How do we actually fix the rental market?

JimmyVik

Peregrinus wrote: »

Yeah. But also in German the tenant gets much greater security of tenure, plus protection against rent increases. Tenancies are open-ended and the tenant can basically stay as long as he wants, unless the landlord can prove that one of a limited number of specific termination conditions has occurred.
The tenant can terminate without reason, but may need to give up to 9 months notice. As a result of all this, average tenancy length in Germany is 11 years; I think it's less than 3 years in Ireland. The long tenancies combined with restrictions on rent increases for sitting tenants means that rents do not move in line with shifts in mortgage costs or house prices, except in the very long term, and neither landlords nor tenants expect them to.

And handing back broke furniture doesn't arise because the landlord doesn't generally provide the furniture and appliances; the tenant does. The tenant will often also fit a kitchen, and take it away when he leaves.

In short, it's a very different market. A tenancy implies much greater commitment on both sides. The majority of German families live in rented accommodation, and the system is set up on the assumption that tenants are presumed to be there for the long haul. And of course tenants are a powerful voting bloc; there are many more tenant voters than landlord voters, and all the political parties are conscious of this. Tenants' unions and representative bodies are politically significant.

This might be a better system than the Irish system; when tenants stay longer they have more commitment to the property and more incentive to maintain it in good condition. But it wouldn't necessarily suit Irish landlords who want to rent property for a short period, or who see renting as a way of initially financing the acquistion of a property that he intends for himself. And it certainly wouldn't suit landlords who expect the rental income to cover the mortgage payment, because there is there is only a very indirect connection between them.

When I lived in germany, God help you if you missed the rent, or gave the place back in a less than pristine state.
You could hire furniture too in furniture warehouses when you started your tenancy. You would also not ever get another tenancy if you were a bad tenant.

Great system over there, but tenants had to follow the rules and would be out on their ear quick smart if they didnt.
Big deposits too.

ELM327

JimmyVik wrote: »

When I lived in germany, God help you if you missed the rent, or gave the place back in a less than pristine state.
You could hire furniture too in furniture warehouses when you started your tenancy. You would also not ever get another tenancy if you were a bad tenant.

Great system over there, but tenants had to follow the rules and would be out on their ear quick smart if they didnt.
Big deposits too.

This is what we need here IMO

brisan

Dav010 wrote: »

Do LLs really expect tenants to finance the purchase of the property? I wouldn’t have thought so. Tenants pay for a service not a physical asset, the benefit of the is that they have use of the property during the tenancy period, not an asset at the end of it. If the tenant wants an asset, buy, don’t rent.

I do agree with you that LLs should not assume that the proceeds of the rental will cover the mortgage, but they should be able to assume that a tenant who stops paying rent can be replaced within a reasonable timeframe, therefore allowing the LL to continue to use the rent for whatever they see fit, including paying off the finance on the property. We know this is not the case due to legislation which favours the tenant.

You say that it is up to the LL to “fix those problems” when there is a poor tenancy and that the LL should be capitalised enough to cover expenses during that period. If this were like any other business the tenant would cease to have benefit of the service once they stopped paying for it, saying landlordism is a business and a LL should be able to cover expenses while the eviction process moves painfully past the moratorium on evictions then slowly through the RTB and courts, is like saying a law office should have enough money to continue as normal to provide services for clients for up to two years, without any payment whatsoever coming in. To be honest, I find that unreasonable, could you be expected to have enough capital to continue pay your staff/expenses/mortgage/rental/utilities/insurance for that period as normal with no income?

At a time when rents were at historically high levels, landlords were leaving the sector in significant numbers and buy to let mortgage applications were extremely low. If the rental market is to improve, the reasons for those market anomalies must be considered and addressed. If investors are not staying in the market when demand/rent is high, nor new LLs interested in entering the market, there is a huge problem.

In a lot of cases yes
That is why so many landlords expect a rental to wash it face

JimmyVik

brisan wrote: »

In a lot of cases yes
That is why so many landlords expect a rental to wash it face

Show us where you can invest in a property that washes its own face?
I'll buy it tomorrow if you can find one

Smouse156

Fol20 wrote: »

How exactly are the state going to make a profit from this because history has long shown that the lose money in this but it helps Ireland from a societal POV. Case in point selling social stock at a massive discount to them, tenants paying virtually nothing and the maintenances costs are very expensive relative to the equivalent private sector.

I’m saying to build private homes predominantly and sell at prevailing market rates. Given they have zero percent finance and free land the profits should be huge! If they build a 80/20 or 85/15 mix then they could sell them at competitive prices, thereby increasing supply and keeping a lib on price rises.

I never suggested selling them way below market value like they did in the past.

Smouse156

Eric Cartman wrote: »

not really. Like what would you say the top 10 things are that make a 'bad landlord'

the deposit not being in escrow is a big one, often tenants say the landlord won't give it back or is late giving it back. Often they don't have it till a new tenant comes in. Most aren't greedy, just broke.

the house has mould issues - turns out tenants won't open windows for showers, won't put on the rad in the hallway, block vents to 'save money on heat' etc...

the landlord won't fix the boiler / shower - they tried to service it before and bad tenants wouldn't let the service guy in / wouldn't agree a date / the boiler is ancient and the landlord isn't even covering the mortgage payment with the rent and doesn't have a grand or 3 to drop upgrading it.

most issues around 'bad landlords' Ive found stem from tenants inaction / refusal to operate things properly or simple cashflow issues.

Considering over 80% of rental accommodation is substandard you can’t actually believe it’s the tenants fault:

https://www.irishtimes.com/news/social-affairs/more-than-80-of-private-rental-accommodation-fail-tests-1.3977156

Most “broke” landlords didn’t buy a second or third property with a 30% deposit because they were skinned.

Most are out and out fleecers with their units kitted out with 1980s worthless bullet proof furniture that try to withhold deposits for “damage to contents”...even though those contents are often worthless.

brisan

Fol20 wrote: »

He doesn’t acquire the asset for free. He needs up front capital of 30pc at a minimum. They also bear all the risk during the 25-35years mortgage where property values may go up and down at the point they need to sell, they have a highly concentrated asset, 35 years is a very long time to be overpaying a mortgage. It looks like what you say is contradictory. You say it’s a business yet at the same time. You expect the business to not be profitably for 35years as they will have a free asset at the end. Normally a business is profitable throughout to pay all the bills that come in. Look at car rental companies or any company that allow rentals of anything. The rental cost is usually always more expensive that owning.

A rental car is a depreciating asset ,property is in the main an appreciating asset
Your comparison of the two holds no water

brisan

Peregrinus wrote: »

Yeah, but car renters don't end up with a valuable asset; a car depreciates immediately and quickly. Whereas you expect a house to appreciate in value. So the profit in a house-rental business is loaded to the back end in a way that is never going to be true of the profit in a car-rental business. House rental is essentially a way of financing the purchase of a house; you'd never say that about car rental, where the cars are basically consumables.

That's not to say that the rent shouldn't exceed the mortgage payment. It may, and from time to time it often will. But of course the rent has to cover not just the mortgage payment but also the maintenance and other outgoings on the house, and the other overhead costs of renting out a house (like providing and renewing furniture and appliances).

My point is that the landlord takes this risk, in return for the upside risk of a valuable capital asset, free of mortgage, at the end. It's inherent in the property rental business that the downside risks come first, and the upside at the end. That's not the tenant's fault. It's not anybody's fault, really; it's just the economic nature of the business. Which means, don't get into the business unless you have the resilience to deal with the downside risks, should they eventuate. You need to have some capital (or surplus income from other sources) to make expenditures that are not covered by the rental income, because there will definitely be times when that happens, and they could come quite early in the piece. That's not unfair, and it's not market dysfunction, and it's not a bias against landlords - it's capitalism, red in tooth and claw.

Exactly you need a business plan and to plan for the vagaries of the business
When we had rentals we worked on the following assumptions
10 months rent a year
Allow for management fees
Allow for reasonable expenses ,boiler service, replacement of white goods over a 5yr period
Full repaint every 5 years
Cleaning after every tenancy
Run of the mill repairs
RTB registration
Mortgage repayments
Tax
Deposits kept in a separate account
If you could not cover this from the rent then either increase the deposit till you could or do not buy
Plan for the worst and hope for the best
We had tenants who stayed for 5 years and ones who stayed for over 6 years
We also had to let one house twice in a calendar year and took a hit in that property that year
Its not a money making machine ,nor is it a form of income unless you are in it on a large scale or a slumlord as seen on primetime in Dublin last week
You hope that 60-70% of the asset at the end will have been paid for by the rental, not the full amount

brisan

JimmyVik wrote: »

When I lived in germany, God help you if you missed the rent, or gave the place back in a less than pristine state.
You could hire furniture too in furniture warehouses when you started your tenancy. You would also not ever get another tenancy if you were a bad tenant.

Great system over there, but tenants had to follow the rules and would be out on their ear quick smart if they didnt.
Big deposits too.

Agreed and in parts of NYC its the same
However landlords have to and do follow the rules
Not all do in Ireland
There are bad tenants and bad landlords, and a lot of the bad landlords do not think they are bad landlords
They just do not know the rules and and regulations or if they do they only follow the ones that they think they should
A lot of landlords do not provide rent books ,reason being they claim bank payments are proof ,makes no difference the law states you must provide a rent book
A lot of landlords do not provide a written lease, why ,"ah I do not need one "
Rentals without BER " It makes no odds to the tenants "
No washer dryer or microwave," God I didn't know that was the law "
Full written inventory of furniture and equipment provided " I know what was there "
Too many accidental landlords who do not know their obligations and too many who look on it as a money making racket
Being a landlord is like having a pension pot
Expect to put money in to get a big payout at the end
You do not draw down a pension at the same time you are funding it

Fred Cryton

yer man! wrote: »

I'm not a home owner yet (saving for it) and have the experience of renting in Ireland in multiple cities over the past few years. I'm just wondering, how do we fix the rental market in Ireland? The high cost, the low quality, the lack of supply, the overcrowding, the crap protections for both the landlords and the tenants, the only viable option being to house share....

How do we actually make it better? I've been contacting politicians for the past 5 years here and always get the same response of toothless policies they have mentioned they're using to fight the problem but clearly there's very little progress.

It honestly feels like we are where we are by design, i remember the time when we had thousands upon thousands of vacant properties all over the country, perhaps I am looking through rose tinted glasses but it definitely seems like we're not heading in the right direction.

The main problem is local government. The council. And specifically planners within the council and whoever is influencing planning decisions at local level.


A good example is Spencer Place in Dublin, where DCC have refused permission for an extra 150 or so apartments on top of the 300 already allowed. Why? Because they don't like height (an extra 3 floors!). And they don't like developers.


Sadly for young people, even if God forbid SF ever did get into the national government, they still wouldn't be able to do anything about housing because local government have so much control over planning, zoning, height etc.. The only way SF would make the country more affordable is if their election caused a massive recession due to multinationals leaving.

brisan

JimmyVik wrote: »

Show us where you can invest in a property that washes its own face?
I'll buy it tomorrow if you can find one

You do it by putting down a large deposit and not the bare minimum
I agree a proper landlord will not expect a property to wash its face ,many landlords will though.

brisan

Smouse156 wrote: »

I’m saying to build private homes predominantly and sell at prevailing market rates. Given they have zero percent finance and free land the profits should be huge! If they build a 80/20 or 85/15 mix then they could sell them at competitive prices, thereby increasing supply and keeping a lib on price rises.

I never suggested selling them way below market value like they did in the past.

Agree with that but with the proviso that they are owner occupied for a set minimum number of years

spaceHopper

Get rid of rent caps, they make 4% rent rises mandatory for a LL, if you have a good tenant and would be happy to leave the rent alone for them you fall behind the market rate then when they move on you are stuck with a below market rate rent. They were meant to be temporary anyway.

Streamline the RTB make their decisions binding, ie if they award compensation or approve and eviction you won't need to go to court to enforce it.

Get rid of slum lords filling houses with bunk bed make it a criminal offence and set revenue on to them as well.

Make it attractive for small time LL's, they are what we've had up to the last decade and they served us well.

Change the planning, less one beds, more storage more family apartments. No apart hotels / shared living spaces they are a con.

Things fell apart when councils stopped building and started relying on private rental sector. Start building again.

Ban councils from buying on the open market it distorts prices which feed into rents.

brisan

spaceHopper wrote: »

Get rid of rent caps, they make 4% rent rises mandatory for a LL, if you have a good tenant and would be happy to leave the rent alone for them you fall behind the market rate then when they move on you are stuck with a below market rate rent. They were meant to be temporary anyway.

Streamline the RTB make their decisions binding, ie if they award compensation or approve and eviction you won't need to go to court to enforce it.

Get rid of slum lords filling houses with bunk bed make it a criminal offence and set revenue on to them as well.

Make it attractive for small time LL's, they are what we've had up to the last decade and they served us well.

Change the planning, less one beds, more storage more family apartments. No apart hotels / shared living spaces they are a con.

Things fell apart when councils stopped building and started relying on private rental sector. Start building again.

Ban councils from buying on the open market it distorts prices which feed into rents.

I agree with most of your points
However the bit in bold was brought in for a very good reason and mayhem would ensue if they were done away with ,once the current pandemic is over and things get back to normal
Nothing stopping a landlord charging the headline rent and increasing it by
the RPZ rates every year
Does not mean he has to collect that amount every month

The Student

brisan wrote: »

I agree with most of your points
However the bit in bold was brought in for a very good reason and mayhem would ensue if they were done away with ,once the current pandemic is over and things get back to normal
Nothing stopping a landlord charging the headline rent and increasing it by
the RPZ rates every year
Does not mean he has to collect that amount every month

If you want supply to increase you need to attract new entrants.

brisan

The Student wrote: »

If you want supply to increase you need to attract new entrants.

Depends on the quality on the new entrants and if they know what they are doing and are prepared to accept and abide by the laws and not bitch about them and only accept the ones that suit
Buying an investment property with a mortgage is a long term game ,it should not be viewed as additional income ,which many landlords do

DubCount

brisan wrote: »

Depends on the quality on the new entrants and if they know what they are doing and are prepared to accept and abide by the laws and not bitch about them and only accept the ones that suit
Buying an investment property with a mortgage is a long term game ,it should not be viewed as additional income ,which many landlords do

Its such a sad reality that Irish Residential Property is not the only place to put your money. People can put their money in foreign property, shares, gold, government bonds or whatever else they want to.

If you make rules which discourages people to invest in Irish Residential Property, you cant be surprised that they put their money elsewhere. Its their absolute right to bitch about the rules or explain their investment choices (whichever you prefer) and vote with their feet.

If you want more supply, then you need to encourage people with money to put that money where you want them to. Otherwise, the state can make up the supply - which they cant afford.

Buying a property as an investment is a long term game, but if there are easier ways to make money, why would anyone choose this method of making money. If you were offered a job with better terms and conditions and better pay, would you stay in your current job just as a "social good"?

The Student

brisan wrote: »

Depends on the quality on the new entrants and if they know what they are doing and are prepared to accept and abide by the laws and not bitch about them and only accept the ones that suit
Buying an investment property with a mortgage is a long term game ,it should not be viewed as additional income ,which many landlords do

If the market is attractive new entrants will come. If you constantly change the market conditions existing suppliers will leave. Suppliers need to have some influence in a market not constantly being dictated to.

No matter how much you want to you can't control the market. Participants will act in their own interests. That's exactly what markets do

brisan

DubCount wrote: »

Its such a sad reality that Irish Residential Property is not the only place to put your money. People can put their money in foreign property, shares, gold, government bonds or whatever else they want to.

If you make rules which discourages people to invest in Irish Residential Property, you cant be surprised that they put their money elsewhere. Its their absolute right to bitch about the rules or explain their investment choices (whichever you prefer) and vote with their feet.

If you want more supply, then you need to encourage people with money to put that money where you want them to. Otherwise, the state can make up the supply - which they cant afford.

Buying a property as an investment is a long term game, but if there are easier ways to make money, why would anyone choose this method of making money. If you were offered a job with better terms and conditions and better pay, would you stay in your current job just as a "social good"?

I have no problem with investors either leaving the Irish property market ,or deciding to not invest in the Irish property market
I /we had investment properties
We sold up
We have had opportunities to get back in and declined
I have a problem with investors who go into the market unprepared to obey the rules and regulations ,see it as a quick money maker (when it should be viewed as the exact opposite ) and then moan how they cannot make money in the current set up
I have no problem with an investor who goes in with their eyes wide open ,is prepared to be totally legit and knows what he is doing

brisan

The Student wrote: »

If the market is attractive new entrants will come. If you constantly change the market conditions existing suppliers will leave. Suppliers need to have some influence in a market not constantly being dictated to.

No matter how much you want to you can't control the market. Participants will act in their own interests. That's exactly what markets do

And as I said I have no issue with that
If someone does not like the rules they can take their ball back and go home
As long as someone is prepared to play by all the rules and knows the objectives of the game then they can stay as long as they like
if you cant see the endgame in the rental market ,or are not prepared to obey the rules .then by all means sell up and leave
Its not the gravy train some where expecting

brisan

DubCount wrote: »

Its such a sad reality that Irish Residential Property is not the only place to put your money. People can put their money in foreign property, shares, gold, government bonds or whatever else they want to.

If you make rules which discourages people to invest in Irish Residential Property, you cant be surprised that they put their money elsewhere. Its their absolute right to bitch about the rules or explain their investment choices (whichever you prefer) and vote with their feet.

If you want more supply, then you need to encourage people with money to put that money where you want them to. Otherwise, the state can make up the supply - which they cant afford.

Buying a property as an investment is a long term game, but if there are easier ways to make money, why would anyone choose this method of making money. If you were offered a job with better terms and conditions and better pay, would you stay in your current job just as a "social good"?

Instead of bitching about the rules ,if they don't suit sell up and leave the market

DubCount

brisan wrote: »

Instead of bitching about the rules ,if they don't suit sell up and leave the market

They can and they do. That doesnt help the rental market though. It doesnt help if you have more people looking to rent, than available rental property. It doesnt help reduce rental costs.

brisan

DubCount wrote: »

They can and they do. That doesnt help the rental market though. It doesnt help if you have more people looking to rent, than available rental property. It doesnt help reduce rental costs.

Maybe not but no landlord is better than a bad landlord
The market will stabilize as market forces come into play
Already rents are dropping
REITS will eventually have to drop prices to increase occupancy and cash flow
The days of the cheap grubby bedsit are gone and some landlords don't like it

Dav010

brisan wrote: »

Instead of bitching about the rules ,if they don't suit sell up and leave the market

Which they are doing, I fail to see how less rental properties helps the rental market though. Those that are leaving the market because they are unhappy with the legislation are not necessarily bad landlords.

The Student

brisan wrote: »

And as I said I have no issue with that
If someone does not like the rules they can take their ball back and go home
As long as someone is prepared to play by all the rules and knows the objectives of the game then they can stay as long as they like
if you cant see the endgame in the rental market ,or are not prepared to obey the rules .then by all means sell up and leave
Its not the gravy train some where expecting

But they cant take their ball and go home. What happens if you have a rogue tenant who wont leave when you want to sell?

BryanMartin21

Turquoise Hexagon Sun wrote: »

Reduce the number of student visas from non EEA areas.

Figures show that around 13,500 first residence permits were issued to students entering higher education in Ireland from non-European Economic Area (EEA) countries in 2017 – a 45% increase on the same figure from 2013
https://www.google.com/amp/s/www.thejournal.ie/international-student-numbers-origin-ireland-2017-4643317-May2019/%3famp=1

It don't think its a coincidence that since 2013 there was nearly a 50% increase in non EEA student visas. Thats 13,500 Visas they gave out to students coming to Ireland. Where is this 45% increase of students going to live. I'll give you a clue. Its not student accommodation. Its normal rental accommodation. Locals are competing against a 45% increase in students. Its mental.

I'm all for students coming and studying. I think its great. Its not their fault. Its our sham government and politicans trying to make a quick buck and import a temporary cheap, working part-time working class and so their friends that own some English schools can get a influx of students for their English School businesses whilst screwing over local population.

Government gives out all the 3 year visas. They get cash from those student visas. They have to have 5000 euros in the bank to attain the visas to prove they can pay their way if there are problems. This money may or may not prop the economy a bit. 13,500 people putting 5,000 each into Irish bank accounts... But wait.

Government overcrowds rental market and guess who are the beneficiaries of an overcrowded rental market? All those politicians that own a second or third rental property. They arent going to want change anything.

Its rotten to the core.

So, how so we fix it? First of all stop giving out 13,500 visas when we don't have the infrastructure.

All these 13,500 are competing with locals on rental. That 13,500 is controlable. Its a decision made by our government.

That's only non EAA visas. It doesnt even account for anyone moving to Ireland within Europe.

This is not a critique of students or freely moving around Europe. This is a critique of greedy politicians.

I don't think a form of Irish EU exit is totally off the cards in this context. We have past form for rejecting EU treaties and the younger voters who are fed up is growing each year they are being left behind and fed propaganda from the government about jobs and the economy. I'm very much pro-EU but I wouldn't completely rule it out. Particularly if France and Germany shaft us and our MNC gravy train once the UK are out. The US and UK would push for us to leave as well.

brisan

Dav010 wrote: »

Which they are doing, I fail to see how less rental properties helps the rental market though. Those that are leaving the market because they are unhappy with the legislation are not necessarily bad landlords.

Then why are they leaving ?
If not the regs what reasons ?
Inability to make a monthly profit ?
Inability for the property to wash its face ? I

brisan

The Student wrote: »

But they cant take their ball and go home. What happens if you have a rogue tenant who wont leave when you want to sell?

Change the laws
Run it the same as European models
But that puts more obligations on landlords and tenants
And landlords already give out about the regs and some don’t follow the ones that are there

the_syco

brisan wrote: »

Maybe not but no landlord is better than a bad landlord

A bad landlord is better than sleeping on the streets.

brisan wrote: »

The market will stabilize as market forces come into play

This will only happen when landlords can evict people again. You'll then get a few rentals available again, but I'd say a lot of rentals will cease being rentals.

brisan wrote: »

Already rents are dropping

Because no-one is renting. Once COVID is over, and people go back to Dublin, the rents will rise again.

brisan wrote: »

REITS will eventually have to drop prices to increase occupancy and cash flow

No. The beauty of having money is that you don't have to drop prices.

brisan wrote: »

The days of the cheap grubby bedsit are gone and some landlords don't like it

Many of the current homeless could only afford the cheap grubby bedsits. When they were eliminated, nothing came in their place, and people who used them are now homeless.

The Student wrote: »

What happens if you have a rogue tenant who wont leave when you want to sell?

Currently, by law, you can't evict them. I wonder how many evictions will take place once the landlords are able to evict people?

brisan

The Student wrote: »

But they cant take their ball and go home. What happens if you have a rogue tenant who wont leave when you want to sell?

If you want to be a landlord within a proper market then you are in it for the long haul
There should be very strict and very limited reasons for both a tenant and a landlord ending a tenancy