# New controls on landlords & rental properties



## Tommy (23 Jun 2002)

*New controls on landlords & rental properties*

-after reading in fridays newspaper the new legislation coming in next year that restict landlords in obtaining possesion of the property as well as dealing with yahoo tenants, i believe that any investment in this area needs plenty of careful consideration-rent increases it seems will be restricted to market value and once a tenant is in for 6 months it will be difficult to get your property back within 4 years-yes thats FOUR years !!!
-new govt housing boards will be interfering and generally adding to the hassle factor in these type of investment-putting up with bad tenants for 1 yr. is way too long in my view, 4 yrs forget it-add in capital gains taxes, legal fees, cleaning up after filthy tenants, repairs due to carelessness and negligent tenants all add up to an unattractive investment-left wing housing groups seem to be having it all there own way-what with interest rates going up and the possibity of capital gains going up sometime in the future who would be bothered with all of this when you can find a nice managed fund and draw an income hassle free-property investors beware!!!-its going to get worse -think before buying!


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## Bearish (24 Jun 2002)

*A renters view*

Its about time these sort of measures were put into law. Being able to obtain a long-term lease is something that is quiet common in most European countries. Ireland has long needed such measures. I see no reason why a landlord would have a problem with having a well behaved long-term tenant, other than they wont be able to sell the property at a whim. Careful vetting of potential tenants at the start of any lease period should ensure a landlord will not have any future problems with the tenant. Stopping exorbitant rent hikes is another good thing.


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## investor (24 Jun 2002)

*Reply to a Renter*

-good tenants are indeed valuable-most property is not sold on a whim and if it was the case so what?
-if it is my property it is mine not someone else's -i suggest you need to respect private property more-as for european laws on renting there would be more property on the market if there was more protection for the owners-look what happened in britain when they had anti landlord / investor legislation-the investors fled-not all tenants want to live in corpo housing you know-renting in the private area is a privilege not a right!!
-as for rent increases if a tenant is good i give very modest increases -i have no plans to invest again because of these new changes


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## Bearish (24 Jun 2002)

*Glad youre not my landlord*

Quote:

“-most property is not sold on a whim and if it was the case so what?”

If you have a good tenant renting from you, selling the property on a whim is going to cause serious difficulties for that tenant, not to mention that fact that you are probably breaking a lease contract. Landlords sometimes forget that they are effectively running a business with the tenant their customer. I’m sure you wouldn’t take the same view if the Bank (the real owners of most investment properties) decided to call in the mortgage on your property on a whim even though you had been making regular repayments.

Quote:
“renting in the private area is a privilege not a right!!”

I’m sure your tenants will be pleased to hear how privileged they are. Oh what lucky people!

What do other property investors make of these up coming laws? Will investors sell their investments before the laws come into force? Will it discourage them from buying more property?


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## Ian (24 Jun 2002)

*"new legislation coming"*

Missed the article reffered to in first post, can anyone point me to info on this new legislation or a link to the article?

Thanks.


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## concerned (24 Jun 2002)

*new legislation*

-it was in fridays independent i believe-much to be concerned about!!


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## ronanb (25 Jun 2002)

*Report*

The following is from MyHome.ie and I have added a link to the report on the private rental sector.

Details published in the Programme for Government yesterday include a number of commitments with regard to housing. The programme describes the implementation of a "multi-stranded approach to addressing housing needs right across the spectrum". 

The main features include - 

A commitment to expand various social housing programmes 

Assisting the voluntary housing sector so that the target of 4,000 accommodation units per annum envisaged under the National Development Plan can be reached.

The implementation of a full package of reforms in rented accommodation sector, arising from the report of the Commission on the Private Rented Sector. 

The extension of the Serviced Land Initiative, to make more efficient use of housing land and make further Special Development Zone designations as required. 

The implementation of the comprehensive Homelessness Strategies now in place.

The provision of Housing Advice Services through the local authority system. Advice will be provided information on all the housing options and supports will be available to the public. 

A review of procedures for dealing with insubstantial planning appeals.

A review of the operation of the Planning and Development Act to ensure that it is meeting the objectives for which it was enacted with particular reference to social and affordable housing.

The implementation of a new approach to urban renewal based on the combined use of Compulsory Purchase Orders and Public Private Partnerships.

The Government will also consider the introduction of legislation to regulate the establishment and operation of apartment complex management companies. The document also promises the compilation of a National Public Property Register to identify properties in state control suitable for housing projects. 

Wednesday 5 June 2002

The following link will bring you to report of the Commission on the Private Rented Sector. 
www.environ.ie/pdf/rentsummary.pdf


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## investor (25 Jun 2002)

*glad your not my tenant*

-if i have a right to private property, perhaps i can live in your house then
-your landlord must consider you a real treasure!


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## Alastair (3 Aug 2002)

*living up to the cliche*

Just the sort of attitude that gives landlords a bad rep in this country. The points made about security of tenure within a lease agreement are perfectly valid. As bearish pointed out; if the bank decided to treat your mortgage contract with such  casual abandon, you'd have concerns.

The rental sector in this country is plagued with short-term and exploititive greed. It wouldn't hurt to import some of the mature rental/lease culture from the continent. Fair contracts needn't be at the expense of profit. The business is nothing to do with privilege, and to admit to thinking so is ludicrous.


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## jobman (4 Aug 2002)

*living up to the cliche*

-what cliche?-
-so if a landlord gives a standard lease for 12 months and this is agreed by both parties one party can stay there for 4 yrs !!! regardless?
-the mortgage is subject to terms and conditions too i.e. a contract -it is a legal contract is it not?
-after having  had tenants who managed to put holes in doors, flood bathrooms,have pit bull terriers for pets and some who were late in rent 9 out of 12 months i can tell you I am sceptical that many landlords would continue to invest
-is housing a right? do people have a right to live in other people's houses?
-in other words if you rent out a room in your house you would be happy to recognise that the tenant has a right to  private property ( yours!!!!!) for 4 yrs
-rgds


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## Alastair (4 Aug 2002)

*clarity*

-what cliche?-
The well known one about the exploititive, self serving, short term profiteering Irish landlord? Surely you have encountered this?

-so if a landlord gives a standard lease for 12 months and this is agreed by both parties one party can stay there for 4 yrs !!! regardless?

My reading of the document indicates that the landlord may terminate the lease agreement if the tenant abuses the property, or if the landlord is selling the propeerty. I don't see how good long term tenants in a situation where the propertty isn't up for resale, is any imposition.

-the mortgage is subject to terms and conditions too i.e. a contract -it is a legal contract is it not?

Yes, we are in agreement there. You wouldn't expect your mortgage lender to foreclose/change the terms of your loan on a whim, so why expect a tenant to do so?

-after having had tenants who managed to put holes in doors, flood bathrooms,have pit bull terriers for pets and some who were late in rent 9 out of 12 months i can tell you I am sceptical that many landlords would continue to invest

Have you read the document? No landlord is expected to endure tenants who damage property.

-is housing a right? do people have a right to live in other people's houses?

Do you have a right to live in your house pending full payment of your mortgage? Why should a tenant expect less of their contract with a landlord? It certainly isn't a 'privilege' to enter into a business arrangement. It's a transaction with obligations and responsibilities on both sides.

-in other words if you rent out a room in your house you would be happy to recognise that the tenant has a right to private property ( yours!!!!!) for 4 yrs

As Bearish points out, it's usually the bank's property, but I sense you would be happier with the status quo, where tenancy terms are perpetually short term, and at the mercy of a benevolent dictatorship from one party to the commercial transaction. Presently if someone decides they don't want to enter into home ownership, but rather rent, they are given an extremely raw deal. I suspect you wouldn't willingly sign up for the cost and conditions applied to leased accomodation in this country at present. Would you? I know I wouldn't, but in a legislated environment like on the continent, it is a viable option, and one that supports many more tenancy's than here. Perhaps continental landlords' eyes are on the long term security of their arrangement, rather than obsessed with reaffirming their private ownership?

I just don't see a legitimate cause for concern with this proposed legislation. Long overdue in my view.

-rgds


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## tedd (5 Aug 2002)

*Re: clarity*

<!--EZCODE QUOTE START--><blockquote>*Quote:*<hr> I don't see how good long term tenants in a situation where the property isn't up for resale, is any imposition.<hr></blockquote><!--EZCODE QUOTE END-->

Exactly. So in my view this legislation is not required by "good long term tenants" as they are highly desirable but is open to a lot of abuse by unscrupulous tenants.

<!--EZCODE QUOTE START--><blockquote>*Quote:*<hr> Perhaps continental landlords' eyes are on the long term security of their arrangement, rather than obsessed with reaffirming their private ownership?<hr></blockquote><!--EZCODE QUOTE END-->

Continental landlords are extremely fussy in choosing tenants for their property making rental under the favourable circumstances you refer to available only to very good tenants in long-term employment with stable banking records. Tenants on short term contracts, with short credit histories, etc end up paying way over the odds as landlords renting property to these categories of tenants charge higher rents to make up for the risk they believe is involved in dealing with such rentals. Part of the perceived risk (on the part of landlords) is that such tenants may use legal mechanisms to avoid paying rent or vacating the premises. Private ownership is alive and well on the continent....such landlords don't exist because they have some glorified notion of housing the masses. They exist to make money, just like here.

tedd


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## jobman (5 Aug 2002)

*more clarity*

oh my! -the poor renter!
30% of them on social welfare and close to 90%of rent paid by the tax payer
-curious to see how many are cohabiting?
-the only time i saw a mortgage foreclosure was abroad when the house owner decided to not pay anyone and lost his house!
Shame on those terrible bailiffs!
-saw one tenant advice site with a picture of michael davitt, pax christie and the labour party-objective eh?
2 grown people can't decide on a contract for 12 months then? -you would want explanations after the contract ends
-i have rented in 3 countries, none were cheap!

I just can't  see a pensioner who has invested in property for his retirement going down to a housing board and telling them he doesn't want to renew the lease as there appears to be anti social behaviour from the tenant, or the house is wrecked, or there is cohabiting when collectiong rent allowance ie fraud

I prefer the north american model and not the european model on private housing( it can vary from state and province)-i guess you forgot to mention the speed debtors are dealt with throughout north america
I wonder why big business ie property companies don't go in to residential lettings?
If there is so much money in it why aren't they lining up to invest-Go figure it out!
Quote
"exploitative" " benevolent dictatorship"
-as you have appeared to have insulted every decent irish property investor, i suggest the private sector is not for you.
I think on this final point we will agree to disagree and move on
-rgds


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## Alastair (5 Aug 2002)

*touchy*

oh my! -the poor renter!
Never said that. I said the current legislation was unfairly biased towards landlords. The absence of a long lease culture in this country is evidence of that.


30% of them on social welfare and close to 90%of rent paid by the tax payer
your point being?

-curious to see how many are cohabiting?
again, the relevence?

-the only time i saw a mortgage foreclosure was abroad when the house owner decided to not pay anyone and lost his house!
Shame on those terrible bailiffs!

Perhaps you missed my point. You wouldn't enter into a short term and tenious contract with your mortgage lender, but you expect a tenant to do so? Short term leases without any security of tenure may suit some renters, but I'd hazard that there are a significant number who wish for some different arrangement, and these people should be a fair crack of the whip.


-saw one tenant advice site with a picture of michael davitt, pax christie and the labour party-objective eh?

Oh dear. Not very constructive . It matters not a whit what the political orientation of any tenancy lobbyists is. The case for revised legislation stands on it's own merits.


2 grown people can't decide on a contract for 12 months then? -you would want explanations after the contract ends
-i have rented in 3 countries, none were cheap!

Who is arguing for 'cheap' leases? Did i miss something?

I just can't see a pensioner who has invested in property for his retirement going down to a housing board and telling them he doesn't want to renew the lease as there appears to be anti social behaviour from the tenant, or the house is wrecked, or there is cohabiting when collectiong rent allowance ie fraud

Why not? If there is a dispute, why not take advantage of a standard arbitration process? and when did the typical profile of a landlord become a seemingly feeble and intimidated old age pensioner?

I prefer the north american model and not the european model on private housing( it can vary from state and province)-i guess you forgot to mention the speed debtors are dealt with throughout north america

I didn't forget anything. The legislation clearly indicates any breach of lease agreement as a default on any contract, and allows for eviction. I'm not supporting bad tenants. I'm not sure why you would think I am.

I wonder why big business ie property companies don't go in to residential lettings?

The obvious reasons; too many hassles, too much admin, and less profit?

If there is so much money in it why aren't they lining up to invest-Go figure it out!
Quote
"exploitative" " benevolent dictatorship"
-as you have appeared to have insulted every decent irish property investor, i suggest the private sector is not for you.

Can you honestly claim that the present state of affairs is fair to those who chose to rent? Am I the only one who has seen repeated instances of perfectly good tenants moved on for greedy motives by landlords. Or completely unwarranted jumps in rental costs on no more basis than pure greed? There is a difference between the legitimate pursuit of profit within a commercial enterprise, and the wholesale exploitation of those without legislative recourse.
I'm not claiming this of all property investors. 'Decent' landlords shouldn't have any issue with my comments. Just as you focus on the bad apple tenants, I'm referring to the landlords who abuse the lack of any legislation in support of tenants.

I think on this final point we will agree to disagree and move on
-rgds


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## Spiderman (8 Aug 2002)

*Rentals*

One of the problems with the private rented sector is the apartment blocks where each apartment is owned by a separete landlord. Granted, some investors may own more than one unit.

My own experience of this activity is that most investors just want to take their rent and are not interested in the long term success of the development. Hence, they refuse to pay service charges, with the obvious effect on the site. Yes, you could say the mgt company should pursue them thru' the courts, but that is not economically viable. So the place ends up as somewhere where they are happy to own and rent out an apartment, but would never live in.

Some of the apartment develpments around Dublin are quickly turning into eyesores, and will probably end up having to be knocked down in years to come.

The solution to this is for the Govt to set up a series of tax incentives to encourage property investment companies to own, manage , and lease apartment blocks, and multiple housing units (admittedly this is more complex than apartment blocks, but not impossible). And also discourage individual investors, although, in a free society, people should be still entitled to do it if they so wish.

The advantages would be:
1. Apartment blocks would be maintained properly, because it would be in the interest of the owners to do so;
2. Companies would have a long term interest, and would therefore be more inclined to consider long-term leases;
3. Tax collection on rents would be more effective (don't try to convince me that all landlords declare all rental income, because they do not);
4. If structured properly, there could even be some restriction on rent increases.


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## jem (9 Aug 2002)

*Re: Rent*

Hi I have been following this tread and wish to make a few points:
First of all I am not a landlord and therefore hve no conflict of interest.
If the tenant is good the landlord will not want to get rid of him/her.
If they enter into a contract for 12 months then it should expire at the end of 12 months unless they BOTH agree otherwise.
The contract is a business agreement the landlord agrees to provide and the tenant agrees to pay for it.
In any business you can decide that at the end of a contract whether or not you wish to do business with that person again. 
I feel it is wrong to force a business person to do business with another person after the period of the contract is over and also that the length of this contract should be decided by anyone other than the two individuals themselves.

Spiderman: "If structured properly, there could even be some restriction on rent increases."
why should anyone other than the businessman himself decide what a business charges for his goods/services and what rate of increase he should get.
An earlier poster mentioned about selling property willy nilly  surely if they own the property they should be able to sell it whenever they want.


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## Spiderman (9 Aug 2002)

*Rent*

"why should anyone other than the businessman himself decide what a business charges for his goods/services and what rate of increase he should get."

Beacuse we are talking about housing here, and housing is a fundamental right that should be subject to some degree of price control. (Up the revolution!!) 
Seriously, though, many (socialist) European countries have controls over rent increase which afford protection to tenants. The result is that property companies can and do make money (not huge amounts, admittedly), and tenants can and do spend long periods, sometimes their entire lives, in rented accomodation.


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## Jobman (10 Aug 2002)

*re  re rent*

jem
-my sentiments 100%


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## rainyday (10 Aug 2002)

*Re: re  re rent*

Hi Spiderman - I'm not sure that they're is any real need for price regulation in the rental market. Really, the Govt should pull out of the market by removing mortgage interest relief for property investors. This would let the market decide it's own rates in a free market environment.

I think anecdotal evidence shows that rental prices are stabilising (if not dropping slightly) and even NoelC's comment about generously paying the refuse charges shows that the Shylock landlords of the past are a dying breed.

Regards - RainyDay


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## Tommy (10 Aug 2002)

*Re: re  re rent*

<!--EZCODE BOLD START-->* the Govt should pull out of the market by removing mortgage interest relief for property investors. This would let the market decide it's own rates in a free market environment.*<!--EZCODE BOLD END-->

The govt tried this, on the advice of Peter Bacon, in Spring 1998. The result - stagnation in the rental property market, shortages of rental accomodation, and disastrous rent increases for tenants as a result - Problems that are only now being alleviated by the recent repeal of the 1998 legislation. 

I don't think we want to go down that road again...

Tommy
www.mcgibney.com


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## GeoffreyOD (10 Aug 2002)

*removal of mortgage interest relief.*

"I don't think we want to go down that road again".
Speak for yourself Tommy.
There have been other threads over the last few months where it has been obvious that many of the regular contributors aren't in agreement with you on the matter of mortgage interest relief for investment property so stop using 'we'.


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## Liam D Ferguson (11 Aug 2002)

*Matter of interpretation*

My reading of Tommy's post was "<!--EZCODE BOLD START-->* <!--EZCODE ITALIC START--> I<!--EZCODE ITALIC END-->*<!--EZCODE BOLD END--> don't think we {as a nation} want to go down that road again."  In other words he was speaking for himself, and expressing his own opinion of what's good for the country.


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## Tommy (12 Aug 2002)

*Re: 4 yrs to get your property back?*

Once again, I (we?? :lol   ) have obviously (and innocently     )  hit a nerve... I wonder how many times Geoffrey read my post before replying?


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## GeoffreyOD (12 Aug 2002)

*I saw the 'I'*

You know that people don't agree with you on this so stop thinking on behalf of the nation on this one.

Please and Thanks. : )


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## Bearish (12 Aug 2002)

*Cant have it both ways*

Investors either agree that the state should not interfere in workings of the property market, i.e. no mortgage interest relief, no tax incentivised property schemes etc. or accept that the government has a role to play in providing some form of security for tenants, unable to afford to buy a property, and in return investors continuing to receive lucrative tax benefits from the state. So which is it to be?


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## jem (12 Aug 2002)

*Re: I saw the 'I'*

Hi GeoffreyOD,"You know that people don't agree with you on this so stop thinking on behalf of the nation on this one."

Actually quite an amount of people agree that the bacon report was one of those ideas that should have beeen left at that - an idea.This includes a large amount of contributors to AAM.

The  actual was in many cases that landlords upped the rent to counter the reduction in their net situation, therefore as rent went up the net amount that leesees had to save went down so in actual fact it was harder in most cases for them to buy their own house.
In addition to this the building industry suffered and had the ledg. not been repealed many jobs would have been lost paticularly the small builders who only have a few employees suffered and would have gone out of business.

Why should the landlord not have the same rights as any other business person in deciding who he wants to do business with and at what rate they should charge?

Bearish

" Investors either agree that the state should not interfere in workings of the property market, i.e. no mortgage interest relief, no tax incentivised property schemes etc. or accept that the government has a role to play in providing some form of security for tenants, unable to afford to buy a property, and in return investors continuing to receive lucrative tax benefits from the state. So which is it to be?  "

If you invest in your business should u not get interest relief on the loan that you had to take out. ???
The reason for the tax incentivised property schemes was that there were areas that were so run down that no-one wanted to invest in them. The govt. decided to try and rebuild these areas and the easest/cheepest /most practical way was to give extra tax relief for those who were prepared to spend their money in these areas.


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## Tommy (12 Aug 2002)

*tax relief*

Okay, if we want the govt to abolish interest relief for landlords, should they not go the whole hog and abolish the other tax reliefs and deductions they receive, e.g. deductions for refuse charges, letting and management fees, capital allowances etc - to effectively tax all rental income (without deduction) at the recipient's marginal tax rate? 

The effect of this would be to reduce (by up to 42%) the landlord's rate of return on their investment, in the absence of a rent increase. As many landlords have purchased their rental properties using hefty borrowings, surely they would, in that scenario, have no option but to increase rents to make up the shortfall and to keep the bank manager happy? In that scenario, who's going to suffer? - yes, once again, the hapless tenant.  

Tommy
www.mcgibney.com

ps Geoffrey, lay off the satire, please... It really wasn't that funny in the first place.


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## GeoffreyOD (12 Aug 2002)

*regarding opinions on mortgage interest relief.*

Many people agree and many people disagree and that is the point I made. Tommy, who said I was trying to be humourous.  You are not speaking for me and many other contributors to these forums on this point.  That was the point I made and would have left it at that if the point had been taken rather than getting all defensive.

I remember not participating in a contentious thread on this many months back.
I think it was in the general election area.

I think Bearish was one of the ones most strongly opposed to mortgage interest relief but I do remember him being backed up by a number of others.

Abolition of mortgage interest relief wasn't given enough time to work as sellers and estate agents held out rather than reducing asking prices but they could only hold out so long. Just before the re-introduction of mortgage interest relief newspapers were reporting that Estate agents were laying off staff due to a drop in sales but selling prices weren't dropping.


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## Tommy (12 Aug 2002)

*Re: tax relief*

Geoffrey, for the nth time, I did not intend to speak for you, or indeed for any other contributor, in my earlier comment. If you bothered to read my post correctly (and as Liam helpfully pointed out) you will see that I said "<!--EZCODE BOLD START-->* <!--EZCODE ITALIC START--> I<!--EZCODE ITALIC END--> don't think...*<!--EZCODE BOLD END-->, not "We don't think". Far be it from me to get overly "defensive" about your comments but you did seem to (i) misquote me and (ii) call into question my right to make the comments I made. Because of the way you laboured the point, I did wonder were you trying to be ironic or satirical but I'll take your word on it.

I think you're under some sort of misapprehension that the purpose of the Bacon measures was to reduce house prices. This wasn't the case. The purpose of Bacon was to reduce or eliminate the involvement of new investors in the housing market, in order to leave the market open solely to first-time owner-occupiers. Oddly enough, they did succeed in this objective but Bacon and the policymakers failed to recognise that these measures would have such an inflationary effect on rents that they worsened, rather than improved, the plight of those in the rented sector trying to gain a foothold in the property purchase ladder.

Tommy
www.mcgibney.com


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## swizzle (12 Aug 2002)

*Re: Tommy's I and Geoffrey's we*

Quote from Geoffrey

<!--EZCODE QUOTE START--><blockquote>*Quote:*<hr> "You know that people don't agree with you on this so stop thinking on behalf of the nation on this one."<hr></blockquote><!--EZCODE QUOTE END--> 

Geoffery, do you not think this order from you (which is not set out as a personal opinion) to Tommy is as imperious as you consider his statement to be?


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## GeoffreyOD (13 Aug 2002)

*Keep 'the nation's good' out of the disc. and I'm happy.*

No Swizzle I don't.  I acknowledged that Mortgage interest relief is a contentious issue.   Tommy's post was so condescending and then he tries to lecture me on being satirical.

Tommy, back at ya - lay off the condescension, please...
and if you don't consider 'I don't think we want to go down that road again....' as it appeared in a previous reply to this thread is condescending then I don't know what to say. 

I'm outta here.  All I'm going to see from here on is people trying to save face.

Swizzle, you confuse me.  Your posts sometimes seem to be hints on how to reply more than replies in their own respect.


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## swizzle (13 Aug 2002)

*sorry to confuse you Geoffrey*

<!--EZCODE QUOTE START--><blockquote>*Quote:*<hr> "Swizzle, you confuse me. Your posts sometimes seem to be hints on how to reply more than replies in their own respect. "<hr></blockquote><!--EZCODE QUOTE END--> 

Sorry to confuse you Geoffery.  Do you have some examples please?

I don't agree that my posts are hints on how to reply - they're not exactly 'swizzle's guide to posting etiquette' are they?

I do agree that my posts tend to be reactive to posts which make assertions without the author thinking or checking facts first.  I usually agree with one side or the other in most of the debates (Tommy and others here for example) so I usually only dive in if something I would like to see challenged goes unchallenged (okay so I'm lazy).  If you look back through some of my posts (and you're making me feel cyber-stalked lemme tell ya) , you'll see that some of the debates stop when I bring a touch of reality to them.

My opinions for the record:

A landlord should have the right to sell his house whenever he wants to.
The rent payable should be the market rent not a rent-controlled figure.
A lower-than-market-rate rent-controlled amount will make the landlord resent the tenant and want to get them out so he can get market rate for his property.
Any abuse of the property should allow the landlord get his property back straight away.
All expenses of buying and running the property (including mortgage interest relief) should be allowable against tax - property investment is a business and to many people it is their livelihood and should be respected as such.
Geoffrey gets grumpy and threatens to leave the discussion when he's not winning.
I don't find Tommy's comments condescending.


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## Tommy (13 Aug 2002)

*Re: Tommy's I and Geoffrey's we*

For God's sake Geoffrey, lighten up! So an innocent throwaway remark such as 'I don't think we want to go down that road again....' is (1) "thinking on behalf of the nation" and, now (2) condescending? 

In case you're getting paranoid again, I can remind you that I could hardly be accused of trying to be "condescending" to you, as you hadn't contributed to this thread before I made my point. On that basis, I really don't know what your problem is. Perhaps you're reading far too much into what was, let's face it, a rather innocuous statement. 

Maybe everything won't appear as gloomy tomorrow, Geoffrey. At least il will be Tuesday...


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## Alastair (13 Aug 2002)

*handbags at dawn*

>swizzle said:
>A landlord should have the right to sell his house whenever he wants to.

The legislation doesn't say any different. (Did you read it?)
Personally I think a reasonable period of notice should be required. What that period is could be hammered out.

>The rent payable should be the market rent not a rent-controlled figure.

The 'market' rental costs in certain parts of this country are artificially high. I'd argue that there is a nice cozy cartel in operation, and that's never a good thing. The present 'throw up substandard rental boxes and charge through the nose for them' attitude is going to harm everyone in the longer term.

>A lower-than-market-rate rent-controlled amount will make the landlord resent the tenant and want to get them out so he can get market rate for his property.

If security of tenure were introduced then tenant B would have the same rights as tenant A, so resentment shouldn't be a factor. Obviously some landlords would be unable to make the excessive profits that are attainable at the moment (not that I'm suggesting ALL landlords do so).

>Any abuse of the property should allow the landlord get his property back straight away.

Any breach of lease contract removes security of tenure. I take it your concern lies in the 'straight away' comment?

>All expenses of buying and running the property (including mortgage interest relief) should be allowable against tax - property investment is a business and to many people it is their livelihood and should be respected as such.

Don't see any problem with this, other than convincing Charlie.

>Geoffrey gets grumpy and threatens to leave the discussion when he's not winning.
>I don't find Tommy's comments condescending.

I think they need to get a room.


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## swizzle (13 Aug 2002)

*re: handbags at dawn*

Hmmm - Tommy and Geoffrey alone in a room - I don't see it as the start of a beautiful relationship somehow.

Alastair, you seem to think my comments were a 'wish-list' of things that aren't in place at the moment.  It was just a list of where I stand on the issue of the respective rights of landlords and tenants (as Geoffrey implied that I make comments about comments rather than stand-alone comments).  

<!--EZCODE QUOTE START--><blockquote>*Quote:*<hr> "If security of tenure were introduced then tenant B would have the same rights as tenant A, so resentment shouldn't be a factor."<hr></blockquote><!--EZCODE QUOTE END-->  

Not true - in countries where security of tenure is a feature, it is usually only given after a certain period of residency e.g. 12 months.  I think landlords would be more likely to get new tenants every year rather than risk seeing their real income erode over time.  

My brother has got a property in the UK where the rent is about 50% of the market rate and, by law, this cannot be substantially increased.  He cannot sell the property with vacant possession - the guy is now a sitting tenant.  He wants to sell to buy a bigger house in Dublin but with a sitting tenant, the market value of the property is about 25% lower than it would otherwise be.  I don't think this is fair.  

BTW he regularly gets letters from companies which specialise in buying up properties with sitting tenants (at a big discount of course) and then somehow 'persuading' them to leave.  Anybody want to see that happen here (and don't think it wouldn't)?


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## Bearish (13 Aug 2002)

*Removing the reliefs*

Possible effect of mortgage interest relief and other relieves, aimed at property investors, being removed:

Tommy states that this will cause an increase in rents as investors who recently bought properties at high valuations seek to cover their mortgage payments via increased rents. Economics 101 - if you put prices up, demand tends to fall assuming the good has some price elasticity. In my opinion, based on being a renter myself and most of my friends being renters, rental levels in Dublin have reached an affordability ceiling and therefore tenants are increasingly sensitive to rent hikes. If mortgage interest relief were removed, landlords would find it extremely difficult to increase rents to compensate. Landlords would either have to make up the difference themselves or sell their property. As I suspect most new buy-to-let landlords would be hard pressed to make up the difference themselves, many would be forced to sell thereby increasing the housing supply and reducing house prices. FTBs are happy, tenants are happy as there is less demand for rental accommodation due to previous renters buying affordable their own place, the tax man is happy as he increases the total tax take. The hard pressed property investors, accountants, tax advisers and estate agents (whom I assume the majority of people are on his tread) are none too happy.


Jem Quote:
“If you invest in your business should u not get interest relief on the loan that you had to take out. ???”

The rationale behind the tax man allowing businesses to write off interest on loans used to finance capital investment, is that it is hoped such a measure will encourage businesses to increase productivity, increase employment and thereby increase the welfare of the entire economy. Such a measure may reduce the initial tax take in the short term, but businesses are expected to give something back to society in the long-run. Mortgage interest relief on the other hand appears to only benefit the investor under current legislation. I’d hardly call the provision of 12month leases a service to the economy. Why should a tenant’s taxes go to effectively subsidise the cost to his landlord of buying the property in which the tenant resides, when that same tenant has little security other than some 12month lease. I’m not normally in favour of state intervention to either support producers (landlords) or customers (tenants) but when the market is not supplying what the customer wants – in this case long-term leases, something is wrong with the market mechanism.

Just  in case anyone missed it, I have an interest to declare – I am a renter. Anyone else any interests to declare???


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## Tommy (13 Aug 2002)

*Re: Removing the reliefs*

Hi Bearish,
My point is not solely that removing interest relief for landlords will cause rent hikes for tenants, but more a general observation that this is what happened when the govt (on Bacon's say-so) did so in 1998, and a prediction that this experience would be likely to be repeated if the measure was re-introduced. 

<!--EZCODE QUOTE START--><blockquote>*Quote:*<hr>  If mortgage interest relief were removed, landlords would find it extremely difficult to increase rents to compensate. <hr></blockquote><!--EZCODE QUOTE END-->

In the post-Spring 1998 period, many commentators and politicians scoffed at claims that rents would go through the roof as a result of Bacon, using the logic that rents had already reached a ceiling at that stage, that tenants could not at that stage afford to pay any more rent, and on that basis rents could not increase again. We found out pretty quickly that this was not the case and that many tenants literally had to beggar themselves by paying excessive rents with the only alternative being to sleep on the streets. As the State chose not to provide social housing by building houses of its own to cater for these people, many unfortunates did end up homeless.

Who is to say that the same won't happen again? To go back to economics, housing is not an optional purchase, it is a basic human necessity, like food or clothing. When Communism collapsed in Russia a decade ago, the people of Moscow found themselves impoverished. That did not stop them having to pay ridiculous amounts for food when the "robber capitalists" took over the main arteries of food supply in the city and began overcharging for basic foodstuffs like bread, meat, and vegetables.  

There is little, if any, price elasticity in the housing market in Ireland because there are chronic shortages of accomodation in almost every sector of the market. These shortages have now existed for the better part of a decade. Which is precisely why any policy move to further worsen these shortages would be catastrophic.

<!--EZCODE QUOTE START--><blockquote>*Quote:*<hr> Landlords would either have to make up the difference themselves or sell their property. As I suspect most new buy-to-let landlords would be hard pressed to make up the difference themselves, many would be forced to sell thereby increasing the housing supply and reducing house prices. <hr></blockquote><!--EZCODE QUOTE END-->

The problem in that scenario is that much of the existing rented housing stock would invariably be sold to first-time buyer owner-occupiers. Fine and dandy in theory, but the problem with this scenario is many existing tenants (esp. those not in a position to buy a house themselves) would find themselves homeless as their homes are sold from under them.

This scenario is worsened by the fact that the average numbers of people living in the average "owner-occupier"-owned property is a lot less than in the average landlord-owned property.

<!--EZCODE QUOTE START--><blockquote>*Quote:*<hr>  The hard pressed property investors, accountants, tax advisers and estate agents (whom I assume the majority of people are on his tread) are none too happy.<hr></blockquote><!--EZCODE QUOTE END-->

Remember, nobody did better out of the Bacon restrictions than existing rental property owners who saw their rental incomes rocket while others were effectively barred from entering the market to compete with them, leaving them with an effective monopoly.

I'm puzzled by how you think that accountants and tax advisors would lose out as a result of landlords having to pay more tax. Isn't it true that tax increases (such as the effective tax increase you're proposing) fuel increases in demand for accountancy and tax advisory services in order for individuals to legally mitigate the amount of tax which they owe?

Tommy
www.mcgibney.com


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## Bearish (14 Aug 2002)

*I disagree*

Tommy, you are obviously not a renter if you think rents are capable of increasing significantly in 2002. 1998 is a lot different to 2002. In 1998 rents started from a much lower base, the economy was booming and most people were experiencing significant increases in real disposable income, especially the young professionals that make up a significant portion of the Dublin rental market. Fast forward to 2002 – real disposable income is stagnating or will likely fall due to high inflation and increased taxes, many of this year’s graduate class cant get a well paid job in Ireland, particularly in the IT and financial services sectors and many existing professionals are losing their jobs or at least getting little or nothing in the way of pay increases. Many young Europeans who moved to Dublin in the late 1990s are moving back home as costs in Dublin have surpassed most other European capitals. Housing may be a necessity, but where you choose to live is not set in stone - the Irish have never been afraid to move abroad when times got tough. You’ll also find many people, particularly those looking to buy, moving back in with their parents or relatives rather than pay another €50-€100 of “dead money” a month to a landlord. Rents in my view have reached a ceiling and I for one certainly wouldn’t pay any more. I therefore have to disagree with you that removing mortgage interest relief would hurt the majority of tenants via rent hikes.

Irish people seem to prefer owning their homes than renting. Giving very generous tax breaks to investors to encourage them to buy more property is naturally reducing the ability of FTBs to buying those same properties as FTBs tend to be in a weaker financial position than someone who already owns a property, i.e. an investor can outbid a FTB. It seems strange that the government should on one hand recognise the that most Irish people want to own their own home, while at the same time encourage investors to buy properties. Investors would likely not buy Irish property without tax breaks, i.e. tax reliefs are an effective subsidy to property investment.. Eliminating them would result in most property investments being unattractive to the Investor. . If a property  investment doesn’t make sense on its own merits ( i.e. excluding tax breaks) then property valuations are obvisously too high! Eliminating tax breaks will therefore likely reduce property prices as taking the investor out naturally reduces demand, and as we saw late last year before Charlie came to the rescue, causes property prices to fall. 

I take your point regarding a higher number of people in a rented accommodation than a PPR, however the rent-a-room scheme might help alleviate in the short term. Affordable housing schemes, increased supply of property from investors selling plus new developments and falling prices would solve this problem in the medium to long term.

Quote:
“Remember, nobody did better out of the Bacon restrictions than existing rental property owners who saw their rental incomes rocket while others were effectively barred from entering the market to compete with them, leaving them with an effective monopoly.”

Isn’t that because the existing investors were still able to claim relief so long as it had been bought pre- Bacon? Getting rid of tax relief for all investors, both existing and future would surely create a level playing field.

Having investment properties usually increase the complexities of a persons tax affairs for which accountants and tax advisors get paid to help sort out. More investment properties therefore tend to mean more fees for these professions. I fail to see how people could legitimately reduce the tax they owe on rental income if all relief were removed. So why would this give accountants and tax advisors more business.


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## Tommy (15 Aug 2002)

*Re: Removing the reliefs*

<!--EZCODE QUOTE START--><blockquote>*Quote:*<hr>  So why would this give accountants and tax advisors more business.<hr></blockquote><!--EZCODE QUOTE END-->

Well for a start high-taxpaying taxpayers tend to spend more on tax shelters such as BES, pension schemes etc (which are generally formulated and promoted by financial and tax advisors) than those who pay comparitively less tax.

Remember, there was no shortage of demand for accountancy and tax consultancy services (both legitimate and otherwise) back in the grim days of '80s when we had very high tax rates, even though the wider economy was in a mess at the time.

BTW, I find it odd that you seem to imply that I have some sort of vested interest in the housing market that somehow invalidates my opinion when I don't agree with you. If I were a dentist or a teacher, rather than an accountant, would my opinion count for more?  Certainly, as a would-be first time buyer, you may well have a vested interest in wrecking the private rental housing market (no matter how many people’s lives are affected as a result) but you will notice that I haven’t questioned your right to speak on this topic.  

<!--EZCODE QUOTE START--><blockquote>*Quote:*<hr>  Tommy, you are obviously not a renter if you think rents are capable of increasing significantly in 2002...Rents in my view have reached a ceiling and I for one certainly wouldn’t pay any more. I therefore have to disagree with you that removing mortgage interest relief would hurt the majority of tenants via rent hikes.
<hr></blockquote><!--EZCODE QUOTE END-->

Rents have increased exponentially in Dublin in the past 5 years not because everyone's wages were rising (tell that to the teachers, nurses and low-paid civil servants) but because the laws of supply and demand meant that a large pool of tenants effectively outbid each other paying higher and higher rents to secure a place to live from a declining and stagnant pool of rental properties. 

The example of the impoverished Russian pensioners and widows who found themselves paying a fiver for an apple or a tenner for a loaf of bread in the early 1990's would seem to indicate that people would indeed pay even more ridiculous amounts in rent if the only alternative was the park bench.

<!--EZCODE QUOTE START--><blockquote>*Quote:*<hr>  Affordable housing schemes, increased supply of property from investors selling plus new developments and falling prices would solve this problem in the medium to long term.<hr></blockquote><!--EZCODE QUOTE END-->

Yes, but homelessness, by its nature, is a short-term problem. If you haven't a place to sleep tonight, it matters little what policy moves are afoot to solve the problem in a few months time. Are you really comfortable advocating a situation where large numbers of tenants would be turfed out onto the streets because their landlords could not afford to keep renting their properties?

Remember, in the past few years, the State has housed (and paid the rent for) many, many thousands of social welfare recipients in private rented accomodation under the "rent allowance" scheme. It is no exaggeration to say that most of these people would be homeless if they lost their accomodation as a result of their landlords going out of business. The existence of this sector within the private rented accommodation sector is the one reason why, thankfully, your proposal will never be adopted by any government, no matter who gets in.


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## Bearish (15 Aug 2002)

*Being up front*

Tommy I think you are getting slightly sensitive on this topic. Nowhere in my posts have I questioned your right to speak on this or any other topic. However, just as you have to look carefully at the institution that issues a recommendation on a quoted company or promotes a particular investment product, so to is it important to understand the motivation behind a person’s argument. I take it, that’s why Brendan asks people to declare their interests. Lets be clear on this: I have declared my interest as a renter and therefore have an interest in seeing falling rents and/or better protection of my tenant rights. You, as an accountant and I presume home-owner, have an interest in seeing the continuation of property reliefs and rising house prices. There is nothing wrong with either of our positions, but I think it is important for people to understand our motivations in any debate. 

By the way, I do not classify myself as a potential FTB as I have no intention of living in Ireland for any serious length of time. Therefore I’m not out to “wreck the private rental housing market” so that I might get a cheaper house.

Getting back to my overall point. I fail see why the Irish tax payer should subsidise the activities of property investors, when those same investors are unwilling to be subjected to regulation that would improve their customers rights. Property tax reliefs represent a transfer of wealth, via the taxation system, from tax payers (many of which are tenants) to property investors. I can think of better ways of spending tax payers money. With the government finances deteriorating, I think it might be better to cut these types of reliefs that tend to benefit wealthier members of society, and more importantly distort the free workings of a market, than cutting the aid we provide to third world countries. I hope Im not sounding like some “left wing pinko” but I’d prefer that my taxes are spent on projects that will provide some benefit to society than to someone else’s Bank account.

If the government in its wisdom (and Im not casting any dispersions on possible FF ties to the construction industry) believes that property tax reliefs should remain in place, then I don’t think it is too much to ask investors to provide an improved service to tenants in return. At present there are many students desperately searching Dublin for accommodation. There process seems to repeats itself every year with the same horror stories of students having to take some dingy flat and paying some outrageous rent. Students are hard pressed enough with recent hike in fees and the general increased cost of going to college, without having to spend a month trying to find accommodation. Surely legislation that would allow tenants a 4 year lease (same length as the average degree) would help these students greatly. It would also help many other working tenants to be able to plan ahead over a longer time horizon than a year. I think the proposed legislation is a small price to pay for the benefit that property investors currently receive from the tax payer. Perhaps someone would like to explain why property investors should get the best of both worlds????

Qoute:
“Rents have increased exponentially in Dublin in the past 5 years not because everyone's wages were rising (tell that to the teachers, nurses and low-paid civil servants) but because the laws of supply and demand meant that a large pool of tenants effectively outbid each other paying higher and higher rents to secure a place to live from a declining and stagnant pool of rental properties.”

The only way people can outbid others, is if they have more disposable income with which to bid with.

Qoute
“Are you really comfortable advocating a situation where large numbers of tenants would be turfed out onto the streets because their landlords could not afford to keep renting their properties?”

This is just plain scare mongering. The removal of property reliefs would result in a process of change happening over time, not over night.


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## Tom (15 Aug 2002)

*Agree*

Many landlords have long since paid for their properties (or paying minimal mortgages) so they're not relying on rent rises to sustain any mortgage.While I tend to think that governments should stay out of the market place generally I think housing should be an exception as its such a basic need.If governments are expected to stay out of the property market then that should also mean removing interest relief and tax incentives.
I think if Bacons proposals had been given more time they would have helped FTBs.I still find it hard to figure out why its wrong to tip the scales towards helping those who want to buy a home.Invetors don't build houses,they only buy into the market.Builders and estate agents tried to say that fewer houses were built last year because of Bacon but that was patently false.


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## jem (15 Aug 2002)

*Rent*

I am an Accountant, I own my own house, I don't own a second house so I have no rental Income.

A couple of points If I may:
1) I have made this point before , The country doesn't begin and end in Dublin.
 2)There appears to be a" housing crises" in Dublin with substancial rents etc. I live and work in Tipperary, and yes I have clients who are Landlords. The average rent per 2/3 bed house would vary from £100-£120 per week. The rent in many cases does not cover the mortgage repayments and they have to dip into their own pockets for the balance.

3)These rented houses are often peoples pension policy. 

4) Being a landlord is the same as being in any other business and the same reliefs should apply.
5) Likewise the same rights should apply.As to when they want to sell etc 
6) The landlord doesn't owe anyone a foof over their head, the state is obliged to stop people from being homeless the landlord is not- its business.

7) Down this part of the country there was a slow down in the building of houses due to Bacon, maybe not in Dublin but my first point apply's there.
8)  Higher rents meen less ability to save. Lower tax relief meens the landlord needs to increase rents. Therefore harder to buy first house. Its basic economics.


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## Tommy (15 Aug 2002)

*Re: Agree*

Well said jem.

Bearish, allowing landlords and others to deduct interest and other costs from their gross income before expenses is not a "tax relief" - it is a fundamental principle of all tax systems in the developed world that taxpayers are taxed on their net income <!--EZCODE BOLD START-->* after*<!--EZCODE BOLD END--> associated allowable expenses and not on their turnover. 

You could argue, depending on your ideology, that tax reliefs and deductions “represent a transfer of wealth, via the taxation system” from taxpayers to property investors and entrepreneurs, or indeed that businesses should be taxed more heavily than they are. However, it is true that much of Ireland's economic success in recent years has been based on rewarding and incentivizing risk-taking, enterprise and capital investment via a low-tax regime. The result is an unprecedented economic boom and a huge increase in employment. 

Whether you like it or not, the same economic principles apply to the housing market. If a govt makes it attractive for investors to invest, (and for builders to build) then the stock of housing will increase and you will have enough accommodation for everyone. In the long term this will mean meaningful competition in the rental market with a fair rent for the tenant, a decent (but not obscene) profit for the landlord and a roof over everyone's head.

If you discourage investors from investing, you will get a worsened shortage of properties, higher prices in the form of rents, and a reduced pool of landlords operating an effective cartel and enjoying obscene profits. New money for investment will go elsewhere - most likely into foreign property or stockmarkets. This has already happened to an extent during the period of the Bacon experiment and there is no evidence to show that the same thing wouldn’t happen again if Bacon or more extreme measures were introduced. You talk of people’s disposable incomes having peaked. Well that may be true in some sectors, but your claim doesn’t tally with the current economic statistics regarding wage increases, particularly in the services sector and possible industrial unrest (re, e.g. benchmarking) imminent in other sectors.

It is <!--EZCODE BOLD START-->* not*<!--EZCODE BOLD END--> scaremongering to say that many tenants would face eviction if a  number of landlords hit financial difficulty and were forced to put their property up for sale. No first-time buyer or other owner-occupier would buy a property unless vacant possession were available. Where will the tenants go? How many long-term vacant rental properties are there in Dublin?

Private-sector tenants would be in a far safer position if the govt were building massive amounts of state housing, to replace the current dependence on private landlords, (which IMHO is the way forward) but in the current public finances climate, that seems unlikely to happen. It would be a disastrous folly to mess around so drastically with the housing market without such a backup being available for these people.

By the way, I have no quibble with your arguments for better security of tenure for tenants. However, I do think it’s a bit much for you to lecture me at length about allegations of hidden vested interests, given that you haven’t revealed your identity and circumstances on AAM while I have. No matter what you might like to believe, I have no interest in seeing the current rent and house price spirals continue.


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## Richard (19 Aug 2002)

*Property investment as a business*

Other countries have rent control because they believe that people have a right to affordable housing and that property investment should not be treated as a normal business,obtaining tax reliefs,incentives etc.Rents are controlled depending on location,age of house and inflation.People still make money from inseting in property but don't expect to have their complete mortage paid for by rental income.
Its said that in investors were taken out of the market then there would be a lack of properties to rent but why should this happen?.We live in a capitalist society where supply is extricably linked to demand.If theres a demand for housing and builders can make money from supplying it then why wouldn't they?.The problem last year was that the government gave up on Bacon far too early.


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## jem (19 Aug 2002)

*Re: Property investment as a business*

Hi Richard I would agree that 
<!--EZCODE BOLD START-->*   "people have a right to affordable housing"*<!--EZCODE BOLD END--> 

However it is not up to landlords to provide it. Its the states duty. The only way to reduce rents etc is to have more properties available whether in the private sector or public. Therefore supply and demand will dictate that rents fall. It does not help the situation is any way to reduce the numbers of rented properties by way of decreasing the interest relief etc. all that does is reduce supply of rented accomodation and therefore increase rents. The reason there would be less properties to rent is the fact that it would cost more for landlords to service the loans thereon, therefore either they would increase rents accordinly or not purchase in the first place. In fact both happened.

<!--EZCODE BOLD START-->*  "If theres a demand for housing and builders can make money from supplying it then why wouldn't they?."*<!--EZCODE BOLD END-->

Because there maybe a demand for housing - paticularly in "Little Ireland"(Dublin) however can those who want housing afford it? Or do house prices need to fall dramatically in order to help them afford a house? I don't think that the majority of people want this to happen. The only solution to this malise is increased state housing and increased levels of rented property. More of both of these will infact reduce the rents being paid in "Little Ireland" and increase the possibility of first time buyers being able to afford to purchase.


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## Eddie (20 Aug 2002)

*alternative view*

"people have a right to affordable housing 

However it is not up to landlords to provide it. Its the states duty."

True but equally its not the states duty to help landlords make money from property investment by providing interest relief.


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## Tommy (20 Aug 2002)

*Re: Property investment as a business*

...nor IMHO is it the state's duty to penalise landlords by subjecting their earnings to a harsher tax regime than that applied on every other business person in the country.


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## toby (1 Sep 2002)

*tenancy*

sadly, now landlords will only give 6 month tenancies, what choice will they have.  It will cost more.  All the politicians will be happy because all the solicitors etc will make money.  The tenants will pay for it and have less tenure.  It wont work and then they'll change it in a couple of years.  Every tenant I've had has been for about three years.  Yet , no matter how good,  all have forfeited the last months rent for the deposit, which after , three years was always less, and I have always let it go.  Most landlords now charge two months rent as deposit.  I will start that with my next tenant, sadly.


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