Why there is so little house building in Ireland

[Folsom]

Some interesting obs from that independent article.

"In broad terms, the pattern of home ownership is shifting from households to investors. Moreover, the profile of these investors is changing. Gradually, but unmistakably, the amateur is being displaced by the professional."

I would take this as a good development overall. Tenants need to have security of tenure long-term for a stable and sustainable rental market to develop.
Worrying about the reaction of amateur landlords to every policy change is a cause for instability, particularly if the amateur landlord does not understand fully the implications of changes or cannot factor in such changes over the long term and adjust their business model accordingly.

"Drilling deeper into the data gives us an insight into the profile of these investors. First and foremost, 95pc of them are cash buyers."

This is unsurprising. With central bank restrictions on mortgage lending for owner-occupiers and amateur landlords borrowing is tight.
The door is open for institutional investors with deep pockets to beat any competition particularly in the apartment blocks. The FTB can no longer compete.

"At one level, these concerns may be understandable. It is undeniable that every property bought by an investor leads to one less unit being available to an owner-occupier. Furthermore, by competing alongside traditional home-buyers, investors add to the demand for housing. In a context of tight supply, this undoubtedly drives up prices."

This would suggest that landlords dont add to supply they just compete for existing supply.

"If anything we need more rather than fewer landlords to come forward and supply rental properties. And if these are professionally-managed units, so much the better."

Somewhat a contradiction to previous comment, but in the overall context of the article it makes sense.

"The real problem is that we do not have enough houses to accommodate our population."

As the article finishes, all roads lead to supply. The State needs to step in where the commercial sector is failing and build houses.

 

[cremeegg]

Gradually, but unmistakably, the amateur is being displaced by the professional."

I would take this as a good development overall.

Why?

Large investment companies will operate properties to maximise profits, just like smaller investors. However I suspect that they will be much more efficient at it.

Many small landlord don't raise rents during a tenancy, especially if they are happy with the tenant. Company directors are under a legal obligation to their shareholders to maximise return. This suggests that they must raise rents to the maximum permissible.

Small investors dread the prospect of being brought to the RTB, large investment companies with many properties and well fed lawyers will have no such fear.

Small investors sometimes take pride in their properties and value their neighbours good opinion, investment companies will expect a return on every penny they invest in their properties. Unless maintenance or improvements can show a return, they will go undone.

Most small investors pay tax at rates in excess of 50% on their investment income. While I do not understand the tax arrangements of institutional investors I am told that they pay much lower tax rates.

 

[Folsom]

Why?

All succinct points @cremeegg with more than a dollop of validity.

When I consider professional v amateur landlord im not actually thinking small v institutional.
Im thinking of those 'landlords' who bought into the game in the with sloppy, nonchalant, pigsback, type of thinking. The ones who had no long-term strategy, no regard for standards of accommodation, must maximize profits through overcrowding etc...etc...
These are the amateur 'landlords' - big or small.

Im thinking professional landlords, big or small, with written tenancy agreements, long-term strategy, business models to implement modest rent increases (or decreases) in line with inflation, interest rates, incomes to maintain stable and sustainable market.
Im thinking competition, competitive rents with quality accommodation.

This will take engineering, involving government, banks, landlords and tenant rights groups.
Where the impetus is on the landlord to provide competitive rents with quality accommodation. The impetus for tenants must be to maintain and respect properties. The rental market needs to be redesigned to offer a real competitive alternative to the owner occupier model. A real choice of renting for life.

 

[Bronte]

Building land is expensive in Dublin.

In May 2012, it was €194k to build a house before site costs. Even if it has risen in the meantime, presumably it's a max of €250,000. Most 3 beds sell for far more than this in Dublin. So it would not make sense to build one house on an acre, when you can build 12.

Accordingly to the Newspaper SI, Dublin CC can build a house for less than the cost of purchasing. Figure of 199k apparently. I understood this included all costs including the site cost. Is the article incorrect.

Nice round figure. 199k. They quote the Housing agency as the source for this figure. Now I think it’s tosh. Because they say that is cheaper than buying at 124k.

Why do newspapers get away with half truths. This is the second article peddling half truths on housing this week.

 

[Bronte]

All succinct points @cremeegg with more than a dollop of validity.

When I consider professional v amateur landlord im not actually thinking small v institutional.
Im thinking of those 'landlords' who bought into the game in the with sloppy, nonchalant, pigsback, type of thinking. The ones who had no long-term strategy, no regard for standards of accommodation, must maximize profits through overcrowding etc...etc...
These are the amateur 'landlords' - big or small.

Im thinking professional landlords, big or small, with written tenancy agreements, long-term strategy, business models to implement modest rent increases (or decreases) in line with inflation, interest rates, incomes to maintain stable and sustainable market.
Im thinking competition, competitive rents with quality accommodation.

This will take engineering, involving government, banks, landlords and tenant rights groups.
Where the impetus is on the landlord to provide competitive rents with quality accommodation. The impetus for tenants must be to maintain and respect properties. The rental market needs to be redesigned to offer a real competitive alternative to the owner occupier model. A real choice of renting for life.

No written leases.
Don’t increase rents.(but I’m gong to have to because of the rent cap)
No business model.
Started in stratospheric interest rates.
Nearly 30 years a landlord.
Stability you say.
Never evicted a tenant yet.
Seen rents go the unbelievable highs, and collapse.
Inflarion in the last three decades...


And by your reckoning I’m an amateur.

Good luck to the institutional REITs when the market collapses. They’ll be selling like hot potatoes. Professionals like them is what you want. I will live to see the day they will pull out and move to better markets having made their money on capital appreciation in Ireland. This will happen once the housing stock catches up. Which it will.

 

[Folsom]

No written leases

So in the event of a dispute, how would matters be settled.
For instance, if it is verbally agreed that
-
the tenant will mow and maintain the lawn
the tenant is responsible for keyholding and replacing locks if required
the landlord will provide window cleaning services at least four times a year
the landlord will provide for chimney sweep once a year
the landlord will service smoke/fire/detectors, gas or oil boilers once a year
the tenant is responsible for refuse collection
Etc....etc...etc...
- and one party fails to honour their end of the agreement, how are disputes resolved?

Don’t increase rents.(but I’m gong to have to because of the rent cap)

Why? If you don't increase rents, why is a rent cap making you increase them now?

No business model.

Its part of the problem why there are so many disputes and why some landlords are chasing 'average market rents'.

Professionals like them is what you want

You quoted my post in its entirety. Did you read it?

 

[jpd]

Proof that even back in 2014 it was clear REITs would drive up rents.

That is not what the report said - the conclusion was

The real problem is that we do not have enough houses to accommodate our population. As such, we are trapped in a zero-sum game; on one hand we need more rental properties, but we also need more homes for owner-occupiers. These objectives simply cannot be reconciled without building additional units. Ultimately, when it comes to solving our housing problems, all roads lead back to supply.

It was clear then, and even more so now, that without building more homes, no matter what the split of the housing stock between rented properties and ppr, there is a crisis in play.

 

[The Horseman]

So in the event of a dispute, how would matters be settled.
For instance, if it is verbally agreed that
-
the tenant will mow and maintain the lawn
the tenant is responsible for keyholding and replacing locks if required
the landlord will provide window cleaning services at least four times a year
the landlord will provide for chimney sweep once a year
the landlord will service smoke/fire/detectors, gas or oil boilers once a year
the tenant is responsible for refuse collection
Etc....etc...etc...
- and one party fails to honour their end of the agreement, how are disputes resolved?



Why? If you don't increase rents, why is a rent cap making you increase them now?



Its part of the problem why there are so many disputes and why some landlords are chasing 'average market rents'.




You quoted my post in its entirety. Did you read it?

Can you make up your mind, either you think a lease is needed or not!

https://www.threshold.ie/advice/seeking-private-rented-accommodation/do-i-have-to-sign-a-lease/

You have to get past the concept of the business that you are in is just the same as any other business. It is not. Tenants are not your customers, they are your tenants. Housing is not a commodity, it is a social necessity.

 

[Folsom]

Can you make up your mind, either you think a lease is needed or not!

That is part of the problem why the rental sector is so inefficient. That there is no legal requirement to issue written tenancy agreements.

When did I say otherwise??

There needs to be detailed written agreements in place to resolve disputes upon which the rights of landlords to protect their property and the tenants right to security of tenure can be invoked.
A tenancy agreement may, or may not, include such clauses as length of occupancy. Such clauses, depending on the length of time, may offer protections to tenants to renew agreements, rent reviews based on a set formula which may allow for modest rent reductions as well modest rent increases etc...etc...

 

[Sarenco]

A tenancy agreement may, or may not, include such clauses as length of occupancy. Such clauses, depending on the length of time, may offer protections to tenants to renew agreements, rent reviews based on a set formula which may allow for modest rent reductions as well modest rent increases etc...etc...

All those matters are regulated by Statute. Repeating them in an agreement would be pointless.

 

[Folsom]

All those matters are regulated by Statute. Repeating them in an agreement would be pointless.

The specific details between two parties are not set out in statute. The specific details between two parties would have to adhere to the parameters set out in statute.

For instance, is it possible that the State would never had had to introduce RPZ's if landlords had set out in tenancy agreements the provisions for annual rent reviews and the criteria upon which any rent increase was based? Is it possible that if I was renting a property of you that we could have agreed a maximum rent increase (or decrease) 6% pa subject to certain criteria being met, such as increases in incomes, inflation rate, interest rates etc being met? Is it possible that such a system, if developed thoroughly, could provide for the creation of a more stable and sustainable private rental market?

Instead we have a system that saw rents increase by any amounts on the simple basis that apparently market rates were not being met - devoid of the understanding that below market rents are as contributory to overall market rent as above market rents are.
Instead, the State had no option but to interfere and impose reasonable increase rates on landlords because too many were incapable of managing it themselves.

 

[Sarenco]

Sigh.

Once a Part 4 tenancy arises, the legislation is very specific about the term of the tenancy, when and by how much rents can be raised, how disputes can be resolved, etc. There is no need to repeat all these provisions in an agreement - it would serve no purpose.

Outside a RPZ, rent can only be reviewed every two years. Rent can only be raised to the local market level and there are very specific requirements around the documentation that must be produced to evidence that market rate. Those provisions applied nationwide prior to the introduction of the RPZ regime.

I would strongly encourage you to try and understand the law as it stands before offering your "opinions".

 

[Folsom]

Oh dear! You are outlining the law as it is now, as set out through government policy - devoid of all the gripes and mopes from landlords, on this site, including yourself, threatening to pull out of the rental market etc, because of the exact laws that you are referring to as implemented by government.

It is because of this persistent and constant "moving of goalposts" and interference by government that is making it so hard, apparently, for landlords to make it worthwhile entering the market.

But the government has had no choice because the private rental sector has been unable to provide a stable and sustainable rental market.

So now landlords are stuck with government 'diktats' that tell landlords how to manage their properties instead of landlords and tenants agreeing between themselves all the criteria of any tenancy. Too many landlords are devoid of the social responsibility and social understanding of what it means to be in the business of providing housing and accommodation. Instead the thinking is all short-term, all financial gain.
Now they have to be led by the hand by government.

It is a failed market.

 

[Sarenco]

I have absolutely no idea what you are talking about - your post makes no sense whatsoever.

But just to correct you once again, I am not a landlord. I quit the residential letting business some time ago for the reasons explained elsewhere.

Good bye.

 

[Folsom]

There is at once, a train of thought that the rights of landlords and their properties are being unduly infringed upon by government policy persistently interfering in the private rental market with new laws and restrictions such as rent controls. Here is a snippet of that sentiment

only bombs destroy a city more quickly than rent controls.

Crazy, crazy policy. Ultimately it's renters that pay the price for this madness.

But in reality, it is the ineptitude of a significant amount of landlords themselves, blinded by short-term financial gain and devoid of any understanding the social responsibility and social understanding of the business that they entered into that has led to unstable and unsustainable private rental market sector that we have today.

Its not entirely their fault, housing policy by successive governments outsourcing the provision of housing to the private market is the real culprit.

So in the absence of a private rental market that is capable of providing a stable and sustainable rental accommodation, then landlords should just get used to more and more government interference.

Those that cannot cope with the State interfering should leave.

 

[Folsom]

But just to correct you once again, I am not a landlord. I quit the residential letting business some time ago for the reasons explained elsewhere.

Thats right I forgot, no long-term strategy to deal with periods of financial restrictions. You have done yourself and the rental sector a favour.

 

[Sarenco]

I did actually have a long-term strategy to deal with unfair taxation and over-bearing regulation - I simply put my capital to work elsewhere.

I reluctantly exited the residential letting business after some 20 years because the after-tax returns no longer adequately compensated me for the risks I was bearing.

Nothing to do with not being able to "cope" with State interference as you keep suggesting. It was a purely rational business decision, it wasn't a forced exit.

 

[cremeegg]

There is at once, a train of thought that the rights of landlords and their properties are being unduly infringed upon by government policy persistently interfering in the private rental market with new laws and restrictions such as rent controls.

No sensible landlord objects to tenants having protection from unreasonable behaviour, or for a long term tenancy to be established in law.

Landlords have reasonable concerns that they have no effective remedy against tenants who do not pay their rent. Or to put it bluntly, the possibility scares the life out of me, and ant sensible landlord.

They also have a reasonable concern that certain legal provisions are being introduced retroactively. When I created a particular tenancy I could terminate it with a months notice, without reason. Now I would have to give many months notice and declare my reasons.

The new situation is not the problem, it is the fact that it was introduced for existing tenancies that frightens me.

 

[Firefly]

It amazes me the mess the government has created.

It's amazing that we have proposals for "communal living" where 42 tenants are to share one kitchen, a few short years after banning the bedsit.....give me a bedsit any day!

https://www.independent.ie/irish-ne...as-42-tenants-share-one-kitchen-38094372.html

 

[Folsom]

No sensible landlord objects to tenants having protection from unreasonable behaviour, or for a long term tenancy to be established in law.

I know. Its the ones that will protest against reasonable protections or long-term tenancies that I take issue with.
There is already a knee-jerk reaction in some quarters to a newspaper headline that suggested making lifetime rental easier for tenants.