Why do Landlords feel entitled to rent increases?

fliball123

https://www.boards.ie/discussion/comment/118575161#Comment_118575161

You have to look at external pressures that impact on why landlord set the price. Why would you not try and maximize your profits when costs all around are going up, are you telling me if your boss turned around to you tomorrow and said I am giving you a 5% pay rise you would say no thanks?? Not a chance you would so why are you giving out when a landlord running a business has the option to make more money from an investment they have, they certainly didn't go and buy the investment property so a tenant can gain. So you used the mechanisms at hand to get a lower rate for your rent which is your right as a tenant, so all landlords are doing is using the mechanisms at hand to maximize profits as is their right, If you don't like it feel free to leave again I don't think it will be lying empty for the guts of a year this time. Its a business its nothing personal.

B_S

https://www.boards.ie/discussion/comment/118575205#Comment_118575205

You and I are in agreement up to a point.

Landlords in many cases set rents to maximise profits on an investment. The option is always open to them to set lower rents, which would cover costs and result in smaller profits. However, they don't. It's not some market holding a gun to their head. It's a conscious decision. Like I said, they should own it.

fliball123

https://www.boards.ie/discussion/comment/118575262#Comment_118575262

You do realise that the vast majority of landlords have a mortgage? So after expenses and interest on the mortgage most have to pay 52% on tax and then pay the mortgage?

So why should a landlord subsidize his tenant??

So once again if your boss offers you a pay rise tomorrow under your logic you will you refuse it?? we know you wont only a gobsh1t would.

Look everything is rising Milk has gone up by 20% in the last 12 months as has Apple juice when buying in a super market, why are people not coming out saying supermarkets are gouging customers? Things like lumber/timber has gone up by 100% in the last couple of months. How much more are we paying for oil, gas, electricity.??? Everything is increasing.

Also it is "the market" as all rents are going up not just one or two there has to be some reason why, you need to look at the rate of inflation. Its a fact that if you have 100 Euro in your bank account and inflation goes up by 10% that 100 Euro is now worth 10% less. Ergo external forces , are forcing landlords to up the rent and just to throw the "gun to your head" comment back at you, no one is putting a gun to your head to pay you left a rental before when you were unhappy to pay, feel free to do the same this time around.

B_S

https://www.boards.ie/discussion/comment/118575327#Comment_118575327

If a landlord can't afford the mortgage payments on their property they can consider selling it to someone who would like to live there, like I said. Like they say at the end of stockbrokers' ads: The Value Of Your Investment May Fall As Well As Rise.

And for what it's worth; I think there's a distinction between getting paid for work that you do, and earning money based on returns from an asset. So that's not a particularly persuasive analogy.

But like I said: we are in agreement. Landlords, based on a variety of factors including the maximising of profits, set rents. And for what it's worth; I also think supermarkets are gouging customers.

Ray Palmer

https://www.boards.ie/discussion/comment/118575262#Comment_118575262

You do understand the government punished landlords for not doing this with the RPZ? Not only that they continue to punish them. A good reason long term landlords are leaving the market. I am currently renovating a place to rent. The rent will be considerably more expensive than it was. It would have just been turned around quickly but because the rent was so low there was not much point renting it as the rent had not been increased in so long. Now I am completely gutting it and changing the configuration around. It is costing a lot of time and money as tradesmen are so busy. This is after clearing out the place from the previous tenant who was a hoarder and died there.

Apparently as a landlord I do nothing and being greedy for expecting be paid back on an investment. Not only that I am a horrible human being living off the back of the working class. There is some serious issues with people who think being a landlord is some luxury without risk and effort. We also worked for the money to be able to take the risk.

fliball123

https://www.boards.ie/discussion/comment/118575360#Comment_118575360

You do realise that a lot of landlords would of worked for years to get the money together for the investment property and it would be paid for out of after tax money they have earned and then taken a huge risk in getting the mortgage and then trusting a 3rd party not to destroy the asset and to keep paying when they are renting it, I think that is a very persuasive argument for charging what you can get in the open market, but you think that landlords should just let people rent for free for the greater good and all. Unfortunately that is not how human nature works.

Also I would be very careful what you wish for as the small landlords are running for the hills and are fleeing the market as its not as profitable as you may think otherwise we would see an increase instead of the huge decrease currently going on with regards to the number of landlords renting property in this country and with laws now firmly on the tenants side the risk has become a lot riskier. So I reckon in about 15-20 years time all that will be here for renters will be to rent from REITS and vulture funds and these boyos wont care about you, me or anyone else and will have the financial power to keep rents high even if it means leaving some units empty as they will be able to afford that loss.

Also when you rent your giving a period of how much you be paying as in 12 months after the 12 months you have the option to leave and the landlord has the option to ask you for more, you don't have to pay it.

sk8board

https://www.boards.ie/discussion/comment/118575262#Comment_118575262

of the 165k LLs left in the market (down from 220k in 2012), 120k of them (66%) rent one property. they aren’t ‘investors’, even if some of them might think they are.

the market has lost 12-15 landlords per day every day of the week for the past 5 years, and that figure is only accelerating (source: RTB annual report), as they realise the risk they are taking having all their rental income coming from one tenant. If a tenant stops paying, they lose 100% of their income, but still have all the costs.

With house prices so high, it’s a great time to get out.

Dav010

https://www.boards.ie/discussion/comment/118575161#Comment_118575161

Seems a pretty clear illustration of market forces, wouldn’t you think?

3DataModem

"So I reckon in about 15-20 years time all that will be here for renters will be to rent from REITS and vulture funds and these boyos wont care about you, me or anyone else"

I'd be pretty sure that the REITS are generally giving better tenant service then small accidental landlords, based on the anecdotal evidence I've heard, especially when it comes to maintenance and repairs.

houseyhouse

https://www.boards.ie/discussion/comment/118575360#Comment_118575360

Most small time landlords are not just making money from an asset though. They do quite a bit of work. If you own a home of your own and you'll realise all the expenses and bother you have to deal with that the landlord took care of for you before. In my case, it's true that there are periods of time where I don't have much interaction with my tenants, though I still have to spend small amounts of time and money dealing with things like the mortgage, insurance, management fees etc. during those times. There are other times though when it's like having a second job - particularly in between tenants when there's a lot of cleaning, maintenance, painting, advertising, showing the place, checking references etc. etc. I'm an accidental landlord and knowing what I know now I'd never intentionally become a landlord - there's much less work and better returns in other investments.

B_S

https://www.boards.ie/discussion/comment/118575399#Comment_118575399

"It would have just been turned around quickly but because the rent was so low there was not much point renting it as the rent had not been increased in so long." But this is exactly what I'm talking about. You made the choice to maximise the rent you could charge. The option was there to offer the place at its existing rent, or increased within the RPZ limits (as far as I know). You chose differently, because you "expect to be paid back on an investment."

https://www.boards.ie/discussion/comment/118575429#Comment_118575429

Don't think I ever said they should rent for free. I said they set the rents, not the "market." And no-one forced your hypothetical landlord to invest in property. They decided to. Like any investment, it has its risks.

https://www.boards.ie/discussion/comment/118575466#Comment_118575466

I am genuinely curious about this. What is the problem with landlords exiting the market if they are selling their properties to people who want to live in them? Why is "landlords exiting the market" a problem? Are the houses being demolished?

https://www.boards.ie/discussion/comment/118575534#Comment_118575534

Not really, no. If it was the market that set rents, then the apartment would have been rented a lot quicker. Instead, the landlord kept the rent he expected at a level he decided upon. Landlords set rents.

houseyhouse

"Not really, no. If it was the market that set rents, then the apartment would have been rented a lot quicker. Instead, the landlord kept the rent he expected at a level he decided upon. Landlords set rents."

Not really. The actual rent is the one agreed between the tenant and the landlord. If nobody rented it at that rate, that is a clear illustration that it was too high for the market at that time.

Unless the state steps in and builds Dublin in particular, but other cities notably Cork are following suit, the economy will stall due to lack of affordable rental options.

I’m already aware of several people who’ve taken jobs in both Dublin and Cork and then quit and gone back to continental Europe driven away primarily by bad housing.

The situation here isn’t just the affordability, it’s also the lack of quality. So many adults are now in ridiculous house share situations of homes that were designed to accommodate a family. You also can’t lease or rent an unfurnished unit, long term from a professional landlord. On the continent it’s possible to rent on much the same basis as a shop leases. You do it long term and you can decorate, furnish and make it your home.

The Irish rental market isn’t fit for purpose at all. It’s neither working for tenants nor landlords and there’s bad structuring and lack of understanding of how to use commercial investors. I mean the state could be developing its own housing funds for example. There’s no reason local authorities couldn’t develop housing, or facilitate larger, modern versions of schemes like the Dublin Artisan Dwellings that are now over a century old. They’re solid investments, with low but stable yields that would attract plenty of people and funds desperately seeking places to park money at low risk. Instead we are bringing in high rolling speculative developers and not driving the capital into areas we need it to be in.

As it stands, the market isn’t working and the interventions are always designed to force the status quo to work with crazy and expensive prop up measures.

Relying on accidental landlords to fulfil the role of social housing needs is also nuts. It should only ever have been something for emergency intervention but it has become a staple of the sector. That needs to be urgently replaced by managed social housing.

We also need to accept that a large % of the population can’t earn the kind of money to meet their housing needs in this market. That means there’s something wrong with the market. This notion that everyone can work harder and pull themselves up by their bootstraps and earn more money is frankly liberal fairytale stuff. Some people can do that, most people can’t. A lot of people will earn low to mid incomes all their lives and no matter how many times they retain or upskill that’s as much as they can earn.

The world isn’t mostly high end professionals or high achieving entrepreneurs, most of society is in the middle and when societies can’t provide a decent living (including reasonable housing and quality of life) to a large swathe of the population doing normal job, that’s when things start to breakdown. It means people can’t afford to work in a whole raft of essential jobs, so you either get a fall off in services - find you can’t recruit people in areas like nursing, social care, teachers, police, administrators etc and that prices go up as retail etc gets more and more expensive.

That’s precisely what you’re seeing with the rise of extreme politics etc in many countries. It’s social and economic needs being unaddressed.

Driving people further and further out of what are very small cities by any international comparison, with very mediocre and undeveloped public transit options is also totally unsustainable. With rising fuel costs being an inevitability, you’ll end up with people trapped into long and expressive commutes they can’t afford and that’s going to rapidly create problems. It is already happening with the spike in fuel prices. If that keeps going up, and you’re adding hundred of euros a month to overheads, then you’re into big issues and that’s before you even look at the environmental impact - and we will be penalised for that by international commitments even if we decided to ignore it. You’re looking at fines, levies and if we don’t pay those, probably tariffs. There isn’t an acceptance of environmental dumping anymore. We just seem to drift into making the same housing policy choices over and over, with no vision for anything better.

sk8board

https://www.boards.ie/discussion/comment/118575571#Comment_118575571

For sure.

on the one hand, the REITs will have a cold view of annual rent changes, but on the other hand tenants have certainty that the REIT will have to abide by all the rules and regulations.

there’s no chance of a knock at the door some day by a REIT to say “I want to move back in”.

I’ve been saying it for years, the market needs to professionalise. However that also means that private LLs with 3 or 4+ Rentals should be allowed set up a company and run it as such, just like the REITs.

The accidental LLs will be an ever-dwindling number - the only way you keep the accidentals is via some big change in tax treatment of rental income, and there’s little appetite for it, but the market can’t function without full time LLs and REITs.

B_S

https://www.boards.ie/discussion/comment/118575596#Comment_118575596

"I'm an accidental landlord and knowing what I know now I'd never intentionally become a landlord - there's much less work and better returns in other investments." For your lips to God's ears; landlords, consider selling your rental properties to people who want to live in them, and investing the money elsewhere.

fliball123

https://www.boards.ie/discussion/comment/118575571#Comment_118575571

You may be right but its hearsay unless you have figures, I have no figures or seen any figures to date but like I say they wont care about rising the price to match inflation and when a downturn hits they will have the power to keep a good load of their properties vacant to keep prices high and absorb the losses, when the last downturn hit the majority of the rental market were small landlords and they had to reduce rents. So as I say be careful what you wish for

Pawwed Rig

https://www.boards.ie/discussion/comment/118575161#Comment_118575161

Do did you then rent cheaper elsewhere?

That is what the market is

fliball123

https://www.boards.ie/discussion/comment/118575599#Comment_118575599

Well back at you no one is asking you to pay the rent you are currently paying at your current location feel free to buy or rent somewhere else.

The problem with landlords leaving is the only game in town for renters will. be the big boys.

The market drives the price the landlord adjusts the price to what the market dictates. In your scenario back after the bust of 08. The market was dictating to the landlord that the rent they are charging should be lower, they didnt listen and as a result they lost nearly a year of rent. If they had lowered it they would of made more hense external forces at work pushing prices up or down. This external force is what most experts call "the market" it exists in most commodities that can be bought or sold.

houseyhouse

https://www.boards.ie/discussion/comment/118575637#Comment_118575637

Actually, now that we can get back what we paid for it we will. But we're not going to kick our tenants out to do it.

B_S

https://www.boards.ie/discussion/comment/118575617#Comment_118575617

This is getting a little esoteric, but I think of it this way: the landlord, as all landlords do, had the option to set the rent at whatever level he wished. This number may or may not have been in line with the market, but that's immaterial. He had a figure he wanted, he decided on it, and was able to ask for it. If it truly was the market that set rents, that choice would not have been available to him.

B_S

https://www.boards.ie/discussion/comment/118575650#Comment_118575650

I don't think I ever denied the existence of markets; what I've been stating (that I didn't think was controversial) was the fact that landlords set rents.

https://www.boards.ie/discussion/comment/118575656#Comment_118575656

...Ok?

https://www.boards.ie/discussion/comment/118575664#Comment_118575664

Consider selling to your tenants!

houseyhouse

https://www.boards.ie/discussion/comment/118575676#Comment_118575676

But he didn't have the choice. He set the rent that he wanted to get but he didn't actually get that rent. Because it was too high for the market.

As a tenant, I could just as well decide that the rent I'm willing to pay for a two-bed apartment in Dublin is E500 but if nobody is willing to rent to me at that rate then I won't be able to get a place. It's exactly the same.

B_S

https://www.boards.ie/discussion/comment/118575656#Comment_118575656

"The market drives the price the landlord adjusts the price to what the market dictates. In your scenario back after the bust of 08. The market was dictating to the landlord that the rent they are charging should be lower, they didnt listen and as a result they lost nearly a year of rent."

So the market dictated the price, but the landlord didn't listen and set the price higher? How does that contradict the idea that Landlords Set Rents?

sk8board

https://www.boards.ie/discussion/comment/118575599#Comment_118575599

All well and good in theory. However, not all houses being sold are all sold to owner occupiers (most rentals are apartments, remember); and not every renter only does so because they can’t buy a house.

there will always be a rental market, and a large one. Right now it’s 330k leases in a country with 1.7m residential properties, or about 1-in-4 roughly, but most are apartments or small houses in the main cities and city centres.

Population growth is the source of most of the new renters to the market these days, and projections show that will continue for years to come.

B_S

https://www.boards.ie/discussion/comment/118575696#Comment_118575696

Landlord sets rent at X

Market rent for similar properties is <X

Landlord decides to hold out for X.

This is absolutely a choice on the part of the landlord, and in a way, one you can respect. He most likely played the long game, gambling that it was worth holding out for more so that when the market improved (from a landlord's perspective) he'd have a higher base rent from which to derive a return.

The market suggested he charge a particular figure. He chose not to.

sk8board

https://www.boards.ie/discussion/comment/118575625#Comment_118575625

“Relying on accidental landlords to fulfil the role of social housing needs is also nuts. It should only ever have been something for emergency intervention but it has become a staple of the sector. That needs to be urgently replaced by managed social housing.”

this is a crucial point - it was never the job of private investment landlords to solve the country’s social housing problem.

with the introduction of HAP and RPZ’s, existing landlords no longer have control of their own rents, while new entrants to the market can charge what they want. It’s literally the opposite to a free market.

B_S

https://www.boards.ie/discussion/comment/118575711#Comment_118575711

Fine. However, the agency of landlords, accidental or otherwise, is still being obfuscated. The option to sell to prospective owner-occupiers is there, as is the option to set whatever rent you want (within RPZ limits as relevant). Landlords: own your power!

fliball123

https://www.boards.ie/discussion/comment/118575704#Comment_118575704

Did the landlord get rent during the period where he set the price higher than what the market dictated..No he didnt so in effect he didnt dictate the price at all as he didnt get anything, you can only dictate if someone is willing to follow.

B_S

https://www.boards.ie/discussion/comment/118575906#Comment_118575906

"you can only dictate if someone is willing to follow." We agree! The market "dictated," and he didn't follow.

fliball123

https://www.boards.ie/discussion/comment/118575918#Comment_118575918

Your not getting my point. The market was dictating to the landlord to lower his rent. The landlord set himself against the market and no tenant was willing to listen to the landlord and if he had gone with the market some tenants would of rented the property..So you have in effect proven that the market dictates the price and not the landlord. Good man.