# Increasing Rent



## jdpl28 (21 Oct 2015)

Just before I get spammed by people saying I am evil even considering this - my current situation is:
- I am loosing very significant money on the property. 2k over 2014
- Tenants have been in the property for 5 years & have only had 1 rental decrease in that time. 4 years ago
- Rental is a good 300 euro less than the going market rate in the area (Bray for a 2 bed) thats even if you can get a property in the area. I will only be increasing by 100 euro.

Having said all that - the tenants are good & have never had a problem with them. 

Do I need to increase the rent over the next few weeks in case legislation comes in? 

The current contract is up at the end of February. Does this make increasing the rent impossible if the legislation comes in before February?


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## Bronte (21 Oct 2015)

There's nothing wrong with increasing the rent if you want to.  The 2K in 2014 is 38 Euro a week. 

I don't advise increasing rent for good sitting tenants, but you have the legal right to increase once a year in line with market rates.  I think it woudl be asking way to much to increase by 300 Euro and you've setttled on a reasonable 100. 

If you're talking about that Alan Kelly and he bluff and bluster for the last few weeks, I very much doubt there will be rent certainty as I think it will be unconstitutional and anyway it's a crazy time to do it now with rents so high.  The government missed the boat on it. 

The whole thing for you is moot anyway as you have a contract until February. 

The cost of 2K to you is less because of the savings in hassle free good tenants.  In my book that's worth it's weight in gold.


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## cremeegg (21 Oct 2015)

Unless you have increased the rent within the last 12 months you are entitled to conduct a rent review under the tenancies legislation. See here [broken link removed].

A rent review involves you doing some research to establish the applicable market rent. The Central Statistics Office publishes data on this, which is probably the most authoritative source. [broken link removed]

You should then write to the tenant to inform them of the new rent. If you think you have a particularly good tenant you might be willing to accept a slightly lower figure.

You and Bronte obviously think that a good tenant should be charged less than the market rate. I suggest some reasons why this is a bad idea, apart from the obvious one that as a landlord you make less money.

A good tenant should be willing to pay a good rent to a good landlord.

A tenant who is paying less than market rent will find it ever more difficult to move and so they and you may be trapped in the situation for a long time.

The landlord will eventually become resentful of the lost income.


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## Mrs Vimes (21 Oct 2015)

If the tenants are in a lease at present you cannot increase the rent unless there is a clause to that effect in the lease.


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## Gerard123 (21 Oct 2015)

Good tenants may be worth a modest reduction below market rate. 

However, I got a good 'lesson' during the crash when tenants who were with me for several years, that I had looked after and not charged market rates in the '06/07 period, came looking for rent reductions in '09.  When I wasn't able to reduce by the large amount they wanted they left and weren't too nice about it either.  Taught me that good tenants are worth keeping, but only on sensible terms, close to market rate. If they are not prepared to pay it then need to replace them.  Now I may give a modest reduction, say 50 a month, below market to keep good tenants.  I would not go beyond that anymore.  Landlord is a business.  Agree with cremeeggs comments. 

May sound clinical but in an era when landlords are effectively subsidising private tenants already, paying PRSI on rent, LPT, PRTB, etc, let the Govt get the message loud and clear from tenants also that Govt taxes on landlords force rents up.  It's not all the 'greedy' landlords doing it all!


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## cremeegg (21 Oct 2015)

Mrs Vimes said:


> If the tenants are in a lease at present you cannot increase the rent unless there is a clause to that effect in the lease.




There are two types of private residential tenancy a fixed term and a part four (everything which isn't fixed term).

A part four is subject to an annual rent review.


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## Bronte (22 Oct 2015)

I'm not resentful of the reduced rent, I'm too annoyed at all the taxes.  What Cremeegg do you think of the latest madness from Alan Kelly to sort out homelessness

Towith:

- If landlords want to increase rent they have to prove to the tenant that 3 comparable properties are paying a higher rent

I had a great laugh about that crazy idea today with my DH.  He was asking me how we'd go about it, until I explained that Kelly is coming up with one more hair brained scheme than another every second day. 

Have you seen a prefab home by any chance, they're all the rage in Dublin I hear, but they have a nice name for them. Modular.  You couldn't make it up. 

My accountant tells me that all the landlords he deals with who bought just before the bust are just waiting to get out of the Biz.


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## T McGibney (22 Oct 2015)

Bronte said:


> My accountant tells me that all the landlords he deals with who bought just before the bust are just waiting to get out of the Biz.



Same here. Nobody is making a profit after tax, all are inundated with headaches and only for low interest rates, many of them would be bust.


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## Mrs Vimes (22 Oct 2015)

cremeegg said:


> There are two types of private residential tenancy a fixed term and a part four (everything which isn't fixed term).
> 
> A part four is subject to an annual rent review.



The OP stated that the tenants contract is up in February so I assumed they are in a fixed term lease, although they of course also have the protections afforded by Part IV.


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## Nutso (22 Oct 2015)

Debating a rent increase myself.  Our situation is that tenants are in the property 4.5 years, paying approximately 500 a month under what a similar property has gone for in the area recently.  I don't want to hit them with that size of a rise but feel that we should be getting closer to the market rent.  What would be a fair increase given that they are currently paying less than a lot of 2-bed apts are going for (property is 3 bed + attic, fully renovated in 2007)?  We are paying an extra 200 on the rent to meet the mortgage.


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## odyssey06 (22 Oct 2015)

Nutso said:


> Debating a rent increase myself.  Our situation is that tenants are in the property 4.5 years, paying approximately 500 a month under what a similar property has gone for in the area recently.  I don't want to hit them with that size of a rise but feel that we should be getting closer to the market rent.  What would be a fair increase given that they are currently paying less than a lot of 2-bed apts are going for (property is 3 bed + attic, fully renovated in 2007)?  We are paying an extra 200 on the rent to meet the mortgage.



My instinct would be to go for €250... you have enough to cover your mortgage, but make it clear that you are still charging X% under the market rate. Plus you have some wiggle room if they haggle you down whilst still covering mortgage.


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## cremeegg (22 Oct 2015)

Nutso,

Nice that you can let €6,000 a year slip through your fingers. Of course it makes things more difficult for those of us who need the income.

I suggest that how you approach this is as important as how much. First I would let the tenants know that you feel the rent is well below that market value, and that you are personally paying an extra €200 a month on the mortgage. Let that sit with them for a week or so.

Then tell them that you are researching other properties for rent in the area and the prices they are going for, maybe point out some specific adverts.

Then maybe ask then what they suggest. I think you will find they know they cannot rent at €500 below market for ever. You may be surprised at their reaction, they may well offer a €300 to €400 increase if they really are paying €500 less than market rate as you say. They won't want to loose that .

Good luck


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## Nutso (22 Oct 2015)

Thanks for the responses.
We have left if as the status quo as they have been good tenants, always pay on time and have been no trouble.  We don't live close by which makes it more difficult to sort issues out (reluctant landlords) and I suppose having good tenants has made things a lot easier for us.  I do feel that this peace of mind is worth a discount.  The way I've looked at it to date is that the net value of a rent increase may not be worth losing the tenants over, but now that the difference is sizeable it's probably time to take action.
I think I may go with odyssey's suggestion of 250pm more; I feel that's fair to both sides.


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## Gerard123 (22 Oct 2015)

Really like your approach cremeegg, going to use that myself next time!  Put the onus on the tenant to see what they think is fair.  Though from experience they will probably say zero and point put all the alleged flaws in the house.

For one I cannot understand:
1  Why myself and the mrs have had one washing machine for over 10 years with no problem, yet here again am I replacing a four and half year machine in a rented property
2  Why tenants don't clean a cooker as if it was their own.  recently put a new cooker in a house and when I was there for another reason the cooker was a disgrace.  let them know.
3  Basic fixes, hinges broken, screws fall out - why a tenant would bother to do basic preventative repairs rather than watch stuff break.
4  Why a tenant expects instant service when something breaks, wouldn't get it from trades people if they were calling in regards to their own house.
5  Why they won't pick up a brush and sweep the driveway?
6  Why the media continue to engage in all this nonsense that the mortgage cost of a house can be compared directly to the rent, without any consideration to the other running costs of a house.  Gives a perception that rents are higher than the costs of owning a house.  Need to fully cost the costs of owning a house, mortgage payment, insurance, repairs, equipping the house, , etc etc.  I doubt that the full cost of owning most houses are cheaper to buy and run than own.
7  LPT, PRTB, PRSI on rents, 25% interest disallowed, etc, etc.
8  Why Govt, Kelly, etc expect private landlords to use their own salary to fund tenants rents, pay back on negative equity, etc. 

Perhaps Kelly should tell tenants to mind their rental properties as if it was their own and they might see a far better and friendlier landlord and better rents, etc.

Sorry, rant over!


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## odyssey06 (22 Oct 2015)

Why should they mind the property as if it was their own? What's in it for them? 
At the end of the day it will be yours not theirs after they pay off your mortgage.
If you want them to take an interest in a property, you must engage their self-interest.
If you are having to replace items then come rent review time bring that to the table, if you are not perhaps you should consider that when assessing your rental income against "market" rates.


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## Gerard123 (22 Oct 2015)

Should be a collaborative approach between tenant and landlords whereby landlord is motivated to provide good quality accommodation, sort things out if issues, be reasonable on rent side. In return tenants get a good quality abode, well presented and maintained, a fair rent, etc. Isn't that the way it's supposed to be? How it works in all these countries held out as best practice, Sweden, Germany, etc. win win. 

Landlords should not be allowed to have tenants move out on a whim, tenants should be invested in their home and feel they have degree of stability. 

Certainly no tenant paying off my mortgage, when negative equity reverses I will be out of the business. Same for lots of others. No hesitation in saying some people making money alright.


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## Bronte (22 Oct 2015)

Nutso said:


> Thanks for the responses.
> We have left if as the status quo as they have been good tenants, always pay on time and have been no trouble.  We don't live close by which makes it more difficult to sort issues out (reluctant landlords) and I suppose having good tenants has made things a lot easier for us.  I do feel that this peace of mind is worth a discount.  The way I've looked at it to date is that the net value of a rent increase may not be worth losing the tenants over, but now that the difference is sizeable it's probably time to take action.
> I think I may go with odyssey's suggestion of 250pm more; I feel that's fair to both sides.



What is the current rent? 200 Euro extra can be a heck of a lot for some people all in one go, imagine if your mortgage went up that much.

( I'm amazed at how much your rent is below market rate!)


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## Bronte (22 Oct 2015)

odyssey06 said:


> Why should they mind the property as if it was their own? What's in it for them?
> At the end of the day it will be yours not theirs after they pay off your mortgage.
> If you want them to take an interest in a property, you must engage their self-interest.
> If you are having to replace items then come rent review time bring that to the table, if you are not perhaps you should consider that when assessing your rental income against "market" rates.



It's not about what's in it for them, it's about respect.


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## odyssey06 (22 Oct 2015)

Bronte said:


> It's not about what's in it for them, it's about respect.



It cannot be seriously expected though that when a business asset is used e.g. by employees, tenants, car hirers, hotel guests... that it is going to be treated the same as a privately owned asset.
Hertz doesn't expect that when you hire a car, but it does incentivize you to treat their asset properly. And if you knew you were going to have the same car for 12 months, or 5 years, it may lead you to treat it with even more care.

I'm not going to trash my work laptop cos I need it, but with the best will in the world... I'm going to take more care of my own one.

I don't see much likelihood of instilling respect (or my preferred term would be considerate behaviour) in people who have gotten to adulthood without it.
There's a large section of humanity who wouldn't even take proper care of their own assets (car, cooker whatever), let alone anyone else's.
If you're running any kind of business (and well, in all walks of life), unfortunately there's a chance you encounter some people like this.

Then there's another section of humanity, and well, cleaning cookers isn't fun and spare hours are short - but they tend to be more amenable to persuasion and incentives. When it's not your own, it moves down the priority list and I don't think that necessarily implies disrespect. Give people a reason to move it up the priority list... whether that's lower rent, or secure lease etc...

For both groups, I think relying on their self interest would be a surer bet - but not a guaranteed one, even with a carrot and stick you can't nudge some people.

Also, I wouldn't necessarily assume that a tenant will actually know the risks of clogging up a washing machine with too much powder \ too low a temperature, or how to do basic maintenance tasks. If they've never had their own place, they may just be treating the place the same as the recently left family nest.


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## facetious (23 Oct 2015)

odyssey06, the incentive should be in the deposit. Unfortunately, in my opinion, the PRTB's definition of "normal wear and tear" is somewhat abnormal and the PRTB seem to allow too much "damage" as normal W&T. What to me is damage (often due to neglect on the tenant's part), the PRTB allows as W&T.

After one year's occupation, a landlord will usually have to do some form of redecoration. My family never even considered any redecoration within 5 years and we had wall papered rooms. As children, we were brought up to not put our "grubby little fingers" on the walls and certainly not put chalk, pencil, pen, marker marks on the walls or paint work. There is no need for oven's to be left dirty except through laziness and/or the attitude: "well, it's not mine so it doesn't matter". Then at the end of the tenancy we get the "we spent 3 hours cleaning the oven" excuse.

How tenants can suddenly one day find mould everywhere is beyond me. As soon as mould appears, it should be dealt with by cleaning with an appropriate mould cleaner or a strong solution of bleach. This is especially so in bathrooms and around windows. It is recommended to open windows for a few hours daily to help alleviate the problem. However, in my opinion and from experience, a lack of a constant warm room temperature is one of the main factors to prevent mould growth. If walls are allowed to get cold then any moisture in warm air will condense on these cold surfaces and mould starts to grow.


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## odyssey06 (23 Oct 2015)

facetious said:


> How tenants can suddenly one day find mould everywhere is beyond me. As soon as mould appears, it should be dealt with by cleaning with an appropriate mould cleaner or a strong solution of bleach. This is especially so in bathrooms and around windows. It is recommended to open windows for a few hours daily to help alleviate the problem. However, in my opinion and from experience, a lack of a constant warm room temperature is one of the main factors to prevent mould growth. If walls are allowed to get cold then any moisture in warm air will condense on these cold surfaces and mould starts to grow.



I fear we're going a bit off-topic (happy to discuss on another thread) ... Trying to steer it slightly back - in relation to mould, heating systems and rent... I agree with you re: warmth being needed to guard against mould, but how many landlords will give tenants credit against rent in winter months if they are having to run an inefficient expensive heating system to accomplish this?


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## facetious (23 Oct 2015)

odyssey06 said:


> I fear we're going a bit off-topic (happy to discuss on another thread) ... Trying to steer it slightly back - in relation to mould, heating systems and rent... I agree with you re: warmth being needed to guard against mould, but how many landlords will give tenants credit against rent in winter months if they are having to run an inefficient expensive heating system to accomplish this?


They should have asked for a BER cert to get an indication of the energy needs of the property. Every landlord should have one available for viewing. If it has a low rating then rent somewhere else.

Going off topic, I think happens the longer a thread becomes. Some posters join in at the end of the thread and miss the beginning.


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## Bronte (23 Oct 2015)

odyssey06 said:


> Hertz doesn't expect that when you hire a car, but it does incentivize you to treat their asset properly. And if you knew you were going to have the same car for 12 months, or 5 years, it may lead you to treat it with even more care.
> 
> Then there's another section of humanity, and well, cleaning cookers isn't fun and spare hours are short - but they tend to be more amenable to persuasion and incentives. When it's not your own, it moves down the priority list and I don't think that necessarily implies disrespect. Give people a reason to move it up the priority list... whether that's lower rent, or secure lease etc...



I don't quite know what to say about the rental car other than to say I treat rentals even better than my own but I do not need to go deep into the human psych to understand that some people think it's ok for me to spend my time cleaning their cooker because they are disgusting lazy slobs.  And I've better things to be doing than cleaning cookers, but I do it on a pretty much daily basis.


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## Bronte (23 Oct 2015)

cremeegg said:


> Then maybe ask then what they suggest. I think you will find they know they cannot rent at €500 below market for ever. You may be surprised at their reaction, they may well offer a €300 to €400 increase if they really are paying €500 less than market rate as you say. They won't want to loose that .



I can't see this happening nor can I see how someone paying say 1000 Euro a month can suddenly pay 300 or 400 extra. 

1000 X 10%  is 100
1000 X 20% is 200
1000 X 30% is 300
1000 X 40% is 400 etc

It's just plain wrong to try and increase by a figure north of 10%.  I don't know anybody getting salary increases of 10% etc.


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## Nutso (23 Oct 2015)

I agree with you bronte to some extent. The current rent is 1400 and I will probably propose 1650 - so approx 18% increase.  Do you think this is unfair considering they have had the benefit of at least 3 years under market rate?  They wouldn't get a similar property in the area for that price.


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## facetious (23 Oct 2015)

Nutso said:


> I agree with you bronte to some extent. The current rent is 1400 and I will probably propose 1650 - so approx 18% increase.  Do you think this is unfair considering they have had the benefit of at least 3 years under market rate?  They wouldn't get a similar property in the area for that price.


Put it this way, if the tenant decides not to pay the increased rent what is that likely to cost you?
Some void period while you do some redecoration.
Cost of redecoration - paint, tools and labour or decorators price.
Say 2 weeks loss of rent
New tenants will be an unknown quantity - will they pay rent in full and on time?

Now, you are, or should be, a businessman and you are in business, not for charity but to make a profit. You may say you are happy to accept a rent significantly below the market rate. However, if you got new tenants willing to pay that rate or fairly close to it, how mush more would you "earn" per month, per year? Would it cover a holiday or give you some safety net in the bank?

If you are computer literate (I presume you are as you can use the internet and write on a forum) then it is worth using a simple spreadsheet to calculate different scenarios giving monthly totals and accumulated totals. Great things, spreadsheets.


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## Nutso (24 Oct 2015)

I don't need a spreadsheet to figure it out! 

If they are not willing to pay the extra (and I will give them 3 months notice of the increase), they are free to hand in their notice, however they would be paying a lot more for something similar.  In that case, we may have a short void period but would get a much increased rent (a lot more than the proposed increase).
There is always a risk with new tenants and I would rather keep my current tenants but I think we need to make the investment work for us too.


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## Bronte (25 Oct 2015)

Nutso said:


> I agree with you bronte to some extent. The current rent is 1400 and I will probably propose 1650 - so approx 18% increase.  Do you think this is unfair considering they have had the benefit of at least 3 years under market rate?  They wouldn't get a similar property in the area for that price.



That sounds fair based on all you've posted, and you are giving them plenty of notice.


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## galway_blow_in (25 Oct 2015)

its a land lords market right now , thats the reality , if they are being charged way below market , they are no doubt aware of this , if they react negatively , you might be better without them , you owe them nothing , i dont buy this arguement about not being able to find decent tenants again or that the unoccupied period will cancel out  any increased rent


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## Nutso (3 Mar 2016)

Just to update here, we finally got around to giving the tenants notice of the rent increase.  We went for 250 taking the rent from 1400 to 1650.  I checked the properties available to rent in the general area (not many!) and the average rent for 7 similar properties was 1950.  Some people may think we should have gone higher but considering their track record I felt that was fair.  Our preference was to keep the tenants and we took into consideration that over 50% of any extra income we get from the property will go to Revenue.  While no-one wants their rent increased, they seemed happy enough with that and they have security knowing that it will be at least 2 years before they have another increase.  Of course they may decide to buy their own property or move on before that, but in the meantime we can continue to pay off the mortgage as we currently are and use the extra rent to create a buffer for void periods and allow to to repay any deposit.


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## Bronte (4 Mar 2016)

Well done Nutso on coming to a reasonable solution and thank you for sharing the result with us.  One often wonders how our advice on here pans out so that's great to get feedback.  It's also nice to know that not only are you happy but the tenant is also treated fairly.  And my God rents have gone crazy.  Can't believe that useless ex Minister in charge Kelly got voted back in.


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## moneybox (4 Mar 2016)

Bronte said:


> And my God rents have gone crazy.



I was thinking the.same, €1650 to rent an apt in Dublin, that's more than a month's salary for many people.


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## Nutso (4 Mar 2016)

It's a 3-bed house with converted attic if that makes you feel any better!  There were a couple of similar properties for up to 2,200 per month and some starting at 1,800 per month around the general area.  €2,200 does seem high but back in 2003, my hubby lived in a shared 4 bed house which rented for 1800 which was a similar size to ours and not particularly grand!  So rents haven't moved a huge amount from that period, they just dropped drastically in 2007/2008/2009 when there was oversupply.


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## moneybox (4 Mar 2016)

Nutso said:


> It's a 3-bed house with converted attic if that makes you feel any better!  There were a couple of similar properties for up to 2,200 per month and some starting at 1,800 per month around the general area.  €2,200 does seem high but back in 2003, my hubby lived in a shared 4 bed house which rented for 1800 which was a similar size to ours and not particularly grand!  So rents haven't moved a huge amount from that period, they just dropped drastically in 2007/2008/2009 when there was oversupply.



ah yes, I was looking at OP initial post where he mentioned an apartment.

It's got me thinking what is the government paying every week to house all the homeless families in B&B, it must be costing a fortune. Why they don't kick start a house building program is beyond me.


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## cremeegg (5 Mar 2016)

moneybox said:


> It's got me thinking what is the government paying every week to house all the homeless families in B&B, it must be costing a fortune. Why they don't kick start a house building program is beyond me.



Because the County Councils don't want to landlords anymore. Even with free houses they cannot make the rental business pay.


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## moneybox (5 Mar 2016)

surely paying out rent supplement is going to cost a lot more in the longer term.


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## Firefly (7 Mar 2016)

moneybox said:


> surely paying out rent supplement is going to cost a lot more in the longer term.



It's hard to know. I would imagine the repair costs for socially provided houses would be a factor also...with that outsourced to the private sector, the cost goes away...


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## moneybox (7 Mar 2016)

Firefly said:


> It's hard to know. I would imagine the repair costs for socially provided houses would be a factor also...with that outsourced to the private sector, the cost goes away...



Which is probably one of reasons so many landlords are selling up. The taxes on top of all the cost are too punitive. In the UK housing associtations provide a large amount of social housing ever since Thatcher sold off the bulk of the housing stock during the eighties. I would envisage we will see a growth in the no of housing associations setting up in Ireland in the future. Something is going to have to fill the void that is currently there.


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