Rent rises - what can the Gov do about it?

Sam Russell · 22-11-2022 11:47am #1

Reports by Daft.ie that rents continue to rise ever faster.

The Gov appear to be unable to do anything much to force them down - or even stop them rising.

The whole notion of 'rent pressure zones' was ill conceived from the start. Why try to stop rent rises by allowing them to rise by 4% a year. Surely it would be wiser to stop all rent rises in the pressure zones - or am I missing something.

Another problem is evicting tenants for reasons other than non-payment of the rent or failing to comply with reasonable terms of the lease (like antisocial behaviour or causing nuisance or damage). Landlords should be able to evict the non-payers within weeks rather than the months or years currently, but that is another matter. The National Tenancy Register Board need more resources and more teeth, such that it can set rents, eject non-payers, bring order to landlord/tenant disputes etc.

But above all, the Gov needs to build many more houses and apartments. Buying off the market is self-defeating in itself. Allowing whole estates to be bought by single entities prevents the market operating as it should. The planning system needs much needed reform, and faster decisions, with the judicial revue treated with expeditious speed so that construction is not delayed.

We all know the solutions - they just do not happen. Political parties urging more houses, but politicians objecting to developments in their own constituencies.

The long finger just gets longer by the day.

alias no.9 · 22-11-2022 12:12pm

The current system penalises the landlords who weren't taking the piss in the first place and has been doing so for so long that they're giving up up and cashing out. At the same time, any new to the rental market property can charge top dollar.

The below market rent units are not being advertised between tenants, they're being filled by word of mouth or from waiting lists kept by letting agents, why would you set yourself up to be inundated with calls and emails when you could cherry pick from a handful of potential tenants? This further emboldened the new entrants to charge top dollar as the archaic system requires 3 advertised properties as reference for the market rent and cheaper ones are not being advertised.

With the lower priced stock disappearing and all new stock priced to the top of the market, is it any wonder that average rents are rising way ahead of maximum permitted rent increases?

Even if rent increases were prohibited in the morning, average rents would continue to rise because of all of the other rules. If rent controls are to be applied, they should apply equally to two identical neighbouring properties, until that happens, they landlords being unfairly penalised will continue to leave the market and average rents will continue to rise. Use RTB data to establish benchmark rents on a per square meter basis for areas with an allowance for BER. Use this as the benchmark for all new tenancies and apply a higher rate of tax to rental income above the benchmark rate.

thegame983 · 22-11-2022 12:17pm

The government want high rents. Their goal is to transfer as much of your payslip as possible into the hands of investment firms.

They're doing a great job.

enricoh · 22-11-2022 12:22pm

Is it not government policy to increase rents as much as possible?!

Certainly nothing that has been done in the last 10 years by politicians has done anything to help price rises- quite the opposite.

ELM327 · 22-11-2022 12:23pm

They could start by removing nonsense market interference like rent controls and hap.

ancapailldorcha · 22-11-2022 12:39pm

https://www.boards.ie/discussion/comment/119906106#Comment_119906106

Free market nonsense like this isn't going to help anyone. What's needed is either tighter regulation and enforcement or, at the very, least more homes. If needs be, NIMBY's need to be trampled over. This isn't going away any time soon.

ELM327 · 22-11-2022 12:42pm

https://www.boards.ie/discussion/comment/119906195#Comment_119906195

You can regulate and enforce till the cows come home, but I don't think that will change anything. In fact it is likely to make things worse, as LLs exit the market.

The only real solution is to go back to the future (ie the 50's) and start building social housing.

ancapailldorcha · 22-11-2022 12:46pm

https://www.boards.ie/discussion/comment/119906215#Comment_119906215

True but since building enough social housing - a policy I wholeheartedly endorse - isn't going to happen, this is the next best thing. Germany has a successful and regulated rental sector. I'm sure there are downsides to it as well but since the obvious solution isn't being pursued, this seems like the next best thing.

Danzy · 22-11-2022 12:56pm

https://www.boards.ie/discussion/comment/119906215#Comment_119906215

Even at an unprecedented level it's not even going to cover this years inward migration alone with several years building, nevermind backlogs.

The 3 big parties have no interest in rent mitigation in reality

ELM327 · 22-11-2022 1:18pm

https://www.boards.ie/discussion/comment/119906241#Comment_119906241

The german situation - and I am of German descent, my maternal grandmother moved here during the war - is different for a number of reasons. There is a different culture towards renting. There are also better controls on both sides. Leases are long term and properties are generally bought for pension funds. The properties are let unfurnished, and often tenants even fit their own kitchens etc. This is coupled with it being normal for properties to be sold with a sitting tenant. There are good legal repercussions for non-payment of rent.

If (and it's a big IF) we could implement all that in one go here it would be great.

ELM327 · 22-11-2022 1:21pm

https://www.boards.ie/discussion/comment/119906313#Comment_119906313

We shouldn't be housing immigrants in social housing, there should be quick processing of inward migration and then either the immigrants are expected to work and contribute, or are not allowed enter.

There are thousands and thousands on the housing list. Any positive change would be better than doing nothing. I'm a right wing FG supporter but I hate market interference, rent controls and HAP more than I hate the idea of building social housing. If we are entering a recession, large social housing building contracts are a great idea too.

afatbollix · 22-11-2022 1:25pm

We need more housing stock. That's about it. We might be on the verge of a recession but if they stop building it will only get worse in years to come.

But that would be seen as a bad thing to help out some builders so would never happen.

Wanderer78 · 22-11-2022 2:10pm

https://www.boards.ie/discussion/comment/119906215#Comment_119906215

we have to accept that free market fundamentalism has completely failed, and is now in a state of collapse, yes much greater state interventions and actions is actually the only solution, but we seem to be stuck, and unable to do so, for various different reasons, many ideologically based....

..once again our governmental majorly fcuked up during covid, as bond rates went negative, public finances should have been refinanced under these conditions, and significant borrowing done to build, this didnt happen, so.......

ELM327 · 22-11-2022 2:13pm

https://www.boards.ie/discussion/comment/119906495#Comment_119906495

Agree, building some is better than building none, but building more is better. Start now.

https://www.boards.ie/discussion/comment/119906693#Comment_119906693

LOL. Purple haze is a great product.

(seriously though, I'm not interested in a discussion with someone who states that free market fundamentalism has failed. Free market sales of Tin Foil will be going through the roof!)

Wanderer78 · 22-11-2022 2:43pm

https://www.boards.ie/discussion/comment/119906713#Comment_119906713

please show us where free market fundamental ideologies are leading to more stable housing markets, providing us with appropriate health care needs, environmental needs, amongst other critical human needs?

salonfire · 22-11-2022 10:27pm

https://www.boards.ie/discussion/comment/119906853#Comment_119906853

What state entities produces the innovative advances in medicines, diagnostic equipment and therpaies over the past 50 years? Or was it mostly driven and developed by the US corporations who pour billions into R+D with R+D budgets the size of small countries' budgets?

ELM327 · 23-11-2022 11:48am

https://www.boards.ie/discussion/comment/119906853#Comment_119906853

Venezuela, north korea, ussr, cuba, these are all great examples of non free market state run thriving economies.

lisasimpson · 23-11-2022 11:57am

The worse thing that ever happened the rental market was HAP. Shouldnt never have been the job of private sector to provide social housing.

Also proper enforement of vacant and derelict taxes. Rediculous situation in Macroom for example where Dunnes Stores are sitting on numerous empty apartments above their store never occupied. Also patricks st Templemore half of one side of the street falling into dereliction since tiger years. Owned by a former county councilor yet locals cannot get planning permission within the urban area to build their own family homes

ancapailldorcha · 23-11-2022 11:59am

https://www.boards.ie/discussion/comment/119906853#Comment_119906853

https://www.boards.ie/discussion/comment/119908985#Comment_119908985

What has this to do with the Irish housing market?

If ideology doesn't evolve, it gets discarded. It's remarkable how those who make the most noises about the free market almost never support an actual housing market.

Sam Russell · 23-11-2022 2:02pm

FF were in thrall to the construction industry. The only building they favoured was the building of a tent at the Galway Races - which gives a good indication as to what drove them.

FG then went for populist aping of their policies to get elected, and followed UK in selling the existing social houses at a massive discount and did not replace them.

Approximately 30% of housing needs to be social housing with the rent subsidised according to the means of the occupiers. If they do not need the subsidy, then the rent mirrors the open market rent.

The Gov has set the ration of social housing at 10%. I think that would indicate something. The Gov has built next to no social housing for the last 40 years, and that says something also.

Draw your own conclusions as to the intent of Irish Governments over those 40 years.

Good loser · 23-11-2022 9:05pm

https://www.boards.ie/discussion/comment/119910983#Comment_119910983

I've told you before (more than once if I remember correctly) that the Councils did continue to provide social housing; the only difference being they BOUGHT houses already built by the private sector rather than BUILDING them. For the simple and obvious reason that this was CHEAPER. The Approved Housing Bodies were also a factor - I am not sure what role they played. I know they bought a 28 unit estate in a local town around 2010.

Sam Russell · 23-11-2022 9:24pm

No they built none and bought a few, but nothing like the number required.

Buying houses that got planning for private ownership is not right as it diminishes the number available for the first time market.

Also, there was a huge increase in private landlords with buy to let mortgages that relied on rising property prices.

None of these measures tackled the shortage of supply, and that has led to the current problem of sky high rets and no houses to buy.

Good loser · 23-11-2022 9:54pm

https://www.boards.ie/discussion/comment/119910423#Comment_119910423

You want more Govt interference in the housing market when all the evidence points to them having made a hames of it - especially the rental market. The only worthwhile intervention by the Govt in the rental market is the HAP scheme; the market sets the rent, the tenant finds the accommodation and the Govt fills the gap between the actual rent and what the tenant can afford. There is minimal State interference and little bureaucratic input.

On News at One Tuesday Bryan Dobson interviewed Prof Michelle Norris of UCD re rentals. Quite the best interview I have heard on the subject for a long, long time. 20,000 small landlords have left the market in recent years. Reasons (1) some are no longer in neg equity and cashed out (2) some find the business unattractive - unlike other businesses they are taxed on turnover NOT on profits i.e. taxed on gross rent less allowable deductions (3) Some years ago PRSI was not paid on the income, now it is significantly increasing the tax (4) She said there had been 6 interventions by the State in the housing rental market in the last 3 years all putting burdens on landlords either on rents or on repossessions. [Incidentally Eoin O Broin only ever refers to the first of these reasons and is never interrogated on it]

Prof Norris said the first thing to do is [no, not extend rent cap Eoin] stem the exit of small landlords from the market thro action on tax and no NEW regulations should be introduced without modelling/testing for potential impact on supply.

Effectively no new regulations.

salonfire · 24-11-2022 10:07am

https://www.boards.ie/discussion/comment/119912997#Comment_119912997

How many times must we build social housing only for them to turn into dumps like Ballymun, Moyross and other areas by those housed there? They weren't all high rise either in case you want to use that as an excuse.

Thankfully this is one example of the Government not repeating mistakes of the past.

If social housing is needed, it must be limited as much as possible and in small numbers, dispersed across all areas.

Good loser · 24-11-2022 10:52am

https://www.boards.ie/discussion/comment/119912997#Comment_119912997

ou're all over the place. When the market collapsed in 2008 the LA's and the Housing Bodies were the ONLY substantial buyers in the market.

What do you mean by 'they bought a few'? How do you know? Do you not remember the problem of unfinished/ghost estates, where the problem was how quickly they could be demolished ? There was a great chance then for the State to go counter cyclical (NOT NOW) but they hadn't a bob and if they did they would have been accused of bailing out builders/developers/banks. Short term ism again which bedevils the housing sector.

No Houses 'got panning for private ownership'. Builders had to provide some social housing but could sell the rest as they wished and the LA was free to buy as they wished.

Your third sentence sets out a huge (your word) increase in private landlords as being a PROBLEM. Surely they were helping the problem??

24-11-2022 11:19am

Government interference has lead us to this point. Maybe they should take a step back and see if it starts to right itself.

The constant introduction of new standards and controls are adding additional costs to home ownership and rentals. HAP and First time buyer payments are just giving people more money to throw at the problem and increasing costs. The government is competing with the public when it comes to home ownership pushing prices up.

The amount of money being wasted on social housing with little improvement in the situation is mind boggling. Instead of being ringfenced for local area improvements half the LPT collected is spent on social housing and a significant portion of of the HSE budget is spent on housing.

The state should just focus on providing low cost purpose built social accommodation, go back to building small flats to help people when they are in need. If the recipients turn it into a ghetto at least they will be easier to police when they are all in one location. The idea of the state providing you with your dream home in the location of your choice needs to end.

Sam Russell · 24-11-2022 11:20am

https://www.boards.ie/discussion/comment/119914368#Comment_119914368

Just to look at Ballymun.

Ballymun was a brilliant development when first built, according to those lucky enough to get housed there. They had lifts and caretakers - just to keep the place well looked after. But when the money got tight, the caretakers were dispensed with, and when the lifts stopped working, the general tone began to tend towards grim.

When damp began to appear, it was not sorted because money was tight. So more tending towards grim.

So those who could get out did, and the general level of tenants tended towards being anti-social. Drugs began to appear, and then dominate.

The DCC eventually chose to demolish the high rise, but could have revamped them as student accommodation for the local DCU, but did not.

This is the result of lack of funding from central Gov, poor management of local funding, and short sighted housing planning with no vision.

Social houses are needed by the poorest in society, and generally have needs much more than funding. Social housing, therefore, needs active management, not just provision of bricks and mortar.

Sam Russell · 24-11-2022 11:27am

https://www.boards.ie/discussion/comment/119914573#Comment_119914573

The lack of social housing dates back to the 1980s. The whole market collapse was the result of lack of social housing, as existing units were sold off at a discount and not replaced. This led to the continuous rise in house prices, and allowed the private landlords to buy houses on buy-to-let mortgages and based the scheme on the benefit gained from that house price inflation - the rent paid the buy-to-let mortgage.

In the 1950s and 1960s the State built Ballyfermot, Ballymun, Finglas, and many more estates around the country. When has such a building campaign happened since?

Donald Trump · 24-11-2022 11:35am

https://www.boards.ie/discussion/comment/119906195#Comment_119906195

If the public money flowing from the bottomless public purse into the private market was stopped, you'd quickly see a decrease in prices.

jimmybobbyschweiz · 24-11-2022 11:41am

If rents reduce materially, so do housing prices as housing prices have been plucked up due to the yield potential of the property. If it turns out it's 1000 per room per month rent in Dublin, this would be a yield of 7% per annum on a three bed home worth €500,000! The rental market has been used as the funnel to prop up the whole market consequently and the politicians have invented so many schemes to quench supply of rentals while inflating demand in order to keep rents going up, from HAP which is putting a very high floor under rents, to kicking out small landlords from the market etc.

When the economic prosperity and wealth of the nation has been largely judged by what it is provided for on paper (particularly household wealth which incorporates the value of the extremely illiquid family home), it is in the politicians interest to have a booming housing market as this inflates the paper prosperity metrics which they think voters care about in terms of seeing the economy perform well. It's a con and the actual housing crisis is a political issue, not an economic one.

Therefore, the way for politics to contribute to the housing crisis alleviation is, quite simply, for it to let the sleeping free market capitalist dogs lie and stay out of it, except to ensure the very bottom have shelter.

And remember, this has not been an overnight result, it has been the same course FG have taken the last decade.

https://www.thejournal.ie/readme/michael-noonan-house-prices-damien-kiberd-1410085-Apr2014/

ancapailldorcha · 24-11-2022 11:49am

https://www.boards.ie/discussion/comment/119914763#Comment_119914763

But this flow is caused by a lack of social housing. Build proper, fit-for-purpose, managed social housing lile @Sam Russell says and you'd bring down rents in a sensible way, create jobs and probably decrease crime as well.

By the way, Sam, could you explain this please?

FF were in thrall to the construction industry. The only building they favoured was the building of a tent at the Galway Races - which gives a good indication as to what drove them.

I live in the UK and would have thought a government in thrall to the construction sector would be building left, right and centre.

Rent rises - what can the Gov do about it?

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