Are rent controls making things better or worse for renters?

LotharIngum

This would probably be better as a poll.

Now that it has been shown that rental supply is dwindling and rents are going up and up and up and landlords are leaving the sphere, does anyone actually think that rent controls are working or are have they made the rental issues worse?

Dinarius

Well, take the evil landlords out of the equation and people either live with their parents or buy a house; period.

Sometimes I wonder if it is forgotten that landlords are the *only* middle-ground. Without them, our homeless crisis would be multiples of what it is.

I suspect that ever increasing legislation in favour of the tenant, coupled with a very heady property market (in what are unpredictable times) are two of the reasons that many landlords have had enough and are bailing out.

I fully understand legislation regarding minimum requirements in lettings. But, RPZs and 4% limits on rent increases barely keep pace with inflation. There is a middle-ground, but is this it? The market doesn’t seem to think so.

D.

mrslancaster

Imo it is not just the rent controls that are causing less supply.

If you were a small landlord and read the proposed anti eviction bill or other similar changes on the way, imo it would make you think about leaving the sector.

More landlords are needed to provide houses to rent but too much uncertainty and constant changes makes everyone nervous. it's hard to keep up with all the regulations and it's not good for tenants if rental supply is reduced again.

Maybe the government should try to encourage more landlords instead of the current approach.

Andycap8

I don't think there's any way to tell if they're a good or bad thing. They're obviously a good thing for existing tenants.

The lack of rental supply growth is largely due to a wider lack of total new supply overall.

At Q3 there were 339,117 tenancies registered, which is only down 0.6% on Q3 2017. Similarly, the number of landlords is only down 1.6% over the same period.


RTB figures below
https://onestopshop.rtb.ie/images/uploads/Registration/Reg_Q3_2018.pdf

matrim

What isn't helping is this piecemeal tweaking every year. Neither tenants or landlords have any stability. They should look at a full review that priortises long term stable tenancies and allows landlords to remove people who don't pay

Den14

Those horrible landlords are the baddies. Tax them to the hilt then slap a ton of regulations on top of that. That'll learn 'em.... *Sarcasm

antoinolachtnai

It is good for people who have adequate rental accommodation.

It is on the whole bad for people who don’t.

Wheres Me Jumper?

RTE reported that whilst rents were still rising, the pace of increase has slowed down.
Also the number of LLs has fallen.

There are 1,778 fewer landlords than there were three years ago, while tenancies have declined by 8,829.

https://www.rte.ie/news/2018/1213/1016879-rent_index/

Wheres Me Jumper?

Den14 wrote: »

Those horrible landlords are the baddies. Tax them to the hilt then slap a ton of regulations on top of that. That'll learn 'em.... *Sarcasm

it's ok Eoghan, we know it's you.

LotharIngum

With all of the current legislation and the bills and changes being scoped out now,
Im thinking we are going to see a move from houses and large apartments to one or two bed apartments.
REITs will take over and as such it will only be manageable apartments for rent in future.
I think houses for rent are going to dwindle and are already.
Smaller apartments may hang on for a little while, but they are going too.
God help anyone who has to move now. They are in for a shock, especially families in houses.

theboringfox

Better Short Term and ii already renting.
Bad long term and in particular if looking to rent.

If you want more investment in a sector you don't disincentive investment there.

Wheres Me Jumper?

LotharIngum wrote: »

With all of the current legislation and the bills and changes being scoped out now,
Im thinking we are going to see a move from houses and large apartments to one or two bed apartments.
REITs will take over and as such it will only be manageable apartments for rent in future.
I think houses for rent are going to dwindle and are already.
Smaller apartments may hang on for a little while, but they are going too.
God help anyone who has to move now. They are in for a shock, especially families in houses.

i agree. every time the Govt. interferes in the housing market they just make a bad situation worse. every bit of extra regulation simply confuses and discourages people.

eg the removal of bedsits was so badly thought through. plenty of tenants (many possibly now homeless) were perfectly happy in them. they didn't need or want a yuppie apartment. most couldn't afford one tbh.

An_Toirpin

Andycap8 wrote: »

I don't think there's any way to tell if they're a good or bad thing. They're obviously a good thing for existing tenants.

The lack of rental supply growth is largely due to a wider lack of total new supply overall.

At Q3 there were 339,117 tenancies registered, which is only down 0.6% on Q3 2017. Similarly, the number of landlords is only down 1.6% over the same period.


RTB figures below
https://onestopshop.rtb.ie/images/uploads/Registration/Reg_Q3_2018.pdf

You could look at how the price of renting is at all time highs while the cost of buying is still well below 2007 and infer that its not driven by a lack of houses.

AlmightyCushion

An_Toirpin wrote: »

You could look at how the price of renting is at all time highs while the cost of buying is still well below 2007 and infer that its not driven by a lack of houses.

That would be due to a lack of credit. Back in the boom people could borrow a lot more than they can now and we were building a hell of a lot more back then as well. Back in the boom people were buying second and third houses on interest only and renting them out and then planning to sell the place when the interest only period was over and make a load of easy money. We don't have that now.

The_Conductor

AlmightyCushion wrote: »

That would be due to a lack of credit. Back in the boom people could borrow a lot more than they can now and we were building a hell of a lot more back then as well. Back in the boom people were buying second and third houses on interest only and renting them out and then planning to sell the place when the interest only period was over and make a load of easy money. We don't have that now.

IS there a lack of credit though?
According to Central Bank figures- there were over 40,000 approvals in principle issued by Irish financial institutions in the 12 months to the end of September- that were allowed lapse.

The absolute issue is a lack of supply of residential dwellings- however, the rental sector is going the way of the dodo- and in future, will be limited to 1-2 bed apartments in centrally managed blocks. The renting a house of yore- is going to be seen as a quaint historic quirk. Good luck to anyone trying to find one in future.

Mitzy

I am a landlord and consider myself to be a good one however because of the increased regulations etc I am selling up in 2019.
The rules & now potential criminalisation is simply scaring me off and I'm simply not willing to put myself at risk because the area is becoming very complex with ever changing rules.
I fear that in the long term renters will be in a much worse state because the large REITS will never show any mercy to tenants & don't care about the law's of the country.
This crisis will never be resolved for a long time to come.

Claw Hammer

The_Conductor wrote: »

IS there a lack of credit though?
According to Central Bank figures- there were over 40,000 approvals in principle issued by Irish financial institutions in the 12 months to the end of September- that were allowed lapse.

The absolute issue is a lack of supply of residential dwellings- however, the rental sector is going the way of the dodo- and in future, will be limited to 1-2 bed apartments in centrally managed blocks. The renting a house of yore- is going to be seen as a quaint historic quirk. Good luck to anyone trying to find one in future.

The amount lent by the banks on property or declining year on year. AIPs happen but when it comes to drawdown the banks act the maggot. The banks have no notion of actually giving out the amount of money approved. More money is coming in on repayments than is going out in loans where property is concerned. The European Central Bank wants the Irish banks to reduce their exposure to property. The result is that developers cannot get credit to build from the banks and people who get loan approval discover they can't find a property to purchase.

Del2005

Den14 wrote: »

Those horrible landlords are the baddies. Tax them to the hilt then slap a ton of regulations on top of that. That'll learn 'em.... *Sarcasm

Only the small private landlord with a few properties stuck in an RPZ are the baddies.

The REITs releasing new rentals at the top of the market , rent is capped at 4% for any previously rented property so it has to be new releases driving the >4% increase, and gaining from the higher rent and near zero tax are the darlings.

Wheres Me Jumper?

Del2005 wrote: »

Only the small private landlord with a few properties stuck in an RPZ are the baddies.

The REITs releasing new rentals at the top of the market , rent is capped at 4% for any previously rented property so it has to be new releases driving the >4% increase, and gaining from the higher rent and near zero tax are the darlings.

why do we always love discriminating in favour of foreigners in this country?
local Irish LLs are providing a valuable service, yet the Govt. loves to hammer us, while vulture funds get tax break after tax break.
Irish begrudgery even at the top echelons of Govt. it seems...

Tar.Aldarion

Dinarius wrote: »

Well, take the evil landlords out of the equation and people either live with their parents or buy a house; period.

Sometimes I wonder if it is forgotten that landlords are the *only* middle-ground. Without them, our homeless crisis would be multiples of what it is.

I suspect that ever increasing legislation in favour of the tenant, coupled with a very heady property market (in what are unpredictable times) are two of the reasons that many landlords have had enough and are bailing out.

I fully understand legislation regarding minimum requirements in lettings. But, RPZs and 4% limits on rent increases barely keep pace with inflation. There is a middle-ground, but is this it? The market doesn’t seem to think so.

D.

Rents are higher than they have ever been and inflation is really low, certainly nowhere near 4%, it's been effectively 0 or negative for the last 6 years. This year it went up a bit and still is well below 1%. Compare a 4% increase yearly over those 6 years. Property price is still laughably low compared to London where rents are comparable to here. My brothers apartment rents for the same rate as here and is worth far far more than a similar apartment here, so returns are far worse than here. It's a great time to be a landlord here from that perspective. The only reason people could be leaving is if the laws on overstaying and things bite them on the ass.

robp

Wheres Me Jumper? wrote: »

why do we always love discriminating in favour of foreigners in this country?
local Irish LLs are providing a valuable service, yet the Govt. loves to hammer us, while vulture funds get tax break after tax break.
Irish begrudgery even at the top echelons of Govt. it seems...

REITs are shells that buy property and act as landlords. Many are public companies and anyone can buy their shares. When people actually receive their profits it is taxed.

The_Conductor

robp wrote: »

REITs are shells that buy property and act as landlords. Many are public companies and anyone can buy their shares. When people actually receive their profits it is taxed.

In theory. In practice the holdings in REITs are structured such that the vast preponderance of holders are not liable for tax- indeed, a not insignificant number of holders are purely nominees in various autonomous British tax jurisdictions. Several posters in this forum have already outlined how they have helped set up this structure for several clients in the recent past. If you go back a little to the Panama revelations- there are significant REIT holdings in the arrangements documented..........

Its all well and good to suppose the disbursements are taxed in the jurisdiction in which the holder is resident- but in a not insignificant number of cases- this simply is not the case........

AlmightyCushion

The_Conductor wrote: »

In theory. In practice the holdings in REITs are structured such that the vast preponderance of holders are not liable for tax- indeed, a not insignificant number of holders are purely nominees in various autonomous British tax jurisdictions. Several posters in this forum have already outlined how they have helped set up this structure for several clients in the recent past. If you go back a little to the Panama revelations- there are significant REIT holdings in the arrangements documented..........

Its all well and good to suppose the disbursements are taxed in the jurisdiction in which the holder is resident- but in a not insignificant number of cases- this simply is not the case........

And if these people owned property directly instead of investing in a REIT, they'd be able to do the exact same thing.

The_Conductor

AlmightyCushion wrote: »

And if these people owned property directly instead of investing in a REIT, they'd be able to do the exact same thing.

Yup. And some of the wealthiest people in Irish society do just this.

AlmightyCushion

The_Conductor wrote: »

Yup. And some of the wealthiest people in Irish society do just this.

So, REITs don't offer these people any advantage tax wise over being a normal landlord.

LotharIngum

LotharIngum wrote: »

This would probably be better as a poll.

Now that it has been shown that rental supply is dwindling and rents are going up and up and up and landlords are leaving the sphere, does anyone actually think that rent controls are working or are have they made the rental issues worse?

It's not the rent control, its how they were implemented. What they should have done was a rent freeze, and say something like "What your rent was at midnight last night will stay the same for 2 years". Instead, they announced they "would be bringing in a cap of 4% in the next couple of weeks". The result? I got a text the next day saying my rent was going up by 12%. Then a year later, my rent went up a further 4% in line with the regulations.

The_Conductor

AlmightyCushion wrote: »

So, REITs don't offer these people any advantage tax wise over being a normal landlord.

They insulate people from dealing with the nitty gritty of being a landlord- while making it far easier to obsfusciate the ultimate ownership of the REIT shares. It used to be the case that you could handily incorporate an office in Jersey, with bank accounts there, or in the Isle of Man- and presto- you were untouchable- hell, boilerplate outfits were even common in Dublin once upon a time- have a look in the classified section of Time Magazines from the 1980s- it was the wild wild west here- every bit as bad as the channel islands. Its far easier to hide the ownership of shares- by use of nominated owners- than it is a full property- thanks to the crackdown on tax evasion that has gathered pace here over the last 12 years- however, not every jurisdiction has had the same success in dealing with evasion, as Ireland has done (and even Ireland is managing to bring in vast sums that it had no idea existed- equal to nearly a quarter a billion in 2017).

Tax avoidance and tax evasion- are legal and illegal- however, they get murkied terribly and one often encroaches from legal territory into illegal actions.......... There are whole industries based on people minimising their payable tax- not all those involved in those industries are necessarily only looking at 'legal' options..............

Claw Hammer

Deleted User wrote: »

It's not the rent control, its how they were implemented. What they should have done was a rent freeze, and say something like "What your rent was at midnight last night will stay the same for 2 years". Instead, they announced they "would be bringing in a cap of 4% in the next couple of weeks". The result? I got a text the next day saying my rent was going up by 12%. Then a year later, my rent went up a further 4% in line with the regulations.

a text is not a adequate notice of a rent increase. you should have objected.

AlmightyCushion

The_Conductor wrote: »

They insulate people from dealing with the nitty gritty of being a landlord- while making it far easier to obsfusciate the ultimate ownership of the REIT shares. It used to be the case that you could handily incorporate an office in Jersey, with bank accounts there, or in the Isle of Man- and presto- you were untouchable- hell, boilerplate outfits were even common in Dublin once upon a time- have a look in the classified section of Time Magazines from the 1980s- it was the wild wild west here- every bit as bad as the channel islands. Its far easier to hide the ownership of shares- by use of nominated owners- than it is a full property- thanks to the crackdown on tax evasion that has gathered pace here over the last 12 years- however, not every jurisdiction has had the same success in dealing with evasion, as Ireland has done (and even Ireland is managing to bring in vast sums that it had no idea existed- equal to nearly a quarter a billion in 2017).

Tax avoidance and tax evasion- are legal and illegal- however, they get murkied terribly and one often encroaches from legal territory into illegal actions.......... There are whole industries based on people minimising their payable tax- not all those involved in those industries are necessarily only looking at 'legal' options..............

You're sidestepping the point there. If someone can structure their tax affairs in a way that they can avoid the tax from the income they receive from a REIT, then they can do the same for the income they receive from a rental property. If a normal person like you or me invests in a REIT we will end up paying tax on the income just like we would on the income from a rental property. You're saying REITs have an unfair advantage over landlords because REITs don't pay tax but that isn't the case. Wealthy individuals who can structure their affairs in a way that avoids tax have an unfair advantage but that has nothing to do with REITs as they will reduce their tax burden whether the income is from a REIT or a rental property.

Dinarius

[Deleted User] wrote: »

It's not the rent control, its how they were implemented. What they should have done was a rent freeze, and say something like "What your rent was at midnight last night will stay the same for 2 years". Instead, they announced they "would be bringing in a cap of 4% in the next couple of weeks". The result? I got a text the next day saying my rent was going up by 12%. Then a year later, my rent went up a further 4% in line with the regulations.

And those landlords who were locked into a lease found themselves caught out by the suddenness of it and, in some cases (me included) have never been able to catch up. (We own a purpose built one-bed apartment in Dublin 6 let for €1250 p/m. Check out Daft or MyHome and see a. How many one-beds there are to let in the whole of Dublin 6 and... b. What can you get for €1250?)

Hence the huge temptation in this heady property market to say, bu**er it, and sell.

I’m not sure what the solution is; but, what we have doesn’t seem to be working.

D.

Wheres Me Jumper?

AlmightyCushion wrote: »

And if these people owned property directly instead of investing in a REIT, they'd be able to do the exact same thing.

sure but your average Irish LL with a few apartments is highly unlikely to go down that route.