Rent levels outlook

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moneymakeover

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Folks,

As a landlord, is it time to reduce the rent with all the uncertainty and unemployment?

Getting ahead of the curve. Before the tenant announce they are moving out.
 
Something in the region of 20,000 students in Galway may be looking for payback of rent because of the closure of 3rd level institutions, that doesn't include any people who have lost jobs. There's going to be an awful lot of empty properties and anxious landlords.
 
Depends on where you are vis-a-vis market rents.

Rents fell 25% 2007-2010 but there was still a lot of new build on supply side and outward migration on demand side.

I don't think the circumstances are the same this time. It's just a straightforward income shock.
 
Depends as well on whether your tenant's income has been affected. If you think it hasn't and if you're charging a fair market rent I'd sit it out. Review again if there has been significant falls in rent in a few months time or if your tenant approaches you for a reduction in the mean time.
 
This really isn't a simple answer. If it were me I'd probably allow them rent free for a month then re-valuate.
As the rules aren't clear abut rent freeze, or dropping the rent. You might drop the rent only to find yourself locked into it for years.
That's not to say rents won't fall they will. But you'll know more in a month.
 
Maybe check in with your tenants and see how they are, you’ll find out how and if they have been impacted by COVID and then stay in touch and make a fair decision based on their needs/situation
 
Given the RPZ legislation, it might make more sense to allow arrears to build up rather than cutting the rent; presumably once you cut it you’re then stuck with 4% increases thereafter?
 
OP would your tenants not discuss options with you before moving out? I would have thought that as long as there is a reasonable relationship between landlord and tenant, the tenant will come to the landlord first to see what options are available, if they are impacted by Covid-19 and are struggling to pay the rent. As others have already said, I wouldn't go making the first move but would be open to any request from the tenant and take it from there.
 
Gordon Gekko said:
Given the RPZ legislation, it might make more sense to allow arrears to build up rather than cutting the rent; presumably once you cut it you’re then stuck with 4% increases thereafter?
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That's the best approach in my opinion.
 
I have seen a two bed apartment in south Dublin advertised for 1600 per month.
This is the lowest that two beds have been advertised for since the Autumn of 2018. The laws of Supply and Demand will come into play and will give opportunities for people to move to bigger apartments for near the same rent
 
It's simply too early to say what way rents will go. We don't know the trajectory and length of the recession or recovery. Nobody does. We've never had a pandemic based recession in modern times. Any predictions are little more than guesswork.
 
Vanessa said:
I have seen a two bed apartment in south Dublin advertised for 1600 per month.
This is the lowest that two beds have been advertised for since the Autumn of 2018. The laws of Supply and Demand will come into play and will give opportunities for people to move to bigger apartments for near the same rent
Click to expand...

This is most likely temporary though. Once we start to recover and air bnb comes back into full swing there is going to be a reduction in available properties to rent. You might get value in the short term via reduced rent but rents will increase in time and you could find yourself (after giving up your smaller property) in a bigger apartment and not being able to afford it.
 
I guess it depends on the location and type of your property. I expect over priced / poor quality accomodation to reduce in price as it should, whilst in the interim nice apartments / houses will be sought after with people working from home.

Are there any stats on properties being successfully let in April?
 
Here's a link to the full Daft report –

Irish Rental Price Report Q1 2020 | Daft.ie

www.daft.ie www.daft.ie
Apparently the number of homes available to rent nationwide on 1 May was almost 40% higher than on the same date a year ago.

The basic laws of supply and demand would suggest that a significant softening of rents is a near certainty over the coming months.
 
moneymakeover said:
As a landlord, is it time to reduce the rent with all the uncertainty and unemployment?
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I see it as adjusting when required.

My thinking on this has been, ( and this will go against the grain for quite a few) I have 2 different type of tenant.

I have one of in the motor industry, which I contacted in the beginning of this saying pay half, and catch up when things improve, and another in the Public Sector who has not being financially affected by this Pandemic. I have no intention of reducing their rent. Why would I,?

Unlikely, but they may go to a new LL for a 5 or 10% or what ever reduction in rent they look to achieve, but, that would be very silly knowing the amount of reluctant LLs out there who have not got the tenants best interest at heart.

Im hands on with the people I let to, so will be adjusting only as necessary.
 
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