Irish State could be inadvertently complicit in small landlords losing their investment BTL properties in RPZs.

[CarrotStick]

New York has rent controls
Germany Berlin has rent controls
Ireland some apartments were subject to rent controls in the 70s
Hence the value was limited


Bad and all as the 2% is in Ireland
if sinn fein get in it will be 0%

Berlin rent cap overturned by Germany's top court – DW – 04/15/2021

Germany's constitutional court has decided that the Berlin rent cap violates Germany's constitution. The cap was one of the most-debated laws in the country.

www.dw.com

Please read the article! It appears to back up the ex Attorney General Paul Gallagher’s advices to the Irish Government regarding the issue. But hey, IANAL

 

[The Horseman]

There have been three significant Supreme Court judgments in the 1980s and 1990s, including one which struck down rent controls on the basis of property rights. These three judgments form cases precedent on the issue. Paul Gallagher AG gave advice that rent freezes would be open to constitutional challenge and most likely would be found unlawful.

I would tend to agree with this post. The current govt know rent controls are unconstitutional hence the reason for the temporary nature and constant extension of same.

If the govt could guarantee indefinite rent controls it would boost their ratings somewhat in the polls.

This is purely a delaying tactic as a constitutional challenge would be taken if the State introduced Indefinite rent controls.

 

[azerty]

There is no reference to rent controls in the French constitution. It would be unlikely to see what would be an ever changing policy becoming enshrined in any constitution.

Primary legislation would meet such a specific requirement.

Initial research on your claim regarding rent controls suggest they are only operating in Paris on a trial 5 yr basis.

I never said rent control were enshrined in the constitution. I mentioned that there were property rights in the French Constitution similar to Ireland. Despite this, rents are regulated for several years. During a lease you cannot increase your rent more than by a specific percentage, this doesn't apply only to Paris. They apply to different regions.

 

[The Horseman]

I never said rent control were enshrined in the constitution. I mentioned that there were property rights in the French Constitution similar to Ireland. Despite this, rents are regulated for years. During a lease you cannot increase your rent more than by a specific percentage, this doesn't apply only to Paris

Can you shared a link to support your claim regarding the rent controls you reference. I only had a quick look online. No doubt you can access it quickly.

 

[azerty]

Can you shared a link to support your claim regarding the rent controls you reference. I only had a quick look online. No doubt you can access it quickly.

"My claim" is based on family members renting a property in France for the last 25 years and having to follow these regulations. Look for indice de référence des loyers, it is the percentage of increased authorized. Paris is specific as they are controlling on how much you can rent according to size and characteristics of the rental (haven't researched on this).

 

[llgon]

If Carrotstick doesn't mind I will add a little detail to the original scenario which I think will help the point.

The landlord in question can charge €1500 rent max, while the landlord of the next door identical property can charge €2500.

I note the reference to social justice in relation to property rights in the Constitution. No wonder the government are concerned about the legislation being challenged.

 

[CarrotStick]

If Carrotstick doesn't mind I will add a little detail to the original scenario which I think will help the point.

The landlord in question can charge €1500 rent max, while the landlord of the next door identical property can charge €2500.

I note the reference to social justice in relation to property rights in the Constitution. No wonder the government are concerned about the legislation being challenged.

Thanks IIgon, I don’t think some so called consumer advocates on this forum get the issue at all. The subject matter is flying over their heads (when it suits them) so as to speak. Others, just try to derail my threads at every occasion (take a peek, the same posters all the time). They have to be put back in their boxes. All I want is some meaningful discussion on the thread and the scenario posted, but instead the poster gets attacked as opposed to the post. Rather pitiful and adolescent. Lots of pompous egos on this forum methinks and rather tiresome.

 

[azerty]

If Carrotstick doesn't mind I will add a little detail to the original scenario which I think will help the point.

The landlord in question can charge €1500 rent max, while the landlord of the next door identical property can charge €2500.

I note the reference to social justice in relation to property rights in the Constitution. No wonder the government are concerned about the legislation being challenged

Constitution refers to social justice and then refers to the right for the state to limit property rights for the common good.
I am not sure that the right for a landlord to charge a high rent will soon be seen protecting the common good.

 

[CarrotStick]

Constitution refers to social justice and then refers to the right for the state to limit property rights for the common good.
I am not sure that the right for a landlord to charge a high rent will soon be seen protecting the common good.

I am sure the borrower in the scenario outlined at the start of this thread would disagree with your opinion. What would you do in his situation, say, ah sure, it’s for the common good? Please answer this question and be as truthful as possible.

 

[The Horseman]

Constitution refers to social justice and then refers to the right for the state to limit property rights for the common good.
I am not sure that the right for a landlord to charge a high rent will soon be seen protecting the common good.

The common good does not favour one private citizen over another.

It may favour private citizens over commercial entities but it would not over two private citizens.

The State has remedies via primary legislation in the form of compulsory purchase orders. This however is a long and costly process.

 

[azerty]

You want to know if the case would be won. I am giving you some arguments that could be made. Bring a case if you want. Doesn't mean you would win. I don't like rent controls. They cost me at least €600 a month. I, as thousands of landlords, am on the verge of selling because I don't know if I want to take anymore risks for low gains, you asked a question, I answered politely to what I could see might be the issues. You don't want to hear that, don't ask the questions. I am not a legal expert, I am not defending the case for the state. Property rights doesn't mean you can rent without regulations. It means you can own a property. I just know that if they were clearly unconstitutional, interest groups would have acted here and in other countries. I don't say it could never win, I say that I could see it difficult to argue.

 

[CarrotStick]

You want to know if the case would be won. I am giving you some arguments that could be made. Bring a case if you want. Doesn't mean you would win. I don't like rent controls. They cost me at least €600 a month. I, as thousands of landlords, am on the verge of selling because I don't know if I want to take anymore risks for low gains, you asked a question, I answered politely to what I could see might be the issues. You don't want to hear that, don't ask the questions. I am not a legal expert, I am not defending the case for the state. Property rights doesn't mean you can rent without regulations. It means you can own a property. I just know that if they were clearly unconstitutional, interest groups would have acted here and in other countries. I don't say it could never win, I say that I could see it difficult to argue.

Berlin rent cap overturned by Germany's top court – DW – 04/15/2021

Germany's constitutional court has decided that the Berlin rent cap violates Germany's constitution. The cap was one of the most-debated laws in the country.

www.dw.com

Thank you for that response. You say that ”Property rights doesn’t mean you can rent out without regulations” From 1928 until recently, you could. If these new regulations interfere with your ability to repay your mortgage obligations on a variable rate mortgage then they are simply unjust and open to challenge. You cannot have the contractual obligations to repay a mortgage loan agreement interfered with by newly imposed State regulations during the term of that mortgage, it’s simply untenable, unjust and unreasonable, but that is precisely what has happened.

 

[azerty]

Berlin rent cap overturned by Germany's top court – DW – 04/15/2021

Germany's constitutional court has decided that the Berlin rent cap violates Germany's constitution. The cap was one of the most-debated laws in the country.

www.dw.com

Thank you for that response. You say that ”Property rights doesn’t mean you can rent out without regulations” From 1928 until recently, you could. If these new regulations interfere with your ability to repay your mortgage obligations on a variable rate mortgage then they are simply unjust and open to challenge. You cannot have the contractual obligations to repay a mortgage loan agreement interfered with by newly imposed State regulations during the term of that mortgage, it’s simply untenable, unjust and unreasonable, but that is precisely what has happened.

Mortgage terms can be 40 years. I think it's unreasonable to expect no change of the regulations during such a period. Changes would never be possible then. I do understand the difficulties faced. As I said in my first post, renting is a risky business and constant changes over the last few years made the situation even more risky. I don't know what is the solution for that individual.

 

[CarrotStick]

Mortgage terms can be 40 years. I think it's unreasonable to expect no change of the regulations during such a period. Changes would never be possible then. I do understand the difficulties faced. As I said in my first post, renting is a risky business and constant changes over the last few years made the situation even more risky. I don't know what is the solution for that individual.

Firstly, the vast majority of BTL mortgages in Ireland are for between 20 and 25 years.

As it stands, this borrower will be thrown under the bus, with both Funds and Government looking the other way. A more equitable solution could have been to introduce these regulations for new residential btl’s mortgages only from a well advertised date. Then over the course of time the percentage of btl mortgages that would come under these regulation would increase naturally. All new btl mortgage purchasers getting into the rental market would know in advance what they are getting into and the regulations that affect them. Currently, the regulatory goalposts keep moving, sometimes from month to month and in an ad hoc manner. Small time landlords are leaving the market in their droves, unable to compete with large IREIT’s , ICAVs, QIF’s etc. where their respective rental income is taxed much more favourably. These structured entities do not pay CAT, CGT etc. This exodus from the rental market by small landlords is piling more pressure on the Government. This leads to them increasing regulation with the effect that more landlords sell up, and the cycle repeats itself. Either the Government are fools (which I do not believe they are) or maybe this is the deliberate policy they have chosen to follow for whatever reason.

 

[Micks'r]

Apologies if this is slightly off topic but I have a question in relation to the Constitution provision for property rights and the reference to the common good mentioned earlier up thread.

I don't have skin in the game per se except my kids in their 20's are finding that the lack of rental availability is hampering their career choices/progression which, for instance, I never gave a moment's thought to when I was at their stage of life.

Suppose it was shown that the reason for the exodus of the vast majority of small private landlords from the rental market and the reluctance of new investors to enter the market was the cumulative effect of all the new rental legislations introduced over the last say 8 years which has resulted in the dearth of rentals available all over the country. This lack of rentals has now resulted in real restrictions on ordinary citizens in choosing where you can live / work no matter the price for example.

Could it be argued that the cumulative effect of all the recent legislation is therefore contrary to both the rights of property owners AND the common good of general citizens and is therefore unconstitutional as a whole?

 

[The Horseman]

Apologies if this is slightly off topic but I have a question in relation to the Constitution provision for property rights and the reference to the common good mentioned earlier up thread.

I don't have skin in the game per se except my kids in their 20's are finding that the lack of rental availability is hampering their career choices/progression which, for instance, I never gave a moment's thought to when I was at their stage of life.

Suppose it was shown that the reason for the exodus of the vast majority of small private landlords from the rental market and the reluctance of new investors to enter the market was the cumulative effect of all the new rental legislations introduced over the last say 8 years which has resulted in the dearth of rentals available all over the country. This lack of rentals has now resulted in real restrictions on ordinary citizens in choosing where you can live / work no matter the price for example.

Could it be argued that the cumulative effect of all the recent legislation is therefore contrary to both the rights of property owners AND the common good of general citizens and is therefore unconstitutional as a whole?

Unlikely in my opinion. The constitution gives people a right to property ownership and the rights that come with it.

It does not unilaterally give people rights if they can't afford property ownership. The constitution does place an responsibility on the State to house people or provide assistance to do so (social housing etc).

The current housing situation is as a result of failed housing policies, be it the sale of council housing, cessation of the building of council estates etc, the granting of right to join the housing list once a person turns 18. The reluctance to deal with troublesome tenants, the failure to pay mortgages or rent (both private and social) and the lack of any real consequences.

Tough decisions need to be taken at Govt level to stem the flow of landlords from the sector but Govt won't grasp that nettle. I suspect they know they are on thin ice regarding the Constitutionality of doing so.

 

[Greenbook]

There is a difference between understanding ETFs are subject to CGT and Revenue clarifying that they are subject to exit tax and deemed disposal on the one hand and Government introducing new legislation limiting your freedom of action in the market on the other. Price control legislation like this is unprecedented.

ETF disposal or deemed disposal actually subject to income tax not CGT

 

[CarrotStick]

Apologies if this is slightly off topic but I have a question in relation to the Constitution provision for property rights and the reference to the common good mentioned earlier up thread.

I don't have skin in the game per se except my kids in their 20's are finding that the lack of rental availability is hampering their career choices/progression which, for instance, I never gave a moment's thought to when I was at their stage of life.

Suppose it was shown that the reason for the exodus of the vast majority of small private landlords from the rental market and the reluctance of new investors to enter the market was the cumulative effect of all the new rental legislations introduced over the last say 8 years which has resulted in the dearth of rentals available all over the country. This lack of rentals has now resulted in real restrictions on ordinary citizens in choosing where you can live / work no matter the price for example.

Could it be argued that the cumulative effect of all the recent legislation is therefore contrary to both the rights of property owners AND the common good of general citizens and is therefore unconstitutional as a whole?

I agree with Norseman, but if I was advising Government, I would certainly bring the cause and effect that the lack of rentals have on the general economy (as set out in your post) to Government’s attention. I believe some business group are starting to do just that. This could very quickly become a political hot potato.

 

[The Horseman]

And maybe sue ptsb for restructuring the loan instead of repossessing it years ago.
They could also be liable for mismanaging the economy causing a downturn in rents over what could have been expected.
They could also be liable for failure to allow lenders repossess properties easily.
And have a go at the ECB for raising interest rates and for the the Governor of the Central Bank to call on lenders to pass on such rates.

Brendan

IANALE

The scenario as set out in the initial post is not the same as you the situation in your example.

The Irish rental market specifically the rpz legislation does not treat all parties equally. For example a new rental to the market is not bound by rpz legislation to charge the same rent as an identical property already rented next door.

The rpz was designed to penalise existing tenancies while not discouraging new ones (all designed to increase supply). Ironically with all the changing legislation it has actually had the net opposite effect.

I am not aware of any other regulated market (I will stand corrected) where different rules are in force for different identical participants in the service they provide.

If the mortgage was sold then the original terms of the contract should remain in force as any change in a contract requires both parties to agree. At the heart of the matter is that costs are increasing while the ability to increase income is being hampered by legislation. Legislation which is is affecting identical participants in different (unfair ways).

 

[azerty]

The scenario as set out in the initial post is not the same as you the situation in your example.

The Irish rental market specifically the rpz legislation does not treat all parties equally. For example a new rental to the market is not bound by rpz legislation to charge the same rent as an identical property already rented next door.

The rpz was designed to penalise existing tenancies while not discouraging new ones (all designed to increase supply). Ironically with all the changing legislation it has actually had the net opposite effect.

I am not aware of any other regulated market (I will stand corrected) where different rules are in force for different identical participants in the service they provide.

If the mortgage was sold then the original terms of the contract should remain in force as any change in a contract requires both parties to agree. At the heart of the matter is that costs are increasing while the ability to increase income is being hampered by legislation. Legislation which is is affecting identical participants in different (unfair

My understanding is that it's a rent increase legislation. It applies to everyone. New entrants are setting a rent, they are free to set that rent. They are not in the identical situation as the existing landlords. Then they are bound by the same legislation. I once again am not defending RPZ as a good system but the same rules for rent reviews apply to everyone in the RPZ zones.