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RENTING FROM A private landlord now comprises a large component of the Irish housing market. In places like Dublin, Cork and Galway about one in three households are renting from a private landlord (plus another one in ten from their local authority). That’s over 635,000 private tenants. Not all are renting by choice, of course, but many are.
The rental market – and especially an efficient rental market – is increasingly important not just to house people, but also for the broader economy. Too much home-ownership (above 70%) is not good for an economy like Ireland’s, as among other things it diverts too much money into a volatile investment, and away from other potentially more productive activities.
Not keeping pace in terms of quantity or quality
A functioning rental market also aids economic competitiveness (especially for large FDI companies needing to attract good staff) and labour mobility. Of all the thousands of non-nationals working in Ireland, paying taxes, spending their wages, the vast majority are renting in the private sector. Despite being able to afford it, many don’t want to buy a property, as their careers regularly mean they are on the move, so they need to rent.
For other reasons, there are many in the private rented sector who have no choice but to rent. People who traditionally would have been housed by their local authority are – totally inappropriately – being directed towards private landlords. So the private rented sector is important here too.
Unfortunately, more landlords are leaving the business than are entering it, which is also unhelpful, as less of a supply will tend to equate to higher rents.
The problem is, the world is moving on and the rented sector as we traditionally know it is not keeping pace in terms of quantity or quality. The private rented sector needs to change, and here are some suggestions on how it might be done.
Suggestions…
1. Ireland needs more landlords. A decreasing supply of landlords is not a good thing. Currently nearly one in three landlords are seriously considering leaving the market, partly because their properties are slowly coming out of negative equity and they want to sell them (leaving tenants to find new accommodation), and partly because the taxation situation can be very punitive. It is important therefore that 100% interest relief on borrowings and the deduction of local property tax for tax purposes should be allowed, especially if the tenant stays longer than four years.
2. Ireland also needs new types of landlords to cater for people who wish to rent long-term in professionally developed and managed units (including family units) in which there’s no danger of being asked to leave because, for example, a family member wants to use the accommodation (see next point). Although there is the welcome emergence of such landlords here like Kennedy Wilson and Capreit, they are not enough.
In other countries this type of long-term accommodation is often provided by pension funds, and indeed some are compulsorily required to invest in rented residential development. Pension funds are prime potential for supplying the rental market and should be encouraged, facilitated and directed to do so. Irish pension funds will invest in this type of property abroad but not in Ireland, and they should.
3. The changing nature of renting – different types of people renting for longer – means tenants requirements are changing too: security of tenure is one such area where change is needed. There are two aspects to security of tenure, one of which is lease length, and there’s currently nothing to stop landlords and tenants signing leases of any duration they agree on. There other aspect is reasons for termination.
The reasons whereby an Irish landlord can terminate a lease are fairly similar in other countries, but in order to prevent abuse of these reasons (i.e. a landlord saying a family member wants to use the property, but really they want the tenant out so they can achieve a higher rent) notice periods should be double where the property isn’t being sold and where the lease hasn’t been breached.
4. Rents are the big issue for tenants, not just the amount, but also the certainty of knowing what payments might be. Whereas mortgage-holders are often also uncertain in knowing what their repayments might be, they are much more likely to not lose their accommodation in the event of it becoming more expensive. Rental increases should either be linked to an index (of which there are several to chose from) or market increases limited to no more than a 20% increase over three years. This would provide security of outgoings for tenants, and certainty of income for landlords. Despite the normal discourse about rents being controlled (and they are already to an extent), serious investors like this certainty of income.
5. With local authorities having abandoned building housing in the last decade (although it is due to restart), and forcing tenants into the private rented sector, the housing waiting list has become a factor in rents and the supply of accommodation. The local authority housing waiting list system and the way in which properties are offered to people on the list is outdated and an unnecessary burden on all concerned.
Instead, there should be one national housing waiting list with all properties across the country (not just in individual counties) available to see online and to be taken up by anybody on the waiting list, regardless of the local authority area in which they currently reside. This would help reduce duplication on the list, allow people to take up properties in areas in which they might never have been offered accommodation, and also facilitate better social and (hopefully) labour mobility. It would also take people out of the private rented sector.
6. The final point is about disputes (with some good news). Long the record holder, it is only recently that the issue of landlords withholding deposits has moved into second place as the most popular case for tenants to bring against landlords (rental arrears is now in top place, in case you were wondering). It is and has always been wrong that landlords hold the monies of their tenants, especially when in more recent times there are cases where the landlord has spent the deposit involved and simply doesn’t have it to return, which is, to my mind, theft.
A deposit retention scheme – whereby a third party holds the deposit – has been mooted in Ireland for at least 20 years but never materialised. At last, a scheme is to become operational and run by the Private Rented Tenancies Board. This is good news indeed, and if run as efficiently as proposed should resolve one of the major areas of contention between landlords and their tenants.
A new generation of renters
The private rented sector is very important to Ireland, economically and societally, and in the main tenants have a good relationship with their landlords (well, c.56% according to the PRTB). It is very complex area, and there is much to be concerned about and considered. The private rented sector needs to be able to cater for a different cohort or generation of new renters as well as the traditional type, and right now it’s questionable whether it is capable of meeting that challenge.
The challenge is, of course, a governmental one as none of the suggestions above will be put in place by either landlords or tenants, but by ministers and their advisors.
These are just my ideas – there’s plenty more to be found in PRTB’s report on the future of the PRS, available here.
Dr Lorcan Sirr is a lecturer in housing at DIT, and a renter. He is editor of Renting in Ireland: the social, voluntary and private sectors, published by the Institute of Public Administration and available here.
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Are landlords legally obliged to ensure that their tenants behave properly. Can they evict them if, for example, they are engaging constantly in anti social behavior?
Yes Michael it’s hard to get them out,I work in an apartment and the landlords don’t really bother if the rent is being paid on time and them living the other side of the county,
I think if you say you want to move in yourself it has a good case,even just to move
Them.
Or give them a months notice and arrive down with a few friends and pull them out of it.
“Of all the thousands of non-nationals working in Ireland, paying taxes, spending their wages, the vast majority are renting in the private sector.”
stupid comment that doesn’t help. theres a vast majority not working as well which goes on to explain this…
this…
http://www.herald.ie/news/over-half-on-housing-list-are-foreign-27973856.html
might also explain one of the reasons for the shortage yea?
might i add theres a vast majority of our own working and paying taxes, that are renting in the private sector because they can’t afford a mortgage deposit as it all goes on rent.
vast majority… pfff
Good informative article, thanks
The article unfortunately only really deals with the renters side. Landlords are leaving the market because there are better ways of using your assets than renting.
Landlords are heavily exposed if the renter doesn’t pay. It takes far too long to evict a non – paying renter while the landlord has to pay for the property all the while. This has to be speeded up.
Damage to property is often not covered by deposit amount. Only option to landlords is criminal charges or civil damage suits. Both high-risk, slow and expensive. We need a central tenant database for references and history.
The tax charges on rental income are 52% for most landlords. Yet rent-a-room allows you earn nearly €10k without tax. There should be a special tax band for payments received from assets as for most other business types.
While we pay rental income as personal income (see the 52%) we also have to pay capital gains tax if the property rises in value. Basically we get stuffed both ways.
Write-offs are not sufficient (only 75% of interest currently for example). Landlords contribute hugely to the economy but are treated low leaches by the tax system.
It’s not worth investing in. Shares are a much better option
I would add, if the landlord is a company, “unearned” income comes into play and the landlord pays 25% corp tax on rental profit. This brings distribution to s bareholder, after tax to about 37%.
That reduces the incentive for well run companies to get into rental provision.
What kind of savings are landlords making who don’t register with the ptrb?
Nothing about ensuring that all properties which are rented are of a state which is considered reasonable for people to live in. I would have thought that should be one of the top priorities.
The private rental ‘market’ is first and foremost a complete failure.
Yet again we see the underlying neo liberal assumption that ‘the market’ – ie private market – is predominently the best way to provide housing.
‘Labour mobility’ is apparently an unquestioned ‘good’ thing. For who Lorcan? Not usually for most people who prefer to settle and remain near family and friends.
Labour mobility is another one those Labour ‘flexibility’ things, like working whatever odd or unsocial hours that an employer wants (for no extra pay rate), the now very common short term work cotracts or even ‘zero hours’ contracts. (These are what’s meant when economists talk about the need for ‘structural’ changes, esp in the failing Euro zone – ie Labour must work for less money, while Capital continues to clean up.)
Much changed employment practices, over the last decades, that the neo liberal doctrine now wants us all to unquestionably ‘assume’ is always and everywhere ‘good’, or indeed, simply the ‘natural’ order of things.
In reality, near all the changes toward ‘Labour flexibility’ have been decidedly ONE WAY. In the interests of employers & Capital owners & +not+ Labour.
And after the neo liberal doctrine caused mess, the banking pyramid fraud crash, and gratuitous recession extending ‘Austerity’ following, we’re now being told that Landlords are leaving the rented housing market. The poor dears simply can’t make enough money off us.
Let me tell you why Lorcan.
With ‘real’ unemployment (shortage of jobs) near 20% (cf Dept of Finance & economists like Gurdgiev), much depressed real wages, there is only so much money you can squeeze out of the ‘market’, especially the newly enlarged low income end.
The Landlords leaving are the ones who jumped on the bandwagon of deliberately contrived housing scarcity, this last decade & thought they could make big rent and Capital gains for doing virtually nothing & owning virtually no Capital, but having access thru’ an old school regular job income to lots of bank loan mortgage finance. Nothing more in fact that another ‘Financialisation’ game of money extraction, for nothing productive in return whatever.
But Lorcan (and ‘Hairy Lemon’) still thinks we should all be assisting Landlords to get ‘a return’ even tho’ they paid absurdly high prices for houses, outbidding potential owner occupiers, note, and now are whinging because the economy was crashed by their fellow travellers in public office.
Talk about a sense of ‘entitlement’ !!
There is only one answer to the housing question and that is that the public sector needs to be a major provider of rented housing, especially at the low cost end of the market. And also ensure that the private market comprises proper professional property companies offering secure tenancies, not all the money for nothing jokers we have now.
I love the way Lorcan says ‘most’ tenants have a good relationship with their Landlords… then tells us it’s ’56%’…. well, that means that 44% +don’t+ have a good relationship… Would such a customer satisfaction figure be any way acceptable in any other sector of the economy?? Not at all.
And let’s just remember one thing, and the word that Lorcan and others conspicuously +never use+.
Housing is peoples’ HOMES. With very considerable wellbeing and social value to all of us, as a society.
People should have an adequate and secure HOME by right, not left to a patently failed ‘free market’ neo liberal scam for the benefit of a few Capital owners.
Have to say that is a good post Mike.
As a reluctant landlord, I had a tenant who played the “game”. His rent NEVER on time. Always an excuse (lost wallet, bank didn’t set up standing order etc) and then when these excuses ran out he became totally aggressive in that he complained this or that was wrong with the property. He was Given the “two weeks notice” letter for 10 months and would then pay it the day before that time was up. Every month there was something. It turned out he faked where he worked, wife didn’t have a full time job. Eventually when lease was up didn’t pay last month’s rent.. Left the garden like a jungle (took three of us 8 hours to clear it). I could not evict him has the laws would not allow me. It is a joke. My property was in good condition (new bathrooms) new carpets and curtains upstairs, newly painted and wooden floors downstairs. The laws need to be equitable for both tenant and landlord. Financially, if I could sell I would. I would advise anyone NOT to be a landlord. There are too many dishonest people out there and the laws DO NOT protect the landlord,it is all on the side of the tenant and until that changes there will be a shortage of properties on the rental market.
That sure is a long-winded post/ reply there Mike. Without making much of a point I might add.
To set the record straight I bought my rental property as my family home and lived in it myself for many years. Whatever price I bought it at I am still entitled to a return. Would you give your house or car or other possessions away for no return? I doubt it – so less of the high horse hectoring please.
To deal with your argument – such as it is. You envision a ‘market’ with only large players – the public sector and big business. You somehow deem it reasonable to exclude small providers – indeed calling them Jokers to boot on the basis that they have somehow managed to buy a property and rent it! In essence you are arguing for an oligopoly – that economic bastion of high standards and low prices loved the world over!
Let’s use your oligopoly argument across a number of other industries to see how it works…
Retail – only Tesco need apply. Mom and pop stores can go jump
B&Bs – no small setups please. Only large players allowed
Taxis – only massive conglomerates need apply. The little guy is a joker surely
Pubs – sure let’s have the same type pub everywhere – it’s what people want
Coffee shops – sure isn’t all coffee the same. What do you want wifi for!
It’s apparent your oligopoly model doesn’t workable in many industries and those industries with only a few large and powerful players tend to push prices up. There is no reason to believe it would work in the rental area either.
Finally – the state has no barriers to becoming a major player in the rental market – it is the largest landlord in the state after all. It chooses not to do so – preferring an open market approach. That makes the State the neo-liberal not those who operate in the market it creates.
Pile of nonsense & ‘straw man’ arguments from yourself there Lemon (apt name I think).
I advocated ‘professional’ private landlords… you added some fantasy ‘large’ to that idea & then doubled down with ‘oligopoloy’… ‘professional’ requires none of those… I guess all that comes from your own feelings of insecurity as a ‘small’ or ‘mom & pop’ landlord where your ‘sure thing’ of a few years ago has turned sour? So, no need for me to respond to the rest of your straw man drivel…. let’s just help you out again with the linguistic definition… ‘professional’ does not imply either ‘large’ & certainly not ‘oligopoly’… if you can’t manage to work that out, nothing I say can help you.
And what is this ‘State’ you speak of? Do you imagine it has had some magical ‘independence’ ? Perhaps it has inhabited Mars these last decades, such that it was entirely free of any Earthly corrupting influences & decided itself to adopt neo liberal doctrine?
No, Lemon, I think the rest of us, aside from the Capital owners like yourself (albeit small fry), have now realised that there has been massive collusion between public officials and the Capital owning classes, bankers, property developers and the rest, in order to have the ‘State’ serve their interests, not majority citizens.
Politicians are the sales people for the scams, sowing confusion & obfuscation to persuade citizens that if we look after the rich, the rest of us will benefit. (As we see, the opposite has resulted…) They are no where near smart enough to invent anything themselves… ‘Landlords’ Agents’ would be the right way to view the behaviour of the State thus far. We need that to change.
It makes me laugh when people like yourself think of yourselves as ‘investors’…. you are nothing of the sort… you are merely ‘rent seekers’ playing financial rigged ‘market’ games with existing assets. You bring nothing of value to the table of Capitalism whatever.
There is a worthwhile role for Capital owners. To bring some genuine entrepreneurial skill to develop and produce goods and services of real value to society.
But what has happened is that the Capital owners have captured the process of democratic government that is the only thing that has prevented them acquiring far too big a share of society’s wealth & trying to extract an ever increasing size of ‘return’, beyond the capacity of the ‘real’ economy to provide it.
So…the ever more bloated Capital owning sector has turned to mere ‘rent’ extraction – especially these last twenty years – where a whole new ‘Financialised’ economy has grown up, comprising financial frauds, scams & market rigging games, rigged ‘derivative’ markets etc. All with only one purpose – to extract ‘economic rent’ for nothing in return from the real, productive economy – in increasing amounts.
Of course, a moments consideration of the mathematics of this and one realises that it is a Pyramid scheme. Capital cannot continue to accumulate in greater & greater quantities and take an ever increasing share of society’s produced value. As we see, ‘real’ investment in productive activity itself is squeezed out. Collapse is inevitable, or at least reversion to some 19th century industrialised version of neo feudalism. The two classes become so sharply separated that Capital owners own everything & the rest nothing, merely working for some subsistence wage that barely keeps them alive. We’re well on the way.
But what do you care Lemon? You own a couple of properties, in asset wealth placing you among the top few percent. You are clueless about the macro economics of the situation but so long as your rent keeps coming eh?…. Can’t even see that all the small fish will eventually also be eaten by the big fish if we allow the present system to continue.
Deeply maxist nonsense there, the fact is socialist housing pushes up the cost of private housing. It’s easy to pick 1 or 2 overpriced apartments and claim the rental market is crazy. What needs to happen is far less red tape more lax planning laws and a removal of property tax. Why should people who have worked their lives to pay for the home of their dreams be punished, and subsidise welfare estates. Government interference in housing just increases cost, tax and anti social issues. Fact
Good, sensible article offering workable solutions. Number of other European countries operate some if the suggestions if they work thee why can’t they here. Particularly the national housing waiting list. Personally I am on the DCC waiting list. In 2 years time I will be retiring, at that point I would be happy to move out of Dublin. However there is no way I could get a corporation/council property so I will continue occupying space in Dublin which could be used by a younger working/studying person. As I will be on the state pension will probably not be able to afford decent private rented accommodation.
“Ireland needs more landlords”.
Sorry, I wouldn’t bother reading the rest of that article.
The last thing this country needs is more landlords.
We need professionals, not amateurs.
That is the problem – take a leaf out of the Germans book when it comes to renting.
@patlyndo…. define professional landlord please. What is an amateur in your opinion?
Certainly Hairy Lemon.
Many landlords are “investors” or homeowners who could not sell their properties due to NE – I think we can agree on that.
If you ask many landlords the reason for “investing” in property you will hear – “for my pension”.
That doesn’t qualify people to be involved in what is a business.
A professional organisation is one which takes investors money and uses it to buy up apartment blocks (as in Germany for example), they hire property agents and caretakers etc.. In other words, people who they employ to look after the properties purchased using investment money.
Investors then receive a return on their investment – you are either an investor or you are a landlord. When you combine the two, as has been the case in this country for years, then it simply doesn’t work.
When you rent a property abroad (as I have done) you rent it as is, in other words, minus furniture, with blank walls and floors and kitchens (there is a secondary market for used kitchens and you can pick them up at a very reasonable price), you are provided with an invoice (paid) for a redecorating company which is proof that the apartment has been redecorated prior to you moving in.
You must use this company (or an equal one) to repaint when you move out.
You can do what you want in your home for the duration of your tenancy – providing you leave it exactly as you found it.
You are responsible for repairs and other maintenance.
Your rent increases are capped, your leases much longer and you deal with the company only.
Your deposit is held by a third party and an independent person checks the apartment before you leave.
It is run in an entirely professional manner and tenants are fully aware of their obligations as is the property company.
Well said Patlyndo,the Irish market has always been run by five eight operators looking to make a quick buck.There lies the problem,no rent controls or security of tenure.This is a massive time bomb,the government or their senior civil servants need to regulate this.A friend of mine rents in Manhattan and all rent is controlled there,with tenants rights.
Providing rental accommodation is for many Irish landlords a cross between a cottage industry and a pension plan. To provide high quality properly maintained rental housing a change to large specialist and professionally managed property rental companies is needed. Also needed are secure leases, a standard rent increase / decrease formula, properly designed apartment blocks containing all the facilities offered in the best new development internationally, etc.
People wishing to invest in property can do so via property based investment funds.
Moving the non-working class out of the city centre would also free up hundreds, and possibly thousands of housing units for workers and students who currently commute long distances from the suburbs while the freeloaders sleep-in.
Completely agree Paddy. As I have previously said, I lived and rented abroad for a number of years, some in Germany and in relation to housing assistance – if you needed help with accommodation then you were provided with one option (not 3) as I recall from friends of mine who were in that situation.
They were offered a beautiful 2 bedroom apartment about 45 minutes to an hours commute to Munich, it had everything including a courtyard with a playground, near schools and shops. It was about a 10 minute walk to the bus-stop into the city.
They took it without question, no complaints, no big song and dance, when I asked them if they weren’t bothered by the distance – they said that it wasn’t ideal, but they had no choice as if you seek help with housing – then turning down the offer renders you ineligible – if you can afford to turn down an offer they you clearly aren’t desperate.
Their plan was to stay for a couple of years, re-train, find work and then move closer where they could afford to live.
It is truly bizarre that we have a situation in this country where those who cannot afford to live in the center – live in the center. The old “this is where the jobs are” is a complete joke if the person has been unemployed for years – seriously!
those in the centre can’t all afford it either, which is why you have 2-3 to a room sleeping in bunks… in the centre. students perhaps? workers perhaps? yea. short term too, revolving doors.
I have mentioned that Paudi – single people/students finding it difficult to rent due to floor on rentals. They group together and rent bigger homes to share.
There are people living in subsidised accommodation who’ve been on the dole for years walking distance from St. Stephen’s Green. Why would they bother working?
Exactly William Why would you be incentivised to look for work in the full knowledge that you won’t be paid enough to live in the city?
To hell or to Connacht, eh.
Only if you have to work to pay your own rent Doc…..
Jesus I read this and all I saw was “State Interference” , “State Control” and “State Regulation”. Some people really want the big Nanny state.
I do agree with one point, We do need long term rental options, but we also need to be building apartments that are family friendly, larger balconies, decent sized bedrooms and better sound proofing between apartments. A lot of the large apartment complexes here in Cork are now full of immigrant families, Irish people just don’t seem to like apartments for families as opposed to our Eastern European friends who most likely did grow up in an apartment.
Good points John and I’ll add to that. Rent Allowance has put a floor on rents, particularly apartments, as a result of this many single people cannot afford to rent and instead they join together into groups and rent 3/4 bed houses. This means LL’s can achieve higher rent as families can’t afford to compete with 3 or 4 single people they are forced into accommodation that is completely unsuitable for family living.
Good article. Don’t think I’d be wanting my pension invested in Irish property though!
Nice piece
Yes indeed – there are no homeowners in Ireland with unkempt or overgrown gardens – apparently when you buy a house you receive a free set of green fingers…. This mentality is so old and tiresome….
Good article. Let’s hope the ministers take the issues raised on board and we see some meaningful reform of the private rented sector.
In the 1870′s and 1880′s the land league campaigned for Fair Rent & Fixity of Tenure, seems we havent really moved on since then
Indeed Alan and look who the VI’s were then?
Good article. Let’s hope the ministers take the issues on board and we see some meaningful reform of the private rented sector.
Good article all right, but makes me think a little different, I would be against more landlords, more renting, in my opinion it takes away a community feeling, you can most cases end up living beside people who don’t care about the area, dont care about the house and grounds and leaves the are a looking run down, also for people they pay rent which is there hard earned cash gone and no return for them,
Although there is a very strong case for the economy, I think the cost would be to high with regards to people living in a community,
Yes your dead right. People only stay fir a short time and the gardens of rented properties usually stick out loke a sore thumb
The article says that high home ownership is damaging to the economy as it diverts capital from more productive investments and then goes on to claim that the pension funds should invest in rental properties. This is a glaring contradiction. I can’t imagine that private investors and casual landlords would make better more productive investments than pension fund managers. Second issue is that a mortgage is the only way for individuals to leverage their investment 4 times. If a private investor choses to invest in something else rather than a Euro 200k rental property he/she will not have Euro 200k to invest but 20-40k Euro which is the amount of cash the private investor has at their disposal. A rental investment turns the 20-40k Euro into 200k Euro over 20 years and provides an investment generating at worst a 5% return. This is as good as any annuity will pay. Lastly, yes you can do better than turning 40k into 200k on the stock market. But you can do a lot worse too. There are periods where stock market provided 400% return in a space of 2 decades but there are also periods where returns were much poorer in the same space of time.
have your say