Are renters their own worst enemies?

Are renters their own worst enemies?

Rental costs have soared in recent years with no signs on the horizon of that changing.

However, are private renters their own worst enemies? Possibly, according to DIT’s lecturer in housing and economics, Lorcan Sirr.

He says that competition between tenants is so fierce that they are now out-bidding each other on properties. This is driving up the price of some rental properties by as much as 50%, he claims.

“There is a lack of supply of accommodation for people to rent,” Dr Sirr told the Herald.

“Landlords don’t really set the price. Tenants are out-bidding each other for the price.

“Under the legislation we have in Ireland, rent can be increased to the market level, which is being pushed up by 30%, 40% or 50%.

“It is unaffordable for people and causes them to move away to other places and you hear of kids going to stay with their granny, etc.”

Dr Sirr says there is not enough being done for renters compared to the provisions in place for homebuyers.

“We are happy to control affordability for people in the home ownership category,” he said. “But we won’t do it in the rental sector, which is wrong.

“People don’t really have security of tenure for what I would call spurious reasons, like the landlord needing the place back for themselves or for a family member.”

Dr Sirr says the Government should introduce more measures for the private rented market.

“Rent certainty is a very good thing and there is enough extensive and detailed research from the OECD and the National Economic and Social Council to show it is good in any civilised society,” he said.

“Rent certainty should be linked to the Consumer Price Index for a period of five years.

“The first thing I would do is provide 100pc mortgage interest relief for landlords. The system we have at the moment is not fit for purpose.”

Opposition parties have called for the Government to increase housing supply and introduce more measures to help those in the rented market.

What are your thoughts on the matter?

  • Are rents their own worst enemies?
  • Would rent certainty help the market?
  • Is there any hope of rents falling or stabilising in 2016?

Have your say below…

There are 17 comments for this article
  1. Jac at 7:09 pm

    Landlords are really in trouble!

  2. Jac at 5:04 pm

    It seems tenant may have no choice in this matter other than to outbid each other but that does not make them their own enemies – they have to secure a place to live.
    Neither does the landlords have any fault on this issue:
    they are being crucified with unbearable taxes
    higher interest rate/repossesion and victimisations from banks,
    some tenants have made a habit not paying rent and moving when they are pursued.
    They law also requires landlords to pay for everything tenants requires in a house when they are renting, bar feeding them.
    This is a stupid regulation, especially the 2008 housing Act.
    Landlords are cut in the middle.
    In this scenario landlords have no choice but to increase rent whenever they can and by whatever mean they have.
    The problem is therefore not landlords or tenants but the stupid regulation and lack of investment from the government.
    Landlords are being penalised left and right while they are also carrying the burden for the government and tenants. By law it is government responsibility to house those who cannot afford to house themselves.
    Until a reasonable regulation is in place which is fear to the tenants and the landlords no solution will be found.
    It will be ebb and flow and tenants will be the loser on the long run.
    Solution:
    Allow tenants to provide their own furniture and let them take responsibility for internal repairs and repair of their white goods.
    Prevent rent allowance tenants pocketing rent and paying what they want (even PRTB couldn’t compel them to pay where they fall in arrears)
    Reduce the tax burden on landlords and treat private renting as any other business
    Provide a strong law against tenant anti-social behavoiur.
    Then create a tenure certainty law for tenants – no landlord renting a house on which he is paying mortgage or receiving retirement income will want to let tenant go – but in most case the economic reality is to evict a burdensome or trouble tenants.
    if these are done:
    There will be no need for control rent.
    There will be more investment in rental property making rent affordable (even where government is not willing to build – institutional investors will enter the market and supply will certainly respond to demand).
    Tenants will behave more responsibly when they are renting because they will have a stake in the property they are renting.
    Those on social welfare or housing allowance will be spared the burden and temptation of spending the money that is not theirs.

    Infact I can see fewer none professional landlords because it may not be a good investment for non-professionals, whereas the professional will be encouraged to invest in the market and the quality of rental property will also be better for it.

    At the moment one group is being set against the others by those law makers (especially those on the left labour, Sien Fein, and the likes) who thinks they know best – all they want is to use these issues to divide the people and win election (unfortunately they are also the losers).

    • Owen at 1:35 pm

      Does no one remember that there was rent control in Ireland since 1918…….it destroyed the whole rental market and landlords let their properties go to rack and ruin because it cost more to keep them than they got in rent…..it was a total disaster.

      • Jac at 6:27 pm

        Hopefully, the hypocrites pushing for rent control will remember this, learn from history and stop before destroying the markets and causing more problems for those they are purporting to protect.
        They are only biting the finger that feeds them!

  3. Owen at 11:20 pm

    I have 3 houses rented out…way below their market rent. Now the government talks of “rent control” by allowing only CPI increases…but from what base. The market rent for those is 1400 per month, 1100 pm and 1700 pm. They are currently 700pm, 700pm and 1100 pm respectively. I am now forced to increase all to market rent price. 2 are on rent allowance one is not. 2 will have to leave because they cannot pay the increase. However I am stuck…increase the rent and suffer further loss due to the proposed rent restriction. All 3 tenants are ok and have been there over 4 years, when I never increased the rent in that time.
    Why are the bedsits not reopened..the govt closed them down for such spurious reasons of sharing bathrooms… isn’t that what happens in hotels world wide >>> utter nonsense.

  4. Michael larkin at 9:23 pm

    I am a Landlord for quite sometime and all I can say is that if it was such a rewarding occupation why is their not more people entering it. It is a very capital intensive business. When we hear people crying out for more regulation it is generally to make matters more difficult for Landlords. When we have a media “hissy fit” looking for a bad landlord it is never balanced. Yes there are good Landlords (mainly) and bad Landlords and the same with tenants. I have not seen too many investigations showing up good Landlords and bad tenants. A bit of balance in the media and in the legislation might make it more attractive to be a landlord.
    If we keep bringing in more unbalanced legislation with an anti landlord bias we will have more landlords exiting the market. What then?
    I will be exiting the Landlord market within the next 5 years and even if I say it myself I have been a good landlord but I am now tired of it.

    • Jac at 6:35 pm

      it is easy to attack Landlords. They are the minority – that is what media and the hypocritical politician do. Show them the bad tenants and they will turn their eyes the other way.
      They are not the one who will surfer for the lack of accommodation – they are wolfs in sheep skin – only out to save their own skin – every progress in the society is bad for their career.

  5. PEADAR MACMILLAN at 8:49 pm

    TIRED OF HEARING FROM THE SO CALLED EXPERTS LIKE – LORCAN SIRR. WHO CAN BLAME TENANTS WHO ARE DESPERATE FOR ACCOMMODATION. IT IS ALL DOWN TO GOVERNMENT POLICY – LACK OF PROGRESSIVE POLICY OVER THEIR TERM. IT IS AKIN TO OBSERVING A FIRE BRIGADE OUTSIDE A FIREWORKS FACTORY AND JUST LETTING IT BURN.THIS GOVERNMENT HAS HAD ITS WATCH – HAS BEEN IN CHARGE AND HAS LET PEOPLE WHO ARE DESPERATE DOWN.
    I WONDER WHAT PERCENTAGE OF TD’S HAVE RENTED PROPERTIES, MAYBE EVEN NAMA PROPERTIES [ WAIT 5 YEARS ???] AND ARE DOING VERY NICELY, YES, THANK YOU VERY MUCH. WOULD BE WORTH INVESTIGATING, IF A JOURNALIST HAD THE TIME TO SPARE !!!!!
    COULD GO ON – BUT JUST RAN OUT OF STEAM – WHAT’S THE FECKING POINT – IT’S ALL SEWN UP ANYWAY.

  6. Liv at 6:59 pm

    Being a private landlord myself is tough, especially since I am renting out the property because the cost of it on my own is too much. Rented it to a family and it is luckily ‘just’ covering my lovely tax bill at the end of the years.

    Promised no rent increases and I an renting at the going rate for a 3 bed seni in a nice area. I never rented to house to make money an I do agree with a previous comment. Supply and demand comes in to play, not all provate landlords are out to bleed people dry and cover their own mortgage and then some… Also like that,, if I there were not as many private (decent) landlords then the rental market would be a lot worse.

    Renters are renting properties that, if the had the massive deposit for a home of their own, they would be better off and happier. It is what it is. Government policy is where the land lies ‘pardon the pun’….

  7. lohengrinperez at 5:46 pm

    To answer the question, no. Renters aren’t the enemy. The problem is offer/demand. There is plenty of demand, but few offer. People need where to live, so the outbid is because they don’t want to be living under the bridge.

    Landlords are the villains? I will answer, yes and no. Yes, because they played a part in this plot, trying to get rich. No, because not all the landlords are the same.

    Currently I’m forced to move out and search for another thing because my landlord thinks that 1700 for a 2 bed apartment in Dun Laoghaire is a very competitive rent.

    Is the Government guilty? Yes in a big part. Raising tax, doing nothing to control the rent raise, not providing solutions for building or helping to develop more housing. Not using the NAMA for a more productive goal: renting all the houses they have and with the money, finishing all the houses not finished, for renting then investing the money in new development, and so and so.

  8. Jayne H at 5:27 pm

    Rents have supposedly returned to peak levels but since the collapse in rents we have seen the introduction of Reits with top of the market rents and the development of expensive short term lets which are competing with the hotel sector and inflating the average rent figure. Does anyone really know the true recovery of rents since the collapse.

    The current debate among politicians and in the media is strangely silent on the banks who are steadily removing buy to lets from the sector via voluntary disposals, surrenders and receiverships.

    The current frenzied campaign by the main banks is pretty scary for the future supply of rented accommodation and it is being studiously ignored by the Minister for Finance and his colleague in Environment. It is easier to blame “the greedy landlords and developers”.

    These impaired loans have already been written down courtesy of the bailout. Now the tenants are being put out and the properties put on the market bringing profits back to the banks and guess what: “Bonuses for bankers in time for Christmas”.

    The tax payers have already paid the banks handsomely to allow them to write down these debts but the bankers still want more.

    Could we have a Nama for the landlords in difficulties and the government could take the properties, keep them in the rental market and let the investor away without the property but free of the residual debt to be allowed to re-join the economy as a functioning member.

    We definitely need to start building social housing and increasing the supply but the politicians need to take a stand and disrupt the current outflow of rentals from the market.

  9. stephenhamilton1 at 4:51 pm

    you cannot blame renters! Whats up with this economist? Its simply a case of supply and demand. What is it about supply and demand that this guy does not get?? Policy makers simply need to get off their bums and legislate to reduce the tax burden on Landlords and provide some certainty for tenants.

  10. Siobhan M at 3:52 pm

    The issues here are simple, supply and demand, if it wasn’t for the private landlords the situation would be much worse as their is a lack of supply of homes in the marketplace . This is purely lack of gov policy and a lack of willingness to actually put a long term project together. These new prefab houses being built shortly are a waste of money and in the long run will cost more. Lack of vision or care of the Irish population .

  11. Charles at 3:45 pm

    As a landlord and negative equity “owner” I’m frustrated beyond sympathy and highly suspicious of these headlines.. The real villain here is FG incompetence, their relaxed attitude to evictions and the tax grab.. All are fuelling this crises. One cause FG.. The unwillingness and incompetence of Enda the muppet. and his cronies. There is a smaller population in Ireland than in 2009 and yet there is a housing crises. 70 families a week lose their homes and there is a housing shortage. Landlord tax is almost the size of some mortgages and I will be working until I am 78 before I can break even and get out of this mess.. Go Enda..

    • Peter Grant at 4:27 pm

      I am Also a landlord I have provided a quality home for three families Just trying to meet my costs every month just a holding position for the last few years. Now I have a tax bill to reward me for my work. I just fell angry and frustated with the incompetence of the present government.

  12. Peter Heylin (@pheylin) at 3:42 pm

    To answer your questions:

    Are rents their own worst enemies?

    Short answer is No. Landlords have played there part in this also through seeking regular rent increases which forces out tenants because the place they could once afford quickly becomes out of reach.

    Would rent certainty help the market?

    Again, I would have to say No. Rent certainty alone is not the answer. It might control the maximum level that rent can reach, however this should not be introduced until such time as we see supply increasing to a satisfactory level.

    Is there any hope of rents falling or stabilising in 2016?

    In my opinion, not a chance unfortunately. The current Government seem to think ignoring the issue is a solution. Enda & Co think if they don’t look at a problem it will simply fade away. If the current polls are any indication as to how a General Election might go then we will have Enda & his cronies back in office for another 5 years of inactivity in this area.

    Ultimately, the solution as I see it is possibly a combination of carefully thought out rent controls and a big increase in housing supply.

    Anyway, that’s my two cents (oops make that 5 😉 )…

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