How will the new rent controls affect the values of properties?

Discussion in 'Property investment and tenants' rights' started by triggs, Dec 20, 2016.

  1. triggs

    triggs Registered User

    I describe an actual situation:2 apartments side by side in one block, similar in almost every respect.Apartment A rents for 700 and Apt for B for 1000.Both rents are now capped.Considering that we live in a Market Economy I ask can any politician[a dissenting voice I did not hear]who voted for Rent Caps or any proponent of these measures please explain the economic rationale of the situation cited above.
    In the absence of an answer I can only conclude that any residue of integrity in the political class has yet again suffered at the alter of a headlong pursuit for popularity at the expense of good law.
    Gordon Gekko and LS400 like this.
  2. Gordon Gekko

    Gordon Gekko Frequent Poster

    Last edited: Dec 20, 2016
    Put another way, both properties in the above example might have been worth €200k a couple of weeks ago.

    Now one is potentially worth only €140k based on a 6% yield.

    How is that fair and how is it constitutional?

    I'd be surprised if this isn't blown out of the water by the Courts.

    If I own the €700 a week property, I'm coming after the State for my €60k!
    Last edited: Dec 20, 2016
    Kine and LS400 like this.
  3. Gordon Gekko

    Gordon Gekko Frequent Poster

    The position with regard to valuing investment properties will be interesting to say the least.

    As I understand it, everyone's now tied to this 4% nonsense, even if they were renting at less than market rate.

    So will estate agents now quote the annual rent?

    And most seriously, a month ago two identical properties were worth the same. Now, potentially, one could be worth substantially more than the other. How will that play out? And does the owner of the less valuable property have grounds to sue the State? And what will banks make of these new rules in terms of lending?

    An unholy mess in my view.
  4. Bronte

    Bronte Frequent Poster

    That's a very good point about Gekko about the value of a property. I suppose a disgruntled sellor might take this to court.

    Would be investor landlords will need a certificate of how much rent when purchasing. Or the RTB registration of tenant which I think has the rent amount mentioned on it.
  5. Gordon Gekko

    Gordon Gekko Frequent Poster

    And apparently virtually nobody updates the RTB in terms of changes to the rent.
  6. Brendan Burgess

    Brendan Burgess Founder

    Taking the example above, a landlord charging €700 when the market rent is €1,000 is in a very difficult position.


    While an investor would pay only €140,000 for Property A, someone buying it as there home would pay the €200,000.

    So a sensible owner of Property A should sell the apartment for €200,000 and buy an existing home and let it out at the market rent.

    In practice, I suspect a lot of landlords will simply sell their properties and not reinvest, so the supply of rental accommodation will fall.

    In general, this messing with the market, will discourage people from investing in rental property.

  7. Sarenco

    Sarenco Frequent Poster