# England, as dysfunctional as Ireland in tenancy laws



## LS400 (20 Jan 2018)

We are not alone in this abuse of power.

Someone mentioned previously on here, about Ireland being a basket case, or words to that effect, regarding tenancy rights here. We share this dysfunctional behavior with our near neighbours.

Letting out property now, seems to come with more concerns than ever before.

I have been lucky in letting property here and England for a good few years, hassle free, but when I encountered a tenancy problem across the pond, I was a little smug thinking, now we will see how the experts handle it.

3 months into a year lease tenancy, the arrears started, but the were clever enough to know when to make a small drip payment which stops any enforcement from me to start proceedings.

Months on, more than £2k spent on legal fees, £4-5k in lost rent and a possession granted, they still remain, (They Have No Fear) until the Bailiffs finally arrive to get them out. Another £350 costs involved there.

When the day finally arrives, they are free to become another LL nightmare. They have got the best part of a years accommodation with me, for free.

So they tell their buddies about how stupid they are to be paying rent when they can frustrate the laws of the land with impunity. Sure they would be mad not to give it a go..

Now I consider myself lucky here, I dont have a loan on that property, but they dont know that, yet what if I were up to my neck in debt, struggling to put food on the table, like so many are, what help do I get. We all know, you are completely on your own, and you take all the risks.

What Law protects me from this theft.

I am at a loss of the best part £7k theft on this property, If I break into a bank, a shop a pub ect and took money like this, 

1) They would have to catch me,
2) They would have to prove it was me

While in this case, they shout from the roof top what they have done and move on to the next victim.

I would be locked up, and rightly so. What is the difference between the two. Theft is theft.


If the Government were serious about helping to improve housing crisis in this Country, it would be a start that they come down hard on Bad LL, and get real with over holding tenants and non payers. This could involve attaching a payment order to either party and enforcing it. 

You need to remove the incentive to default on your obligations, not encourage it.

I read about a LL that hasn't returned a deposit in years, or engaged with the RTB, or put in a defense, absolute pure madness that this is allowed.

Its not my job to house the nation, but if I take the risks involved, and there are many risks, then there should be more protection for for the likes me.
Not looking for favors, just a level playing field.


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## TheBigShort (20 Jan 2018)

LS400 said:


> Not looking for favors, just a level playing field.



I don't think any reasonable person could argue with that.

Part of the problem as I see it is that the rental sector should offer a viable competitive alternative to the property ownership sector. 
As it is the two sectors are too entangled with each other with too many small LL's banking on their tenants to pay the cost of their mortgage over 25/30yrs in the hope that it supplement their pensions.


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## galway_blow_in (20 Jan 2018)

does entering into a long term lease with the local authority not provide an attractive option to those who are very concerned about potential abuses by tenants ? , i.e withholding of rent or mistreating the property

i know you receive a 20% discount but id have thought the guarantee of payment and not having to deal direct with tenants , coupled with the likelyhood of a lender feeling more secure doing business with someeone who  effectively had  a state tenant ( local authority ) , would easily balance it in this direction ? ,  would this be a silver bullet solution to landlord woes ? , yield would be lower but in the likes of germany , yields are nothing special but there is no messing about when it comes to deadbeat tenants being indulged long term ?


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## vandriver (20 Jan 2018)

This guy probably doesn't think so!
www.askaboutmoney.com/threads/ras-tenants-destroyed-my-property.206853/


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## AlbacoreA (21 Jan 2018)

galway_blow_in said:


> does entering into a long term lease with the local authority not provide an attractive option....



Simply no. No protection whatsoever.


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## AlbacoreA (21 Jan 2018)

TheBigShort said:


> I don't think any reasonable person could argue with that.
> 
> Part of the problem as I see it is that the rental sector should offer a viable competitive alternative to the property ownership sector.
> As it is the two sectors are too entangled with each other with too many small LL's banking on their tenants to pay the cost of their mortgage over 25/30yrs in the hope that it supplement their pensions.



Basically don't it run as a business. But as a public service, with the costs borne by some mystery benefactor.


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## TheBigShort (21 Jan 2018)

AlbacoreA said:


> Basically don't it run as a business. But as a public service



Ideally the concept of providing homes should be a public service as it benefits everyone in a multitude of ways to have everyone provided with housing.

If people want to engage in a private rental sector business they are of course free to do so.
But I would suggest that before entering that market, they should do their homework and make a business plan as to how they plan to operate the letting, contingency for non-payment of rent, falling rental prices, keeping the property up to standard etc. 
Without it, banks should not be lending to people for the purposes of entering the private rental sector.


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## AlbacoreA (21 Jan 2018)

You could say the same of the tenant.

Before renting they should have to provide something similar to a business plan showing their finances and guarantees and have a truly massive deposit to cover any issues.


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## galway_blow_in (21 Jan 2018)

AlbacoreA said:


> Simply no. No protection whatsoever.



so you have less protection than letting a property to a private tenant ?


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## AlbacoreA (21 Jan 2018)

Yes because its paid in arrears. Though you could choose to offset that by asking for an extra months rent up front. 
Of course these are the tenants least likely to be able to afford that. So that's a problem.

If the authorities choose to fix both these issues and gave some protection above that offered by private tenants then they might attract more to it. That they don't suggests they aren't really that interested in addressing the problems in this sector.


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## AlbacoreA (21 Jan 2018)

galway_blow_in said:


> . in the likes of germany , yields are nothing special but there is no messing about when it comes to deadbeat tenants being indulged long term ?



Germany has similar problems of shortages and rent caps not working. 

That aside, they do somethings better, and they are stricter with the rules and enforcing them. There is a slightly different mindset in that renting is more long term and normalized. Its not treated like temporary housing. So places are generally rented unfurnished and when you get the places its painted white walls. When you hand the place back you have to get it painted. So there's no scope for breakages, damaged walls etc.  They also have a longer deposit I think its 3 months rent. 

I don't know their system that well. So I'm open to correction on it.


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## galway_blow_in (21 Jan 2018)

AlbacoreA said:


> Germany has similar problems of shortages and rent caps not working.
> 
> That aside, they do somethings better, and they are stricter with the rules and enforcing them. There is a slightly different mindset in that renting is more long term and normalized. Its not treated like temporary housing. So places are generally rented unfurnished and when you get the places its painted white walls. When you hand the place back you have to get it painted. So there's no scope for breakages, damaged walls etc.  They also have a longer deposit I think its 3 months rent.
> 
> I don't know their system that well. So I'm open to correction on it.



i know long term rentals are the norm in germany , thats why i thought letting to the local authority might be comparable in this regard ?

i was unaware that letting to the local authority offered less protection than letting in the private market


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## RETIRED2017 (21 Jan 2018)

AlbacoreA said:


> Yes because its paid in arrears. Though you could choose to offset that by asking for an extra months rent up front.
> Of course these are the tenants least likely to be able to afford that. So that's a problem.
> 
> If the authorities choose to fix both these issues and gave some protection above that offered by private tenants then they might attract more to it. That they don't suggests they aren't really that interested in addressing the problems in this sector.


Or they are getting the supply and don't need to do any more,


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## RETIRED2017 (21 Jan 2018)

AlbacoreA said:


> Germany has similar problems of shortages and rent caps not working.
> 
> That aside, they do somethings better, and they are stricter with the rules and enforcing them. There is a slightly different mindset in that renting is more long term and normalized. Its not treated like temporary housing. So places are generally rented unfurnished and when you get the places its painted white walls. When you hand the place back you have to get it painted. So there's no scope for breakages, damaged walls etc.  They also have a longer deposit I think its 3 months rent.
> 
> I don't know their system that well. So I'm open to correction on it.


In some areas in germany you have to leave it ready for painting all holes drilled in walls while renting have to be filled  all walls  sanded along with any damage and as you said unfurnished for the most part,


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## TheBigShort (21 Jan 2018)

AlbacoreA said:


> Before renting they should have to provide something similar to a business plan showing their finances and guarantees and have a truly massive deposit to cover any issues.



You could try that, but I would suspect that would exclude a large proportion of tenants who are renting on the basis that they cant afford a home of their own. 
Defeats the purpose of being a LL in the first place for many.


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## RETIRED2017 (21 Jan 2018)

TheBigShort said:


> You could try that, but I would suspect that would exclude a large proportion of tenants who are renting on the basis that they cant afford a home of their own.
> Defeats the purpose of being a LL in the first place for many.


the big problem we have people buying property and letting it out as part of there pension , they would be better off contributing to a pension,


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## TheBigShort (21 Jan 2018)

RETIRED2017 said:


> the big problem we have people buying property and letting it out as part of there pension , they would be better off contributing to a pension,



Its a good point. Too many people depending on others to pay off their mortgage.
We should move away from the concept of 'landlord', instead move to a property management concept.
Prospective 'landlords', instead of taking out a mortgage, take out a leasehold on property. This could be for periods of 50 or 100yrs. They can then get on with providing decent accommadation at competitive prices.
In return, the laws are tightened to ensure respect of property, rental payments etc.


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## cremeegg (21 Jan 2018)

AlbacoreA said:


> Yes because its paid in arrears. Though you could choose to offset that by asking for an extra months rent up front.
> Of course these are the tenants least likely to be able to afford that. So that's a problem.
> 
> If the authorities choose to fix both these issues and gave some protection above that offered by private tenants then they might attract more to it. That they don't suggests they aren't really that interested in addressing the problems in this sector.



One reason, among many, we have the present housing shortage is that local authorities are no longer building council houses. This is because councils were unable to manage their properties. Many local authorities have arrears rates over 30%. And significant voids due to properties not being in a state fit to be let.

LAs are not looking to give protection to private landlords. They are more interested in avoiding the issues of being a landlord than taking responsibility for them.


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## TheBigShort (21 Jan 2018)

cremeegg said:


> LAs are not looking to give protection to private landlords. They are more interested in avoiding the issues of being a landlord than taking responsibility for them.



Indeed, that is why we should move to a property management system. Council, or developer build houses that are designated as letting properties. Propestive 'landlords' can take out leasehold on property and become property managers. The leasehold could be over 50 or 100yrs and the business acts as a going concern.
Rents could drop dramatically with 'landlords' competiting to attract tenants with quality accommodation.
A real competitive alternative to the mortgage/ownership market.


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## cremeegg (21 Jan 2018)

TheBigShort said:


> Rents could drop dramatically with 'landlords' competiting to attract tenants with quality accommodation.



How would rents drop dramatically, would the council lease the properties to these "property managers" at a subsidised rate.

Would these property managers be able to evict non-payers promptly.

Would these property managers be able to get deposits from tenants that would cover all possible damages, or be indemnified by the council, or have meaningful recourse to the courts.


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## Tebbit (21 Jan 2018)

Its true that the council have stopped building houses and this is a huge reason for the homeless problem. They were costing it seems a lot of money and in arrears hugely however I can never understand why it wasn't possible to take any rent/ maintenance owing from the income of the tenant. People went into arrears as they knew they could and the council couldn't get it from them.  I believe council housing should be built again but rules should be stricter.  More should beexpected from the tenants.    As to the private sector LL.  - if a tenant does damage or doesn't pay I again believe it should be the law that it can be recovered over time from the income of the tenant.  If you had to pay you wouldn't do damage!!


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## RETIRED2017 (21 Jan 2018)

cremeegg said:


> One reason, among many, we have the present housing shortage is that local authorities are no longer building council houses. This is because councils were unable to manage their properties. Many local authorities have arrears rates over 30%. And significant voids due to properties not being in a state fit to be let.
> 
> LAs are not looking to give protection to private landlords. They are more interested in avoiding the issues of being a landlord than taking responsibility for them.


If you take it one step further LL are taking over the problem from the local authorities including the 30 % in arrears ,The 30% are still there ,


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## cremeegg (21 Jan 2018)

RETIRED2017 said:


> If you take it one step further LL are taking over the problem from the local authorities including the 30 % in arrears ,The 30% are still there ,



You think ?


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## AlbacoreA (21 Jan 2018)

galway_blow_in said:


> i know long term rentals are the norm in germany , thats why i thought letting to the local authority might be comparable in this regard ?
> 
> i was unaware that letting to the local authority offered less protection than letting in the private market



What protection do think exists in either sector. The deposit? No protection really.


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## TheBigShort (21 Jan 2018)

TheBigShort said:


> In return, the laws are tightened to ensure respect of property, rental payments etc.



As stated earlier.




cremeegg said:


> How would rents drop dramatically, would the council lease the properties to these "property managers" at a subsidised rate.



Instead of having a large batch of small 'landlords' with the objectives of getting others to repay their mortgages obligations, passed off as a rental market we could abandon this concept by developing designated letting properties. These properties could be leased as going concerns to let. Property managers could then go about the business of affording good accomodation at very affordable rates.

Eg: Council builds a house designated for letting for €250,000. Council leases the property to a property manager as a going concern. This could be set at a very affordable rate by the council - lets say, €2,500 pa. The property manager will also require, say €50,000 deposit returnable at the end of leasehold, to secure the property.
The property manager will be required to furnish and maintain property to a required minimum standard. The property manager, competiting with other others will set a rental price on the basis of the quality of the home they are trying to rent rather than trying to cover the mortgage repayments over 25yrs. Effectively €2,500 pa + furnishing & mainteance (as costs).

This way the council is detatched as the landlord, the property manager/landlord is detatched from mortgage obligations. The laws are tightened re non-payment etc.
And a viable alternative to rent high standard high quality accomodation instead of mortgage ownership opens up in the housing market.


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## AlbacoreA (21 Jan 2018)

TheBigShort said:


> Indeed, that is why we should move to a property management system. Council, or developer build houses that are designated as letting properties. Propestive 'landlords' can take out leasehold on property and become property managers. The leasehold could be over 50 or 100yrs and the business acts as a going concern.
> Rents could drop dramatically with 'landlords' competiting to attract tenants with quality accommodation.
> A real competitive alternative to the mortgage/ownership market.



There is little of no profit (potential losses certainly) in your business model require to attract anyone to invest in it. So they won't.

Even in the model that exists now which has better potential (and potential losses), the supply of rental market is decreasing.

How making it even less attractive will increase supply is a mystery.


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## TheBigShort (21 Jan 2018)

AlbacoreA said:


> There is little of no profit in your business model require to attract anyone to invest in it. So they won't.



Of course there is.
For one, if the council builds the house it only needs a return to cover the costs over a 100yrs or more.
Ditto a developer. Say any city centre development will require 10% letting properties. If the cost of the property to build is €250,000, then €2,500 payable over 100yrs, all things being equal, will break even. The real profit will be on property sales.
Furthermore, conditions could be set if rentals go over a certain threshold, the lease will increase. 
Admittedly there would be a lot of maths to work out, but the concept is a viable option I would consider.


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## AlbacoreA (21 Jan 2018)

Yes because councils and govt and politicians are always looking for something that gives a return after they are dead. 

The whole market is looking at short term gains only. Especially big business and organisation. 

The only people looking for a long term return are those people looking to use it as a pension. But you want them out of the market.


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## RETIRED2017 (21 Jan 2018)

AlbacoreA said:


> What protection do think exists in either sector. The deposit? No protection really.





cremeegg said:


> You think ?


Looking at some of the posts on hear from time to time you will see people saying they are  lease to the council as a better option the council are not able to look after there own property why do people expect them to do a better job when the don't own the property,

Some councils do a fair enough job of looking after there property and managing there tenants some councils do a very bad job of managing there tenants and collecting  there rent any LL who hands property over to this lot are in trouble ,


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## cremeegg (21 Jan 2018)

TheBigShort said:


> Of course there is.
> For one, if the council builds the house it only needs a return to cover the costs over a 100yrs or more.
> Ditto a developer.



So all the painting currently being done free of charge by the small time landlord will have to be done by painters on a wage. Unionised ? Paying pension contributions, entitled to sick leave, maternity leave?

Don’t ever start a business.


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## TheBigShort (21 Jan 2018)

AlbacoreA said:


> The only people looking for a long term return are those people looking to use it as a pension. But you want them out of the market.



I dont consider 25/30 yrs in the lifetime of a property to be long-term.
That is part of the problem. Returns are sought after 25/30yrs which cover the full cost of the property + interest repayments + maintenance + sufficient profit.
As a consequence, a dysfunctional market.


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## TheBigShort (21 Jan 2018)

cremeegg said:


> So all the painting currently being done free of charge by the small time landlord will have to be done by painters on a wage. Unionised ? Paying pension contributions, entitled to sick leave, maternity leave?
> 
> Don’t ever start a business.




????


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## cremeegg (21 Jan 2018)

Your plan blithely skips over all sorts of additional costs !


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## cremeegg (21 Jan 2018)

As a small landlord. I am effectively in the position you suggest. My mortgage interest is less than €2,500 per annum. While my business is profitable based on me putting in my time for free, there wouldn’t be much left if I charged for my time. If the property manager had hundreds of properties to recover the costs over, I Think the costs per property would not go down. A management layer would be needed and need to be paid for. 

In fact you would be back to something close to the LA model which has failed.


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## AlbacoreA (21 Jan 2018)

TheBigShort said:


> I dont consider 25/30 yrs in the lifetime of a property to be long-term.
> That is part of the problem. Returns are sought after 25/30yrs which cover the full cost of the property + interest repayments + maintenance + sufficient profit.
> As a consequence, a dysfunctional market.



No offence but doesn't matter what we think. What matters is what the people investing think. 

The Govt doesn't want to cover the cost of that is effectively a loss making service.  Only problem neither does anyone else. 

The reason for a dysfunctional market is a lack of supply.


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## TheBigShort (21 Jan 2018)

cremeegg said:


> My mortgage interest is less than €2,500 per annum.



What is the mortgage amount? 



cremeegg said:


> In fact you would be back to something close to the LA model which has failed.



Perhaps, it just a notion anyways. As much as the LA model has failed, it pales into comparison to how the private housing market is now in boom, bust cycle. 
A market failure if there ever there was one. 

My concept is considerate that any house built to standards and maintained properly will have a minimum life span of 150yrs or more. Yet there is a compulsion in property 'investors' to have all mortgage etc paid by 25/30yrs. 
My proposal is to have designated properties which be available to let for 100, 150yrs etc. This takes the onus from small LL's to have mortgage paid by 30yrs.


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## RETIRED2017 (21 Jan 2018)

TheBigShort said:


> What is the mortgage amount?
> 
> 
> 
> ...


Where is the money going to come from,


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## cremeegg (21 Jan 2018)

You are right that the current practice is that the entire capital cost of the mortgage must be repaid in 25/30 years and that is not a long time in comparison with the expected life of a house.

The last people to have this insight were Bank if Scotland and others who gave out interest only mortgages to investors. I actually have one of those and it has worked out well for me and indeed to a less extent for my tenants. I charge a rent the market will bear but not being under excessive pressure, I can do repairs etc when needed, I always give back the deposit.

However long term interest only mortgages didn’t on the whole work for either landlords or banks.


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## AlbacoreA (21 Jan 2018)

TheBigShort said:


> ...Perhaps, it just a notion anyways. As much as the LA model has failed, it pales into comparison to how the private housing market is now in boom, bust cycle.
> A market failure if there ever there was one.,,



..maybe the aim was to raise property value and attract investors, while reducing costs to govt....


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## TheBigShort (21 Jan 2018)

cremeegg said:


> The last people to have this insight were Bank if Scotland and others who gave out interest only mortgages to investors. I actually have one of those and it has worked out well for me and indeed to a less extent for my tenants. I charge a rent the market will bear but not being under excessive pressure, I can do repairs etc when needed, I always give back the deposit.
> 
> However long term interest only mortgages didn’t on the whole work for either landlords or banks.



Yes I agree, the problem with interest only mortgages, as I see it, the principal still has to be paid within the investors earning lifetime?

So taking the idea that a €250,00 property is designated by a local authority as a letting property, and that its lifespan is of the order of 100-150yrs, then any prospective 'landlord/property manager' will not require a mortgage for the full amount, but rather a leasehold (say for 25yrs or 0.25 of €250,000 100yrs = €62,500 or, 0.16 of €250k 150yrs = €41k ). 
After the leasehold is up, the investor exits the market with whatever profit (if any) they made, that depending on the quality of accommodation provided and rent charged. 

Laws to be strengthened to protect against non-payment of rent etc.


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## RETIRED2017 (21 Jan 2018)

Laws to be strengthened to protect against non-payment of rent etc.[/QUOTE]
 Why wait


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## TheBigShort (21 Jan 2018)

RETIRED2017 said:


> Laws to be strengthened to protect against non-payment of rent etc.


Why wait[/QUOTE]

I suspect that a large proportion of the reason for non-payment of rent is due to the high cost of rent. The high cost of rent being driven, amongst other things, the outstanding mortgage repayments.
We could strengthen eviction laws now, but we would exacerbate the homeless situation. Thats cold comfort for landlords under pressure for loss of rent, but my underlying point is that we have two sectors in the housing market - ownership and rental. The two sectors are too entwined via the mortgage market. 
My hope would be that a system is devised that offers a real competitive alternative to the mortgage ownership market, insofar, that people, families of all walks of life, may seriously consider between home ownership or home rental.


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## RETIRED2017 (21 Jan 2018)

TheBigShort said:


> Why wait



I suspect that a large proportion of the reason for non-payment of rent is due to the high cost of rent. The high cost of rent being driven, amongst other things, the outstanding mortgage repayments.
We could strengthen eviction laws now, but we would exacerbate the homeless situation. Thats cold comfort for landlords under pressure for loss of rent, but[/QUOTE]

The 30% not paying there rent  to there local council is because of high rent??? , what you are proposing failed to work in the past because  rents could not be collected,


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## AlbacoreA (21 Jan 2018)

In other words the high cost of rent is a reflection of the high cost of property. In a market with a shortage of supply.

Also it's reflection of the war chest a LL has to have to mitigate against loss like over holding or damage. Which can't be recovered from the tenant usually.


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## TheBigShort (21 Jan 2018)

AlbacoreA said:


> In other words the high cost of rent is a reflection of the high cost of property. In a market with a shortage of supply.



Yes. That is understood. So I have suggested a concept that dramatically reduces the cost (designated properties to let the mortgage costs which are spread over 100-150yrs, the lifetime of the property), any suggestions yourself?


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## newirishman (21 Jan 2018)

TheBigShort said:


> Yes I agree, the problem with interest only mortgages, as I see it, the principal still has to be paid within the investors earning lifetime?
> 
> So taking the idea that a €250,00 property is designated by a local authority as a letting property, and that its lifespan is of the order of 100-150yrs, then any prospective 'landlord/property manager' will not require a mortgage for the full amount, but rather a leasehold (say for 25yrs or 0.25 of €250,000 100yrs = €62,500 or, 0.16 of €250k 150yrs = €41k ).
> After the leasehold is up, the investor exits the market with whatever profit (if any) they made, that depending on the quality of accommodation provided and rent charged.
> ...



A lifespan 100-150 years is totally unrealistic. You have to calculate significant costs (ie. total refurb) at least every 25 years, plus major (potential structural) work every 50 (roof, etc.) if you want to keep up with safety, buidling regs, etc.
For tax write off purposes, most western industrialised countries allow for about a 40 year lifespan over which a property can be written off.


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## TheBigShort (21 Jan 2018)

Darn it! There I thought I had the whole housing market crisis solved within a handful of off the cuff posts on AAM.

Alas, not yet time to put away the drawing board. Nevertheless, perhaps cleverer people than me can see a way where the private rental market offers a viable competitive alternative to mortgage ownership?


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## AlbacoreA (21 Jan 2018)

When there is over supply and the rental is significantly cheaper than mortgage repayments. 

I remember those debates on the forums...


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## llgon (21 Jan 2018)

TheBigShort said:


> As it is the two sectors are too entangled with each other with too many small LL's banking on their tenants to pay the cost of their mortgage over 25/30yrs in the hope that it supplement their pensions.



BS, you have made numerous references in this thread about the influence on the rental market of small landlords dependent on rents to pay their mortgages.  Have you any idea what proportion of small landlords have mortgages on their investment properties versus those who own them mortgage free?  I would suspect it is a lot less than you think,  judging from your posts.


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## TheBigShort (21 Jan 2018)

AlbacoreA said:


> When there is over supply and the rental is significantly cheaper than mortgage repayments.
> 
> I remember those debates on the forums...



Where there is oversupply also tends to drive prices down leaving lots of mortgage holders in negative equity.
Oversupply, undersupply, at particular points leads to market dysfunction.


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## TheBigShort (21 Jan 2018)

llgon said:


> BS, you have made numerous references in this thread about the influence on the rental market of small landlords dependent on rents to pay their mortgages.  Have you any idea what proportion of small landlords have mortgages on their investment properties versus those who own them mortgage free?  I would suspect it is a lot less than you think,  judging from your posts.



To be honest, I do not know what the ratio is. I have made a generalised assumption based on the Celtic Tiger property boom that had favourable mortgage interest tax deductions for buy to let investors. 
I think it is generally accepted that this was, in part, fuel to the fire for house price rises, that is, thousands of people who wouldnt ordinarily be landlords took the opportunity to become one.


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## AlbacoreA (21 Jan 2018)

...


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## llgon (21 Jan 2018)

TheBigShort said:


> To be honest, I do not know what the ratio is. I have made a generalised assumption based on the Celtic Tiger property boom that had favourable mortgage interest tax deductions for buy to let investors.
> I think it is generally accepted that this was, in part, fuel to the fire for house price rises, that is, thousands of people who wouldnt ordinarily be landlords took the opportunity to become one.



I don't know the ratio either but I think your assumption would have been more accurate 10 years ago than it is now. As far as I know the vast majority of buy to let properties purchased in the interim have been by cash buyers.  I'll admit that I don't have any figures to back this up though.


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## AlbacoreA (21 Jan 2018)

TheBigShort said:


> Where there is oversupply also tends to drive prices down leaving lots of mortgage holders in negative equity.
> Oversupply, undersupply, at particular points leads to market dysfunction.



You wanted to know when rental is competitive with ownership. Well that is when. You might call it dysfunction but is it not simply the market balancing itself out. At that time some people sold up, rented for a while then bought again when it started to swing back. 

I think what you are asking is some economic system where renting, is competitive in the longer term. I'm not sure that even possible. Someone has to supply the housing and maintain it. It makes no sense to do that unless there is a return for the person doing it. The only exception to that is where the Govt is doing it. But those systems have ended up being rife with corruption, or abused, so that there was indeed someone making a profit on it.


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## AlbacoreA (21 Jan 2018)

http://www.theweek.co.uk/66688/buy-to-let-mortgages-pulled-at-fastest-rate-since-2009

The UK market is a little different to the Irish market though.


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## LS400 (22 Jan 2018)

TheBigShort said:


> To be honest, I do not know what the ratio is. I have made a generalised assumption based on the Celtic Tiger property boom that had favourable mortgage interest tax deductions for buy to let investors.
> I think it is generally accepted that this was, in part, fuel to the fire for house price rises, that is, thousands of people who wouldnt ordinarily be landlords took the opportunity to become one.



Thats very true, and we are still paying the price of that today.
The irony also there is, I know some folk who couldnt wait to get rid of the property, and now with the improvement in the market, have decided to embrace the prospect of being a LL again, if they get a non favorable tenant, and all they need is one.. then their back to square one, no rent, big mortgage and phone calls from the bank.  

I do agree, folk out there thought it would be a great idea to buy a property and get others to pay for it and become a LL and all would be rosey in the garden, what a mess.



llgon said:


> I don't know the ratio either but I think your assumption would have been more accurate 10 years ago than it is now. As far as I know the vast majority of buy to let properties purchased in the interim have been by cash buyers.  I'll admit that I don't have any figures to back this up though.



Its very very difficult to obtain a loan on a but to let, and if I were selling, i would reduce the price for a cash buyer. Having bought one last year, i went grey with the hoops, I was made go through, and while I appreciate due diligence must be done, common sense has gone completely out the window in this field. 

The Minister says he working hard to improve the housing crisis, well this Country need LLs to do their bit, provide quality accommodation, we/I have been tarnished by the absolute despicable LLs out there who are out for the quick bucks, knowing we dont have a system to put right a wrong doing .

Dont get me wrong, I not some doo gooder trying to be a savior to the nation, I do expect a return in a reasonable time, not 100/150 years, but thats my gamble.  

I shouldnt have had to increase my rents, I was happy with my return and happy with my tenants, I treated them well, and they looked after the place as if it was their own, I know its a business, but it should be a business with humanity. That is evaporating with every involvement by ministers thrown to sort out a market they dont understand.

If I were a Minister, I would draught new laws which would come down on Bad LLs like a ton of bricks, and the same for goes for tenants who trash someones property, or renters weather the be on s/w or not abusing the system while not passing on rents etc.   It cant have been always like this, its greed on a huge scale by a few that ruin it for the majority. You need to know that if you do wrong in this market, there will be consequences. 

I love being a LL, I like sourcing the property, closing the deal, putting my mark on it, putting it on the market, dealing with the tenants sorting out issues that arise, and they do arise, only last week I received a call to say the shower tray was leaking, but I expect these calls, I make allowances for them, and I sort the issue out.

So in short, This market needs private LLs, the likes of me, while I still enjoy doing it. But everyone has their breaking point...


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## TheBigShort (22 Jan 2018)

I agree with a lot of your post, but just to clarify,



LS400 said:


> I do expect a return in a reasonable time, not 100/150 years, but thats my gamble.



The return wouldnt be made over 100/150yrs, it would be made over the term of the leasehold, say 25yrs.

Instead of being a small LL with a €200k mortgage to carry, the leasehold of say €50,000 is paid with the leaseholder/landlord providing quality accommodation over the 25yrs. The LL charges rent at much lower prices.
Depending on the standard of accommadation, the price will vary, but people, families would have a real competitive option between wanting to buy a place of their own or renting, instead of renting because of having no choice.


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## AlbacoreA (22 Jan 2018)

Who pays the 200


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## TheBigShort (22 Jan 2018)

Think of it like a shopping centre. A developer builds it and a property management comp leases the units to various retailers.

A housing development could have designated letting properties. If im interested I put up €50,000 for 25yrs. All things being equal I put another €50k (tax deductable costs) for furnishings, fixtures, maintenance etc. Thats €100k outlay over 25yrs. Or €4,000 rent price to tenants to break even, excluding tax deductable business costs for maintaining the property to spec. 
Can you see how, with competition, how rents might fall while standards improve? Or am I missing something?


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## LS400 (22 Jan 2018)

Maybe I'm being greedy now, on those figures, after 25 years I'm only getting my money back.

I would want rent at a min double that, which isn't exactly too far off the mark before all the Government interference on bed sits etc.

I see where your going with this, but it's a one sided coin. Tenants would love it, it wouldn't be my cup of tea, then again, maybe that's the idea.


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## AlbacoreA (23 Jan 2018)

Where does the 100k come from originally.


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## TheBigShort (23 Jan 2018)

€50k upfront deposit to secure property. €50k (estimate) over 25yrs of the lease in maintenance, furnishings etc - much of which will be written off as business cost expenses for tax purposes.


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## RETIRED2017 (23 Jan 2018)

TheBigShort said:


> €50k upfront deposit to secure property. €50k (estimate) over 25yrs of the lease in maintenance, furnishings etc - much of which will be written off as business cost expenses for tax purposes.


Where do the government find the money the now take off LL,
If they refund tenants back the tax /prsi/usc the take off them through there LL,or re invested it in housing would it be the same thing,


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## AlbacoreA (23 Jan 2018)

I meant who do you borrow the 100k from.

If I bought a house for 100k 25yrs ago. I'd probably be getting 200k just selling it now...


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## TheBigShort (23 Jan 2018)

AlbacoreA said:


> I meant who do you borrow the 100k from.
> 
> If I bought a house for 100k 25yrs ago. I'd probably be getting 200k just selling it now...



Who is borrowing €100K?

If you want to become a LL you need to put €50K up front. As it is a leasehold, a going concern, your business costs (e.g. €2,500pa for leasehold, say €2,500pa avr for maintenance etc ) can be used for reducing tax liability on rental income. You are not the owner of the property, you are providing furnished accommodation to tenants who cannot (i.e. they don't have €50k up front) or who do not want to purchase to property and the mortgage that goes with it.

As the property is designated a 'letting' property it is not available for owner occupancy.

This provides an opportunity for small LL's to provide rental accommodation at rental prices that are not tied to an underlying mortgage that must be paid in 25/30yrs.
The more LL's that do this, the more competition. The more competition the higher the standard of rental properties, the more competitive the rental rates.


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## AlbacoreA (23 Jan 2018)

Yes but the person who does own the property how did they buy it. Or finance the building of it. Is it state owned?


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## TheBigShort (23 Jan 2018)

RETIRED2017 said:


> Where do the government find the money the now take off LL,
> If they refund tenants back the tax /prsi/usc the take off them through there LL,or re invested it in housing would it be the same thing,



I'm not sure what this means, sorry.


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## TheBigShort (23 Jan 2018)

AlbacoreA said:


> Yes but the person who does own the property how did they buy it.



The person who owns the property is a developer.

The development consists of say, 40 units, homes and apartments. Of which, the planning regulations state that say, 10 of these units are for letting. These units could be managed by a property management company.

The property management company will consist of members who, having put up the €50k (or whatever the price is) will secure one of the properties for the purposes of letting it on to tenants.

Big LL (the property developer continues to get income stream – perhaps even a % of rental takings). Small LL, is involved for the purposes of making money on providing quality accommodation in a competitive market, and not, for the purposes of securing their pension on the backs of others paying down their mortgage obligations.

It is only a concept, Im not here to cross every T and dot every I. But can you see how such a concept, having detached the small LL from a 30yr mortgage obligation, _may_, provide an opportunity to create a real alternative to the mortgage ownership market?


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## Brendan Burgess (23 Jan 2018)

I spoke to a friend of mine in the UK who responded as follows: 

I sympathise with the OP.  It's an all too familiar experience here in the UK.  I'm a landlord based in Birmingham and let houses and flats to working tenants.  I've accumulated a fair amount of landlord experience over the last 10 years operating a portfolio of between 15 and 30 properties.  It's certainly true to say that if a tenant gets into arrears and is uncooperative, then obtaining possession is going to be an expensive and protracted process.  So the best approach is to think along the lines of "prevention is better than cure".  As a landlord I have done everything possible to minimise the risk of letting to a tenant who cannot or will not pay the rent.  The good news is that I rarely have a tenant in arrears, and my bad debt is well under 3% of rent due.  In case this is helpful to anyone currently letting, or thinking of letting, here's a few points to consider.

1) I nearly always let through agents.  The reason for this is that the worst type of tenant, who takes on a tenancy with the intention of non-payment, will prefer to rent directly from a private landlord. So by using an agent, you screen out some of the worst serial non-payers who may be very skilled in creating a false impression of their circumstances, and highly persuasive in getting you to grant a tenancy. In addition, the other type of tenant who intends to pay the rent, but gets into financial difficulties, will be easier to manage at arm's length via an agent because there is no personal relationship between landlord and tenant when you use an agent.  Letting directly can lead to landlords feeling under pressure from their tenants to enter into payment plans, and before you know it, the arrears get out of hand.  Far better to be one step removed from the tenant, and to keep things business-like.

2) Letting unfurnished to families is a good idea. Tenants who bring all their own furnishings are lower risk, and typically stay longer.  This is especially so if there are children at local schools. Should arrears arise, the harder it is for the tenant to "up sticks and leave", the less likely they are to exploit the difficulty landlords face in obtaining possession.

3) If a tenant does get evicted leaving substantial rent arrears, then a judgement can be obtained for recovery of arrears via an Attachment To Earnings.  These work well, so long as the tenant is paid PAYE, and has stable employment with a recognised employer.  So the quality of the employer, and the likelihood of the tenant staying with that employer long term is a key factor in deciding whether to let or not. That's why tenants who are public sector employees are best.  At a more subtle level, the tenant who would be embarrassed if their employer was brought into the payment of arrears is going to be less likely to default on rent commitments.  

4) If you are going to let directly to a tenant rather than through an agent, then get as much information as possible about the tenant to help with tracing the tenant in the event of non payment and eviction.  I would photocopy ID, record NI numbers, note their car registrations, and have a record of next of kin.  I would also ask for 6 months bank statements, and would scrutinise these because the information gleaned tells a story that no third party credit file information would reveal. 

In all of the above, ask yourself the question:  "would I sleep well having lent £5000 to this person who I have only just met?"  If you can't answer yes, then best not to let.


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## Firefly (30 Jan 2018)

How about a PPP model?

A private investor / fund builds an apartment complex and enters into a commercial lease with the government for say 30 years at a certain rent. Nothing added to the national debt and the government can then dish out the apartments as they see fit (to either social housing or housing for the low paid) . The investor is not on the hook for non-paying tenants and is protected from eviction hassles. At the end they can either renew the lease or not. If enough of these were built then rates in the wider market would fall due to the increased supply.


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## RETIRED2017 (30 Jan 2018)

We are suppose close to full employment you have to ask the question why some of these people are not building houses ,
if we bring more people into the Country to build these houses where do the live ,


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## Leo (31 Jan 2018)

RETIRED2017 said:


> We are suppose close to full employment you have to ask the question why some of these people are not building houses ,



Because in most cases they can't afford to, and those who can likely don't want to live far away from the major urban centers.


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## Thirsty (31 Jan 2018)

> Letting unfurnished to families is a good idea


.Am I right in saying that our minimum standards effectively prevent landlords from letting unfurnished?


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