't afford to buy themselves, that are never reclaimed by the local council and then sold onto the 'temporary' social tenants a large discount to the market price? How much of social tenants are performing?

Barely Hedged

Barely Hedged wrote: »

Ban Air BnB? How will this solve the medium term rental market? What proportion of Air BnB rentals currently on their website would ever be intended for anything other than short term rental? Closing the short term rental market is not an answer. It's a valid and functioning part of the rental market.

Build more social housing. Is this building properties using taxes from, amongst other groups, people who can't afford to buy themselves, that are never reclaimed by the local council and then sold onto the 'temporary' social tenants a large discount to the market price? How much of social tenants are performing?

Christ, can we get off the social housing dick here please? There's plans for social housing. Now what about the majority of renters, you know, private renters? The people who have to share apartments to survive - when did you last hear of someone sharing social housing?

The government cares about social housing because the state is paying for it so there's essentially a blank cheque in it for their buddies, or for people like Willie O'Dea, for themselves.

30 percent of TDs are landlords - why does it come as a surprise that when it comes to fixing this problem, one they have a personal profit motive in, there's complete silence.

I posted this in another thread today and it completely sums up the government's attitude to private renters:

"If you heard Mr Coveney on the matter last night when it was brought up by a woman in your situation, his advice was to get in touch with Threshold.

Yes, that's right, 2 people earning above the national average wage should have to get in touch with a fcucking charity to assist them with accommodation."

I believe in English this translates roughly into "go **** yourself".

KomradeBishop

The_Conductor wrote: »

KomradeBishop - you're right- there is a serious lack of social housing being constructed at the moment- however, rather than focusing on this inalienable fact- the issue is overall- construction has fallen off a cliff. Counter-intuitively- social housing- as a percentage of overall housing construction- has never been better represented. This is primarily because funding is available to construct social housing- whereas funding for other development types- is on such onerous terms (interest rates >15%) that developers, for all intents and purposes, are frozen out of the market.

The construction of social housing has different constraints associated with it- that are unique to the sector- notably the manner in which the public sector recruitment embargo over the last decade decimated the means of local authorities to actually run construction projects (in general). There was over 800m ringfenced for social housing in 2015- less than 140m of this has been spent (and of this- a sizeable majority of it related to the purchase of pre-existing housing stock- rather than the construction of new residential property- aka it did absolutely nothing to alleviate the shortage of accommodation in general.

There are some common and some unique factors associated with the various property strings and markets.

Interest rates are hovering around all-time lows. I don't focus only on social housing as an issue either, I've researched many areas where the housing market is distorted, over the last year - and covered a fair few in my post.

What matters is not the proportion of all houses being built, that is social housing - it is the raw numbers of houses being built, of whatever kind - and making sure they are being sold to people who are going to live in them, or to people who are going to rent them out long-term to locals.

There may be complex reasons why the construction rate is so slow - but there is no complexity about fixing those issues, it needs a massive massive dose of investment in construction - and this has to start with the public purse, because private developers (who own a proportion of existing property) have every incentive to sit on land and let the market overheat.


With interest rates hovering around all-time lows, it's the perfect time to be pumping absolutely loads of money into all of this - the reasons why this is not happening, are political only.

The_Conductor

Interest rates may be hovering around all-time lows- however, the interest rates being offered to developers were last at this level in the mid 1980s. Developers are frozen out of finance. Finance- as a percentage of construction costs- is now over 20%- when by rights it should be less than 5%.

This factor alone- aside from our still remarkable wages in the sector- is making the construction of residential units, nigh impossible in the country.

Idbatterim

There may be complex reasons why the construction rate is so slow - but there is no complexity about fixing those issues, it needs a massive massive dose of investment in construction - and this has to start with the public purse, because private developers (who own a proportion of existing property) have every incentive to sit on land and let the market overheat.

yes but you cant blame them for that, again this comes back to the government. We are the same, you wouldnt go to work and work for €1 an hour... I read an article or two in the indo from developers and from the costs etc, it makes absolutely no sense to build in a lot of cases, you cant blame them for that...

Interest rates may be hovering around all-time lows- however, the interest rates being offered to developers were last at this level in the mid 1980s. Developers are frozen out of finance. Finance- as a percentage of construction costs- is now over 20%- when by rights it should be less than 5%.

could NAMA set up a fund and open applications for developments it deems sound?

syklops

Alf Veedersane wrote: »

I only caught a bit of Lorcan Sirr on the radio on Sunday but he was saying that it wasn't just a case of building higher but making better use of the space in the building. I think he was advocating the lift/stairs outside as you would see on the social housing blocks because the area taken up by lift shafts was a poorer use of space.

I didn't get to hear much but I found that interesting nonetheless.

That sounds a bit wishy washy to me. Moving the lift outside saves you 2 square metres per floor. If the building has 4 floors its a saving of 8 square metres - and you still have to have the lift outside. It might make sense if you are talking about 10 or 15 floors but while we continue having apartment blocks with 4 and 5 floors I really dont think moving the lift outside is helpful.

What they really need to do is look at the regulations, like the twin aspect nonsense. Also what happened regarding the bedsits? They got banned and 6 months later we got a housing crisis. Are there bedsits out there right now lying empty?

Idbatterim

Dublins "world class" docklands, 5-6 storey of s**te architecture on prime land! Id go so far as to say, that is an architectural crime on a scale at least as big as the destruction of Dublin...



with this new city development plan, an increase in heights needs to be permitted, that it makes it viable to knock these architectural scars and waste of prime land, off the map, sooner rather than later.... With minimum heights, not just what is most profitable for the developer, the consequences are far too serious for that...

Alf Veedersane

syklops wrote: »

That sounds a bit wishy washy to me. Moving the lift outside saves you 2 square metres per floor. If the building has 4 floors its a saving of 8 square metres - and you still have to have the lift outside. It might make sense if you are talking about 10 or 15 floors but while we continue having apartment blocks with 4 and 5 floors I really dont think moving the lift outside is helpful.

I think he meant in tandem with building higher. Like I said, I didn't get to hear meat put on the bones of all he said.

KomradeBishop

The_Conductor wrote: »

Interest rates may be hovering around all-time lows- however, the interest rates being offered to developers were last at this level in the mid 1980s. Developers are frozen out of finance. Finance- as a percentage of construction costs- is now over 20%- when by rights it should be less than 5%.

This factor alone- aside from our still remarkable wages in the sector- is making the construction of residential units, nigh impossible in the country.

Idbatterim wrote: »

yes but you cant blame them for that, again this comes back to the government. We are the same, you wouldnt go to work and work for €1 an hour... I read an article or two in the indo from developers and from the costs etc, it makes absolutely no sense to build in a lot of cases, you cant blame them for that...

could NAMA set up a fund and open applications for developments it deems sound?

I am not convinced that property development is now uneconomical for private developers - they won't take home the profits they did in the boom, but they are just taking as much advantage of the current stage of the property boom/bust cycle we are in, as they can.

You start getting government beefing up the construction of social housing by an enormous degree - removing pressure from the rest of the market by finding a place for waiting list tenants - then you're going to see the market turn the corner, and the supply problem will begin to alleviate.

Couple this with a tax on idle land (i.e. a Land Tax instead of Property Tax), and start funnelling massive amounts of money into e.g. Co-op housing schemes (which is something I think should make up a bigger portion of the housing market, seems far more economical and stable for the market) - with the latter competing directly with the private sector - and it's not going to be advantageous for people to sit on what they have anymore, they're going to have to compete for providing a share of the resupply of houses, if they want to make a profit.

Social houses and funding of co-op housing schemes, both have the ability to take advantage of the low-interest-rate environment - and can alleviate the supply shortage, as well as providing a more stable/less-speculative way of building houses in general, and being less expensive (due to lessened need to stuff profit margins).

Idbatterim

I am not convinced that property development is now uneconomical for private developers - they won't take home the profits they did in the boom, but they are just taking as much advantage of the current stage of the property boom/bust cycle we are in, as they can.

Id say with residential, it is profitable depending on what they paid for the site and the area it is in. But for apartment building, in many cases unless they are in expensive areas, its not viable to build them...

Also you cant just phase an apartment block, it needs to be done in its entirety, unlike houses. Houses are now being built instead of apartments, obviously because it makes sense for developers to do so. Probably easier to get financing, no big underground car parks, lifts etc. The problem I see with this is, that sites that could take several times the amount of residents, are being used for far lower density houses....

here is a link to the article by the developer in the independent, makes reasonable sense to me....

http://www.independent.ie/business/commercial-property/numbers-still-dont-add-up-for-new-building-outside-dublin-34512754.html

zl1whqvjs75cdy

Christ you know it's bad when the guy who stands to make most out of rental property shortages is making statements like that. It is an absolute joke though. Myself and the girlfriend are trying to move into the city and have been at a view viewings lately. Last night at an open viewing there were 6 couples in the place, and we were only there for 10 minutes. I'd say there was well over 20 applicants for the property. It's insanity at the moment.

Idbatterim

Komrade I agree with a lot of your post. Several things need to be done, one in my opinion, is to make apartments a long term option for families and living in general. That to me currently, means 1. decent storage space 2. a second living room perhaps, or some room currently away from the kitchen / dining / living room 3. concrete walls separating properties, not bloody stud partitions. I would also say triple glazed or windows that offer major sound reduction in noisy locations 4. I am not sure if it is practical to do one of my main gripes in apartments, the bloody water pumps! ARRGGGGGGGGGGHHHHHHH!!!!

I am not convinced that property development is now uneconomical for private developers - they won't take home the profits they did in the boom, but they are just taking as much advantage of the current stage of the property boom/bust cycle we are in, as they can.

Id say even if it is marginally profitable, why would you bother, you are taking a risk. I think its ridiculous to say, "oh they should develop, sure couldnt they risk making a 1-2% profit"... Yes I agree boom time profits were probably very nice, but you cant go to the other extreme and then expect them to build just because they could reasonably expect some pittance of a profit in percentage terms...

_Kaiser_

Idbatterim wrote: »

Komrade I agree with a lot of your post. Several things need to be done, one in my opinion, is to make apartments a long term option for families and living in general. That to me currently, means 1. decent storage space 2. a second living room perhaps, or some room currently away from the kitchen / dining / living room 3. concrete walls separating properties, not bloody stud partitions. I would also say triple glazed or windows that offer major sound reduction in noisy locations 4. I am not sure if it is practical to do one of my main gripes in apartments, the bloody water pumps! ARRGGGGGGGGGGHHHHHHH!!!!

Most definitely this..

My current apartment is spacious enough with storage (2 bed) but the walls are paper thin and I can't realistically flush a toilet after about half 11 at night as the noise of the water pump would wake the block. Because of way it's built/facing the hallways are almost always in darkness as well.

If it wasn't cheap (ie: not in Dublin) and in a quiet estate close to the motorway I'd have moved out when the year was up a few months back.

Idbatterim

I used to turn off the pump at night... If I owned the property, I would get rid of it if I could and the mains pressure was good enough... To be honest, if it were doing my nut that much, Id just get a plumber to do it and if pressure ok, put it back the way it was when moving out...

_Kaiser_

Idbatterim wrote: »

I used to turn off the pump at night... If I owned the property, I would get rid of it if I could and the mains pressure was good enough... To be honest, if it were doing my nut that much, Id just get a plumber to do it and if pressure ok, put it back the way it was when moving out...

Must try that. There's no switch that I can see so will probably need to pull the fuse from the panel it's wired to.

Idbatterim

Must try that. There's no switch that I can see so will probably need to pull the fuse from the panel it's wired to.

in both of my previous apartments, they definitely had a switch...

Eric Cartman

The real changes that need to be made

1. Soundproofing - don't care about dual aspect or any of that craic, you should be able to have 5 people over to your apartment to watch a football match (with all the loud chanting involved) and nobody be able to hear it from any other apartment at any hour of the day) , I have never seen anything close to this level of soundproofing here.

2. Building higher - I don't know if dublin is ready for full on high rise, but there should be a planning encouragement to build 10-15 storey blocks, with that number increasing by 3 storeys every 5 years so we can mould our city to high rise.

3. Social housing - We should completely remove the requirement for social housing inside the M50, the land is too valuable and the requirements put off a lot of developers. Nobody is going to buy a luxury apartment for 300k+ if the person below you is getting the same thing for free. All social housing should be pegged to estates where houses/apartments cost less than 80k per bedroom. It leaves a mix to prevent ghettoisation , but also doesn't kick working people in the face by giving away something that most can't afford to those who won't work.

athtrasna

Mod note

I'm starting to sound like a broken record lately but what's with dragging yet another thread off topic. Last time I looked this was about the sustainability of rents in Dublin, not the workings of water pumps or how many TDs are landlords?

Eric Cartman

athtrasna wrote: »

Mod note

I'm starting to sound like a broken record lately but what's with dragging yet another thread off topic. Last time I looked this was about the sustainability of rents in Dublin?

I think we're trying to explain the barriers to development that keep rent insanely high. I will however accept that my post goes off topic on that, feel free to remove should you deem necessary.