No more 4% rent increases

thegreatescape

I think this is great news for tenants. I've recently bought my own place but just before I did, we got notification in the apartment I was renting with another guy that the rent would be increasing by the max 8% increase because of the covid freeze. Some landlords take full advantage of the 4% increase per year rule.

Flinty997

Jjohnrockk wrote: »

It was never supposed to be 4% default increase. Big Vultures (Private LL may not be aware of it) fooled us.

Rule was 4% subject to market rate or rentals of similar apartments nearby. Look at the RTB website for average rents and you will realise 4% rule was exploited even though average rentals were less in surrounding areas.

Lack of awareness perhaps at both LL and Tenant end?? Benefit of doubt. But Big VULTURES always knew this and yet charged 4%

The door was left open for REIT entering the markets and shutting out small LL who are leaving. Which is what tenants wanted.

Amadan Dubh

Amadan Dubh wrote: »

It absolutely is relevant that politicians are landlords.

If we were to ask them to answer this simple question; would you accept that the housing crisis needs additional supply but we need to target significant (ie 40%+) decreases in average rents in the next 5 years?

Do you think they would vote in favour of a policy with this as its stated outcome?

I wonder how Healy-Rae would answer that as on one hand he is the man of the people shouting about injustice and on the other he has about 15 or so rental properties.

Flinty997

Amadan Dubh wrote: »

It absolutely is relevant that politicians are landlords.

If we were to ask them to answer this simple question; would you accept that the housing crisis needs additional supply but we need to target significant (ie 40%+) decreases in average rents in the next 5 years?

Do you think they would vote in favour of a policy with this as its stated outcome?

Sure, but its flawed thinking.

You are making investing in rentals Russian roulette.

FileNotFound

Amadan Dubh wrote: »

40% is significant but I base it on the fact that it is mostly workers, paying income tax and prsi that rent. Therefore, it is appropriate to benchmark rents against salaries (moreso than comparing house prices to salaries).

At a very high level (averages as opposed to median);

Average salary after tax 2600.

2021 price for 1 bed apartment 1500-1800 pm in Dublin.
2021 price for 2 bed house 1600-2000 pm in Dublin.

Compare it to 2015 levels (not even the lows of 2012);

1 bed apartment 900-1250.
2 bed (house/apartment i can't tell from the Daft report) 1070-1700.

1 bed apartments are out of reach if you're earning the average salary in Dublin. Even sharing on the average salary, you'd be losing 30% of your salary sharing a place. It is far more sustainable if housing costs were brought down significantly as this cash would end up sloshing around the economy and be diversified more. People would be able to save more money meaning it would cost the State less in social spending. And as well, it would be easier to make raises to income tax. Who pays for these decreases? Landlords. Who benefits? Society as a whole.

Either we see salaries increase significantly / tax burdens decrease while at the same time rents do not increase or else we need rents to climb down significantly.

This is the only way to stop the rise of populism in the younger (ie renting generation). It is incompatible to not target significant reductions in rents while at the same time trying to keep the status quo with FF and/or FG, that is how I see it. I don't agree with populism but I understand the anger and how it is expressed at the ballot boxes.

I do agree the rents are currently too high for a single low wage person to be renting a 1 bed for example and even for a couple its a very high proportion of their salary.

When you highlight recession rents had they decreased from 2005-2007 times? If they had its not really realistic to expect recession prices to be viable in a more active economy.

Up until not so long ago (2 years) I was sharing a 3 bed with mates at 1800 in dublin. 600 a head. Even that was steep and many other apts around were rising closer to 800 a bed. It is a lot of money when you are trying to save etc.

Does a single wage earner not have the ability to apply for HAP?

I do agree that ideally rents v salaries is the fairest for the tenant but ignoring the rent v cost to the landlord is just us going back to one point of view.

Being as the Gov probably have no real legal way of forcing rents down - incentives like tax relief for low cost rental would be the only realistic way I can see it reducing.

If a landlord only payed 12.5% tax on their rental income - they could reduce the rent by as much as 30%.

Maybe that is a potential path forward where the 2 sides can kind of win?

Heraclius

thegreatescape wrote: »

I think this is great news for tenants. I've recently bought my own place but just before I did, we got notification in the apartment I was renting with another guy that the rent would be increasing by the max 8% increase because of the covid freeze. Some landlords take full advantage of the 4% increase per year rule.

Congratulations! I've just gotten the 4% increase letter in the past few days. I feel some sympathy for small scale landlords dealing with difficult tenants but overall that well of sympathy is pretty shallow (especially for institutional landlords). I don't feel that landlords can expect a rent that increases by 4% every year to be sustainable. Wage rises simply won't allow it in the long term.

It would be good if there was more fixed tenures with agreed rents and rent increases. It should surely be possible to give more resources and powers to the RTB to resolve disputes and make it faster for landlords to deal with the minority of tenants who damage properties or fail to pay. It shouldn't be other tenants who get penalised for this.

titan18

FileNotFound wrote: »

Targeting 40% decrease in rent isn't really realistic is it? Rents move with prices - most landlords lose 40+% of the rent in tax.

If someone bought a house for X planning to charge Y for rent - they may have to surrender their investment if your proposed 40% decrease came in. Mind you I also don't agree with having the mortgage paid for you - but as stated above the tax on rental means most still pay part of the mortgage anyway.


So it would probably be many more than a few TD's that would question the logic of such a decrease.

I do think we need longer term renting, sustained at lower than inflation levels to ensure it becomes more affordable (slow fix sadly), then stronger laws around poor/unpaying tenants (easier evictions where tenant isn't meeting agreed).

What they'd nearly be better off doing is something akin to rent a room and set a max per year per house that is tax free and anything over that is taxed on the full amount. You pretty much encourage landlords to let at that limit then or they'd need to rent at nearly double it to get the same amount. If you set it at a decent amount that landlords cover costs and make enough and where it's also affordable rent based on average salaries, you likely drive down rent a lot and make things more comfortable.

Flinty997

The issue with rents is supply.

I thought that was solved...https://www.boards.ie/vbulletin/showthread.php?t=2058067544

FileNotFound

thegreatescape wrote: »

I think this is great news for tenants. I've recently bought my own place but just before I did, we got notification in the apartment I was renting with another guy that the rent would be increasing by the max 8% increase because of the covid freeze. Some landlords take full advantage of the 4% increase per year rule.

Seems it became a target rather than a maximum.

For years in many rentals may rent rarely changed during my tenancy, but now it seems the standard.

rightmove

rented properties have higher occupancy they owned properties. This is really crucial so when you push out LL's you are displacing ppl and causing more pressure on the rental sector which lead to rent increases. I got out and never regret it.

fash

Jjohnrockk wrote: »

It was never supposed to be 4% default increase. Big Vultures (Private LL may not be aware of it) fooled us.

Rule was 4% subject to market rate or rentals of similar apartments nearby. Look at the RTB website for average rents and you will realise 4% rule was exploited even though average rentals were less in surrounding areas.

Lack of awareness perhaps at both LL and Tenant end?? Benefit of doubt. But Big VULTURES always knew this and yet charged 4%

If incoming new tenants were willing to pay 4%, it does indicate that the 4% was not above the market value.

The housing situation in Ireland is a mess - and now that rent control has been brought in, it can never be removed- as has been the case everywhere in the world.

Mad_maxx

BillyBiggs wrote: »

I don’t think anybody would buy an investment property at the moment anyway, with the current insane house prices. I doubt you’d make any profit on a buy to let house.

the relatively small minority of investors who buy entirely with cash would still do ok by buying and leaving empty , been happening in London for years

the rental market is too much hassle , better to buy , hold for a few years and sell

DubCount

Heraclius wrote: »

I don't feel that landlords can expect a rent that increases by 4% every year to be sustainable.

I think that depends on the starting point. If tenant A is in an apartment with a monthly rent of 1,000, and market rent is 2,100 per month, a 4% increase still leaves tenant A in a pretty good position. If tenant B is in the apartment next door with a starting monthly rent of 2,000, a 4% increase will be 2x the increase tenant A received and their rent just went from too high to too high +4%. Its not fair on anyone, landlords or tenants. Its down to the lottery of where your base rent started.

Heraclius wrote: »

It would be good if there was more fixed tenures with agreed rents and rent increases.

Agreed, but longer fixed contracts should be enforceable on both landlords and tenants. At present, there is no incentive for a LL to give a fixed term lease, as the tenant can walk away from the commitment at any time without penalty (except maybe loosing a deposit, which is now being restricted to 1 month)

Heraclius wrote: »

It should surely be possible to give more resources and powers to the RTB to resolve disputes and make it faster for landlords to deal with the minority of tenants who damage properties or fail to pay. It shouldn't be other tenants who get penalised for this.

Spot on. Yet you never hear any politicians or media complaining that the RTB is slow and ineffective, or that good tenants are paying higher rents because of the rogues milking the system.

Mad_maxx

thegreatescape wrote: »

I think this is great news for tenants. I've recently bought my own place but just before I did, we got notification in the apartment I was renting with another guy that the rent would be increasing by the max 8% increase because of the covid freeze. Some landlords take full advantage of the 4% increase per year rule.

and so they should take full advantage , the system is set up against them , they have to maximise where they can

Mad_maxx

says this will be activated july 19th ?

does this mean if a landlord issues a rent review notice prior to that date , they can increase rent by 4% or does the three months notice need to expire first ?

in essence , is it too late now for someone who has not yet issued notification for a rent review ?

Amadan Dubh

FileNotFound wrote: »

I do agree the rents are currently too high for a single low wage person to be renting a 1 bed for example and even for a couple its a very high proportion of their salary.

When you highlight recession rents had they decreased from 2005-2007 times? If they had its not really realistic to expect recession prices to be viable in a more active economy.

Up until not so long ago (2 years) I was sharing a 3 bed with mates at 1800 in dublin. 600 a head. Even that was steep and many other apts around were rising closer to 800 a bed. It is a lot of money when you are trying to save etc.

Does a single wage earner not have the ability to apply for HAP?

I do agree that ideally rents v salaries is the fairest for the tenant but ignoring the rent v cost to the landlord is just us going back to one point of view.

Being as the Gov probably have no real legal way of forcing rents down - incentives like tax relief for low cost rental would be the only realistic way I can see it reducing.

If a landlord only payed 12.5% tax on their rental income - they could reduce the rent by as much as 30%.

Maybe that is a potential path forward where the 2 sides can kind of win?

Small landlords have been kicked out of the market by FF and FG the last few years, likely aided by lobbying in behalf of institutionals. It is a disgrace. We need smaller landlords and not a few super sized landlords. So I absolutely agree that the playing field needs to be levelled between individual landlords and the institutionals. Something like rent freezes for corporate landlords only, no tax breaks for institutionals but reduced tax for individual landlords, (wishful thinking) easier to kick out non-paying/unruly tenants, anything like that which would stimulate the market for individual landlords.

Flinty997

FileNotFound wrote: »

Seems it became a target rather than a maximum.

For years in many rentals may rent rarely changed during my tenancy, but now it seems the standard.

These policies punish landlords who dont maximize their rents.

I'm not sure people get that.

Flinty997

Amadan Dubh wrote: »

... We need smaller landlords and not a few super sized landlords. ...

That ship has sailed.

rightmove

fash wrote: »

If incoming new tenants were willing to pay 4%, it does indicate that the 4% was not above the market value.

The housing situation in Ireland is a mess - and now that rent control has been brought in, it can never be removed- as has been the case everywhere in the world.

we have a country run by fools and being egged on by fools

AlmightyCushion

titan18 wrote: »

What they'd nearly be better off doing is something akin to rent a room and set a max per year per house that is tax free and anything over that is taxed on the full amount. You pretty much encourage landlords to let at that limit then or they'd need to rent at nearly double it to get the same amount. If you set it at a decent amount that landlords cover costs and make enough and where it's also affordable rent based on average salaries, you likely drive down rent a lot and make things more comfortable.

That would just lead to landlords sub-dividing houses up into separate properties or renting on a room by room basis and saying tenant 1 is in 1A, tenant 2 is in 1B etc.

Browney7

What this will change is the review process of the three comparable properties and thus reduces the scope for IRES, Kennedy wilson etc with a significant concentration of properties in one area to rack rent. All they ever have to do is have 3 properties in the general area vacant at rents higher than their incumbent tenant's rents and they achieve their 4% p.a. presumably the HICP cap will kick in now.

The inflation genie does seem to be out of the bottle though so anyone at near market rent could realistically look forward to a 4% increase this time next year anyway. Also, the extension of the RPZ to end 2024 seems significant. Presumably, if rental inflation in Dublin cools, Dublin would no longer satisfy the criteria of having a rent index increase of 7% in four of the last 6 quarters [RTA 2004 section 24.A]. Does the RTA compel the minister to undesignate an area?

IRES share price dropped marginally yesterday and has dropped from 1.62 in early June and now sits at 1.51.

Less rentals available, more places available for sale.

rightmove

Deleted User wrote: »

Less rentals available, more places available for sale.

and less occupancy and more displacement and higher rents

Flinty997

Supply is the only answer to this.

rightmove

also anybody renting and thinks the gov measure being introduced or previously introduced is good for them as a section of society is a fool.

I was both a LL and renter and as a renter they were bad news for me and as a LL it was bad news for me. I was moved on from my rented house and my tenants were moved on by me.

listermint

rightmove wrote: »

also anybody renting and thinks the gov measure being introduced or previously introduced is good for them as a section of society is a fool.

I was both a LL and renter and as a renter they were bad news for me and as a LL it was bad news for me. I was moved on from my rented house and my tenants were moved on by me.

You do keep hearing this yet there are still thousands of landlords . It obviously can't be all negative as with anything in life there are people that do a good job as landlords any can navigate policy.

2Mad2BeMad

I got a notice at the beginning of this month for an 8% increase that begins in September.
Is this void now? The increase is abit of a killer so would be welcomed

titan18

AlmightyCushion wrote: »

That would just lead to landlords sub-dividing houses up into separate properties or renting on a room by room basis and saying tenant 1 is in 1A, tenant 2 is in 1B etc.

You could probably legislate against that to make that more difficult tbf, and if a landlord is found to be abusing it and caught, they get fined and will end up owing Revenue the outstanding taxes.

AlmightyCushion

titan18 wrote: »

You could probably legislate against that to make that more difficult tbf, and if a landlord is found to be abusing it and caught, they get fined and will end up owing Revenue the outstanding taxes.

Enforcement would be the problem. We brought in legislation to stop residential properties being used for short term lets and there were still plenty of properties being used for short term lets that shouldn't have been.

Mad_maxx

Browney7 wrote: »

What this will change is the review process of the three comparable properties and thus reduces the scope for IRES, Kennedy wilson etc with a significant concentration of properties in one area to rack rent. All they ever have to do is have 3 properties in the general area vacant at rents higher than their incumbent tenant's rents and they achieve their 4% p.a. presumably the HICP cap will kick in now.

The inflation genie does seem to be out of the bottle though so anyone at near market rent could realistically look forward to a 4% increase this time next year anyway. Also, the extension of the RPZ to end 2024 seems significant. Presumably, if rental inflation in Dublin cools, Dublin would no longer satisfy the criteria of having a rent index increase of 7% in four of the last 6 quarters [RTA 2004 section 24.A]. Does the RTA compel the minister to undesignate an area?

IRES share price dropped marginally yesterday and has dropped from 1.62 in early June and now sits at 1.51.

IRES is a stock , its share price movement tells us nothing , the share price dropped to below IPO in March of last year despite neither prices for rent for property dropping at all