Effect of rent controls? Higher rents and reduced supply

Sarenco said:
I disagree.

Obviously a growing population increases demand for rental properties but rent controls disrupt the supply side response.
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I'm not suggesting that rent controls don't disrupt the supply side response. I'm suggesting that they are not the main reason there are shortages of supply.
Sarenco said:
We also had a growing population during the tiger years but we didn’t have an associated rental market crisis.
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Yes, we'd a credit fuelled property boom with a massive immigrant workforce from the EU accession states.
 
Purple said:
I'm not suggesting that rent controls don't disrupt the supply side response. I'm suggesting that they are not the main reason there are shortages of supply.
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We’ll probably have to agree to disagree but what do you think is the primary reason that there has been a negative supply side response to the increased demand for rental properties?

Or to put it another way, why are we seeing a net decrease in rental properties at a time of increasing rents?
 
I don't have the stats but I suspect that the State buying properties in the private sector to use as social housing is a major part of the problem. That coupled with the appallingly dysfunctional planning process, Covid closing the sector for the bones of two years, labour shortages, supply chain issues and the general dysfunctionality of the entire construction sector all contribute to the problem.
I agree that rent controls are a problem but they aren't the reason there's a housing shortage. A massive increase in the population and fewer people living in each home are, in my opinion, the main drivers.
20 years ago a couple living with one of their parents were not counted as homeless. Now they are. As long as the State is providing almost free accommodation there'll always be a demand for it.
 
Purple said:
I don't have the stats but I suspect that the State buying properties in the private sector to use as social housing is a major part of the problem.
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Surely that would add to the supply of rental properties?

I’m not arguing that rent controls are responsible for problems in the supply of housing more generally.

I’m simply arguing that rent controls are the primary reason for the dramatic reduction in the supply of rental properties that we have seen since 2016.
 
Do you think they are more significant as a cause than Airbnb, or the increase in regulation ?
 
cremeegg said:
Do you think they are more significant as a cause than Airbnb, or the increase in regulation ?
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I do, yes.

I think the impact of Airbnb can be overstated. The pandemic had a significant adverse impact on the short term rental market but we didn’t see a significant increase in the supply of long-term rentals.

The additional regulations that have been introduced since 2016 have been relatively modest - rent controls are the biggie.
 


There been the death of thousand paper cuts to the supply of private rentals. There is no one reason, or a primary one.

But you have to say the catalyst for it all was the disposal of local authority housing and the cessation local authority building housing. That happened all over the developed world. On the back of privatization of many state assets and industries in the 80s. The commoditization of housing. The force adoption of that business on the private market, through legislation.

In Ireland it was mostly about outsourcing and cost cutting. As they've pushed a lot of the costs, like arrears and repairs to the private LL. Look at the arrears the local authority tenants have built up. How much was passed to the LL.

So you push social housing into the private market and you push that pressure up into the rest of it. LL's look for any way out of it, high rents, high deposits, rent a room. AirBnB etc. Every avenue is cut off with legislation. Ultimately the point of being a Private LL is rental income and capital appreciation for low risk. You've now made it high risk, rental income is constricted forever and the the capital appreciation has already been achieved. The population of LL is also aging, the cost of entry is too high for new landlords and institutional large LLs get preferential tax treatment. Those large LLs targe mostly the most profitable section the high end, the smaller landlord the low end.

This all plays out against the background of the Celtic tiger, boom and bust, and the over fueling of the economy and population growth.

Rent controls are just one part of that puzzle.
 

Additional regulations have a much bigger effect than you think. LL rights have been eroded to almost nothing.
 
AlbacoreA said:
Additional regulations have a much bigger effect than you think. LL rights have been eroded to almost nothing.
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What material additional regulations have been introduced since 2016?

The extension of notice periods?

Fairly trivial in the scheme of things.

Again, the introduction of rent controls was the major development and the primary (not the sole) reason for reduction of rental supply over that period IMO.
 
AlbacoreA said:
Ultimately the point of being a Private LL is rental income and capital appreciation for low risk. You've now made it high risk, rental income is constricted forever
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Exactly.

And that constriction of rental income has been caused by …..?

Rent controls!
 
Sarenco said:
Exactly.

And that constriction of rental income has been caused by …..?

Rent controls!
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Not if you sell and buy a new rental. Then you can set a new higher rent. Or keep it empty for two years or just ignore it and pay the fine. You can bypass the restriction then. But you have to deep pockets to do that.

Rental controls are only one factor in why people sell up.

The idea that just this one thing broke it or will fix it, is how this started.

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One was they extended tenancies to 6 yrs. That was notice to quit for many right there.
 
AlbacoreA said:
One was they extended tenancies to 6 yrs. That was notice to quit for many right there.
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I very much doubt it.

The number of “no cause” termination notices issued by landlords after six years prior to this tweak was statistically insignificant.

I would be stunned if this very modest change caused a single landlord to exit the.business.
 

Its a clear signal what way its going. Lifelong tenancies. Unless a tenant initiates it a LL cannot regain the property.

Which is a problem if you want to sell out at the top of the market.

As for RPZ. If you are stuck on low rent. Its because you were happy with that rent and didn't change it. So nothing changes for those LLs. Why would they leave. Also for a RPZ it to be effective it would have to incur punitive fines. Anecdotally it hasn't.

IN addition to all this prior to Covid, the market had peaked. Covid blew that out of the water. Huge effect on supply, and also people not paying rent for a year or more. Everything turned on its head.
 
AlbacoreA said:
As for RPZ. If you are stuck on low rent. Its because you were happy with that rent and didn't change it.
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Nonsense.

There was a two year rent freeze prior to the introduction of the RPZ regime.

Arguing that landlords were “happy” to be stuck renting a property at a rent that was 30%+ below market rates shows a complete misunderstanding of the impact of our rent control legislation.
 
I tell you want though. No one should be looking backwards. Look ahead to what's coming.

Rent freeze
Rent cut across the board
Selling with tenant in situ.
LL can't terminate a tenancy
LL cent sell a property.
Required Energy improvements.
 
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