Galway City Council says RPZ regime pushing more families into homelessness!

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Sarenco

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From the Connaught Tribune -

Galway City Council has warned that the Rent Pressure Zone introduced by the Government earlier this year to curb excessive rent hikes, is actually pushing more families into homelessness.

Since the RPZs were introduced, landlords are abandoning Rental Accommodation Scheme (RAS) and Leasing Schemes for local authority tenants.

Landlords have also threatened legal action against the Council, claiming breach of contract due to the new legislation which curbs the amount of rents they can charge.

The RPZ, which caps annual rent increases at 4%, is “penalising” landlords, the City Council said.

In turn, this is enticing them to leave the schemes, and the increase in notices to quit is creating further homelessness, the Council said.

The argument is set-out in a detailed review of the RPZs, which were introduced in Galway City in January 2017. The review has been submitted to the Department of Environment.

The Council said the rent caps “appear to be negatively impacting on the supply of much-needed homes under our leasing schemes in the social rented market”.

The submission adds: “Since the introduction of these new measures, numerous landlords have decided to withdraw from these schemes and other have indicated that they will do so, based on the fact that the City Council are not adhering to the terms and conditions of the contracts governing the arrangements supplying these houses, specifically the rent review clauses in the contracts, which are based on prevailing market rates.”

Under the schemes’ contracts, landlords have been paid the prevailing market rate, minus 8%. Landlords had a “legitimate expectation” that the terms of the contracts would be honoured, and therefore the “new rental legislation is actually penalising those landlords who are supply Galway City Council with much needed social rented houses”.

http://connachttribune.ie/galways-rent-pressure-zone-is-pushing-families-onto-the-street-000/
 
Thanks for that link Brendan - that's a well thought out submission.

The Council's suggested remedy to their problem is to allow rents to be increased to the market rate at the next review and thereafter increases would be capped at 4% for the following three years. Seems like a perfectly reasonable solution to me.
 
Sarenco - thats an interesting thought, but I think part of the issue is that many landlords would traditionally at times like this raised rents at whatever they felt the market could bear, and risk the tenant leaving on the grounds that they could get another. I recall that at the height of the boom from 1999 to 2006, increases of 15-25% were quite common, and I think there was a legitimate fear of large numbers of tenants being priced out of their homes over a couple of years.

That said, there is a legitmate case for landlords who have been charging well below market rates to be permitted to increase by more than 4%, because someone who is currently charging, for example 700 per month is going to have a lower actual increase than the landlord charging 1100 a month. Its complicated.....
 
And Focus Ireland today has complained about a worrying rise in landlords using a "loophole" to get tenants out. They are refurbishing flats and reletting them at a substantially higher rent.

Brendan
 
Brendan Burgess said:
And Focus Ireland today has complained about a worrying rise in landlords using a "loophole" to get tenants out. They are refurbishing flats and reletting them at a substantially higher rent.
Click to expand...

I think the loophole is that sometimes the "refurbishment" isn't really a refurbishment. It's a pretext to get the existing tenants out.
Even for real improvements such as new windows or improvements to bathrooms\kitchens, I would have to question if tenants should be compelled to vacate - owner occupiers don't sell up when they are getting such work done.
The tenants should be told the scope of the work and the impact it will have on rent. Giving tenants the option to move back in in X months is pretty pointless... a lot of tenants aren't going to be able to find accomodation elsewhere for short duration.

Just as sometimes the property is put onto the market for sale with no intention to sell \ at an unrealistic price as a pretext to get the existing tenants out.
Or taken off the market for a phantom family member who doesn't materialise and actually live in the property...
Either remove the abuse of the loopholes or abolish RPZs.
 
A landlord was telling me that he had rented a flat to a relative at half the market rate. The relative left so he could have been stuck with that low rent forever. So he refurbished it to put it back on the market at the market rent.

He didn't kick the relative out - the relative was moving anyway.

I am surprised that he didn't just sell it and get out of the game.

Brendan
 
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