Reports: Government will retain rent controls for existing landlords but lift them for new investors
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Sister Sara
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Just to answer some responses to my previous post.
There is no magic bullet here. My reference to landlords releasing one property back into private owner-occupier was not meant literally each landlord, one property, although I can understand how it was read that way.
Basically there are some 2m plus dwellings in the State and if I'm on the right track here, about 700,000 of those properties are not owner-occupied.
If 100,000 of those properties were put up for sale for owner-occupancy, then I would suggest that that element of the market will be resolved at least for the next year or two.
But what about those that are renting those properties? Good question. I would suggest, albeit I dont have stats to hand, but commonsense would suggest that a significant cohort, half, even more, of the rental occupiers would actually prefer to own their own home.
So...suggestion 1 - offer an incentive for landlords to relinquish at least one property, but more if they wish, from their portfolio back into owner-occupancy. Landlords could sell for full market rate, plus a nice government sweetner. The tenant would be given first preference to buy. If they can afford the rent, most likely they can afford the mortgage.
If the tenant does not want to buy, then that particular property is invalidated from the scheme. With such a supply of owner-occupier properties coming on stream house prices increases would surely stall?
And with so many former tenants now out of the rental market, the remaining stock will be closer to meeting the demand.
The problem as I see it is that Ireland owner-occupancy has reduced from 80%+ to 60%+ over the last 2 decades. In effect what is happening is that prospective landlords and prospective owner-occupiers are competing against each for the same property. And when the landlord wins the competition it doesn't disappear the owner-occupier demand, it merely transfers it into a tenancy demand with the underlying demand for owner-occupancy still there.
There is no magic bullet here. My reference to landlords releasing one property back into private owner-occupier was not meant literally each landlord, one property, although I can understand how it was read that way.
Basically there are some 2m plus dwellings in the State and if I'm on the right track here, about 700,000 of those properties are not owner-occupied.
If 100,000 of those properties were put up for sale for owner-occupancy, then I would suggest that that element of the market will be resolved at least for the next year or two.
But what about those that are renting those properties? Good question. I would suggest, albeit I dont have stats to hand, but commonsense would suggest that a significant cohort, half, even more, of the rental occupiers would actually prefer to own their own home.
So...suggestion 1 - offer an incentive for landlords to relinquish at least one property, but more if they wish, from their portfolio back into owner-occupancy. Landlords could sell for full market rate, plus a nice government sweetner. The tenant would be given first preference to buy. If they can afford the rent, most likely they can afford the mortgage.
If the tenant does not want to buy, then that particular property is invalidated from the scheme. With such a supply of owner-occupier properties coming on stream house prices increases would surely stall?
And with so many former tenants now out of the rental market, the remaining stock will be closer to meeting the demand.
The problem as I see it is that Ireland owner-occupancy has reduced from 80%+ to 60%+ over the last 2 decades. In effect what is happening is that prospective landlords and prospective owner-occupiers are competing against each for the same property. And when the landlord wins the competition it doesn't disappear the owner-occupier demand, it merely transfers it into a tenancy demand with the underlying demand for owner-occupancy still there.
Shock horror - sophisticated investors dont want to get into an investment that can go upside down in an inflationary environment like we had what only 30 months ago.....very strange behaviour from them.
I sincerely hope that whatever RPZ changes come....that at least the link between rents and CPI (at minimum) inside RPZ tenancies are restored....as matter of minimum fairness to existing landlords....never mind institutions who only need five minutes and a quick look at the IRES stock chart to see how capital is treated when sunk into bricks and mortar projects in Ireland.......when you do the below to international capital that has options to go elsewhere....well they remember and I dont think these changes are enticing enough for them to kinda forget how the rules of the game we're repeatedly changed at their expense over successive governments....and it wont be lost on them that this current coalition did it and they are considered Ireland's centre right free market party! kinda scary as you think about where to put capital to work in the ground in various jurisdictions.....Ireland becomes a kinda of easy pass IMO.
Rented properties are occupied, and generally well occupied, it doesn't create any stock.
I rented for 9 years. I actually wanted to buy only on the last 2 of these years.
Sister Sara
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Exactly! So why is there such an emphasis on getting landlords into the market when they do not actually create any stock? They simply compete with prospective owner-occupiers for the same property.
Simple example: There are 10 new houses for sale, with 10 bidders, all prospective owner-occupiers (OwO). No demand for rental, no landlord.
An 11th bidder enters the scene and successfully outbids one of the prospective owner-occupiers. All other 9 houses are bought by OwOs
Now there are 9 OwO's and 1 rental property. Because there is 1 prospective OwO without a house, it creates a demand for a rental property that, fortunately, our 11th buyer is willing to let to the prospective OwO, now tenant.
The tenant hasnt given up their dream of being an OwO. So now the market has 10 houses, 9 OwO's and 1 tenant, with also the demand for more OwO festering.
A developer may think of building an 11th house to meet the demand but the tenant cannot save the deposit as they are effectively paying a higher amount in rent. So the developer holds off.
Because there is a demand for rentals. Last time I put an ad, I received nearly 200 emails in an hour. People who can't buy because they don't have the income or savings, people who have just started working, young people who want to live as couple for the first time, young workers, students, people who have just separated, nurses who have arrived in the country... Not everyone wants to buy as soon as they leave school and reach 18.
Now the government want to attract investors who can finance developments because no financing, no building. Particularly of apartments.
Sister Sara
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Exactly!
I'd imagine so. And 30yrs ago landlords held a much, much smaller portion of the housing stock. Maybe 15%. Today it is around 35%.
I doubt very much that landlords hold 35% of the housing stock. There are currently 240k registered tenancies. It is probably safe to add at least another, at a guess, 50k unregistered ones. Per the 2022 Census there were 2,125 million permanent dwellings in Ireland so 290/2125 is about 14%. If you use a percentage of occupied dwelling it is about 16%.
A total of 2,124,590 permanent dwellings were counted in Ireland during Census 2022. This is an increase of over 120,000 units (6%) between 2016 and 2022. The number of occupied households increased by over 150,000 (9%) to 1.86 million while the number of vacant dwellings fell by over 16,500 (-9%) to 166,752.23 Jun 2022
Just curious about the 500k, the current RTB figure is around 240k. Does the 500k include AHB and social housing? I don't think they'd be included as properties owned by PRS landlords.
I do not think there would be many investors/landlords bidding on new properties at the moment giving the media/ public sentiment towards landlords.
It doesn't make sense financially and giving the political outlook for investors to enter the market
The balance has tipped too far against entering the market.
As an investor you are going to be playing against the wind for a long time into the future.
It doesn't make sense financially and giving the political outlook for investors to enter the market
The balance has tipped too far against entering the market.
As an investor you are going to be playing against the wind for a long time into the future.
Yes
Correct - and that’s with the most favorable political coalition in control of government (FF & FG)….all other political combinations will be worse….the current situation already has a poor risk reward profile for landlords….and all the likely political alternatives are worse….this is not the macro backdrop that is going to stimulate further external investment in housing.
The way things are playing out it looks this government is going to have to pull domestic household savings into the sector as well as huge commitments from the fiscal….very sad to see….we are about to as a country go “all in” on property again….when external capital I.e other people’s money (OPM) is out there to de-risk things.
Sister Sara
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Perhaps. I would have to include State authorities in that stat too.
CSO
The rate of owner occupancy has fallen by over 50,000 units since 2011 to 2022. That is alarming in a growing population?
Rent from a private landlord has increased, but I would suggest in line with overall population growth
The occupancy rate of 'Not Stated' has trebled.
'Not Stated', emergency occupation?
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I would tend to agree especially with these new 6 year tenancies. If you have one, there is danger that there will be a rent freeze and an eviction ban in place when it ends and God only knows what changes will have been put in place in the meantime. At least with the current system, if you really don't like what is going on you can evict and sell, you could be very easily trapped with the new proposals.
From the IT:
“The changes to the RPZ system would be accompanied by enhanced protection for renters in relation to security of tenure amounting to a minimum of six years.
There would be a restriction on no-fault evictions during this six-year period – a measure that will require legislation”
From IT: https://www.irishtimes.com/politics...-new-builds-in-planned-pressure-zones-reform/
Sounds like there will be two sets of rent rules for RPZ lettings.
1) All existing properties stay at 2% max increase for existing tenancies but can change to market rates for a new tenancy or every six years. Will these new market rate tenancies in existing properties still be at 2% increases?
2) New build properties from X date will allow increases in line with inflation. The new build tenancies will also have restrictions on no-fault evictions for a six year cycle.
Reading through all previous posts but can’t get a handle on how the six year rule will work. Probably a stupid question but will the termination restrictions apply to all tenancies once they move to market rates or will there be two sets of security of tenure rules depending on when the property was built ie.,
1) Tenancies with the 2% rent rules (existing properties) will continue with the current termination rules.
2) Tenancies with the inflation rent rules (new properties) will have the 6 year restricted termination rules.
“The changes to the RPZ system would be accompanied by enhanced protection for renters in relation to security of tenure amounting to a minimum of six years.
There would be a restriction on no-fault evictions during this six-year period – a measure that will require legislation”
From IT: https://www.irishtimes.com/politics...-new-builds-in-planned-pressure-zones-reform/
Sounds like there will be two sets of rent rules for RPZ lettings.
1) All existing properties stay at 2% max increase for existing tenancies but can change to market rates for a new tenancy or every six years. Will these new market rate tenancies in existing properties still be at 2% increases?
2) New build properties from X date will allow increases in line with inflation. The new build tenancies will also have restrictions on no-fault evictions for a six year cycle.
Reading through all previous posts but can’t get a handle on how the six year rule will work. Probably a stupid question but will the termination restrictions apply to all tenancies once they move to market rates or will there be two sets of security of tenure rules depending on when the property was built ie.,
1) Tenancies with the 2% rent rules (existing properties) will continue with the current termination rules.
2) Tenancies with the inflation rent rules (new properties) will have the 6 year restricted termination rules.
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@Sister Sara
I think it’s a dated view that renters are just people waiting to buy.
Obviously a percentage are but I don’t think it’s that simple.
If 100k owner occupied property were put up for sale tomorrow. Where would the buyers come from?
A good percentage of buyers would be living at home. Those will be the ones with the deposit saved.
A house share that has 4 to 6 people. That will be bought by one of the couple.
People who had been thinking of moving back to Ireland will buy some.
It’s a fact that the people per unit is lower in average in owner occupied than rentals. Make that instant shift and you will displace more people.
While difficult to compare because of different controls it seems clear to me that it is the rental sector which is in crisis. One of the highest in Europe and right up there with Sydney, Vancouver etc.
The cost to buy is high but no where near the prices you see in Sydney and Vancouver. However both just get packages under housing crisis.
I think it’s a dated view that renters are just people waiting to buy.
Obviously a percentage are but I don’t think it’s that simple.
If 100k owner occupied property were put up for sale tomorrow. Where would the buyers come from?
A good percentage of buyers would be living at home. Those will be the ones with the deposit saved.
A house share that has 4 to 6 people. That will be bought by one of the couple.
People who had been thinking of moving back to Ireland will buy some.
It’s a fact that the people per unit is lower in average in owner occupied than rentals. Make that instant shift and you will displace more people.
While difficult to compare because of different controls it seems clear to me that it is the rental sector which is in crisis. One of the highest in Europe and right up there with Sydney, Vancouver etc.
The cost to buy is high but no where near the prices you see in Sydney and Vancouver. However both just get packages under housing crisis.
Sister Sara
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Well its important not to paint everyone with the same brush. That is why I highlighted that
i.e - not all renters.
Sister Sara
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I was talking about 100K rental properties.