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MOST PEOPLE TRY to hide away from the housing crisis. Who would want to let anyone know that they have moved back in with their parents as an adult or that they have had to move their children into emergency accommodation?
But log into Facebook any day of the week and the housing crisis is likely to start appearing. It might be in the Renters in Dublin groups, where people post looking for a room, their tone becoming increasingly desperate as it becomes obvious they are willing to take anywhere – no matter the conditions.
Or it could be in the indignant posts shared from Daft.ie of advertisements offering to share a bedroom with three strangers for the sweet deal of €350 per month, living under the stairs, or on a bed that has to be folded away to get to the kitchen.
The problems faced by tenants
According to Census 2011, 18.5% of households in Ireland are now tenants in the private rented sector. Recent research published by the Private Residential Tenancies Board (PRTB) in its report on The Future of the Private Rented Sector shows that 52% of tenants plan to stay in the sector. Even the current Government’s Housing Policy Statement 2011 recognises the role the private rented sector will continue to play.
All Mod Cons? is a photo exhibition brought together by We’re Not Leaving, illustrating some of the problems faced by tenants: illegal deposit retention; homes not meeting minimum standards; lack of security of tenure; and rent increases.
Understanding the problems of the private rented sector is a vital first step but it is also important to ask what can be done for the private rented sector. Our research set out to answer that question and we discovered that plenty can be done.
One possibility is the introduction of rent control.
‘Rent controls’ v ‘rent freezes’
Public debate on regulation has been somewhat lacking, with many media outlets seeming eager to reproduce uncritically the PRTB report conclusions that rent controls wouldn’t work in Ireland. Some commentators and journalists who dismiss rent controls as being counter-productive are actually talking about rent freezes, when rent is not allowed to increase at all. Rent freezes were made famous by their complicated effects on New York City. However, it is disingenuous to discuss rent freezes as rent controls when no one is suggesting a rent freeze.
The PRTB’s report, Rent Stability in the Private Rented Sector, concluded that rent controls would not work in Ireland. But when the report is interrogated even a small amount it becomes clear that the PRTB tested for rent controls in the worst possible scenario; they worked on the assumption of the introduction of rent control with nothing being done to increase supply yet even the most unconnected of governments would not do that. The PRTB also asserted that rent would increase once the market was deregulated again. An obvious solution to that is just not to deregulate.
Critics of rent control rightly point out that when rent is controlled within tenancies, rent is often ‘frontloaded’ and new tenants lose out to sitting tenants. This is why we suggest rent control between as well as within tenancies.
A more stable private rented market
We’re Not Leaving is suggesting something different to the situations the PRTB investigated. ‘Second Generation’ rent controls have been tried and tested around the world from Belgium to Ontario. Ireland could follow the successful model used in Germany, where rent is capped at 15% over three years. This country could also take into account models where the initial rent of a new lease is regulated. In the Netherlands, for example, initial rents are based on a points system, with points gained for square meters, area, local amenities, etc.
Rent control can lead to a more stable private rented market. It’s not just tenants that benefit. Advantages for landlords include the security of income that comes from having rent control, and lower transaction costs because tenants stay longer and have more security of tenure when not faced with economic evictions.
Rent control alone cannot solve the problem. It must be introduced alongside the long-promised deposit protection scheme, increased security of tenure, the enforcement of minimum standards, and a response to the issue of supply by the State. With the PRTB’s finding that 29% of landlords want to get out of the sector as soon as possible, it is obvious that we cannot continue to rely on private landlords to solve the lack of supply. The necessity of State intervention is made even more clear in the PRTB’s finding that 32% of households in the private rented sector are in receipt of rent supplement. The Government must look to all possible mechanisms, including social housing and housing associations.
We cannot continue to watch the private rental sector spiral out of control, and out of reach for far too many people, creating havoc in communities and the economy. It is time for a real, informed and un-prejudiced public debate on regulating the private rental sector.
Aideen Elliott received a Master in Anthropology of Development from SOAS, University of London in 2013. Áine Mannion read for a Master of Studies in Global and Imperial History in 2013. Both are organisers with the We’re Not Leaving campaign, which can be followed on Twitter using @WNLireland.
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Christ for all our sakes don’t let this government near it just be yet another mess made of it
In my entirely unqualified opinion, imposing rent controls may suit existing tenants but surely in the long term it will discourage investors from buying properties to rent out, this adding significantly to a housing shortage
Rent controls are very unlikely because a big percentage of those in government are landlords themselves, turkeys voting for Christmas, some ”emergency funding’ will be put in place to enable people pay the exorbitant rents to said government ministers etc this is ireland after all.
Miguel, rent controls will prompt investors to pay less for property as they will be able to figure these controls into their calculations when buying.
But buy-to-letters are in competition for the same properties with would be owner occupiers. If supply is short, the owner occupiers will outbid the landlords, which reduces the potential supply of properties for rent.
BTL’s are in competition home owners because of the inflated rents which is caused by the limited supply.
If rent controls were introduced then this changes the yield potential for the investor.
Investors buying now are looking at yields and the inflated rents increase the value of the property.
Home buyers are forced to buy because renting is too expensive, it’s not secure and this creates the competition which forces prices up.
We have to change the way we do things and while the rent control will not fully solve the problem, it will stop landlords from increasing rents every year by extortionate amounts.
That has to stop.
What about the problems faced by landlords. Ever increasing government charges are eating away at any profit I might make.
So basically ed you just want the situation to continue where you can raise your rent by any amount you want every year, because it’s ok to stick every increasing landlord charges onto tenants – but you object to the same treatment by the Government?
You cannot put up rent any amount every year in Ireland. Max is 10% above market rate.
If you want to bring in other European models you need to bring in the same type of landlords which is large companies own the properties rented. You can’t have one without the other. The reason they have this is due to massive free money and tax incentives after WW II. We have small private landlords providing the majority of rental property here.
That is the situation we have, any moves to change this would be a form of a land grab. Punishing individuals for running a business that allowed the government to shirk their requirements to provide housing
No Kal, that is incorrect, that would imply that there are already rent controls in place in this county. Landlords can increase the rent once a year and there is no cap on that increase.
Yes, if we want the same model as other countries then we have to have the same type of landlords so in order to attract them we need to make property investment attractive and one of the ways to do that is to decrease the value of investment property.
Doing that would attract private investment and in turn reduce rents – this will drive the small time landlord out of the business.
Nope you are incorrect if you think your landlord rent is above the market rate you can go to the PRTB. They allow 10% variance on what they accept as the market rate.
Nobody has the right to force small private LL out of the market. The constitution stops such things. Upward only rent on business premises is the big companies do when they get control.
Proper fair regulation is needed. Tenants that don’t pay their rent should be removed in reasonable time. It takes over a year at present.
That’s incorrect. Maximum increase is to the market rent, once a year.
Was replying to your first post. Upward only rent reviews (for commercial leases only) are now banned in new leases from 2009. I’m not sure if the PRTB would admit to that 10% variance.
Patlyndo is wrong when he says there is no cap on the increase – increases are capped to market rent.
Kal, Landlords can increase their rents by higher than 10%, if you are not happy then of course you can take it to the PRTB – but before you do this you can check out rents in your area, so if your rent was 1,000 last year and your landlord looks for a 20% increase to 1,200, when you look on the market you will see that properties coming on the market is now 1,000 plus 10% or 1,100 euro, so as you say, if the PRTB allows for a 10% variance, then 1,200 euro falls within that.
The same thing will happen next year and the year after until this practice is allowed – it is not “the market” it is the continual hiking of rents – or price gouging – that is what is causing rents to increase, the supply issue exacerbates it as tenants have no choice and landlords are putting new properties up at inflated prices, making it impossible for tenants to move.
Proper regulation includes preventing Landlords from engaging in price gouging.
Lorcan,
The point in upward only rents was regulation was needed and big business will not solve the problem. They in fact are worse if not regulated.
Things do need to change but further rent caps isn’t the solution. All for a deposit holding scheme but LL also need better protection against non payment. One bad tenant get bankrupt a LL
Lorcan please see my post – there is NO cap on rental increases.
@patlyndo
You described rent control. 10% on a market rate is control versus being able to put it up 200% or more. You originally said LL can put it up ‘any amount’
Rent control is not rent freezing.
You may not like rents increasing but there is at least some control.
More extreme rent controls and freezing have not always worked without other regulation. It allows property to deteriorate when the rent doesn’t cover maintenance costs and can be seen in New York. Go look it up
@Kal – a landlord can increase his rent by any amount in a year. There is no “cap” on what a Landlord can seek – I have already explained to you that if a tenant does not like it then they can take it to the PRTB.
No-one is talking about extreme rent controls or freezing rents, it’s about capping increases to a max percentage in, for example, a 3 year period.
There is no control over rental increases by landlords.
Re Newy York, nobody is advocating rent freezes or any extreme rent controls, maybe if New York had taken tips from Germany – then they may not have that problem.
You simply are ignoring what is in place is rent control. What you want is rent control with a cap. A landlord cannot put it up by any amount there is a limit. It is completely disingenuous to be repeating yourself.
If market rates are up the max the PRTB will allow on top is 10%. That is rent control. That is nowhere near saying the max it can go up is 10% but it limits the increase therefore not ‘any’ amount of an increase is allowed. Repeating it doesn’t make it true.
Patlyndo, see the legislation: rents are capped to market levels. How market is defined etc is a different issue in itself, but rents are certainly capped.
Act here; 19.—(1) In setting, at any particular time, the rent under the tenancy of a dwelling, an amount of rent shall not be provided for that is greater than the amount of the market rent for that tenancy at that time.
(2) The reference in this section to the setting of the rent under a tenancy is a reference to—
(a) the initial setting of the rent under the tenancy, and
(b) any subsequent setting of the rent under the tenancy by way of a review of that rent.
40% increase. I could find you more examples if you want.
There is no rental increase cap, there is no “max” 10% limit.
If I move into a property today and pay 1,000 Euro and in 12 months rents increase by 15% for example – then my landlord – using what you are saying – can increase my rent by 25% and still be within what the PRTB “allow”.
I have explained this clearly to you twice now – to no avail.
You are trying to maintain that there is a 10% increase cap on a market rate that is heading upwards.
Totally false and misleading argument.
Ridiculous actually,
10% cap on a market that increased by 16% last year….
Lorcan- that is not worth the paper that it is written on.
What was the “market” rent last year?
What is the “market” rent this year?
Last year if it was 1,000 Euro, then this year it’s 1,160. If (as Kal) says, the PRTB allow a margin of 10% then the landlord can increase your rent from 1,000 to 1,276 per month, or an increase of over 20% in a 12 month period.
A rental increase cap will insure that rents cannot increase by over 15% from the date you rented the property for at lease 3 years.
You and Kal seem to have a huge difficulty in understanding what a rental increase cap is.
Citing legislation regarding market rents actually confirms the fact that there is no cap in place.
Market rent determined by ESRI index. PRTB do not allow 10% leeway.
I know very well what a rent cap is, and I know what rent control is, and I know what rent certainty is. A rent cap could also ensure that rents don’t increase by more than a certain percentage each year as well, or more logically by a figure over four years, which is the lease cycle in the Residential Tenancies Act. There are loads of options.
Market rent is not determined by the ERSI index – the index measures the price changes, it does not “determine” the market rent, rather it reports it.
I did not say you didn’t understand what a rent cap or rent control was, I said you seem to have difficulty understanding what a rental increase cap is – you then clearly explain what a rental increase cap is – while still calling it a rent cap?
This is the option that has been identified as a viable one.
Re: The PRTB, I only took a look at D.11 for the purpose of this example – a 3 bed semi on the PRTB rent listing is 985.34 – the DAFT report shows rents for 3 bed properties in D.11 asking 1,142.
It’s behind as soon as it’s published.
The reality is that the there is no sign of rents stabilising as there is no new supply projected for at least 3 years.
People are faced with increases for those years – for certain.
1,000 euro in 2014 – could, even with 10% increases, mean increase of over 30% in that period.
That’s unsustainable for many tenants and it is devastating for the economy because that is money that won’t be spent in shops, pubs, hairdressers – imposing a rental increase cap, even as a temporary measure, would go a long way to stabilise the market.
What is happening now is price gouging, nothing more and nothing less.
The issue is a supply problem. DCC and their limits on building height and protecting the “character” of slums like the south circular are the other problem.
It’s stay at home or move abroad for me.
The salary/rent ratios make it impossible to maintain a decent standard of living in Dublin.
Where is the building? Instead of chasing us for water the government need to be encouraging affordable, sustainable housing by any means possible.
I pay almost half my wage every month on rent in a dangerous area where if it didn’t mean the immediate loss of my deposit that I couldn’t afford, I’d break my lease it’s gotten so bad. It’s almost certain ill have to pay another 100 euro a month from when my current lease expires. Plus utilities, plus bills, plus ad hoc expenses I come out with very little disposable income at the end of the week and for a 25 year old I’m doing great compared to some friends who can’t envision moving out of their parents house this side of thirty.
We need to stop fretting about the landlords and future development here because the current system and disgusting price gouging of landlords today are impoverishing a generation into ensuring that anyone who rents now will never be in a position to save for a mortgage and owning of properties in the future will be solely for the wealthiest of society.
Wow that’s dreadful, who made you rent in that terrible area?
Landlords don’t simply increase rent because they want to, there are many valid reasons for doing so.
Very few if any landlords operate their business as a charity, they do it like anyone else with a job, to earn a living.
The costs involved in acquiring and maintaining properties are the same for everyone, therefore to place significant impediments in front of landlords which diminish their return will only cause them to invest elsewhere and compound the burden on the state.
Rodney – tell me the valid reasons why Dublin rents increased by over 10% last year?
The costs involved are costs that investors should factor in before they buy – unfortunately many “investors” during the bubble never factored in that rents would fall or that extra costs could be introduced, they had no cushion and now they are trying to make hay while the sun shines at the expense of tenants.
Many landlords are unable to repay loans taken out and are putting money to rents received in order to break even. They are using tenants like cash machines, many refuse to do repairs, upgrade property – because they don’t have the money.
Again, they never factored in these running costs.
I have to laugh when I hear – “its supply and demand” from landlords and yet when it’s pointed out to them that if the value of their investments may go up and down – this is conveniently ignored.
Painting all landlords with the same brush. Sigh.
Tell me how to calculate costs on a 25 year investment when the government keep adding new costs every few years.
What LL did was made a loss and when the demand increased the price went up and still might not cover costs or the debit incurred. There is why rent went up and is was very predictable. Any business will increase its price when it can when costs go up.
.. exactly. Even at current rates – which is still less than in 2000 – the rent doesn’t even match the mortgage before costs and taxes. So for now private rental is actually subsidised by the LL. To the tune of 400 a month in our case, plus taxes and costs. And it’s 100k in negative equity. If you’ve an issue with that you can direct your energy at Govt, not LL ….If we pull it off the market instead, then that’s more people for the social housing waiting list. Right now private LL are covering for failed Govt policy.
@John, go ahead and pull your property off the market – please.
Let’s see what happens – or will you pay the entire loan yourself?
The fact is that it is your bad investment that is being subsidised by both the tenant and the taxpayer
The value of your investment can go up as well as down.
So as I said – pull your property, let the bank take it and sell at the market rate, revert your NE to a personal loan and move on…
What’s that????
No – I didn’t think so……….
@Kal –
Investment::
“An asset or item that is purchased with the hope that it will generate income or appreciate in the future.”
It’s up to the investor to factor in what may happen, fall in rents. void periods, non paying tenants, damage to property, increased charges.
Unfortunately many investors borrowed massive amounts of money and based it on the presumption that rents would only go up and that incentives in place to make investment more attractive would never change and if they did then it would be to the benefit of the investor.
That is why investors are repeatedly told – the value of your investment can go down as well as up.
The issue is supply.
I don’t believe in any rent controls. Renting property is like buying anything else. If demand is much bigger than supply – prices will go up. There is no way to stop it, but providing more supply. So what if you cap rent increase at whatever percent per year. Landlord can find reason to end your contract and get someone else in – if he can sense he can get easily much more money than legally from you. There are so many ways to bypass the system. And the fact something works in Germany or Sweden does not automatically mean it will work here. There are many others “Irish specific only” factors that affect it. Transport for once. In Germany you could live 100km from work and get there in an hour thanks to superb public communication links and motorway system. In Ireland you would probably need half day in the morning to travel 100km.
Lol – “Ireland is different” – where did we hear that before?
Ah yes, wasn’t this the mantra that everyone used when the warnings a property crash started coming from everywhere – that kind of narrow minded thinking is why we are where we are and why we are going to suffer another recession in the coming years.
Everyone should do the government a favour and move back in with their parents hahahaha
Remove rent allowance and the social welfare created crisis will disappear
That has already proven to be not the case. Rent allowance was capped and rent keeps rising. Less and less property is available for RA and the main cause of homeless families as they don’t want to move away from the area the grew up in, friends and family.
Rents allowance was capped because the alternative was for the state to chase rents upwards and what would happen then?
Landlords would continue to raise the rents.
Less and less property available for RA because there is no rental increase cap in place to stop landlords from hiking rents by any amount that they choose – take the example I linked you to, the rent was hiked from 900 euro a month to 1300 euro per month – if rental increase caps were in place then maybe the family could have negotiated with the landlord – but – the landlord knew he could gouge more on the private market so he hiked it out of their reach.
For anybody affected with a housing issue, in need of permanent housing ect we are here to help. https://www.facebook.com/pages/Public-and-Private-Tenants-Union/825342917530448
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