Rent Freeze - the mechanics of

Tacitus Kilgore

Dav010 wrote: »

I would suspect the main drivers are lack of supply, demand, the purchase cost and profit. Few landlords bought properties during the last recession, most bought before, when prices were very high, or after when prices were rising. And I hate to break it to ya kid, but profit is the reason for all businesses.

Look I understand what you are saying, but you can’t magically make thousands of houses appear, and house building is going to come to a halt. So the market will change, but it would be naive to think this is going to be a free-for-all. Negotiation will be necessary, government help will be necessary, but I can assure you the last thing the Government will want on top of this crisis is mass mortgage defaults and banks needing another bailout. So you might think you will be able to sit tight for a year without paying rent, and expecting the LL to sustain the loss and not attempt to evict. We all know there is a crisis, but there has to be some reality as well.

What I'm trying to break to you is many businessess eg. health & beauty, certain retail elements - pennys/brown thomas etc - aren't viable right now, just like the mortgage business, and the renting business.

We are in the beginning of a major shift in how our society functions, hopefully it goes back to "normal" after, but right now no-one knows how long this goes on for or how it ends. What can be taken from this is that shelter, food & water are the main 3 items humans need. Once those are taken care of - we will figure out how the place rebuilds afterwards.

I'm not looking for a free lunch, I'm just saying that landlords/lenders are just as badly fucked as the rest of us right now.

bucketybuck

Irish_peppa wrote: »

Wheres the 3 month rent freeze you dont have to pay back? I was under the impression its allmost like a moratorium, call it a Corona Moratorium, dont they just stick the 3 months back onto the bill at the end or later on?

How do you stick 3 months rent on the "end" of a rental period? You have some guy renting and he decides to leave, so you go to him and say that he now has to pay that 3 months rent he didn't have to pay during the corona crisis a few years back? Good luck getting that from him, most likely result is that he heads off into the sun laughing and you never see a penny of it.

argolis

I want to put out some sketched out numbers from a landlord's POV on a basic rent freeze (for the record, I am a landlord). I hope there'll be a government policy on this to help those who need it, especially tenants, but I hope that it's going to be a considered and fair one.

So, let's say tenants are paying €1,500 pm rent and get a 3-month rent freeze.

-- For a landlord who owns a property outright --
That means €4,500 in missing income. Maybe there'll be some compensation but who knows. Some landlords can easily afford the hit, some might be dependent on it for their pension.

-- For a landlord with a mortgage given a 3-month payment holiday by the bank --
Mortgage interest accrues for the 3 months. Leave aside that there's going to be interest upon interest building up for the 3 months. Say €3,000 of the €4,500 was going towards interest, then that's €3,000 carried on the mortgage for the rest of the term and only paid off at the very end. At 4%, that's an extra €120 per year in costs. Fairly survivable but can add up to thousands.

The other separate issue is that if the landlord sells before the end of the mortgage term, they're crystalising their losses. They're losing the opportunity to earn the lost rent back at the end of the mortgage. Out of €4,500 lost rent, €1,500 was going to be capital payments then that's €1,500 that was lost to the landlord that they now have to pay back to the bank (on top of the €120 per year above).

I think for the majority of landlords that'll be survivable.

Tenancy
If tenants don't lose their jobs/income, there's no reason for a rent freeze.

If tenants lose their jobs, I think it'd be fair to split the losses so it's not just the landlord who takes the hit i.e. depending on circumstances the tenant pays some nominal rent based on their ability to pay.

One idea is that these tenants are instantly admitted to the HAP scheme. That'd offset losses to landlords and tenants would be in a scheme that determines some nominal rent for them to pay. Nominal rent + HAP may not reach the previous rent figures but that's a hit the landlords would take. Is that feasible?

I think of being a landlord as a business and I don't know if the government is going to be covering the losses of any businesses except for key national interest ones, like airlines, who are on the edge of going bust. That's fair enough but most businesses aren't earning anything because customers aren't getting a service and therefore shouldn't have to pay.

In this situation, tenants are getting a service i.e. accommodation, but people are arguing they shouldn't have to pay at all. I'd argue that they should pay something within their means. Maybe that's too complicated to work out but that'd be ideally fair.

Personally, I'm fine with taking losses if needs be but I dislike the idea of an unfair solution where all the losses are heaped on landlords just because it's the laziest solution. And that's not a reflection on tenants but on government.

dharma200

argolis wrote: »

I want to put out some sketched out numbers from a landlord's POV on a basic rent freeze (for the record, I am a landlord). I hope there'll be a government policy on this to help those who need it, especially tenants, but I hope that it's going to be a considered and fair one.

So, let's say tenants are paying €1,500 pm rent and get a 3-month rent freeze.

-- For a landlord who owns a property outright --
That means €4,500 in missing income. Maybe there'll be some compensation but who knows. Some landlords can easily afford the hit, some might be dependent on it for their pension.

-- For a landlord with a mortgage given a 3-month payment holiday by the bank --
Mortgage interest accrues for the 3 months. Leave aside that there's going to be interest upon interest building up for the 3 months. Say €3,000 of the €4,500 was going towards interest, then that's €3,000 carried on the mortgage for the rest of the term and only paid off at the very end. At 4%, that's an extra €120 per year in costs. Fairly survivable but can add up to thousands.

The other separate issue is that if the landlord sells before the end of the mortgage term, they're crystalising their losses. They're losing the opportunity to earn the lost rent back at the end of the mortgage. Out of €4,500 lost rent, €1,500 was going to be capital payments then that's €1,500 that was lost to the landlord that they now have to pay back to the bank (on top of the €120 per year above).

I think for the majority of landlords that'll be survivable.

Tenancy
If tenants don't lose their jobs/income, there's no reason for a rent freeze.

If tenants lose their jobs, I think it'd be fair to split the losses so it's not just the landlord who takes the hit i.e. depending on circumstances the tenant pays some nominal rent based on their ability to pay.

One idea is that these tenants are instantly admitted to the HAP scheme. That'd offset losses to landlords and tenants would be in a scheme that determines some nominal rent for them to pay. Nominal rent + HAP may not reach the previous rent figures but that's a hit the landlords would take. Is that feasible?

I think of being a landlord as a business and I don't know if the government is going to be covering the losses of any businesses except for key national interest ones, like airlines, who are on the edge of going bust. That's fair enough but most businesses aren't earning anything because customers aren't getting a service and therefore shouldn't have to pay.

In this situation, tenants are getting a service i.e. accommodation, but people are arguing they shouldn't have to pay at all. I'd argue that they should pay something within their means. Maybe that's too complicated to work out but that'd be ideally fair.

Personally, I'm fine with taking losses if needs be but I dislike the idea of an unfair solution where all the losses are heaped on landlords just because it's the laziest solution. And that's not a reflection on tenants but on government.

accommodation is no longer a service. I am not quite sure people are getting this.

Dav010

dharma200 wrote: »

accommodation is no longer a service. I am not quite sure people are getting this.

What is rental accommodation if it is not a service?

GGTrek

dharma200 wrote: »

accommodation is no longer a service. I am not quite sure people are getting this.

Unbelievable what I have to read in this forum! I guess the army of freeloaders is using the latest crisis to come out in arms.
The quality of the posting is unfortunately collapsing as quickly as the economy.

Gumbo

dharma200 wrote: »

accommodation is no longer a service. I am not quite sure people are getting this.

What is it then?

Here's my numbers

Freelancer, contracts gone until minimum Sept. = Value 20,000.

Wife, child to feed.

203 a week given out by govt. for food, utilities, petrol, clothing for baby (they grow very quickly)

And you want the landlords to earn as much as they have been pre covid-19?

HAP comes out of the public purse, and we will need that money down the line.

We are ALL taking a hit. We're all in this together, and I'm real sorry, but life won't be returning to normal for at least 18 months until a cure is found.

Landlords have to wise up to this. Things are very, very different now.

argolis

dharma200 wrote: »

accommodation is no longer a service. I am not quite sure people are getting this.

IMO it is a service. I also recognise that housing is a right. However, those rights are guaranteed by the state so it's the state's responsibility to either 1) house people in state-owned accommodation or 2) pay the private sector to house people. It isn't the responsibility of a landlord to house someone for free.

As a comparison (and I know this is facile), let's say the government decided baked goods were now a basic human right. I would argue that it's not the bakery's job to pay for the ingredients, equipment and labour and then just give away their croissants. To me, that's insane. The state decided it, so the state should step up and either 1) provide the baked goods itself or 2) give money to bakeries to provide croissants.

sbsquarepants

Spencer Winterbotham wrote: »

The only foolish thing a person can do right now is thinking things will get back to normal. They won't.

This will go on for 6 - 18 months... the financial system as we currently know will not survive.

How could it?

A new reality will emerge and it will look nothing like the past.

There are two types of people in the world right now.

People who can see the seriousness of this situation and those with their heads in the sand.

I think you may be over reacting slightly.

Yes this is serious, yes it is probably going to effect and even kill a lot of people and it's definitely going to see a lot of businesses go to the wall, but it is not going to fundamentally alter the global financial system. A system that has survived world wars, global recessions, previous pandemics, countless natural disasters and so on. This will pass and it will be business as usual, it's just a matter of how long that's going to take.

Telling as yet completely unaffected tenants that you'll pick up their tabs till this is all over was very philanthropic of you:D

If the shít hits the fan, then the shít hits the fan and we'll all have to react accordingly, but right now all you really have is a fan and some shít. Settle down a bit!

sbsquarepants

sbsquarepants wrote: »

If the shít hits the fan, then the shít hits the fan and we'll all have to react accordingly, but right now all you really have is a fan and some shít. Settle down a bit!

Lol.

I would love to know what level people work on. Does the sh*t only hit the fan when we're feasting on the goo?

The. Sh*t. HAS. Hit. The. Fan.

argolis

Deleted User wrote: »

Here's my numbers

Freelancer, contracts gone until minimum Sept. = Value 20,000.

Wife, child to feed.

203 a week given out by govt. for food, utilities, petrol, clothing for baby (they grow very quickly)

And you want the landlords to earn as much as they have been pre covid-19?

HAP comes out of the public purse, and we will need that money down the line.

We are ALL taking a hit. We're all in this together, and I'm real sorry, but life won't be returning to normal for at least 18 months until a cure is found.

Landlords have to wise up to this. Things are very, very different now.

I'm a freelancer and I sympathise with losing your contracts. I'm lucky in that I can work remotely and I'm fine.

I didn't say landlords should earn what they were earning pre COVID-19, I said a fair, means-tested solution would be ideal. I also acknowledged that that may not be possible. If you have a wife and kid to feed on €203 per week then sure, you shouldn't need to be paying rent if you can't afford it.

However, I think (and I'm open to correction) HAP is designed for this situation if it can be rapidly extended.

Are you saying that you don't think you should have to apply for HAP, even if you could and it wasn't going to cost you anything, and that your landlord should get nothing?

rob316

Some gall of the landlords group saying the government must give greater access to HAP and increase it. Most won't touch a HAP tenant usually but now their income is threatened they will? You got your flexibility from the banks of 3 months if you have a mortgage, you will be getting tax relief if you don't have a mortgage on it.

Dav010

argolis wrote: »

IMO it is a service. I also recognise that housing is a right. However, those rights are guaranteed by the state so it's the state's responsibility to either 1) house people in state-owned accommodation or 2) pay the private sector to house people. It isn't the responsibility of a landlord to house someone for free.
.

Where do recognise housing being a right from? It might be a necessity, but it certainly is something you are entitled to.

Dav010

rob316 wrote: »

Some gall of the landlords group saying the government must give greater access to HAP and increase it. Most won't touch a HAP tenant usually but now their income is threatened they will? You got your flexibility from the banks of 3 months if you have a mortgage, you will be getting tax relief if you don't have a mortgage on it.

The problems with HAP will still be there, if the tenant is unable to pay their portion, especially now, HAP payment stops.

sbsquarepants

Deleted User wrote: »

Lol.

I would love to know what level people work on. Does the sh*t only hit the fan when we're feasting on the goo?

The. Sh*t. HAS. Hit. The. Fan.

It has not.

These are definitely weird times, unprecedented even and will involve a lot of temporary changes for a lot of people - but it is not armaggedon ffs.

The way some people are carrying on you'd think society itself was coming to an end. Life goes on, normality will return.

argolis

Dav010 wrote: »

Where do recognise housing being a right from? It might be a necessity, but it certainly is something you are entitled to.

Oh right! I didn't think about it too much and assumed it was a recognised right or something. It seems it's not but it's something some NGOs advocate for

http://www.housingrightswatch.org/country/ireland

Great thread folks. Excellent reading as I draft an email to my landlord informing we may not be able to make rent at the end of the month, as unfortunately I live almost month to month. I suspect he is using our rent as a pension.

Grolschevik

Where do recognise housing being a right from? It might be a necessity, but it certainly is something you are entitled to.

argolis wrote: »

Oh right! I didn't think about it too much and assumed it was a recognised right or something. It seems it's not but it's something some NGOs advocate for

http://www.housingrightswatch.org/country/ireland

UN International Covenant on Economic, Social and Cultural Rights, which Ireland signed in 1989. The 'right to housing' is in article 11. The UN has criticised Ireland for failing to adequately implement the covenant.

Pkiernan

[Deleted User] wrote: »

... I suspect he is using our rent as a pension.

What's wrong with that?

Pkiernan

Pkiernan wrote: »

What's wrong with that?

Jesus nothing is wrong with that. Just something I learned on this thread which puts me in a more difficult situation. I'd prefer if he was paying a mortgage and that was frozen.

Sierra Oscar

Government have just announced a three month ban on evictions.

Pkiernan

Will landlords qualify for the 203 euro per week to make up for lost rent, or are we too evil?

Zulu

Spencer Winterbotham wrote: »

The only foolish thing a person can do right now is thinking things will get back to normal. They won't.

This will go on for 6 - 18 months... the financial system as we currently know will not survive.

So your plan is to cut your income off now and get in before the rush is it?

A new reality will emerge and it will look nothing like the past.

Are you expecting the breakdown of society?

There are two types of people in the world right now.

People who can see the seriousness of this situation and those with their heads in the sand.

Well there's a third type apparently - one that give ups their income voluntarily for the benefit of those who might or might not need it.
Fair play to you.

Samuel T. Cogley

Sierra Oscar wrote: »

Government have just announced a three month ban on evictions.

Of Ireland or the UK?

Fann Linn

3 month ban on evictions just passed plus freeze on rent increases in Ireland.

Sierra Oscar

Samuel T. Cogley wrote: »

Of Ireland or the UK?

Ireland. The Dáil are currently debating the emergency legislation, it'll be passed.

Antares35

listermint wrote: »

How exactly would you be taking the hit if its still rented at the tail end ?

The renters would still be covering only later.


Im not sure you understand the mechanics of this at all..... :rolleyes:

Because the renters who owe 4 months rent can just walk away. Why would they stay?

Antares35

sbsquarepants wrote: »

I have an apartment rented out, on which there is still a mortgage to be paid. If i get a 3 month holiday on the repayments, i'd give a 3 month break on the rent - it will leave me out of pocket which is a bit shít (and which i can ill afford) but i don't really see another option. The 3 months "free" rent will just have to be tacked on at the end of the mortgage, finish paying 3 months later than planned - boo hoo!

These are unusual times, we're all going to have to do unusual things!

Good point actually!

gibgodsman

Its like people can't grasp basic maths, if tenants cannot pay the rent for a month or 2, and your mortgage gets pushed down the road, then its not like your not going to get your rent ever. Your not being charged a mortgage for those months the rent is not being paid

Would you rather remove the tenants for that 1 or 2 months without rent being paid? Your not losing money at the end of the day as the Banks won't be taking it from you either right now.

No the tenant will never pay that rent back, but it will eventually make its way to your mortgage via another tenant