Effect of rent controls? Higher rents and reduced supply

Sarenco

Frequent Poster
Messages
6,368
This is worth its weight in gold as the cost of refurbishing a property can be very costly.
Yep, rent controls reduce a landlord's incentive to maintain their property. Why bother spending money on a property if you can't reflect it in the rent? In the long term this is bad for tenants.

Only bombs destroy a city more quickly than rent controls.
 

Brendan Burgess

Founder
Messages
41,582
Due rent controls, for most tenants moving out of a rental property, means paying much more for a new rental, if indeed they can even find one. I have many rental properties and have not had a tenant move out for several years.
Interesting point.

But you don't need rent controls to achieve that.

When you get a good tenant, you just keep the rent well below the market rate.

The problem will arise for you when you do lose a tenant. You will be tied in to the "discounted" rent you charged that tenant and you may well get a bad tenant who will get a low rate, wreck the place, and refuse to leave because the rent is so low.

Brendan
 

AlbacoreA

Frequent Poster
Messages
3,439
Lack of supply (no options) is whats stopping tenants from leaving.

I remember back in the 90s it was like a revolving door tenants would just walk about and into a cheaper place without any notice. Lots of Supply.
I think thats when the issue retaining deposits for this reason, came in.

Cheaper rent sometimes (not always of course) meant getting slight less reliable tenants. Upping the rent could often bring more stability.
 

Sarenco

Frequent Poster
Messages
6,368
Yes but rent controls are contributing to the lack of supply of rental properties.

That's the key point.
 

AlbacoreA

Frequent Poster
Messages
3,439
Rent controls only really hurt a specific section of landlords.

Those with low rents, and who want less churn in tenants. Long term landlords. Those with low margins.
The shortage from PRZ is actually to the advantage to new landlords, and bigger yield (high rents), and mobile. (can buy and sell)
Also those with finance to do extensive refurbishments.

So it mainly discourages, low rents, and encourages renting to the high end of the market.
The majority of new rentals are at the top end of the market. The minority is at the low end.
No shortage at the top end of the market if you have the funds.

So not only does it effect supply. It further reduces supply where the country needs it most, and creates supply where its needed least.
Its probably reflects the growing disparity in wealth, thats also happening. Which is a reversal of social trends in the last century.

That said this is particular to how RPZ have been implemented here. They aren't always done the same way.
Though they do tend to have same end result overall.
 

Sarenco

Frequent Poster
Messages
6,368
Ok, you seem to agree that rent controls are contributing to the lack of supply of rental properties.

There's really nothing nuanced about it.
 

Sarenco

Frequent Poster
Messages
6,368
A lack of supply of rental properties will certainly have a disproportionate impact on lower-income tenants (I think that's your point).
 

Desimomo07

New Member
Messages
8
Rent controls only really hurt a specific section of landlords.

Those with low rents, and who want less churn in tenants. Long term landlords. Those with low margins.
The shortage from PRZ is actually to the advantage to new landlords, and bigger yield (high rents), and mobile. (can buy and sell)
Also those with finance to do extensive refurbishments.

So it mainly discourages, low rents, and encourages renting to the high end of the market.
The majority of new rentals are at the top end of the market. The minority is at the low end.
No shortage at the top end of the market if you have the funds.

So not only does it effect supply. It further reduces supply where the country needs it most, and creates supply where its needed least.
Its probably reflects the growing disparity in wealth, thats also happening. Which is a reversal of social trends in the last century.

That said this is particular to how RPZ have been implemented here. They aren't always done the same way.
Though they do tend to have same end result overall.

Id agree here. I've just brought two new rentals onto the market at the higher end and have seen this first hand. Rent controls mean that I've front loaded normal rent inflation - so the rent is +25% what i would have asked. This will balance out over the years Im sure, but its effects are to make an acute problem worse.

But from my experience, so many prospective tenants are applying with full HAP support sometimes paying up to €1900 pm. Is this not a contributory factor to rent inflation?
 

AlbacoreA

Frequent Poster
Messages
3,439
Certainly.

Though they tried to control rent originally by restricting Ra and hap limits it meant they simply couldn't find any places at those prices. Landlords simply priced themselves above it. One of the many reasons they had to make it illegal to refuse it.

They have a runaway train now. Supply can't meet demand. They keep increasing demand without increasing supply to match.
 

24601

Frequent Poster
Messages
204
Sinn Féin are proposing a full rent freeze: https://twitter.com/eobroin/status/1203015154134331392

They castigate FG for the housing crisis in one breath and propose these measures in the next. I’m very torn on who to vote for next year. FG deserve to be punished for their incompetence but FF are even more tax and spend with the added risk of SF in power.
 
Top