Implications of Greens in government for landlords

Sarenco

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A lot of speculation in the papers over the weekend that Eamon Ryan will be our next Minister for Housing.

So, here's what the Green manifesto says on the rental sector:-

"We will make several legislative and regulatory amendments to make the rental sector fairer. To make sure that people have certainty about their housing costs and the security of their tenure going forward we will remove sale as a reason for ending a lease and will move towards a system of indefinite leases, as recommended by the National Economic and Social Council, with appropriate safeguards for both landlords and tenants. We will also consider a form of rent review that is popular in Germany, known as the ‘mirror rent’ in which rents are based on an official guide for the local area. To make these changes, we will need to strengthen governance in the area of renters’ rights. We will resource the Rental Tenancies Board to allow for swift resolution of disputes between landlords and tenants. We will also give effect to the existing rent pressure zones legislation which is often not being complied with, by requiring all rents in rent pressure zones to be registered."

I would query whether removing sale as a reason for ending a lease would be constitutional.

In any event, any landlord thinking of exiting the market might want to move fairly promptly ...
 

Brendan Burgess

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Hi Sarenco

I have never really understood this.

If I am renting a property under a one year lease can the landlord terminate the lease early to sell the property?

Or does he have to wait until the lease is up if he wants to sell it without a tenant?

Commercial tenants have indefinite leases after 5 years. But they are at market rent.

Is there any argument in favour of indefinite leases for residential properties but at market rent?

And balance that with legislation which allows landlords to deal quickly with tenants who don't pay their rent.

Brendan
 

The Horseman

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Hi Sarenco

I have never really understood this.

If I am renting a property under a one year lease can the landlord terminate the lease early to sell the property?

Or does he have to wait until the lease is up if he wants to sell it without a tenant?

Commercial tenants have indefinite leases after 5 years. But they are at market rent.

Is there any argument in favour of indefinite leases for residential properties but at market rent?

And balance that with legislation which allows landlords to deal quickly with tenants who don't pay their rent.

Brendan

Welcome to the Irish private residential sector. A lease at least in the eyes of the Irish is not actually a contract like any other contract. The tenant can stay or go if they like but the landlord must abide by the RTA so for all intensive purposes the lease is not worth the paper its written on to the landlord.

I would say yes there is an argument for indefinite leases for residential properties at market rent but if you want the property for your own or family use then this is a legitimate reason to terminate a lease (within reasonable time frames).

The above however will never work as no bank will grant a mortgage without vacant possession which will result in only cash buyers for investment purposes and without a quick eviction process for non payment of rent investors will be hesitant to purchase properties with sitting tenants.

While not a legal person I would suspect home ownership by an individual (even the landlord's rented property) is protected by the Constitution. I think if you start tinkering with the Constitution it would not be voted in by the public as there are more homeowners then renters in Ireland.
 

odyssey06

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What happens with commercial leases before and after 5 years if the landlord wishes to sell the property?
Are there any legal ways they can secure vacant possession?
 

Brendan Burgess

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What happens with commercial leases before and after 5 years if the landlord wishes to sell the property?
Are there any legal ways they can secure vacant possession?
The lease is binding on both. If the landlord wants to sell he can do so but with the tenant in place.

You will see a lot of estate agents signs around town advertising a property for sale with the note "tenant not affected".

They can't remove a tenant who is paying the rent.

I think that if they want to redevelop the whole property, they may be able to get the tenant out but would have to compensate the tenant for it.

Brendan
 

odyssey06

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If it's constitutional for commercial leases, then my initial "lay" reaction is that it would be constitutional if extended to landlord-residential tenant leases.

It will certainly complicate sales as once a property has entered the rental sector, unless the tenant leaves for other reasons before the sale is agreed, no owner-occupier is going to buy it. It will become 'sticky' as a 'commercial' property. That reduces the worth of the asset without any compensation from the state. But I'm not sure if that would be sufficient reason for it to be unconstitutional.
 

RedOnion

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If it's constitutional for commercial leases, then my initial "lay" reaction is that it would be constitutional if extended to landlord-residential tenant leases.
It's s completely different thing.
A commercial property with a 'good' tenant actually increases the value of the property, and makes it easier to raise finance.

In the residential market, because of the difficulty in removing a non-paying tenant, it devalues the property, and it's almost impossible to raise finance without vacant possession.
 

odyssey06

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It's s completely different thing.
A commercial property with a 'good' tenant actually increases the value of the property, and makes it easier to raise finance.
In the residential market, because of the difficulty in removing a non-paying tenant, it devalues the property, and it's almost impossible to raise finance without vacant possession.
I agree with you in terms of impact on values.

But governments have passed lots of legislation which impacted the value of properties e.g. banning bedsits.

I'm saying I don't know what in the constitution would allow the Supreme Court to treat them differently.
 

The Horseman

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If it's constitutional for commercial leases, then my initial "lay" reaction is that it would be constitutional if extended to landlord-residential tenant leases.

It will certainly complicate sales as once a property has entered the rental sector, unless the tenant leaves for other reasons before the sale is agreed, no owner-occupier is going to buy it. It will become 'sticky' as a 'commercial' property. That reduces the worth of the asset without any compensation from the state. But I'm not sure if that would be sufficient reason for it to be unconstitutional.
I don't think we are comparing like with like. A commercial property is normally leased to allow the leaseholder use the property to generate an income. Existing leases expressly deny the right to sublet or assign the lease without the owners consent. This is not the case with a lease for residential purposes ie the tenant is using this to live in.

I would agree that a commercial lease with good paying tenants does indeed increase the value of a commercial property. However with the current private residential landscape and the delays in removing tenants I would agree that the value of residential would be negatively impacted.

At least with the banning of bedsits it gave the ownership back to the owners to decide what they wanted to do with the property.
 

odyssey06

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I don't think we are comparing like with like. A commercial property is normally leased to allow the leaseholder use the property to generate an income. Existing leases expressly deny the right to sublet or assign the lease without the owners consent. This is not the case with a lease for residential purposes ie the tenant is using this to live in.
That relates to how the lease is used and I am sure it is important for taxation purposes etc

But as a layman, I don't see how it relates to constitutional protections re: sale of property. Does the constitution distinguish between property owned by a person or corporation for us in commercial leases versus residential leases? If it doesn't, I think it could be hard to challenge this on constitutional grounds.
 

Sarenco

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If I am renting a property under a one year lease can the landlord terminate the lease early to sell the property?
Yes. However, once the tenancy has lasted more than six months Part 4 kicks in and the tenancy can only be terminated on specific grounds, with the appropriate notice. In other words, Part 4 overrides the terms of any (private) lease agreement between the landlord and tenant.

Where a landlord intends to sell the property within 9 months of terminating the tenancy, a Statutory Declaration must accompany the Notice of Termination confirming this intention.
The lease is binding on both. If the landlord wants to sell he can do so but with the tenant in place.
The parties to a commercial lease are free to contract whether either or both have a right of early termination - it's not prescribed by legislation.
 

The Horseman

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That relates to how the lease is used and I am sure it is important for taxation purposes etc

But as a layman, I don't see how it relates to constitutional protections re: sale of property. Does the constitution distinguish between property owned by a person or corporation for us in commercial leases versus residential leases? If it doesn't, I think it could be hard to challenge this on constitutional grounds.
The constitution relates to natural person ie is a physical person. A company is a legal person but is not a natural person.
 

galway_blow_in

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Time will of course tell but i would suggest that the green party would be less negative for landlords than SF by a distance , the German model doesn't give rogue tenants immunity, the greens are not Marxist
 

odyssey06

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The constitution relates to natural person ie is a physical person. A company is a legal person but is not a natural person.
People own companies which own the properties. I dont see whether the rented property is owned directly by an individual or indirectly by a property company they own as changing things materially.
Do you forsee a ruling which allows directly owned properties to evict tenants before a sale but not indirectly owned?

Under what legal basis?
 

Sarenco

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Of course there is nothing to prevent the purchaser of a property with a sitting tenant from evicting that tenant as soon as the purchase completes.

You can't force the purchaser to take on the lease concluded by the previous owner.
 

Firefly

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Of course there is nothing to prevent the purchaser of a property with a sitting tenant from evicting that tenant as soon as the purchase completes.

You can't force the purchaser to take on the lease concluded by the previous owner.
Hi Sarenco,

What about transferring ownership to your spouse - would the spouse then be able to evict the tenants as the new owner?
 

The Horseman

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People own companies which own the properties. I dont see whether the rented property is owned directly by an individual or indirectly by a property company they own as changing things materially.
Do you forsee a ruling which allows directly owned properties to evict tenants before a sale but not indirectly owned?

Under what legal basis?
A company is a separate legal entity, its the co that owns the property and people own shares in the co.

The constitution relates to the right of the individual and property rights. As a co is a separate legal entity its the co that owns the property so is not covered by the constitution.
 

NoRegretsCoyote

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Banning things is silly. No tenant puts an infinite price on their tenancy.

If the Greens want to make it hard for landlords to sell they should just legislate for compensation to be paid to tenants (say a year's rent) for landlords who want to sell up.

I don't advocate this by the way, I just think that there is a better solution than bans.
 
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