tenant asking for a reduction of €200 rent

[minion]

Why does everyone think banks arent lending anymore. They are.
People should Just go into the bank and find out if they can borrow money.
And not just assume they cant because they read it on the interweb.
Radical, but simple.

 

[murphaph]

Of course banks are lending but it is not easy and the buy to let mortgage is particularly hard to come buy. They have been burned and are now lending much more conservatively. That's all I'm saying. Even if the banks were lending-are there enough buy to let landlords out there to take all the properties off the hands of the ones going under? I doubt it myself.

We'll see what happens I suppose. We're already seeing posts from BTL landlords facing negaitive cashflow and talk of selling up is on the increase so it won't be long before we see if other landlords are buying property up.

 

[johnfás]

Well at least make a counter-agument. If rents a depressed beyond a landlord's mortgage, he'll be forced to sell, fair enough so far?

Your statements above don't represent what happens in a market. It is quite simple really:

1) If you don't drop your rents in line with the market you will not get a tenant in the current climate.
2) If you don't have a tenant you will either have to fund the mortgage entirely yourself or if you cannot the bank will eventually repossess the house on your default.
3) The bank will seek to sell the house, as is its duty under the law, however given that it is near impossible to do so in the current climate it will probably just rent it out to someone at near market rent until such time as it can make a sale.
4) Upon sale given the decline in value vis-a-vis the mortgage you granted to the bank over the property it is unlikely that you will receive anything under the legal right of redemption.

That is the tough reality of a market.

 

[noel_c]

If tenants keep forcing rents down when they can in fact pay the going rate then lots of landlords who are leveraged (not me thank god) will be forced to evict their tenants and sell up.

Not to be critical but the "going rate" is not some abstract figure that is completely independent of the rental market. If no tenants will pay the figure you have in mind then it's clearly not the "going rate".

Your argument is akin to Superquinn complaining that some people are now shopping in Aldi when they can in fact afford to pay more for their groceries. In reality increased competition in the rental market and other economic factors are forcing rents down, not some concerted campaign by tenants.

 

[zxcvbnm]

You can reduce it so much but tenants have to shoulder the burden of this recession too.

Murphaph - i disagree with this statement.
Given that you are a landlord this appears to be a very subjective comment rather than objective.

You say a landlord should only reduce it 'so much'.
This strikes me as a notional value.

How is this notional value determined ?
The free market determines rental prices. Nothing else.

The rental market is a free market - driven by supply and demand.

This whole notion of we must all chip in to shoulder the recession with respect to rental prices is naive.
Tenants are quite rightly asking for rent reductions.

If landlords have to sell then so be it. That is the nature of a free market.
And if this in turn affects property prices then so be it also. This is also a free market.

Property prices should not be artificially supported - and least of all by tenants on behalf of landlords which is the inference of your statement !!

I really am unsure what you are suiggesting?
Are you also suggesting that when landlords were making a lot of money in the boom years through capital appreciaion that they should have capped rental prices ?
i.e. when times are bad for tenants you think they should help the landlord by shouldering some of the loss. So therefore are you suggesting the opposite should apply when times are good?

So should the landlord not increease it appropriately when times are good in return? DId that happen in the past?
I think not.
And i am a landord also by the way.

You seem to have inconsistincies in your argumenmt. It doesn't make sense.

It's all about how the cookie crumbles.
Right now the cookie is crumbling in favouir of tenants as demand is not as strong as it was and therefore rents naturally fall. That's the inherent nature of a free market - a market that no one forced you to partake in.
There are losers and winners in every recession.

This whole shouldering-it-together attitude does not apply in this instance.

You made your bed - you have to lie in it !
I think you have to dip your toe in the real world murphaph.

 

[murphaph]

I don't think any of you saw the bit where I said I'm not heavily leveraged. That is, I have no large borrowings on my rental property. I'm not making this point out of fear-I will be one of the ones who survives this and holds on to their rental properties.

Johnfas is the only person touching on reality and his point is based upon banks becoming landlords. I don't see this happening. I see cheap homes to FTBers who have been able to stay at home and save the deposit the bank now wants for a mortgage.

I'll reduce the rent when I believe my tenants can find alternative accmodation fpr substantially less. I'll keep doing it until my competitors sell up and number of rentals falls and then I'll increase it again.

 

[minion]

In fairness, if you charge the right rent you will let property. You certainly cant overcharge and expect to let your property.
A landlord is in competition with other landlords to let and a tenant is in competition with other tenants to rent.

Simple as that and nothing any of use can do about it, but make sure we are giving value for money.

I'll reduce the rent when I believe my tenants can find alternative accmodation fpr substantially less. I'll keep doing it until my competitors sell up and number of rentals falls and then I'll increase it again.

That comment is bang on the money i think.

If its not attractive for the tenant to move somewhere else, then no need to reduce the rent at all. If someone wants to pacify them then make them an offer where they both win. Like the one i suggested about a refund after 12 months. They get a reduction but must commit to 12 months to get it. You both win.

If it becomes economical for the tenant to move then a landlord will act on it.

 

[Mommah]

hi there

tenant has asked for a reduction in 200 rent as he has lost his job His wife is still working. This would mean rent now below mortgage. Also this is mid lease? any thoughts. . Not fully convinced he has lost it either , could be just a ploy to get rent reduced. its a one bed apartment city centre.
Could he leave mid lease?

I was in similar situation and tenant asked me to drop rent to by €150pm
I said I couldn't, so I put it on daft at my asking price....no responses, I dropped price incrementally and started getting lots of calls at €75 drop. I offered it to original tenant at this level but he had made other plans.

So I'm still €900 pa up on what he asked for although down €900 on what I was getting.

 

[blueskies]

its strange you know, there seems to be a spread of prices on daft for my exact property type and location now. A week ago, a landlord reduced the going rental rate for my type of property property down by 150. Hence I guess the sudden request from the tenant to go down the 200. So to be fair I guess , he is right on the ball now, redundany or no redundancy. Thing is I have been following daft quite closely and properties have been renting quickly(within two-three weeks max ) at the higher price. I rang the letting agent, and said that the rental price of this property was 150 lower than other properties of the exact same type and she said that it was under the instruction of the landlord and that she knew it was lower than others in the area.It rented within 3 days she said. Be careful of the snowball effect of reducing rent un neccarily. Sometimes it appears that rent is lowered not necessarily by the dictates of the current market but by the expediency needs of one landlord. And this then effects the rest of us as we start getting emails etc from our sitting tenants!
Is there any reasons out there why landlords would reduce rent artifically. The letting agent said it was because the landlord in this case financial commitments allowed it. Im just wondering would the 75% restriction on mortgage interest relief encourage certain landlords not to be too concerned about their income dropping on the other side in order to minimise tax liability? Just a mad question I know but just a thought that occured

 

[sam h]

Is there any reasons out there why landlords would reduce rent artifically. The letting agent said it was because the landlord in this case financial commitments allowed it. Im just wondering would the 75% restriction on mortgage interest relief encourage certain landlords not to be too concerned about their income dropping on the other side in order to minimise tax liability? Just a mad question I know but just a thought that occured

My attitude would be that is is better to have the place rented than vacant. The rent is determined by the market & what they are willing to pay rather than what your financial commitments are (as mistake often made when people are taking out mortgages on investment properties). And at the moment there is a glut of property so the tenants are in a position to negotiate.

There is no point in having a place vacant at €1200 for 2 months if a drop of €100 would have the place rented within a few days.

The other landlord may not have a mortgage on their property so may be in a position to be more flexible with their rental income.

I know of one landlord who advertised at €1400, when the market could only sustain €1200 - they were convinced that ideally they would get the higher rent & at worst they could negotiate downward. Place was vacnat for 3 months & in the end could only get €1100 as things had adjusted in the time - so they were really €3600 down as they probably would have had no problem shifting the property at €1200 in the begining. Renting is different to a "stock held" business as with stock you can always sell (albeit at a loss) & recoup some of your investment. You can't get back time!

 

[minion]

its strange you know, there seems to be a spread of prices on daft for my exact property type and location now. A week ago, a landlord reduced the going rental rate for my type of property property down by 150. Hence I guess the sudden request from the tenant to go down the 200. So to be fair I guess , he is right on the ball now, redundany or no redundancy. Thing is I have been following daft quite closely and properties have been renting quickly(within two-three weeks max ) at the higher price. I rang the letting agent, and said that the rental price of this property was 150 lower than other properties of the exact same type and she said that it was under the instruction of the landlord and that she knew it was lower than others in the area.It rented within 3 days she said. Be careful of the snowball effect of reducing rent un neccarily. Sometimes it appears that rent is lowered not necessarily by the dictates of the current market but by the expediency needs of one landlord. And this then effects the rest of us as we start getting emails etc from our sitting tenants!
Is there any reasons out there why landlords would reduce rent artifically. The letting agent said it was because the landlord in this case financial commitments allowed it. Im just wondering would the 75% restriction on mortgage interest relief encourage certain landlords not to be too concerned about their income dropping on the other side in order to minimise tax liability? Just a mad question I know but just a thought that occured

I had a tenant point me at an apartment on Daft that was €200 cheaper than what i was charging him. He said he would move if i didnt drop the rent. I decided to call next day to see if it was still on the market for that price or at least find out how long it took to let.

Guess who answered the phone. He did. The idiot had put his own number in the add.

I suppose he might as well chance his arm for €20. I was kinda impressed with the sheer boldness (it was brilliant really aprt from the mess up on the phone number), but the rent stayed the same.

 

[Mommah]

Not all landlords are in the same boat however.
I have turned down 6 tenants for rent reductions so far...only one has moved on and I got a tenant who was willing to pay €75 pm more than he was...without any vacant periods.

A reduction of €150 pm is the annual equivalent of €1800 to me.
Given that my paper profit on this property last year was €1250 its very significant. (By paper profit I am not including the negative cashflow caused by capital repayments)

So landlords should bargain back and not roll over and play dead.
The tenant isn't going to hold his hand when s/he has to deal with the banks.

ETA: one tenant actually had the gall to say that the increased cost of living was driving their request!
Huh...do they not watch the news...cost of living is dropping!

 

[Caroline4262]

Hi Tenants are looking to reduce rents as a 'chance their arm' approach.

Our tenant lost job and is looking for Social welfare Rent allowance to pay,so we have dropped rent by €100 to meet halfway. We were then told we needed to have a letter saying we are the owners too. So we wrote a letter and both signed it. This was not accepted by the SW probably due to the fact that they have copped on to the fact that people have bought houses and are renting them out to their girlfirend or boyfriend (actual parnters) who have different surnames and are getting SW to pay. Now the real legitimate landlords are being asked for an official document to state ownership......i.e a solicitors letter!! More cost. Fair enough if they are catching these fraudsters out but the legitmate landlords are now incurring more costs!!! Anyone else being ask for this letter and if so how did they solve it?

 

[minion]

Hi Tenants are looking to reduce rents as a 'chance their arm' approach.

Our tenant lost job and is looking for Social welfare Rent allowance to pay,so we have dropped rent by €100 to meet halfway. We were then told we needed to have a letter saying we are the owners too. So we wrote a letter and both signed it. This was not accepted by the SW probably due to the fact that they have copped on to the fact that people have bought houses and are renting them out to their girlfirend or boyfriend (actual parnters) who have different surnames and are getting SW to pay. Now the real legitimate landlords are being asked for an official document to state ownership......i.e a solicitors letter!! More cost. Fair enough if they are catching these fraudsters out but the legitmate landlords are now incurring more costs!!! Anyone else being ask for this letter and if so how did they solve it?

Get the PRTB to write you a letter.