How about easing rent controls for landlords with 3 properties or fewer?

Brendan Burgess

Brendan Burgess

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I watched Sinn Féin accusing the government of taking the side of the institutional landlords against the tenants.

As far as I can see, the institutional landlords are still investing in the Irish market. It's the small landlords who are leaving.

So how about telling [small] landlords that rent restrictions will be eased over the next three years?
After two years, they can charge the full market rent.
In six months, they can increase the rent half way between the current rent and the market rent.

Existing landlords who enjoy the business, might be tempted to stay.
New small landlords might enter the market if they knew that they could manage their investment like an investment.

It would stop penalising good landlords who did not maximise their rent.

At the moment any property which is rented below the market value will not be bought by a potential landlord because of the restrictions. But if this restriction was eased, potential landlords may well buy existing investment properties.

There would have to be some anti-avoidance measures so that investors with 6 properties wouldn't sell off three of them to get down to the 3 property limit.

Brendan
 
There would probably have to be all-party agreement on such proposals so that Sinn Féin would not reverse it if they are leading the next government.

Maybe produce a charter for small landlords?

Brendan
 
That would be I think acceptable for landlords. However at that stage, it would be very difficult to put into place. For example I charge a rent that is at least €600 under the market, but it could be €800. How could this suddenly be taken by tenants. On top of that, many like me have very little trust left on the current policies and would be tempted to charge as much as the market could possibly bear. I think it would create chaos.
 
Brendan Burgess said:
So how about telling [small] landlords that rent restrictions will be eased over the next three years?
After two years, they can charge the full market rent.
In six months, they can increase the rent half way between the current rent and the market rent.
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Far too slow and far too complicated. Small landlords' confidence in the regulatory environment here is totally shot and will remain so unless there is a dramatic and sustained reversal of policy.

In the meantime, I can't imagine anyone anywhere has the energy to even contemplate the current disaster continuing for a further three years.
 
I think it's very difficult to get a policy right if it tries to hard to just treat one aspect of the difficulties.
Even the distinction of small landlords made there, why should a multi-property landlord not be able to charge the market rate if others are?
 
Folks. We have lots of threads on landlords.

This is a very specific proposal. Please don't take it off topic by repeating what is covered extensively in other threads.

If you have other ideas for solving the problem, start a new thread.

Brendan
 
azerty said:
Even the distinction of small landlords made there, why should a multi-property landlord not be able to charge the market rate of others are?
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I think that should be the ultimate objective - a return to market pricing for all.

But the crisis at the moment seems to be that small landlords are exiting the market and I am trying to come with an idea which might encourage them to stay and might encourage others to enter the market.

Brendan
 
The issue is that rpz are just one problem among others. It might not even be the biggest one. Short term, I think working with CGT would be easier. But if it is that a landlord need to go through loops and conditions to get a relief, I am not sure it would work either. What I mean is that the market needs to be able to cater for both long term and medium term tenants, basically there needs to be more accommodation available.
 
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One way to get around sudden increases on RPZ removal is to allow max of 5% or inflation increases instead of 2%, to catch up gradually to market and to allow the rent to reset to market in between tenants/on sale of the property. That solves the value impact on sale issue.

But then you would have new rent control as you would have to define and track 'market rent' and once that comparison is there the pressure will be on to control new units entering to cap them at existing market rent. This means new controls on the institutional investment side.

Being able to exit your investment in a reasonable time frame and with vacant possession is another big issue, and then you have eviction of non-paying tenants in a reasonable time frame.

All 3 are massive deterrents and any one on its own is enough to put most people off, they would need to address all three and left wing party-proof the solutions to be credible. The government have directly ramped up all three of these issues in recent years with increased regulations and indefinite duration leases, the RTB and legal process delaying 'fault' evictions and the 'no fault' eviction ban.
 
One way to get around sudden increases on RPZ removal is to allow max of 5% or inflation increases instead of 2%, to catch up gradually to market and to allow the rent to reset to market in between tenants/on sale of the property. That solves the value impact on sale issue.
Yes a reset is necessary.
However with 5 per cent increase, it would take me approximately 10 years to make up the current reduction of my rent if I had sitting tenants, that is if the rest of the market stands pretty still!
But I suppose if I sold, it would mean the property could interest an investor which is a positive for the market. I might not feel it is good for me but the rental market might not loose a rental unit.
 
azerty said:
However with 5 per cent increase, it would take me approximately 10 years to make up the current reduction of my rent if I had sitting tenants, that is if the rest of the market stands pretty still!
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The max of CPI would kick in instead of 5% at the moment, so you would get a large increase based on the last couple of years.

Edit: As a change I was suggesting the max of rather than the current min of, so you'd get the bigger of the two.
That would only apply in a catch up scenario.
Overall, I think rent controls are a bad idea and whatever you do you will tend to do something wrong and have unintended consequences.
We are now trying to come up with ways to unwind the damage they have caused.....
 
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But if everyone else move with the CPI, how does a LL like me catch up? I would need a new tenant.
It is the kind of idea that I would also see. CPI are in place in some other countries. But the "catching up" seems to me an issue.
 
It's a bit ridiculous even talking about these controls because they just don't work, but the idea was that only people in catch up mode could use that bigger max of 5% or CPI increment.

I was assuming everyone at or above current market rate would be capped at the current rate, but you are right that is unlikely to be brought in as they won't cap institutional investors. That would be actual rent control and the growth in advertised rents might not be 14% a year.
 
From what I've read, many landlords are happy to charge lower rents to good tenants. The issue seems to be when that tenant leaves, the goodwill of the discounted rent applies to ALL future tenants. Thats bonkers imo, but any individual landlord I've talked to that invested in a house for their family or their own pension, are more concerned that the rules will change again and they may not be able to get vacant possession when they need it.

It's unlikely that a REIT or a property company with large portfolios will have those concerns and they are not the ones leaving the market. Also why they charge huge rents at the start as they are tied into that base rate for ever more.
 
On rent control, I don't think there is any appetite from political parties to actually do something about them. Too toxic. It is too much seen as a payout to LL. It is barely mentioned. When rent increases are mentioned, it is always about the headlines of Daft reports (or the lower 8% of the RTB for new tenancies). The fact that rent only increased by about 3% for existing rentals is barely mentioned. Rents are only spoken of as too high. I am not even sure that the RTB has proper stats on that.
 
Guys we have lots of discussions on landlords.

This is a very specific proposal.

If you go off topic, your post will be deleted.

Please do not respond to posts containing off topic content.

Here is the discussion on tax.

Tax Treatment of Landlords has to be Revisited

“I do think we need to do something for individual landlords who have stayed in the market because we can’t have a situation where for the last six years we’ve had the individual landlords leave the market. That is a concern for me to have to deal with,” said O’Brien. Maybe some tax relief is...
www.askaboutmoney.com
 
the idea of returning sub market rent to market level has merit,
Would tenant pay it without uproar... don't think so,
why would they pay 30% year on year and other 2%
Prior to RPZ's my experience was that tenants were quieter as they valued low rent.
Once potential rent increases were fixed at 4% and then to 2%, environment changed.
Only way to fix now is to give tax big relief to get volume in and abolish 2% to keep them in.
Could phase out the 2% over three years.
Then with volume and choice rents would drop.
if that was done this issue would be gone within 4 years.
 
Unfortunately, I think it is extremely difficult to get rid of rent controls once they are in place, particularly when they are in place for so long. As I said, do they even have any statistics on the number of properties affected or badly affected? I don't see how society could tolerate a jump of some rent by 50/60% or more in two years. And the longer they exist, the more difficult the issue becomes. I think the government would need to have an emergency politic of rent subsidies for renters for the transition period but then where does this stop?
 
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