No more 4% rent increases

celbridge74

This is a crazy decision. I hadn't upped the rent of our rental property by 4% last year as we were in the middle of the pandemic and didn't want to be adding to tenant's problems. This was even though we are caught into a rent of at least 900 less per month than standard rent. Certainly regretting that decision now. Had the new rent reviewed typed and not sure if I can even send that.

At this point, with a loss of almost 11000 per year compared to market rent, it is now worth my while to end the tenancy either to do substantial work with a view to selling or to allow a family member to move in there and take it out of the rental market for two years. Now that house prices are up we still cant sell until we do one or the other as the current below market rent will have a significant impact on resale value. Don't like to have to do it as tenants have been there so long. However, in order to protect my family I'll have no option.

This decision is just going to remove a load of houses from the rental market.

FileNotFound

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.

In fairness that would be a good approach.

Will have to be forced through taxation as no legal way to just demand lower rents I imagine.

FileNotFound

celbridge74 wrote: »

This is a crazy decision. I hadn't upped the rent of our rental property by 4% last year as we were in the middle of the pandemic and didn't want to be adding to tenant's problems. This was even though we are caught into a rent of at least 900 less per month than standard rent. Certainly regretting that decision now. Had the new rent reviewed typed and not sure if I can even send that.

At this point, with a loss of almost 11000 per year compared to market rent, it is now worth my while to end the tenancy either to do substantial work with a view to selling or to allow a family member to move in there and take it out of the rental market for two years. Now that house prices are up we still cant sell until we do one or the other as the current below market rent will have a significant impact on resale value. Don't like to have to do it as tenants have been there so long. However, in order to protect my family I'll have no option.

This decision is just going to remove a load of houses from the rental market.

Well I imagine that some high rents are high due to the cost of the property (new buildings at least) - whereas if you bought some time back and were happy that the rent you demanded was sufficient why the need to make major change anyway.

I think the whole just cause you can is a major issue in rental.

I cannot see anyone forseeing the mass rent rises we have seen and needing it to justify investments before it happened???

You could just keep going in the knowledge that your nest egg is being part paid for by others.. Not all that bad surely?

Flinty997

listermint wrote: »

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.

It only a negative for a LL who didn't keep their rent at the maximum.
If you did then this new policy is not an issue.
Or you are a new LL, or just refurbished a property. You can set whatever rent.

So its only discouraging LL who keep the rent low.

FileNotFound

Flinty997 wrote: »

These policies punish landlords who dont maximize their rents.

I'm not sure people get that.

Is continuing to get the money you planned upon original purchase a punishment or is that just s state of mind.

I doubt many foresaw the mass increases in rent and were happy with the levels when they invested?

Considering that rental supplements the cost of a long term investment this mindset is something i struggle to understand.

If landlords are creaming it and keep wanting more and more just cause they can - well time for even more tough measures maybe.

fash

celbridge74 wrote: »

At this point, with a loss of almost 11000 per year compared to market rent, it is now worth my while to end the tenancy ...r to allow a family member to move in there and take it out of the rental market for two years.

Just to note that that wouldn't entitle you to escape the RPZ rents. The 2 year period was prior to the RPZ coming into effect in your area.

Flinty997

FileNotFound wrote: »

...
You could just keep going in the knowledge that your nest egg is being part paid for by others.. Not all that bad surely?..

Some do.

But the only thing that matters for renters is supply. So if they are happy with the supply then they can ignore what the LL does.

FileNotFound

Amadan Dubh wrote: »

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.

Agree small landlords need protection - not sure how to fix the large institutional rental that has developed.

I always though the best way to remove the bigger mass rental organisations were aggressive property tax

standard price for 1 property
increase by X % per property after that. Thus once a person has 5 properties the last becomes a money pit and any company with 50-100 pays heavily.

I think the above will be more effective than any rent control measure.

celbridge74

I had to keep the house in 2007 as it didn't sell when we were upgrading house with children. Then house prices fell and went into negative equity along with the property we bought and we had no option but to hang on. The rent in 2007/2008 was significantly higher than the rent being paid by the tenants currently and will take years with the new increases to reach that. We had no option but to keep renting while there was negative equity. It's kept the mortgage paid (which is interest only so not even feathering our nest egg:) and the little left over goes into repairs and tax. Certainly not worth the hassle at this stage.

Flinty997

FileNotFound wrote: »

Is continuing to get the money you planned upon original purchase a punishment or is that just s state of mind.

I doubt many foresaw the mass increases in rent and were happy with the levels when they invested?

Considering that rental supplements the cost of a long term investment this mindset is something i struggle to understand.

If landlords are creaming it and keep wanting more and more just cause they can - well time for even more tough measures maybe.

if you are going to buy a rental property. There's a choice of two. Once is 10% below market rents, the other is at market rent. Which will you pay more to buy , all things being the same.

You also have cover yearly expenses and losses and damages. Those aren't going to wait for you to pay them off 25yrs in the future. You have to pay them now. Out of Income.

C14N

I think this policy will likely benefit me as a renter who is not looking to rent again, but I still think it's a bad one. It doesn't help to distort prices like this and limit the incentive to supply rentals. It's fine if you have your rental and have no wish to move (unless of course the LL decides they just want to sell the house and get you out) but it's making it harder for anyone who is potentially looking to move to a new rental.

Browney7

Mad_maxx wrote: »

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

What happened last March? Didn't the world and it's dog think the sky was going to fall in? The stock price is an expectation of future profits combined with sentiment.

In this case, the move by government doesn't seem to have greatly perturbed investors in IRES. If government announced no more reviews for ten years do you think the price would have moved on the news?

FileNotFound

Flinty997 wrote: »

if you are going to buy a rental property. There's a choice of two. Once is 10% below market rents, the other is at market rent. Which will you pay more to buy , all things being the same.

You also have cover yearly expenses and losses and damages. Those aren't going to wait for you to pay them off 25yrs in the future. You have to pay them now. Out of Income.

Indeed - maybe a ruling to allow reset after sale - so its like a fresh start for the new owner (lets be honest they will have a bigger mortgage than the prior owner anyway)

You do have to cover expenses but then thats the well known negative to renting. And the increase in maintaining a home isn't much higher now than it was in 2005 and we are 16 years and double the rents on.

But then allowing tax breaks for maintenance might be something to help here.

At the end of the day (yes in 25 yrs) you may well be a half million or more better off than another person for this minor inconvenience...

Varik

There's a big difference between the 4% and linking it to the HICP rate which going by their average presented was for 2017-2019 as in 2020 it was -0.98%.

Linking it to inflation means that value of rent your paying/receiving has the same on average purchasing power, with some exception most importantly it isn't influenced by owner occupier residential price changes.

Now the LL is only required to link increases to this so choosing not to alter the rent for 2020 for example means they beat inflation by a bit.

This all means the same revenue to an ever increase asset prices for existing rental properties and again will have no effect on the initial rent for new properties which we'll see driving rents above inflation to the surprise of the uninformed who couldn't understand why average rents were increasing above the previously limit.

mrslancaster

FileNotFound wrote: »

....whereas if you bought some time back and were happy that the rent you demanded was sufficient why the need to make major change anyway.

I think the whole just cause you can is a major issue in rental.

I cannot see anyone forseeing the mass rent rises we have seen and needing it to justify investments before it happened???

You could just keep going in the knowledge that your nest egg is being part paid for by others.. Not all that bad surely?

Isn't that what happens in every service market though?

Someone puts their money into buying a property or starting a business & offers their service or product at market rates. Buyers can shop around for the best deal but there will always be stuff that's too expensive whether it's property, rentals, restaurants, cars, holidays, clothing even foodstuffs.

Vendors don't sell stuff in 2021 at 1980s prices because they've been in business since 1980. e.g. If you were selling a property now that you bought 20 years ago, you might be happy to sell below market rates but I don't think many would agree with that.

FileNotFound

mrslancaster wrote: »

Isn't that what happens in every service market though?

Someone puts their money into buying a property or starting a business & offers their service or product at market rates. Buyers can shop around for the best deal but there will always be stuff that's too expensive whether it's property, rentals, restaurants, cars, holidays, clothing even foodstuffs. Vendors don't sell stuff in 2021 at 1980s prices because they've been in business since 1980.

e.g. If you were selling a property now that you bought 20 years ago, you might be happy to sell below market rates but I don't think many would agree with that.

I fully accept that looking for the most money you can from investment is natural.

Most service markets are heavily regulated with year on year greater regulation and expenses. If viewing rental in the same boat then this would be quite standard.

Big business swallow small businesses so watching big rental groups kill off the small LL would be normal.

Maybe I am full of romantic notions but i would like to see us keep the small LL and also find a nice balance between a good investment and ripping off people who are trapped in rental due to housing supply.

Amadan Dubh

https://www.irishtimes.com/business/energy-and-resources/households-face-8-20-energy-bill-hike-as-electric-ireland-increases-prices-1.4608890

ESB hiking electricity and gas prices by, on average, around 8%. Considering these new measures link rental increases to inflation it brings all economic news into relevance for a discussion on the rental market. The big investors who proposed linking rent increases to inflation as a compromise to simply freezing rental increases are most certainly delighted that this policy has flown in under the radar.

Flinty997

FileNotFound wrote: »

Indeed - maybe a ruling to allow reset after sale - so its like a fresh start for the new owner (lets be honest they will have a bigger mortgage than the prior owner anyway)

You do have to cover expenses but then thats the well known negative to renting. And the increase in maintaining a home isn't much higher now than it was in 2005 and we are 16 years and double the rents on.

But then allowing tax breaks for maintenance might be something to help here.

At the end of the day (yes in 25 yrs) you may well be a half million or more better off than another person for this minor inconvenience...

My point was that capital appreciation doesn't cover the day to day for 25yrs.

You need income to do that. The argument about is the capital appreciation being enough for yah, is a bit misleading.

AND it has an effect on capital appreciation anyway.

mrslancaster

FileNotFound wrote: »

I fully accept that looking for the most money you can from investment is natural.

Most service markets are heavily regulated with year on year greater regulation and expenses. If viewing rental in the same boat then this would be quite standard.

Big business swallow small businesses so watching big rental groups kill off the small LL would be normal.

Maybe I am full of romantic notions but i would like to see us keep the small LL and also find a nice balance between a good investment and ripping off people who are trapped in rental due to housing supply.

Agreed it looks like the big rental groups are here to stay & they are setting crazy prices. Not surprising as it's happened in every other facet of society & dealing with faceless corporations is now the norm - who even remembers the days you could meet the local bank manager to ask for a loan...
The personal relationship in most business arrangements is gone the same way as the dodo. unfortunately it looks like small landlords are heading that way too.

Fkall

During the pandemic a number of my properties were re-rented at a lower price - C’est la vie. Today all my tenants received rent increases of 4%-8% with the exception of one property which received a notice to quit in order to complete a substantial refurb.

spaceHopper

This is stupid, so if there is high inflation then rents will jump too! Which in turn will drive up inflation. It's a positive feedback loop. Also at some point there will be a constitutional challenge to this

mrslancaster

Fkall wrote: »

During the pandemic a number of my properties were re-rented at a lower price - C’est la vie. Today all my tenants received rent increases of 4%-8% with the exception of one property which received a notice to quit in order to complete a substantial refurb.

That happened when previous changes were introduced so it will probably affect a lot of tenants in the short term.

I was surprised that D O'Brien said he consulted with student groups, tenant advocacy groups, threshold & opposition parties but no consultation with landlord groups. It's odd the other party wasn't at the table.

FileNotFound

mrslancaster wrote: »

Agreed it looks like the big rental groups are here to stay & they are setting crazy prices. Not surprising as it's happened in every other facet of society & dealing with faceless corporations is now the norm - who even remembers the days you could meet the local bank manager to ask for a loan...
The personal relationship in most business arrangements is gone the same way as the dodo. unfortunately it looks like small landlords are heading that way too.

Yes sadly - I am heavily in favour of incremental property tax increases on secondary properties for both business and everyday people.

This would serve to reduce the large corporations mass buying, free up some rental for purchase (allowing people to leave renting).

Also be good for the exchequer.

At the same time I also support stronger rules supporting landlords and even lending institutions when it comes to bad tenants and debtors.


Then use tax breaks of some sort to make lower rent viable for those that have invested.

BillyBiggs

Flinty997 wrote: »

Why would they bring in a Anti LL change then?

It’s hardly anti- landlord legislation, if it links rent to inflation. We are apparently going to have hyperinflation in the next few years. Oil prices and therefore petrol and diesel prices are already soaring. The prices of steel and wood used in construction, are shooting up.

Flinty997

BillyBiggs wrote: »

It’s hardly anti- landlord legislation, if it links rent to inflation. We are apparently going to have hyperinflation in the next few years. Oil prices and therefore petrol and diesel prices are already soaring. The prices of steel and wood used in construction, are shooting up.

Why have any rule at all. Why not allow 20% for example.

How much of these things is tax. Which is going to the govt anyway.

Also remember it's% from where you're at. You cant jump to market rate in one jump.

Roadtoad

How invested is the state in the rental market as the HAP funder? Are they funding 30%, 50% 70% of the lettings?

They are motivated to keep this bill down, but also like to collect the tax on the gross rent from HAP and from 'free market' landlords.

On top of that Government (not really the state, but FF/FG) are motivated to close a door that SF are always kicking down as the rising stars of a socialist agenda.

Flinty997

Roadtoad wrote: »

How invested is the state in the rental market as the HAP funder? Are they funding 30%, 50% 70% of the lettings?

They are motivated to keep this bill down, but also like to collect the tax on the gross rent from HAP and from 'free market' landlords.

On top of that Government (not really the state, but FF/FG) are motivated to close a door that SF are always kicking down as the rising stars of a socialist agenda.

This is all because they didn't want the cost of building and being the LL for social and affordable housing. So they out sourced it to the private sector. Hence its so expensive.

Back Home

theboringfox wrote: »

In general anytime government interferes things get worse.

Hopefully this helps though and rents can become more affordable.

Hopefully disincentives too people buying investment properties.

"Hopefully disincentives too people buying investment properties"
There's your problem right there.

BillyBiggs

Landlords should have no fear...

https://www.rte.ie/news/business/2021/0701/1232454-electric-ireland-price-increases/

Saudades

2Mad2BeMad wrote: »

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

It's a tricky one. Rent review issued before the legislation, but actual increase due after the legislation.

It wouldn't be a surprise to see all '4% rule' rent increases due after the legislation start date becoming void - and altered to the new 'inflation rule' immediately - otherwise there's going to be a massive spike in rent reviews and 4%-8% increase notices served to tenants within the next few days to beat the official legislation start date.

The RTB may be able to shed some light - but they may not know themselves until the full legislation is published - expected by July 9th. The RTB will also have to update their online calculator.

Certainly further advice is needed before any tenant commits to the old '4% rule' increase. It would be nice to get that 8% hike down to a reasonable 1.9%.