Landlords charging management fees to tenants to get around rent cap

Samuel T. Cogley

awec wrote: »

My bad, I completely misread your post.

You mean the rent relief scheme? Did it go as far as to half rent though? I think I claimed that before and I got back roughly 1 months worth of rent at the end.

Exactly it, as I recall it wasn't particularly generous either but it is the proper way to control rents. One month would be an 8.3% reduction though so even that would go further than the current policy and would apply equally to everyone. One could pay for this by removing the allowance (slowly) of interest on mortgages to start discouraging every idiot with mortgage approval becoming a LL - however given we don't have enough units as it is I can see that being bloody unpopular.

awec

That would be helpful for tenants for sure, but assuming you mean to bring it in to replace the 4% cap the risk would probably be landlords exploiting the fact that tenants get tax back to hike rents further.

It's a vicious circle.

Samuel T. Cogley

awec wrote: »

That would be helpful for tenants for sure, but assuming you mean to bring it in to replace the 4% cap the risk would probably be landlords exploiting the fact that tenants get tax back to hike rents further.

It's a vicious circle.

I'm all for a cap during a given tenancy. I'm actually all for the termination rules being what they are. I think 5% though per year with extra allowances made when something comes in like refuse charges is the way to go. For example for 2018 they might allow 7%. 2019 back to 5%.

Anyway sorry I'm meandering now

Fian

awec wrote: »

That would be helpful for tenants for sure, but assuming you mean to bring it in to replace the 4% cap the risk would probably be landlords exploiting the fact that tenants get tax back to hike rents further.

It's a vicious circle.

Except in a RPZ - but yes if rent were tax deductible the consequence, outside RPZs, would be significant increase in rent. Would exacerbate difficulties for the unemployed or people on lower incomes (who would benefit less from the tax deductions). Supply and demand - we have an unsdersupply and this woudl significantly boost demand. market prices would rise.

I think this is an idea which would backfire.

awec

Samuel T. Cogley wrote: »

I'm all for a cap during a given tenancy. I'm actually all for the termination rules being what they are. I think 5% though per year with extra allowances made when something comes in like refuse charges is the way to go. For example for 2018 they might allow 7%. 2019 back to 5%.

Anyway sorry I'm meandering now

The system would work better if there was an exceptions process to allow landlords to apply for a greater than 4% increase between tenancies if they could demonstrate that the current rent is completely out of whack with market rates.

But administering this would probably be too costly.

Samuel T. Cogley

Fian wrote: »

Except in a RPZ - but yes if rent were tax deductible the consequence, outside RPZs, would be significant increase in rent. Would exacerbate difficulties for the unemployed or people on lower incomes (who would benefit less from the tax deductions). Supply and demand - we have an unsdersupply and this woudl significantly boost demand. market prices would rise.

I think this is an idea which would backfire.

The unemployed / lower incomes should be properly assisted and not dumped in the private rental sector to, essentially, fend for themselves. It's nigh on impossible to find something on HAP as it is. Units should be rented by the council at 80% of market value and completely administered by them. Standards, tenants rent deposits everything. This should be in return for a 10-15 year unbreakable under any circumstances lease, including repossession.

Diemos

Samuel T. Cogley wrote: »

Journalists don't see LL's that way simply as the vast majority are not. They do see people as easily manipulated sheep though, which on the whole, they are.

Instead we have this stupid narrative that LL's must be greedy and the valiant government are there to protect people being forwarded by the media. Bollocks.

Well which is it? Do journalist not paint the majority of LL's by the actions of a few or are they pushing a narrative on the sheep?

Samuel T. Cogley wrote: »

As for a cash grab, if the fees have increased more than 4% what are LL's meant to do? The government didn't, when they changed refuse charges, exempt anyone. The sooner this unconstitutional interference with property rights is dropped the better for everyone including tenants. Many tenants could see their rents halved overnight if the government was serious about sorting this; simply make rent tax deductible, and stop the double taxation of the same money.

The fees can increase by 20% and still be covered by a 1% rise in the annual rent. Basic maths.

Diemos

Samuel T. Cogley wrote: »

I'm all for a cap during a given tenancy. I'm actually all for the termination rules being what they are. I think 5% though per year with extra allowances made when something comes in like refuse charges is the way to go. For example for 2018 they might allow 7%. 2019 back to 5%.

Anyway sorry I'm meandering now

Given that Ireland has had an average inflation of 0.5% over the past 5 years, I think 4% is more than fair. It should be open to review if inflation rises sharply.

Fkall

Over the last five years the marginal tax rate on rental income has increase from 42% to 55%

jamesthepeach

I've been hearing about lots of landlords now stripping out all other charges for the rent.
One told me he is charging 1500 per year for the parking disk and it isn't optional. If they take the apartment they agree to pay for the parking disk.

Others are even stripping.out the furniture and going as unfurnished as possible to remove any potential extra costs.

And many of them are doing zero maintenance apart from maybe plumbing, electrical stuff that could cause knock on or safety issues.
Eg no painting, etc while a tenancy is ongoing.

It was all predicted when rent control was first mentioned.

awec

jamesthepeach wrote: »

I've been hearing about lots of landlords now stripping out all other charges for the rent.
One told me he is charging 1500 per year for the parking disk and it isn't optional. If they take the apartment they agree to pay for the parking disk.

Others are even stripping.out the furniture and going as unfurnished as possible to remove any potential extra costs.

And many of them are doing zero maintenance apart from maybe plumbing, electrical stuff that could cause knock on or safety issues.
Eg no painting, etc while a tenancy is ongoing.

It was all predicted when rent control was first mentioned.

Furniture has never had any impact on the level of rent so that's pretty bizarre. Indeed, I am sure many tenants would only love their landlord to get rid of the existing furniture so they can get their own, especially in properties where the landlord has furnished them with all the old and odd ****e of the day.

And I bet none of these landlords ever actually painted with tenants in-situ anyway, so it seems like another bizarre point.

If they are doing zero maintenance then they're incredibly stupid, it's their property at the end of the day, they'll have to pay for it eventually.

Again, you would nearly think that pre-RPZ that landlords were driving rents down and serving their tenants every whim. Complete nonsense, we now have landlords moaning that they won't do things that they never did anyway.

jamesthepeach

awec wrote: »

Furniture has never had any impact on the level of rent so that's pretty bizarre. Indeed, I am sure many tenants would only love their landlord to get rid of the existing furniture so they can get their own, especially in properties where the landlord has furnished them with all the old and odd ****e of the day.

And I bet none of these landlords ever actually painted with tenants in-situ anyway, so it seems like another bizarre point.

If they are doing zero maintenance then they're incredibly stupid, it's their property at the end of the day, they'll have to pay for it eventually.

Again, you would nearly think that pre-RPZ that landlords were driving rents down and serving their tenants every whim. Complete nonsense, we now have landlords moaning that they won't do things that they never did anyway.

Nonsense.
Ask the poster whose tenants put their curtains into the washing machine which broke down if supplying furniture made any difference to their bottom line. Expand that out and you will get it.

Tenants are soon to get their wish if they don't want landlord supplied furniture. It suits everyone now. It's already starting to happen.
Unfortunately legislation prevents you from going properly unfurnished though.

But hey, at least you'll be able to sleep in a bed bit stained by people before you. That's definitely a plus.

awec

jamesthepeach wrote: »

Nonsense.
Ask the poster whose tenants put their curtains into the washing machine which broke down if supplying furniture made any difference to their bottom line. Expand that out and you will get it.

Tenants are soon to get their wish if they don't want landlord supplied furniture. It suits everyone now. It's already starting to happen.
Unfortunately legislation prevents you from going properly unfurnished though.

But hey, at least you'll be able to sleep in a bed bit stained by people before you. That's definitely a plus.

Excellent news, sounds like a win win for everyone then.

Indeed it is strange that if supplying furniture is so awful and expensive for landlords that it has taken until now for them to realise it's not mandatory.

jamesthepeach

awec wrote: »

Excellent news, sounds like a win win for everyone then.

Indeed it is strange that if supplying furniture is so awful and expensive for landlords that it has taken until now for them to realise it's not mandatory.

Agreed.
Like all other costs/potential costs they are examining them a lot more they used to.
Basically they are adapting to legislation.
Widely predicted when rent control turned up, as exactly the same effect is seen everywhere rent control appears

awec

jamesthepeach wrote: »

Agreed.
Like all other costs/potential costs they are examining them a lot more they used to.
Basically they are adapting to legislation.
Widely predicted when rent control turned up, as exactly the same effect is seen everywhere rent control appears

Yep. I have long advocated unfurnished rentals as both easier for tenants and for landlords.

The maintenance thing though, can't help but feel landlords would be hurting themselves in the long run if they skimp on this.

If the whole car parking and other costs to get around the cap becomes a big issue that'll ultimately just be legislated against as well.

In the mean time, the government needs to increase supply so that rents are driven down and we can remove all this temporary legislation again.

Graham

jamesthepeach wrote: »

I've been hearing about lots of landlords now stripping out all other charges for the rent.
One told me he is charging 1500 per year for the parking disk and it isn't optional. If they take the apartment they agree to pay for the parking disk.

Others are even stripping.out the furniture and going as unfurnished as possible to remove any potential extra costs.

And many of them are doing zero maintenance apart from maybe plumbing, electrical stuff that could cause knock on or safety issues.
Eg no painting, etc while a tenancy is ongoing.

It was all predicted when rent control was first mentioned.

For balance, I don't know any landlords doing any of the above.

jamesthepeach

Graham wrote: »

For balance, I don't know any landlords doing any of the above.

I do. Several. And have a read of the threads on boards.
I think there was one even yesterday who was asking about it.

oppenheimer1

jamesthepeach wrote: »

Agreed.
Like all other costs/potential costs they are examining them a lot more they used to.
Basically they are adapting to legislation.
Widely predicted when rent control turned up, as exactly the same effect is seen everywhere rent control appears

Are you seriously suggesting that landlords never examined the cost of their business up to now?!

jamesthepeach

oppenheimer1 wrote: »

Are you seriously suggesting that landlords never examined the cost of their business up to now?!

I am.
Look at all of us who got stuck with below market rates when rpz came in, just as a small example. If everyone was running their business like they should have been running a business you certainly wouldn't have had that.

Graham

jamesthepeach wrote: »

I do. Several. And have a read of the threads on boards.
I think there was one even yesterday who was asking about it.

There'a a fair bit of ranting, theorising and considering on the thread. That doesn't equate to landlords actually doing it.

I suspect the truth lies somewhere between the two but I don't see much in the way of evidence to support your assertion that there's large scale unbundling or massive drop-offs in maintenance.

I guess we'll be able to see quickly enough if complaints to the RTB increase around either areas.

.......

This post has been deleted.

Graham

....... wrote: »

This post has been deleted.

I've no doubt it's happening. I'm just not personally convinced it's particularly common.

If there's a dispute taken to the RTB about unbundling service charges while leaving rent at the same level, and the RTB determine in favour of the landlord. Then I'd expect to see much more of it.

There is nothing new about charging seperately for parking though. Some apartments in the same complex often include it in the rent others don't. If the tenants don't want the space it's then rented to someone else. This has been going on for years.

.......

This post has been deleted.

Graham

Annalee Agreeable Mandolin wrote: »

There is nothing new about charging seperately for parking though. Some apartments in the same complex often include it in the rent others don't. If the tenants don't want the space it's then rented to someone else. This has been going on for years.

I'd agree, that's a much more common scenario.

Samuel T. Cogley

Diemos wrote: »

Given that Ireland has had an average inflation of 0.5% over the past 5 years, I think 4% is more than fair. It should be open to review if inflation rises sharply.

Rent's aren't linked to inflation. Many LLs have been running at a loss, which is fair enough when the market dictates it. You want your cake and eat it too. Basic economics.

It can't be overstated either that these laws are arguably unconstitutional and certainly an interference with property rights. One should expect the government to at least abide by the countries constitution when they decide to run a business, no matter what that business is. However it's not all bad, constricted supply too so at least many of us can get out of the game and let the big boys come in... let us know how that turns out.

Lantus

Many of these costs are not really a choice for the tenant.

Bins for example. If this is an apartment central scheme then it is part of the management fee.

Management fees are paid by the owner as only his name is on the lease. The owner has no choice in paying these.

Suggesting that a tenant pays these as an optional extra is absurd. They are a part of the owners cost and are essentially a part of the rent.

Imo it's fairly simple. If a tenant is presented with extra costs additional to the rent that they have no choice but to pay to effectively rent that property then those extra costs are rent and should be treated as such.

If the costs can be declined like an associated car parking space for example and the property still rented then it's not rent.

Askthe EA

Lantus wrote: »

Many of these costs are not really a choice for the tenant.

Bins for example. If this is an apartment central scheme then it is part of the management fee.


Suggesting that a tenant pays these as an optional extra is absurd. They are a part of the owners cost and are essentially a part of the rent.

.

But, if your rented a house from the same landlord, you are liable for refuse. Whats the difference?

The_Conductor

Victor wrote: »

Has the price of parking and bins gone up by more than 4%?

Refuse charges could increase by 20-30% on a end-user basis come September. Parking is up by 15-20% on the basis of increases in insurance costs associated with car parks for management companies. Management Charges themselves- are increased only with the agreement of members at AGMs- but 10%+ increases are occurring more and more regularly- to the extent you have some 2-3 bed apartments in Smithfield paying well over 3k per annum (including the aforementioned refuse and carpark fees).

The new norm- is members requesting management companies detail all the elements of the Management Charge separately on payment requests- so you have the core charge, refuse, parking, security, block insurance, block lighting/electricity/heating, etc etc- the landlord keeps the core charge and any payment into the sink fund- and the remainder accrues to the tenant.

Also- many new leases are giving tenants of >3 years, the right to attend Management Company AGMs but not a vote at such meetings. I.e. the tenant gets input into how the Management Company functions- but votes are confined to members in good standing.

Diemos

Samuel T. Cogley wrote: »

Rent's aren't linked to inflation. Many LLs have been running at a loss, which is fair enough when the market dictates it. You want your cake and eat it too. Basic economics.

It can't be overstated either that these laws are arguably unconstitutional and certainly an interference with property rights. One should expect the government to at least abide by the countries constitution when they decide to run a business, no matter what that business is. However it's not all bad, constricted supply too so at least many of us can get out of the game and let the big boys come in... let us know how that turns out.

Do you think I am a tenant because I disagree with you? :rolleyes: