How high will the rental rates go ?

Graham

Grolschevik wrote: »

I was one!

Ahhh, you were that tenant.

On a more serious note, as a general rule it's probably wiser for a landlord to charge market rate wherever possible rather than rely on the good-nature of a tenant to pay above market rates when times are hard.

Idbatterim

this situation is being made far too complex and there is only one solution to it! Allow the construction of cheaper units and allow far higher density. Builders will start building again en masse.

you allow more units to be built, more can be provided for social and affordable housing etc.

trellheim

dublin population increasing, not enough houses being built or available to rent to keep up, ( DAFT is at all time low for supply )

So.... prices will keep rising there is nothing to stop them, I can't see it at the moment ...

The only civilized fix is to improve supply and that will be 3-4 years at the best down the road.

draiochtanois

This post has been deleted.

ongarite

Fian wrote: »

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.

This sums up the renting market in San Francisco to a tee.
If it comes here it'll be a disaster.

2-tier rental market, one stuck on legacy rates & never moving out until death or breach of lease & then the reset fighting over the scraps at huge monthly rental rates.

Idbatterim

Idbatterim wrote: »

this situation is being made far too complex and there is only one solution to it! Allow the construction of cheaper units and allow far higher density. Builders will start building again en masse.

you allow more units to be built, more can be provided for social and affordable housing etc.

And start taxing people for holding onto un-used land. We're taxed for owning the house that's eventually built, why not the landowners?

4ensic15

Idbatterim wrote: »

this situation is being made far too complex and there is only one solution to it! Allow the construction of cheaper units and allow far higher density. Builders will start building again en masse.

you allow more units to be built, more can be provided for social and affordable housing etc.

One of the biggest blockages to building is that builders cannot get credit. Buying a site, getting planning and constructing buildings before a penny comes in from sales consumes a large amount of capital, which very few builders have at the moment. Allowing higher density does not remove this factor.

Idbatterim

One of the biggest blockages to building is that builders cannot get credit. Buying a site, getting planning and constructing buildings before a penny comes in from sales consumes a large amount of capital, which very few builders have at the moment. Allowing higher density does not remove this factor.

I would say they will find it far easier to get credit and at cheaper rates, when the returns are more attractive. Which is also the reason, they arent building en masse at the moment...

David Ehrlich, chief executive of Ires Reit (Irelands largest residential landlord) quotes from him below from an article dates 18th November. Seems like Ires will start building their own properties and finance this themselves...

http://www.irishtimes.com/business/commercial-property/ireland-s-biggest-landlord-i-feel-bad-for-the-irish-people-1.2870230

I will listen to someone like Ehrlich, before the other morons who have us in this situation, i.e. the politicians and "planners" the irnony of that word in this country!

Another way of boosting stock is constructing its own apartments, something which should offer some relief to the overheating rental market by increasing supply.

“What you really need to do is get right down into the costs, design something that can be more affordable, and then you build the regulations around that.”
Pointing out that Sandyford has a 14-storey building height limit, he wonders would anybody notice the difference if it was 18 storeys – “but it would change the cost significantly”.

appfry

Fian wrote: »

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.

Well put.
Bit of that going on with the 2 year rule in place now already.

Claw Hammer

Idbatterim wrote: »

I would say they will find it far easier to get credit and at cheaper rates, when the returns are more attractive. y!

So because you say so, credit will become available? Builders are not getting credit, many have a history of bad debt and are not considered creditworthy. Credit used to happen all along the building chain. The builders providers waited until developments sold, architects and solicitors often waited until there were sales. Subcontractors often waited months to be paid. Now everybody in the situation wants to be paid as they go along. This makes building uneconomic and makes the sourcing of sufficient funds extremely difficult for most projects. The banks do not want to be caught again and want to finance only shovel ready, quick build and sell projects.

davo10

Roisin Shortall on The Last Word this evening (after 6pm news) highlighted a loophole in legislation which will allow landlords in certain cases to increase rent before the 2 year time limit brought into effect in December 15. The item isn't up on the Today FM blog yet so I can't post a link.

Idbatterim

Looking for thoughts on this. For Dublin and maybe one or two other urban centres with highrents. An incentive to get adults renting in a town / city back into the family home, like say stamp duty written off if they are back for two years etc, obviously with provisos. Many parents only live in big houses by themselves. Don't want to share with others. Kids renting in the same town or city. It would make better use of housing stock ...

draiochtanois

This post has been deleted.

pilly

Idbatterim wrote: »

Looking for thoughts on this. For Dublin and maybe one or two other urban centres with highrents. An incentive to get adults renting in a town / city back into the family home, like say stamp duty written off if they are back for two years etc, obviously with provisos. Many parents only live in big houses by themselves. Don't want to share with others. Kids renting in the same town or city. It would make better use of housing stock ...

I've often thought that maybe there should be some incentive for older people who want to move to a smaller place. I emphasise the want. Purely self interest though because from my own point of view I don't want to live in a big, expensive to run house on my own when I'm older.

Graham

pilly wrote: »

I've often thought that maybe there should be some incentive for older people who want to move to a smaller place.

Other countries call that property tax. It's a reasonable economic incentive to right-sizing property purchases and encouraging use of otherwise unused residential accommodation.

pilly

Graham wrote: »

Other countries call that property tax. It's a reasonable economic incentive to right-sizing property purchases and encouraging use of otherwise unused residential accommodation.

I was talking more about a carrot than a stick now.

Michael D Not Higgins

davo10 wrote: »

Roisin Shortall on The Last Word this evening (after 6pm news) highlighted a loophole in legislation which will allow landlords in certain cases to increase rent before the 2 year time limit brought into effect in December 15. The item isn't up on the Today FM blog yet so I can't post a link.

http://www.todayfm.com/player/shows/The_Last_Word_with_Matt_Cooper/7/33715/23rd_November_2016_-_The_Last_Word_with_Matt_Cooper_Part_3

From 23 minutes.

I don't hear about any loophole. Just that with the backdated measures that were brought in last year that these tenancies are starting to become due for renewal again next month.

Idbatterim

Graham wrote: »

Other countries call that property tax. It's a reasonable economic incentive to right-sizing property purchases and encouraging use of otherwise unused residential accommodation.

yeah and we have such a tax. The thing is though, it's a pittance. Nowhere near enough to significantly influence outcomes ...

Graham

pilly wrote: »

I was talking more about a carrot than a stick now.

It's easier to fund the stick than the carrot. The stick is also likely to bring otherwise empty/unused properties back to the market as there's a larger cost to leaving them empty.

Graham

Idbatterim wrote: »

yeah and we have such a tax. The thing is though, it's a pittance. Nowhere near enough to significantly influence outcomes ...

Agreed. That should change although I don't expect it will.

joeysoap

I have a 4 (5 at a pinch- EA described it as a study) bedroom house. Too big for us TBH. New bathrooms, new kitchen, kept reasonably up to date, wooden floors and tiles replaced carpets etc.Kitchen/diner/living space all open plan, approx 35' by 21' - big enough not to use the sitting room (which could be another bedroom) last year approached two seperate EA's with a view to downsizing. It was changing cars- ours was rubbish and theirs were fantastic, one put a value of under €175,000 on it the other over €225,000. When we went looking at what was for sale we were disappointed , some poor condition, some in poor locations and most of new ones badly laid out. In short to downsize was going to cost us a lot of money so we stayed put. And I wouldn't be surprised if a lot of other older owners are in the same boat. Only need two bedrooms, with open plan living space. But no builder is doing that,hence no movement from us older owners.

pilly

joeysoap wrote: »

I have a 4 (5 at a pinch- EA described it as a study) bedroom house. Too big for us TBH. New bathrooms, new kitchen, kept reasonably up to date, wooden floors and tiles replaced carpets etc.Kitchen/diner/living space all open plan, approx 35' by 21' - big enough not to use the sitting room (which could be another bedroom) last year approached two seperate EA's with a view to downsizing. It was changing cars- ours was rubbish and theirs were fantastic, one put a value of under €175,000 on it the other over €225,000. When we went looking at what was for sale we were disappointed , some poor condition, some in poor locations and most of new ones badly laid out. In short to downsize was going to cost us a lot of money so we stayed put. And I wouldn't be surprised if a lot of other older owners are in the same boat. Only need two bedrooms, with open plan living space. But no builder is doing that,hence no movement from us older owners.

I'm in more or less the same situation. Except I've actually moved out of mine and I'm renting down in Tippearary. House in Dublin far too expensive for me to run on my own but can't afford to sell up and buy something smaller.

joeysoap

pilly wrote: »

I'm in more or less the same situation. Except I've actually moved out of mine and I'm renting down in Tippearary. House in Dublin far too expensive for me to run on my own but can't afford to sell up and buy something smaller.

I expect a lot of us in same boat.

appfry

Idbatterim wrote: »

yeah and we have such a tax. The thing is though, it's a pittance. Nowhere near enough to significantly influence outcomes ...

We should be careful what we wish for.
Most countries you pay a tax to live in an area whether you own the property you live in or not. eg uk council tax

appfry

Graham wrote: »

It's easier to fund the stick than the carrot. The stick is also likely to bring otherwise empty/unused properties back to the market as there's a larger cost to leaving them empty.

Make no mistake. Every tax you put into the supply chain will be passed on to the end of it eventually.

Graham

appfry wrote: »

Make no mistake. Every tax you put into the supply chain will be passed on to the end of it eventually.

I'm not suggesting such a tax should be applied selectively and it may be entirely appropriate to adjust other taxes downwards at the same time as increasing property taxes.

appfry

Graham wrote: »

I'm not suggesting such a tax should be applied selectively and it may be entirely appropriate to adjust other taxes downwards at the same time as increasing property taxes.

Getting more complicated already

beauf

joeysoap wrote: »

I have a 4 (5 at a pinch- EA described it as a study) bedroom house. Too big for us TBH. New bathrooms, new kitchen, kept reasonably up to date, wooden floors and tiles replaced carpets etc.Kitchen/diner/living space all open plan, approx 35' by 21' - big enough not to use the sitting room (which could be another bedroom) last year approached two seperate EA's with a view to downsizing. It was changing cars- ours was rubbish and theirs were fantastic, one put a value of under €175,000 on it the other over €225,000. When we went looking at what was for sale we were disappointed , some poor condition, some in poor locations and most of new ones badly laid out. In short to downsize was going to cost us a lot of money so we stayed put. And I wouldn't be surprised if a lot of other older owners are in the same boat. Only need two bedrooms, with open plan living space. But no builder is doing that,hence no movement from us older owners.

Had the same experience with older relatives. Eye watering prices for down sized bungalows which needed complete refurbishment. Was a lot cheaper to buy a new build 3 bed semi in the same area. Its not like they can pass their larger property to children with incurring massive tax bills. That before you consider they would have to move into a new immature area, away from established friends and services. So they just don't move.

The supply of suitable properties to down size to just isn't there, and the negatives for moving are so high to make it nonviable.

Graham

appfry wrote: »

Getting more complicated already

Not really. Property tax goes up, some other tax comes down.

Net effect to the overall tax intake could be zero while incentivising people to rightsize their choice of accommodation.

beauf

Graham wrote: »

Not really. Property tax goes up, some other tax comes down.

Net effect to the overall tax intake could be zero while incentivising people to rightsize their choice of accommodation.

They'll just tax you more, with no incentive.