How high will the rental rates go ?

Graham

draiochtanois wrote: »

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I think you're finding a conspiracy theory when the real reason is much simpler.

draiochtanois

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riclad

riclad wrote: »

The government plan is to build 40,000 houses in the next 5 years ,this will reduce rents at some point or maybe stop them from rising in most area ,s .There seems to be alot of new student housing being built in dublin which will help a bit.

40k houses is about 100k short of what's needed at minimum over that same time period.

Won't put even the slightest dent in rents or house prices.

Graham

draiochtanois wrote: »

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Interesting theory but not one I subscribe to.

Successive governments have demonstrated an almost complete inability to take unpopular decisions unless outside influences have forced their hand. Decisions that should have been taken several years ago were avoided because they wouldn't have been popular. That situation still remains today and I don't expect it to change soon because it is what we (the electorate) keep voting for.

Anyway, we're moving in the direction of political debate so I'll leave it there.

draiochtanois

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Graham

Graham wrote: »

Interesting theory but not one I subscribe to.

Successive governments have demonstrated an almost complete inability to take unpopular decisions unless outside influences have forced their hand. Decisions that should have been taken several years ago were avoided because they wouldn't have been popular. That situation still remains today and I don't expect it to change soon because it is what we (the electorate) keep voting for.

Anyway, we're moving in the direction of political debate so I'll leave it there.

Are you inferring that solving the rental/housing crisis would be UNpopular?

Graham

Sergio Georgini wrote: »

Are you inferring that solving the rental/housing crisis would be UNpopular?

No. I wasn't implying it either.

Significantly increasing property tax to reduce vacant homes wouldn't have been popular. Neither would encouraging/incentivising 'property developers' to start building. Tax incentives to encourage long-term tenancies/lettings would have certain sectors accusing the government of supporting 'da landlords'. Tax on undeveloped land would also not go down well. Reposessing homes with significant mortgage arrears would have people up in arms, as would fast-track evictions for non-paying tenants.

draiochtanois

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whisky_galore

KwackerJack wrote: »

Average 3 bed semi is approx 1600

It will go up and up until nobody can afford it, everyone bar the wealthy will move home with parents or sharing will become the norm, then the landlords will cry save us, the government will step in and public money will be used to help the landlords who put themselves into this position!!

And the banks, well they will just sit back and laugh as they will never lose!

Just like the housing buble we won't listen or learn and it will happen all again.

Me, well im waiting for the next bang to buy and I'll be happy with my little mortgage 😊

People will be forced to couch-surf or sub-let on the sly.

athtrasna

Mod note - Final Warning

This is not a politics forum. The subject being discussed is rental rates and speculation as to how high they will go. If it continues to go so far off topic then it won't stay open much longer.

aido79

I really hope that I am not the only landlord who has no intention of increasing rent to unaffordable rates just because the market says that that's what I should do.
My current tenant moved out of Dublin due to high rents and is currently saving for a deposit for her own place and morally I would feel bad to deprive her of that opportunity for personal gain when my costs have not increased. I think there is a certain amount of greedy landlords pushing up rents with others following suit with "market rates".

Graham

aido79 wrote: »

I really hope that I am not the only landlord who has no intention of increasing rent to unaffordable rates just because the market says that that's what I should do.
My current tenant moved out of Dublin due to high rents and is currently saving for a deposit for her own place and morally I would feel bad to deprive her of that opportunity for personal gain when my costs have not increased. I think there is a certain amount of greedy landlords pushing up rents with others following suit with "market rates".

It sounds like you're in a fortunate position that a below market rent covers your costs. That's not to detract from the fact you're prepared to let your property at below market rates which is thoroughly decent.

It's probably not safe to assume every landlord is in the same position and I do wonder if your tenants would return the favour should the market rent drop below your current costs.

jay0109

How high? A lot more according to Ireland's largest landlord

Ireland’s biggest landlord: ‘I feel bad for the Irish people’
Ires Reit’s David Ehrlich talks about soaring rents and increasing supply
http://www.irishtimes.com/business/commercial-property/ireland-s-biggest-landlord-i-feel-bad-for-the-irish-people-1.2870230

“It’s a great market,” Ehrlich agrees. “We’ve never seen rental increases like this in any jurisdiction that we’re aware of.”

Key to the company’s ability to build its business is the National Asset Management Agency (Nama), which was offloading large blocks of apartments around the capital.
“The question is getting critical mass – if it wasn’t for Nama it would have been impossible for anyone like that, including ourselves, to come into the marketplace,” says Ehrlich.

But this high turnover rate means that Ires Reit can hike up the rents at each turnover, regardless of the new two-year rule – which means that rents can only be increased every two years for sitting tenants.
Stricter rent controls could be a problem however, in terms of attracting capital.
“If you bring in measures to control rent, it is going to be difficult to do that.”
Ires Reit has a sizeable number of apartments coming up for rent review next year; 10 per cent in the first quarter and about 20 per cent in each of the remaining quarters, with the balance up in the first quarter of 2018 for the most part.
The fund has already achieved annual rent increases in the order of about 10 per cent since launch – so, should tenants expect their rents to rise further?
“I expect they will, but I don’t want to speculate [how much] ,” he says. “There is a point where things will have to slow down in terms of affordability.”

So he feels bad for us but not bad enough to stop increasing rents anytime soon.
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draiochtanois

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AlmightyCushion

draiochtanois wrote: »

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This is a common misconception but it isn't true. The companies management team have to act in the best interest of the shareholders but that doesn't mean they have to maximise short term profits at the expense of everything else.

There are plently of reasons why increasing rent could hurt the company in other ways. Increasing rent could increase rent arreats and tenant turnover. If they currently have a low amount of arrears and hassle free tenants who take good care of the property then increasing rents could change that. We've all seen the horror stories here where landlords have to wait years to evict people who aren't paying rent and are wrecking their property. The management team could decide it's best not to risk this leave rents as they are.

The management team could feel that rents in Dublin are spiraling out of control and becoming unsustainable which could hurt investment in Dublin (we're already had the head of Facebook Ireland say that the cost of rent is affecting them and could affect FDI). So they may not want to add to this as it could affect the long term profitability of the company.

Claw Hammer

aido79 wrote: »

I really hope that I am not the only landlord who has no intention of increasing rent to unaffordable rates just because the market says that that's what I should do.
My current tenant moved out of Dublin due to high rents and is currently saving for a deposit for her own place and morally I would feel bad to deprive her of that opportunity for personal gain when my costs have not increased. I think there is a certain amount of greedy landlords pushing up rents with others following suit with "market rates".

The housing market is cyclical. Prices and rents rise and fall every few years. When you have no tenant at all because the market has weakened, you will be told "tough, you have to take the rough with the smooth". You should charge market rent all the time so that the good times will offset the bad when they inevitably come.

beauf

AlmightyCushion wrote: »

.... We've all seen the horror stories here where landlords have to wait years to evict people who aren't paying rent and are wrecking their property. The management team could decide it's best not to risk this leave rents as they are.
...

In my opinion this is only true of smaller LLs. Larger LLs with lots of properties the risk is negated, spread over more properties, and the increased rental income from more properties.

It's probably a bigger risk not doing it as a change in rental rules could have a much bigger impact on a larger business.

thierry14

aido79 wrote: »

I really hope that I am not the only landlord who has no intention of increasing rent to unaffordable rates just because the market says that that's what I should do.
My current tenant moved out of Dublin due to high rents and is currently saving for a deposit for her own place and morally I would feel bad to deprive her of that opportunity for personal gain when my costs have not increased. I think there is a certain amount of greedy landlords pushing up rents with others following suit with "market rates".

I think you have to look out for your business interest first and should maximise your investment, would be foolish not to.

Market could easily drop and no one is going to think weren't you a great
landlord, I will pay him above market rate.

On high it will go, house I was renting in D15 18 months ago has went from 1275 to 1700.

That's a net monthly salary to most people.

Families who can't share will be on the breadline soon.

Bad for the economy too as most of my friends are all hoarding cash now saving for mortgages

Stopped going to restaurants, cinema, day trips out etc

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enfant terrible

If rent rises become untenable in Dublin what's to stop the government changing the two-year rent review to a ten year rent review?

Graham

enfant terrible wrote: »

If rent rises become untenable in Dublin what's to stop the government changing the two-year rent review to a ten year rent review?

Nothing at all. What's to stop landlords selling up if that happens. Will tenants even want to be tied to the current rates for 10years, what happens to them if the market drops again?

enfant terrible

Graham wrote: »

Nothing at all. What's to stop landlords selling up if that happens. Will tenants even want to be tied to the current rates for 10years, what happens to them if the market drops again?

I was thinking just a limit on rises not drops.

DubCount

enfant terrible wrote: »

I was thinking just a limit on rises not drops.

That sounds fair !!

Baby01032012

DubCount wrote: »

That sounds fair !!

That's not fair. That's market manipulation. You can't intervene in the market to the extent that you set the price. The 2 year freeze was meant as a temporary measure until supply caught up and the market corrected itself. However the government failed to put in place any mechanism to increase supply.

lcwill

aido79 wrote: »

I really hope that I am not the only landlord who has no intention of increasing rent to unaffordable rates just because the market says..".

I'm not increasing rents either - I have my own rule that good tenants get the same rent for duration of their part IV contract, i.e. 4 years, as long as they pay on time and keep to all conditions of the contract. After 4 years I will increase but still stay a bit under market rate.

For me to get E50 euro a month more in my pocket, a tenant would have to pay around E200 a month more of their gross pay so the bad feeling that would come from me regularly ratcheting up the rent is not worth it. And I disagree that it should even be allowed anyway. Rent increases during a contract should be tied to the general level of inflation.

A landlord with a long term view should have no interest in pushing rents up so fast that they affect FDI.

4ensic15

lcwill wrote: »

A landlord with a long term view should have no interest in pushing rents up so fast that they affect FDI.

A landlord with a long term view will realise that rents will fall again and the tenants will be pretty sharp in demanding reductions. look at the threads on this forum from 5 years ago when tenants were boasting about how much they had negotiated down their rents. There was zero sympathy for landlords in evidence. It is a free market and you are entitled to charge what you want but remember the good times and the good tenants must be offset against the bad times and the bad tenants.

Graham

lcwill wrote: »

A landlord with a long term view should have no interest in pushing rents up so fast that they affect FDI.

You appear to be under the illusion that landlords reducing rents below market rates is somehow going to increase the supply of rental properties.

lcwill

4ensic15 wrote: »

A landlord with a long term view will realise that rents will fall again and the tenants will be pretty sharp in demanding reductions. look at the threads on this forum from 5 years ago when tenants were boasting about how much they had negotiated down their rents. There was zero sympathy for landlords in evidence. It is a free market and you are entitled to charge what you want but remember the good times and the good tenants must be offset against the bad times and the bad tenants.

A tenant with a good landlord who charges a reasonable rent and hadn't squeezed them for every penny during times of rising rents would think carefully before moving somewhere cheaper but with an unknown landlord.

Graham

lcwill wrote: »

A tenant with a good landlord who charges a reasonable rent and hadn't squeezed them for every penny during times of rising rents would think carefully before moving somewhere cheaper but with an unknown landlord.

There was no sign of that tenant a few years ago.

Grolschevik

Graham wrote: »

There was no sign of that tenant a few years ago.

I was one!

Fian

enfant terrible wrote: »

I was thinking just a limit on rises not drops.

This does not solve any problems.

Let's just imagine that Government did introduce a 10 year restriction on rent increases, or even a permanent ban on rent increases for sitting tenants.

What happens next?

Nobody is interested in investing in buy to let property, which in turn means no builders are interested in building them. Sitting tenants cling to any property they are leasing with a death grip, under no circumstances will they move because they can't afford to give up rents that are years behind the current market price. You probably have some surreptitious subletting going on (as happens in rent controlled apartments in new york) but it is limited because landlords are watching like hawks to find a breach in the lease so they can evict tenants and replace at the new market rent.

Sitting tenants who can remain in their accommodation get a big benefit. Anyone looking to rent is out of luck because the supply is constrained not only by existing tenants being unwilling to give it up but also by the disincentives to build or invest in that sector. Landlords have zero incentive to upgrade or do anything beyond the absolute basic maintenance, they will be delighted if their tenants are unhappy with their places and move on. There will be a lot of spurious breaching of leases where family members want to take over. With a ten year freeze it will actually be economic for family members to take over for a few months just to break a lease.

all in all nobody really wins, least of all people who are looking to move out of their parents houses and get their own place.