Landlords, what have you decided to do about the new amendments?

Senator Palpatine

How is it fair to restrict someone who's offering a discount relative to the market rate to that lower price?

76544567

Senator Palpatine wrote: »

How is it fair to restrict someone who's offering a discount relative to the market rate to that lower price?

Just on that. I wonder is it allowed for a government to enact legislation that is so anti-competitive? It wouldnt be very hard to show that it is anti competition at all. Probably a minefield and requires experts to examine it though.

Paulw

76544567 wrote: »

Just on that. I wonder is it allowed for a government to enact legislation that is so anti-competitive? It wouldnt be very hard to show that it is anti competition at all. Probably a minefield and requires experts to examine it though.

The govt have brought in such laws before. But, if you want to take a case to the High Court, please let us know how you get on.

testaccount123

Senator Palpatine wrote: »

How is it fair to restrict someone who's offering a discount relative to the market rate to that lower price?

It's almost like the government expected people in the sector to run their businesses like a business and charge the actual market rate.

Every business in the country has to price its product appropriately to maximise return. Why do landlords feel they are somehow different? A cynic might come to the conclusion that the sector is riddled by amateurs without the slightest notion of what they are doing who are better off out of it.

76544567

Paulw wrote: »

The govt have brought in such laws before. But, if you want to take a case to the High Court, please let us know how you get on.

Ha ha. The high court.
Talk about putting your house on it

Nobody in their right mind would take such a gamble.
Except maybe if the ipoa were crowd funded they might do it.
Hopefully they'll set up something for funding anyway. See what stuff they are made of.

76544567

testaccount123 wrote: »

It's almost like the government expected people in the sector to run their businesses like a business and charge the actual market rate.

Thats exactly what they did expect and what was happening before.

testaccount123 wrote: »

Every business in the country has to price its product appropriately to maximise return.

They do indeed.

testaccount123 wrote: »

Why do landlords feel they are somehow different?

They dont feel they are different. As with any business, they would like to make a profit and be allowed to price their properties at market rates.

testaccount123

76544567 wrote: »

Thats exactly what they did expect and what was happening before.

Are you reading the thread? That was a response to as poster who is charging 300 euro a month under market rent, for what reason God knows.

They dont feel they are different. As with any business, they would like to make a profit and be allowed to price their properties at market rates.

The market is at a historical high in the pressure zones. If you cannot make a profit now, you never will. Best get out.

Im off out for the day.

Paulw

Mod Note: testaccount123 - I recommend you take a break for a few days. Please don't post to this thread again, unless it's constructive. You won't get another warning.

If there is any more nonsense in the thread, it will be locked, with infractions for those who cause issues.

sublime1

sublime1 wrote: »

I'm running out of time here as my tenants move out next week, and I can't afford to hang around waiting with an empty mortgaged house to see how this unfolds, so I'm going to have to go ahead and advertise the house. One thing I know for sure that when I advertise my house at the 4% increase from the previous rent, I'm going to be deluged with applicants. On one hand, this is a good thing, as I'm sure there will be some wonderful applicants who I'd be very happy to rent to. On the other hand, I don't have clarity about the legislation.
A friend pointed out that applicants will offer all kinds of incentives to win the house. Naturally I feel very uncomfortable in this situation. How would people suggest to handle proposals like that from potential tenants?
What extra charges could I legally separate out from the rent?
Could I ask for a larger deposit for peace of mind against negligent tenants, or is a deposit equal to one month rent the legal maximum?

Got some replies clarifying that I can ask for any amount of deposit. Any suggestions for my other concerns?

Senator Palpatine

testaccount123 wrote: »

Are you reading the thread? That was a response to as poster who is charging 300 euro a month under market rent, for what reason God knows.


The market is at a historical high in the pressure zones. If you cannot make a profit now, you never will. Best get out.

Im off out for the day.

I was charging €300 less than market value per month because:

- My tenants are good.
- They're young and I get the sense that the rent is a burden for them.
- €300 is only €144 after tax in any event.

GGTrek

sublime1 wrote: »

sublime1 wrote: »

I'm running out of time here as my tenants move out next week, and I can't afford to hang around waiting with an empty mortgaged house to see how this unfolds, so I'm going to have to go ahead and advertise the house. One thing I know for sure that when I advertise my house at the 4% increase from the previous rent, I'm going to be deluged with applicants. On one hand, this is a good thing, as I'm sure there will be some wonderful applicants who I'd be very happy to rent to. On the other hand, I don't have clarity about the legislation.
A friend pointed out that applicants will offer all kinds of incentives to win the house. Naturally I feel very uncomfortable in this situation. How would people suggest to handle proposals like that from potential tenants?
What extra charges could I legally separate out from the rent?
Could I ask  for a larger deposit for peace of mind against negligent tenants, or is a  deposit equal to one month rent the legal maximum?

Got some replies clarifying that I can ask for any amount of deposit. Any suggestions for my other concerns?

Apart from the fact that the rule about 4% from previous contract is for all effects unenforceable unless the new tenants manage somehow to trace the old tenants and the old tenants are willing to provide documentation against you. I had a look what they charge in the UK without falling foul of unfair terms in consumer contracts law (EU Directive93/13/EEC that is valid in Ireland as well) since the RTA 2004 is silent about a lot of clauses in Tenancy Agreements, look at the examples section, it is a big but useful read:
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/284440/oft356.pdf

1) Local Property Tax (which is the exact equivalent of Council Tax in the UK) you pass it to the Tenants to pay since it is a tax for local services or any other tax strictly related to local use of services or the tenancy (for example the RTB registration fee of 90 EURs but it might well increase)

2) Any type of a non-repair expense (building management fee, your agent fees to manage the property, refuse collection, common areas electricity, gardening costs, ...)

3) One-off redecoration fee if they stay longer than 12 months to pay for a brand new painting of the place when they leave

You should only be responsible for repairs and insurance of your stuff, nothing else. The expenses above will add between 7% to 20% to the nominal rent. It is what most of the Irish tenants never see (or never want to see), with these fees it will become plain obvious to them how at least part of what the govvie and third-party companies are extracting from the landlord and (maybe) they will be more careful when going to the likes of Threshold or RTB to complain, like some <mod snip> posters in this forum always suggest as first step instead of taking the rational path of negotiating directly with the landlord as a first step.

Graham

GGTrek wrote: »

it is a big but useful

Useful how?

There's nothing to suggest such charges in an Irish tenancy wouldn't result in an unfavourable determination from the RTB.

Landlords taking this approach to try and circumvent the new legislation should certainly understand it is at their peril.

GGTrek

Graham wrote: »

GGTrek wrote: »

it is a big but useful

Useful how?

There's nothing to suggest such charges in an Irish tenancy wouldn't result in an unfavourable determination from the RTB.

Landlords taking this approach to try and circumvent the new legislation should certainly understand it is at their peril.

Agree there is a chance that it will be tested at the RTB and probably High Court (to get a real definitive say on what can be charged or not) to help define the limits, but this is what happens when big regulatory changes happen, the market adapts and tests new boundaries.
There is also nothing to suggest that the RTA 2004 is specifically prohibiting the charges above. So you are just speculating.

sublime1

GGTrek wrote: »

Apart from the fact that the rule about 4% from previous contract is for all effects unenforceable unless the new tenants manage somehow to trace the old tenants and the old tenants are willing to provide documentation against you.

Apart from the fact that I want to err on the safe side, in regards to not taking any possibly illegal interpretations of the legislation, I have registered the previous tenancy with the RTB, so I don't see how it wouldn't be enforceable.

Thanks for the other suggestions. I have to confess I really feel like a guinea pig here! As you say, things may play out very differently over the coming months as the legislation is challenged by various parties, but I need to safeguard my own interests immediately. Does anyone know if I could just rent the house for, say 6 months, which should buy me enough time to see the lie of the land? But how can I ensure smooth return of the property after the 6 month period?

Thanks again for any advice.

tuisginideach

Senator Palpatine wrote: »

I was charging €300 less than market value per month because:

- My tenants are good.
- They're young and I get the sense that the rent is a burden for them.
- €300 is only €144 after tax in any event.

And is your mortgage for that property completely covered by your rental income less tax, insurance, RTB registration, management fees etc?

April 73

sublime1 wrote: »

Apart from the fact that I want to err on the safe side, in regards to not taking any possibly illegal interpretations of the legislation, I have registered the previous tenancy with the RTB, so I don't see how it wouldn't be enforceable.

Thanks for the other suggestions. I have to confess I really feel like a guinea pig here! As you say, things may play out very differently over the coming months as the legislation is challenged by various parties, but I need to safeguard my own interests immediately. Does anyone know if I could just rent the house for, say 6 months, which should buy me enough time to see the lie of the land? But how can I ensure smooth return of the property after the 6 month period?

Thanks again for any advice.

I think you can only rent for five months, give 28 days notice to quit to ensure that Part IV tenancy doesn't kick in at the six month mark.

76544567

sublime1 wrote: »

Apart from the fact that I want to err on the safe side, in regards to not taking any possibly illegal interpretations of the legislation, I have registered the previous tenancy with the RTB, so I don't see how it wouldn't be enforceable.

Thanks for the other suggestions. I have to confess I really feel like a guinea pig here! As you say, things may play out very differently over the coming months as the legislation is challenged by various parties, but I need to safeguard my own interests immediately. Does anyone know if I could just rent the house for, say 6 months, which should buy me enough time to see the lie of the land? But how can I ensure smooth return of the property after the 6 month period?

Thanks again for any advice.

AirBnB it for 6 months maybe?
Talk to an agent and they might give you options, like airbnb or short term let etc.

Jayesdiem

Does anyone know if tenancies can still be ended within their first 6 months?

Senator Palpatine

tuisginideach wrote: »

And is your mortgage for that property completely covered by your rental income less tax, insurance, RTB registration, management fees etc?

Yes, pretty much.

athtrasna

Mod note

Donkeykong5 it is not acceptable that you come on this thread and forum to stir things up. Constructive discussion is welcome, stirring/trolling isn't.

erudec

goz83 wrote: »

It's a terrible plan, because there will be a large number of tenants getting turfed out next year from Landlords selling up, or going the air b&b route. Less supply makes a crisis a disaster.

I would have no desire to invest in any of these funds. I prefer to have some control over what my money is doing for me.

AFAIK the government can simply ban airbnb, or regulate it so restrictively that it is impossible for 90% of airbnb landlords to turn a profit.

I saw an article which said that Barcelona and other tourist cities are doing just that.

This suggests that they are confident that they are not violating EU law.

Senator Palpatine

Does populism know no bounds?

We are now in a situation where people who actually own an asset are being discriminated against and prejudiced.

I find it interesting that the world and its uncle want to see wages back at 2007 levels but heaven forbid that rents get back to 2007 levels.

The war against landlords will ultimately harm tenants and the fabric of society.

Lumen

Senator Palpatine wrote: »

I find it interesting that the world and its uncle want to see wages back at 2007 levels but heaven forbid that rents get back to 2007 levels.

From latest Daft Report.

Anyway, why shouldn't we desire wage growth in excess of housing inflation? Affordable housing is a social good.

erudec

Senator Palpatine wrote: »

Does populism know no bounds?

We are now in a situation where people who actually own an asset are being discriminated against and prejudiced.

I find it interesting that the world and its uncle want to see wages back at 2007 levels but heaven forbid that rents get back to 2007 levels.

The war against landlords will ultimately harm tenants and the fabric of society.

In fairness, landlords have arguably been engaging in a war on tenants by bleeding them dry. I saw an infographic on line that shows that in all 50 US states, it is impossible to rent a one-bedroom flat on minimum wage. This appears to be the case all over the English-speaking world.

As far as I can tell the culprit is local authorities forbidding the building of apartments by making the requirements so stringent that it's simply impossible to turn a profit by building them. The people who want to buy are unable to save up a deposit, and the builders are not legally able to build cheaply enough to allow renters to become owners.

When a local politician suggests loosening the planning restrictions to allow cheaper builds, property-owning voters shoot down the idea and end his career.

newacc2015

Lumen wrote: »

From latest Daft Report.

Anyway, why shouldn't we desire wage growth in excess of housing inflation? Affordable housing is a social good.

We should desire wage growth that matches or exceeds productivity. Remember during the boom when we used to just give wage increases for the sake of it because the money was there? It was great for everyone, until during the recession we realised that the country was seriously uncompetitive and we had to slash wages to get jobs created again

If you look at rents after tax, you will probably find that rents are past 2007 levels before tax, after tax they are still probably 20-25% less. Rents have never been higher but so many landlords are getting out. The marginal rate on rents is 53% versus 40/41% in 2007. Plus there is the caps on mortgage interest relief, LPT, state owned banks gouging landlords with mortgage interest rates close to 6% on their mortgages etc.

testaccount123

Senator Palpatine wrote: »

Does populism know no bounds?

We are now in a situation where people who actually own an asset are being discriminated against and prejudiced.

I find it interesting that the world and its uncle want to see wages back at 2007 levels but heaven forbid that rents get back to 2007 levels.

The war against landlords will ultimately harm tenants and the fabric of society.

Affordable housing for it's citizenry is a priority for all Western governments. Ensuring profitability for amateur landlords who don't even bother to charge market rates is not.

athtrasna

Mod note

Please stay on topic

Lumen

newacc2015 wrote: »

We should desire wage growth that matches or exceeds productivity.

Do you really mean that?

newacc2015 wrote: »

If you look at rents after tax, you will probably find that rents are past 2007 levels before tax, after tax they are still probably 20-25% less. Rents have never been higher but so many landlords are getting out. The marginal rate on rents is 53% versus 40/41% in 2007. Plus there is the caps on mortgage interest relief, LPT, state owned banks gouging landlords with mortgage interest rates close to 6% on their mortgages etc.

Well LPT is not a tax on landlording, it's a tax on property ownership. Anyway, I remember landlords saying they'd be passing on LPT to tenants. Now they're not?

I'd agree that interest relief and bank margins are the main factors making landlording unprofitable on a cashflow basis.

If you look at a gross-yielding rental of 6% with no mortgage, account for void periods, maintenance, marginal income tax and so on, you get an after-tax yield of about 2-3% with no mortgage. That's bad, but it's better than 0% from government bonds or savings accounts.

If you look at the same investment with 75% LTV and 80% interest relief, the net yield is zero. If you could get 100% interest relief it'd be more like 2.5%.

So the entire profit is swallowed by a combination of bank margins and taxes.

OTOH, it's not just landlording that's generating crap returns. ZIRP/NIRP/secular stagnation have driven down yields on everything. Stockmarket returns are coming entirely from price appreciation rather than dividends, and I'm not sure that tax-efficient reinvestment via buybacks can entirely explain this.

Whether it's worth sticking with landlording for possible capital gains or pulling out and sitting on an easy 0% from savings is something only the future can tell us, but history suggests that the times of most dismal sentiment often produce the best returns.

sublime1

April 73 wrote: »

I think you can only rent for five months, give 28 days notice to quit to ensure that Part IV tenancy doesn't kick in at the six month mark.

Thanks. I think this is probably the best strategy for now, to see how things play out. Of course it means going through the whole rigamarole again in 6 months time, but better that than making a bad decision I'll regret in future.

Thanks to the mods for keeping this thread on topic, there's a lot of off-topic comments taking swipes at landords (which I can understand), but the purpose of this thread is to help those of us who need to make a decision immediately as to what we're going to do about this mess. I would ask people to start a new thread if they want to discuss the more general issue of 'greedy' landlords and what to do about them. Some of us are normal humans like you, up to our necks in negative equity and trying to make the best of the situation, while treating our tenants as decently as we can.

Senator Palpatine

But how does it help tenants to introduce rules which force good landlords to increase rents?

I charged less than market rent partly to cut my tenants a break because they're younger and living hand to mouth.

My reward? And attempted shaft by the government which could have cost me tens of thousands of euro.

I had to do the sensible thing and increase the rent by 25%...and in the mouth of Christmas FFS...I felt like Scrooge! And all when I don't want to increase the rent!