How many landlords have quit because of rent controls?

[T McGibney]

You mean the private entrepreneurial spirit is dead? You mean if the State sold RTE that no-one could submit a tender that guarantees the same level of programming, radio and TV, with all its advertising revenues, for a cheaper license fee?
I know TV3 finds it hard to compete with RTE, if only they had a slice of the licence fee however?

You're not talking though about the State selling anything. You're talking about the State producing a social good (housing) and renting it though permitted profit-making intermediaries at significant undervalue, thus generating a ruinously negligible rate of return on the original investment.

 

[TheBigShort]

No, the initial electricity infrastructure installed in Ireland up to the early 1960s is now largely if not totally obsolete and has been supplanted by waves and waves of newer investment.

You mean, as well as forking out the equivalent of 20% current expenditure in 1927, the State has continuously invested time and time again in the electricity infrastructure
You mean the actual spend by the State is actually a multiple of the initial outlay???

When will this madness stop???

Surely we cant keep spending and spending on vital infrastructure?

Where exactly is the incentive?

Profit for property management, affordable rent for tenant.

You cannot insure against normal wear and tear as it's an inevitability.

Yes, thats why I suggested (albeit ball park figure) €1000 contingency fund pa for necessary repairs and replacements of fixtures and fittings.
Id imagine (good) landlords have a few quid tucked away for when the washing machine breaks down and cant be repaired? Wouldn't they?

Ah come on, anyone who has owned a 1970s house since it was built has by now spent a considerable sum on its upkeep, or at this stage has a derelict property.

I said houses built to standard today!

My parents live in a house built in 1960's. Aside from a new roof on the kitchen extension I cant recall any repairs of significance that the plumber or electrician wasnt able to fix.

Where is the service? There's no skill involved in sending a bill out to someone.
Where is the profit?

I put in €333pm = €4,000pa. This covers €2,500 back to government + €500pa over (20yrs) accounts for initial €10,000 furnishing cost + €1,000pa for normal wear and tear.

Tenant pays me €7,200pa. Profit of €3,200 or €267 per month.

That isn't profit, it's contribution towards fixed costs, including cost of capital, and contingencies. What's left at the end is profit.

What is the cost of capital if my initial outlay for yr1 is €10,000 + €1,000 + €2,500 = €13,500 and I have that in my bank account earning 2% interest (if lucky)?

Based on what, though?

A competitive tender process.

 

[TheBigShort]

The children's hospital.

Its not even built yet, is it? How can you judge.

The Luas.

What is wrong with LUAS?

On housing, the entire social housing programme during the bubble years.

What is wrong with the houses built during those years?

You're not talking though about the State selling anything. You're talking about the State producing a social good (housing) and renting it though permitted profit-making intermediaries at significant undervalue, thus generating a ruinously negligible rate of return on the original investment.

Ok, outsourcing so. The State can, and does, RTE outsources some of its funding for private independent film and tv. Why? Because they can do it better, quicker, cheaper.

 

[T McGibney]

This is getting boring so I'll restrict myself

I said houses built to standard today!

Your faith in builders and their standards is touching.

My parents live in a house built in 1960's. Aside from a new roof on the kitchen extension I cant recall any repairs of significance that the plumber or electrician wasnt able to fix.

So it still has the 60s wallpaper, kitchen, bathroom etc?

Profit for property management, affordable rent for tenant.


...

I put in €333pm = €4,000pa. This covers €2,500 back to government + €500pa over (20yrs) accounts for initial €10,000 furnishing cost + €1,000pa for normal wear and tear.

Tenant pays me €7,200pa. Profit of €3,200 or €267 per month.

That's not a real profit. It's actually a ripoff. It depends on the State contenting itself with an artificially low 1% gross return (€2,500 per annum on €250k invested in building a house).

What is the cost of capital if my initial outlay for yr1 is €10,000 + €1,000 + €2,500 = €13,500 and I have that in my bank account earning 2% interest (if lucky)?

The State doesn't enjoy the luxury of having net funds on deposit, so your question is moot.

 

[T McGibney]

Its not even built yet, is it? How can you judge.

QED

Ok, outsourcing so.

I'm confused. You've been arguing til now that the State should build houses, not outsource them to others.

 

[losttheplot]

Why shouldn't they?

Actually, supermarkets are a good example of constantly offer discounts , lower prices in an effort to compete to provide a quality service.

Generally, the super market doesn't pay for these discounts, the suppliers do.

If the property management company can't increase rents to increase profits, they'll find other ways to, like providing substandard service. Or they'll go bust, leaving unattended properties behind.

What incentive would there be for an efficient business if they can't pocket the savings. These could end up like inefficient state companies.

 

[losttheplot]

Maybe it would work better if the houses were rented unfurnished. Tenants can purchase their own furniture and appliances. They could also look after the painting and general maintenance. Then maybe low rents would be achievable.

 

[TheBigShort]

So it still has the 60s wallpaper, kitchen, bathroom etc?

You missed the bit where I said a €1,000pa contingency fund for necessary repairs and replacements?

That's not a real profit. It's actually a ripoff. It depends on the State contenting itself with an artificially low 1% gross return (€2,500 per annum on €250k invested in building a house)

I think I see where you are getting muddled up on this.
You are calculating through a purely accounting exercise. The cost to the State outweighing any profit that is achieved by the property management or returned to the State?

You do not appear to consider the social and economic cost to the State of a situation where property prices and rents are heading beyond, or have gone beyond the reach of low and middle income earners.
In case you haven't noticed, the waiting list for housing is increasing all the time.
There is only so many people you can squeeze into 'digs' sharing with strangers. Only so long before people who had aspirations of starting families one day turn their angst on the political system.
Only so long employers struggling to fill vacancies will base themselves in a city before moving on.
There are dozens of other factors ranging from the welfare of children living in emergency accommodation to the mental health of adults disenchanted with the black-hole of rental poverty or dependency on welfare to simply get by.
There is only so long that taxpayers can continuously find landlords charging extortionate rents on HAP tenants because its the 'market rate'.

The State doesn't enjoy the luxury of having net funds on deposit, so your question is moot.

So should all capital investment projects be cancelled? Should the social housing fund of €400m be withdrawn?

You fail to grasp the concept of social and public policy. It is not to make a profit, certainly not to make a profit from its citizens. It is to improve the standards of living of the population.
Currently, tens of thousands of people are waiting lists for a home, tens of thousands more are drowning in extortionate rents.
My proposal is merely to give relief to those working people who cannot afford to buy and are choking on rent. The 'cost' to the State will be returned per unit via €2,500pa in property management fees, plus PLUS, income taxes, VAT, CT generated from increased economic activity not only from house building, but all through the economy as average working people can now start to afford to spend on other items other than rent. They might buy health insurance, go to the dentist regularly, perhaps even start a pension of their own?

House building could be targeted initially in RPZ's offering tenants a real alternative to the current system.
All that is happening is a transfer of income from landlords to tenants via landlords competing to offer lower rents.
All for the benefit of the economy as a whole.

 

[TheBigShort]

The property management sets a fixed rental fee, reviewable every two years with limited increases no more than prevailing inflation rate

If the property management company can't increase rents to increase profits,

Property management can increase rents in line with inflation. Its not set in stone. Similar to energy and communications regulator, other factors could be considered for rental increases if need be.

like providing substandard service. Or they'll go bust, leaving unattended properties behind.

If they provide substandard service they will be penalised.
I dont see how someone making a profit can go bust.

 

[T McGibney]

If they provide substandard service they will be penalised.

I asked this question days ago and never got an answer: what service exactly is involved in sending out bills for a monopoly?

I dont see how someone making a profit can go bust.

The corporate graveyard is full of profitable businesses that went bust because they ran out of cash.

 

[TheBigShort]

I asked this question days ago and never got an answer: what service exactly is involved in sending out bills for a monopoly?

What monopoly are you talking about??

Here is an idea. If a tenant is not satisfied that the terms of the rental agreement are not being met they complain about their grievances to an independent adjudication body for a hearing.
If a tenant is not paying their rent, or carrying out criminal behaviour like destruction of property etc then the property manager does the same. If the complaint is upheld then sanctions are imposed on tenant.

So where or what is the monopoly?

The corporate graveyard is full of profitable businesses that went bust because they

Yeh, so they went out of business because of poor management of their cashflow, not because they were profitable. Isnt that right?

 

[TheBigShort]

In the meantime, house prices rise by 10.4% y-on-yr

https://www.rte.ie/news/business/2018/0911/993034-residential-property-prices/

And six people arrested for public order offences protesting the lack of accommodation

https://www.rte.ie/news/dublin/2018/0911/993167-north-frederick-street/

But hey, its 'the market'

 

[Gordon Gekko]

BigShort, those people were defying a court order; there has to be respect for the rule of law. And no doubt this legitimate issue is being hijacked by sinister troublemakers and the likes of Sinn Fein IRA.

 

[TheBigShort]

BigShort, those people were defying a court order; there has to be respect for the rule of law.

I agree, but that misses the point that I have outlined frequently.
Housing is not a commodity. It is a social necessity, of which there will be an increasing economic loss to the State the longer the housing shortage persists. This will manifest itself in employers not being able to attend workers, businesses setting up elsewhere, mental health issues for adults disenchanted with living life of dependency on rent supplements to pay "market rates" (I wonder what the market rate would be if the State wasnt subsidizing rent demands for landlords?), children deprived of settled family environment, protests, social unrest, political upheaval.

 

[Gordon Gekko]

Which is why, due to the failure of the market to deal with the social problems that you have highlighted, the State should use the tax system plus its own landbanks to secure land and engage the services of a provider with scale like Cairn Homes to build the homes that are needed right now. Where does the money come from? Borrow it at what are probably never to be repeated low rates.

 

[The Horseman]

In the meantime, house prices rise by 10.4% y-on-yr

https://www.rte.ie/news/business/2018/0911/993034-residential-property-prices/

And six people arrested for public order offences protesting the lack of accommodation

https://www.rte.ie/news/dublin/2018/0911/993167-north-frederick-street/

But hey, its 'the market'

If people wish to protest they have a right to protest at Leinster House or other locations which belong to the State. When people do not follow the law then this is wrong. If you don't like the law lobby your political representatives to have it changed.

It is wrong for people to decide which laws they follow and which they don't. At the end of the day this is private property and the protestors should have left when the court order was granted. The Homeless issue is being overshadowed by a sinister element which is having a negative effect on its cause.

If people have an issue with homelessness then lobby the politicians, scenes like yesterday will not encourage landlords to remain in the market and unless you increase supply of properties the available bed spaces will reduce each time a landlord leaves the sector.

This brings us back to the topic of why landlords are leaving the market because even with court orders people refuse to obey them.

 

[Gordon Gekko]

I note that there are a posse of yahoos on social media attacking the Gardai and the bailiffs for wearing balaclavas; the same people would be threatening and “naming and shaming” the guys if they could see their faces.

The incident is also being linked with the appointment of a former RUC officer as commissioner.

The problem with these issues is that they get hijacked by lunatics like the New Land League or more sinister elements.

 

[T McGibney]

What monopoly are you talking about??

So where or what is the monopoly?

Your "property management company" that, under your harebrained scheme, would "win" a "tender" from the government to let out government-owned properties at a third of their market rental value.

Now again, and please don't deflect with semantics this time:

I asked this question days ago and never got an answer: what service exactly is involved in sending out bills for a monopoly?

 

[losttheplot]

Here is an idea. If a tenant is not satisfied that the terms of the rental agreement are not being met they complain about their grievances to an independent adjudication body for a hearing.
If a tenant is not paying their rent, or carrying out criminal behaviour like destruction of property etc then the property manager does the same. If the complaint is upheld then sanctions are imposed on tenant.
QUOTE]

This sounds like the PRTB.

There would be the usual uproar if a private commercial company was to evict someone.

 

[Firefly]

The State will insure for structural defects that occur over lifetime of property.
The State will insure the property management for non-payment of rent where the tenant is shown to be in financial difficulties and unable to pay (as distinct from refusing to pay).

If a tenant is not satisfied that the terms of the rental agreement are not being met they complain about their grievances to an independent adjudication body for a hearing.

Firstly, well done on putting forward a proposal. Your solution was posted on another thread before and I thought it was a very good idea. However, the details are emerging and I think it could be a disaster. Your solution has grown legs leading to:

• A massive increase in our national debt.
• The state building housing which it will no doubt pay way above market rates for as is usually the case (LUAS, Children's hospital, M50, Port Tunnel etc etc etc)
• The state ensuring property management companies for tenants who won't pay - (incentive for others to not pay as the state will cover them)
• The state ensuring property management companies for damaged houses
• An independent body should tenants complain

When the whole thing falls apart, the property management will probably come under a semi-state, following the government's tried & tested formula of:
"If it moves - tax it, if it keeps moving - regulate it, if it stops moving - subsidise it"

Then we can really put the ribbons on it by setting up a few quangos and obviously an Ombudsman to regulate the semi-state property management company.

There will no doubt be a serious issue down the road. But fear not. We can set up a commission and if it's really serious, a tribunal.