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

As of 2021, 59% of RTB tenancies related to a landlord with 1 or 2 registered tenancies. 86% of RTB-registered landlords had 1 or 2 registered tenancies. (Table 3.1)

You are talking about removing rent control from the majority of the market. I don't think there is any political appetite for that.

We do have to get rid of rent controls at some stage. They are killing the supply of rented properties.
Maybe a longer lead-in period?

[Small] landlords can increase the rent to the market value of the tenancy, subject to a ceiling of 10% a year.
So if the market rent is €2,000 and a landlord is charging €1,500, she can raise the rent in the first year to €1,650.
The following year, she can raise the rent to €1,800 and the following year to €2,200 or the then market rent whichever is the lower.

Brendan

bipped said:

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,

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I agree, but the problem with having a 'reset' between tenancies is it would incentivise any corrupt landlords out there to try and get rid of tenants more quickly to avail of it.

The only way to solve that I think is to have a way to differentiate good landlords from bad.

For example, if a landlord has a good record with the RTB, they should be free to charge market rent at the end of a long-term tenancy (say 4+ years).

wondering said:

I agree, but the problem with having a 'reset' between tenancies is it would incentivise any corrupt landlords out there to try and get rid of tenants more quickly to avail of it.

The only way to solve that I think is to have a way to differentiate good landlords from bad.

For example, if a landlord has a good record with the RTB, they should be free to charge market rent at the end of a long-term tenancy (say 4+ years).

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How do you know that I have a bad record if my tenants leave after 2 years or 3 years? My renter dies after 3.5 years, should I wait another 4 years to be able to reach the market rent? That is the issue with the current policy, the rules try by themselves to control the behavior of LL on the basis that they are "corrupt " or "bad" at the outset. I would suggest putting into place rules and then organise control/checks/safeguards that ensure that the rules are applied appropriately.

Brendan Burgess said:

We do have to get rid of rent controls at some stage. They are killing the supply of rented properties.

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'no' and 'yes', respectively.

The RPZs expire at the end of 2024. We either have a general election before then or FF and FG pick an almighty fight with renters right before an election.

There are far too many in situ renters benefiting from rent control for FF or FG to abolish it (even gradually). And if you take SF policy statements at face value, then rent control is here to stay. If direct social and affordable building proves insufficient, then rent control is still a useful subsidy to give to private renters and (politically at least) comes at the expense of the landlord.

noelÓm said:

private renters and (politically at least) comes at the expense of the landlord.

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But it also comes at the expense of would-be tenants who suffer from the lack of accommodation because rent controls have resulted in an exodus of landlords.

Brendan Burgess said:

But it also comes at the expense of would-be tenants who suffer from the lack of accommodation because rent controls have resulted in an exodus of landlords.

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and the economy as well as the ability of the state to provide services as they struggle to recruit employees or potential employees who can't find accommodation.

Brendan Burgess said:

But it also comes at the expense of would-be tenants who suffer from the lack of accommodation because rent controls have resulted in an exodus of landlords.

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Yes, that's who will lose out the most. And it's also why there will be be further restrictions on the right to sell. I think 'get your skates on' is the name of the thread.... Landlords will need court intervention at this stage to stop the politicians.

There are far more people living in controlled tenancies than people looking for rental units at any one time, so politicians will pick the former group to cater too. SF are a bit different in that they think they can tax and spend to deliver social/affordable housing at large enough scale to take lower income people out of the private rental sector at a steady rate. This will be the same vote buying exercise of old, with massive subsidies being given to lucky people who make it to the top of the housing list.

The system will end up a frankenstein mess with pricing inequities all over the place and chronic private rental shortages, but they can make it work politically IMO. The big risk is a property law challenge from landlords.

noelÓm said:

The big risk is a property law challenge from landlords.

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This is the key to solving the mess. If the politicians have straitjacketed themselves on the topic, it will be up to the judges to sort it, just as they did with taxi numbers a few decades ago.

T McGibney said:

This is the key to solving the mess. If the politicians have straitjacketed themselves on the topic, it will be up to the judges to sort it, just as they did with taxi numbers a few decades ago.

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Agree. The politicians are in trouble if the existing private rental stock is no longer a tool of social policy. Though I suspect that the courts would give a complex ruling that facilitates plenty of terrible policy ideas.

Brendan Burgess said:

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

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Brendan,

Having strived to be a "good" small LL for more than 25 years, we prided ourselves differentiating our BTL product offering through a combination of high quality location, fixtures, fittings, safety, condition, service and value for money. Something not right, or broken, always fixed immediately. A problem related to the property experienced by the tenant, was automatically our problem and priority. This is the type of service we wanted to receive, therefore we provided that same level of service offering to our customers. There are plenty, yes, plenty, of small LLs offering similar levels of product and service around. We are not unique in this regard.

As outlined on an AAM thread previously, due to the volume and type of changes in regulation and growing number of responsibilities being pushed onto LLs, coupled with the loss of control over the investment asset in terms of when and how to sell it, we are currently selling our five BTL’s in Ireland, with three recently sold and two due to go later this year. For us, as “small” LLs this was a significantly sized portfolio in terms of investment. However, caught in RPZ purgatory, these BTLs were all severely underperforming. While we cannot predict the future with any certainty, we can evaluate the recent past and point to the volatility of government policy to determine the likelihood of future market conditions and increasing regulation. Our personal assessment is that the BTL market is now dysfunctional with an unacceptable degree of risk facing small LLs in setting out their eventual BTL exit strategy.

To address your question as an experienced “small” BTL investor, consequent to government performance since the introduction of RPZs in 2016, it no longer matters one jot what leaks or kite flying the current government now undertakes to persuade me to remain in the Irish BTL market. Government policy and resulting volatility has damaged BTL market confidence to the extent that, in my view, it will be a very long road travelled before the government can regain investor trust and confidence to a level where any sane investor will undertake a 20 year repayment obligation on an asset to which control by the owner may be significantly reduced during that time. The ever changing policy landscape has caused long term damage to this segment of the market. Recovery will not be quick. The blame for this lies solely with government, no one else. Small BTL investors currently still in the market should be listening very carefully to the wider mood music. Should they choose to remain in the market, they are either foolish or extremely brave.

LL's have outlined what they require in order to stay in this business segment in Ireland. Government has had opportunity to consider this well publicised and discussed feedback. The government (and revenue) decided against delivering the meaningful change required to enable LLs to continue to operate or to further invest in the market. Its quite simple, small investors will keep investing, but just not in BTLs in the Irish market.

noelÓm said:

Agree. The politicians are in trouble if the existing private rental stock is no longer a tool of social policy. Though I suspect that the courts would give a complex ruling that facilitates plenty of terrible policy ideas.

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Why should they? Their role in this regard is to adjudicate on the constitutionality of a particular law, not to rewrite it.

azerty said:

My renter dies after 3.5 years, should I wait another 4 years to be able to reach the market rent?

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The system should be governed in a way that landlords are free to reset between tenancies (I said 4 years off top of head, but it could be 2, 3..)

My point was that not all landlords are equal - some are good etc; some are not. Those who are not, and who are on record with RTB as not, should not have the same freedom for a period of time after an order is made against them.

That is the issue with the current policy, the rules try by themselves to control the behavior of LL on the basis that they are "corrupt " or "bad" at the outset. I would suggest putting into place rules and then organise control/checks/safeguards that ensure that the rules are applied appropriately.

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I agree completely.
Really the solution is that the RTB should become better at weeding out the bad.

Laws could then cater to the majority rather than, as you say, being based on the assumption that most are corrupt etc.

The issue around any proposed scheme based on 'market rent' at the moment is that we don't have a functioning rental market.
It's chicken and egg - what is a representative market rent?

On the one hand it is low for many people trapped by RPZ's and on the other it is inflated by new entrants out of fear of RPZ's. Maybe some average of the current mess might be used as 'market rent'.

T McGibney said:

Why should they? Their role in this regard is to adjudicate on the constitutionality of a particular law, not to rewrite it.

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I think that's way too simplistic. Property rights are qualified in the constitution by watery social good language. So political context will inform how strong any pushback is on policy choices.

noelÓm said:

I think that's way too simplistic. Property rights are qualified in the constitution by watery social good language. So political context will inform how strong any pushback is on policy choices.

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No. The question will be: "is this law constitutional?"
The answer will be yes or no.
This is what happened with the taxis.
Politics has nothing to do with that question.

With a dysfunctional housing market and rental market in disequilibrium does 'market rate' for rentals have any real permanent meaning.Without a mortgage(many rentals have no mortgage) landlords with gross rental of say 2000 a month are not so badly off despite taxes and regulation.They also have capital appreciation.Thats not to say things could be improved

€2000 is a good rate for a lot of properties but not all. Plenty have been under rent control measures since 2015 with a rent freeze that year and don't get that, even in Dublin. Capital appreciation is good if you get it. But as an investor, if you consider the current value of your rental income and think about your poor rental yield, it also means you might feel you should do something else with your money! It might also discourage new entrants.

Brendan Burgess said:

We do have to get rid of rent controls at some stage. They are killing the supply of rented properties.
Maybe a longer lead-in period?

[Small] landlords can increase the rent to the market value of the tenancy, subject to a ceiling of 10% a year.
So if the market rent is €2,000 and a landlord is charging €1,500, she can raise the rent in the first year to €1,650.
The following year, she can raise the rent to €1,800 and the following year to €2,200 or the then market rent whichever is the lower.

Brendan

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On the RTB website it says the RPZ's are due to end on 31st Dec 2024 - will that actually happen or will it be extended again at that stage?

No rent control will not end in 2024.