Are residential rents going up next year?

  1. Site valuation tax + Non Principal Private Residences tax.
  2. Lack of credit and people who qualify for mortgages.
  3. Higher cost of debt servicing for buy to let.
  4. No money left with other tax rises to subsidise loss making BTLs. (property is my pension)

Thinking about this how many landlords who are highly geared going to be able to stay in the market? Landlords who want to stay in business are going to need to adopt a new service charge structure in order to offset the costs of government taxation, water charges and management company fees.

Those factors are going to combine next year to force up rent prices in some parts of the country, mainly urban areas such as Dublin or Cork. Of course areas that don’t have a population to rent (section 23 estates) still won’t have any pricing power. On the other hand net emigration will continue until 2023 at least based on previous cycles, and unemployment will continue to grow as increasing taxation forces up costs. The increased unemployment and repossessions will drive more demand for rented accommodation at a time when the amount available for rental support schemes is being cut back and be divided among more people.

more demand less supply = price rises

Presumably what should happen in a normal market - in tandem with what OP describes - is that firesales and the attrition of transparency would reduce sales prices, which would mitigate the need for so many renters to enter the market (as more of them would buy instead).

But with the moratorium and the new guidelines on distressed mortgages, there is fuck-all pressure on sales prices so nobody renting sees affordability. Throw in that those on NE can’t budge, that there is political unwillingness to fix the market and unwillingness by banks to realise losses and all the pressure seems to be on rents and rental supply and none on sales prices.

The only thing that might change this is the IMF’s insistence that banks deleverage. That might force the issue I guess if they demand the banks start getting some money in. Indeed, that might already be locked into the agreement for all we know.

Ed: I can see this paralysis lasting years to be honest.

I think that emigration will shoot up after Biffo on the week in politics. So I can see rent continuing to fall.

I haven’t got a pile of statistics to back it up but I’d have to agree.

Some letting agents have told me they are recently able to tell prospective tenants looking for decreases to get lost.
Fellas in that game have predicted so many bottoms to the market you have to just nod and smile when they do it again. It’s rude to get into an argument with them on the fundamentals.

A big thing for me is whether the immigrants will stick around when the low paid get taken into the tax net. I was in a spar today and was being served by a young pakastani who I’ve chatted to a bit. I think they hire those guys from an employment agency. I bet Dublin in a depression beats Peshawar in a boom.

Immigrants are almost all renters so they have a big impact on rental market. And are the majority in my apartment building.

The issue here is not the supply of rentals. Its the supply of property. AFAIK there is plenty f it , to buy or rent

Unquestionably there is a lot of supply as regards property. But I think the demand for rental accommodation is increasing (repossession, lack of credit) while the highly geared landlords are being forced out. (taxation, higher debt servicing costs, higher service charges). In the short term this will increase prices until the banks are forced to start clearing inventory at market clearing prices (foreign takeover)

What about pressure on the demand side:

  • Higher taxes + pay cuts
  • Emigration
  • People not staying on in Dublin after college due to lack of jobs

Currently I rent an apartment on my own. The tax increases mean I will be considering my accommodation arrangements early next year. A rent increase would make my decision for me.

Given that the government is in direct control of half (if not more) of the rental market the short answer is “It depends on rent supplement”. If it gets cut in the budget then that’ll apply severe downward pressure on rents.

Other factors: People are going to get their taxes increased so they’re going to have an incentive to look around for somewhere cheaper to live.

The overall effect will probably be not much change in published rents but landlords will also find it hard to pass on their increased costs.

There are obviously pressures down (supply, emigration, possibility of rent suppplement being reduced, staying at home with mammy) and up (as described by BR above). I see stabilisation.

Unfortunately people are stuck with a perception that the property market can only be either booming or crashing. Any indication that it’s no longer crashing means it must be about to start booming!

I’m expecting a small increase in the demand for rental in the cities as the costs of commuting continue to increase over the income earned, the drop in minimum wages and it’s subsequence knockon to other low paid work will mean that commuting will soon no longer be an option for many low paid workers.

It’ll be a case of either giving up work or moving nearer to where the work is.

given the cost of running a car - let alone a second (household) car this might be significant - in areas with good transport - i.e. not all parts of the city

The question is whether there will be something concrete in the budget with regard to rent allowance.

The IMF plan does talk about some sort of limit to welfare to include rent allowance -

merrionstreet.ie/wp-content/ … gramme.pdf

Yep,rent allowance is the big factor. Budget wiil decide what way rents will go.

Is rent allowance a matter for the national budget? Haven’t changes been announced to it in the past outside of the budget process? I seem to remember a reduction announcement last Spring.

i thought they were leaving it unchanged for a single person and marginally cutting the rates for couples with kids, families etc. i think the minister, O Cuiv?, said it would save 20m a year. it’s unacceptable they way the Govt runs the rental market in this country, total intervention in many ways.

Extra cost on landlords should not increase rents and here’s a live example to illustrate - A working colleague of mine has a brother with 9 rental properties mostly in Dublin but a couple on the out reaches. All are currently let to the HSE who ante up €850 pm for a 2 bed apartment. Agreement specifies that the tenants cough up €150 pm. Total rent is €1,000.

Dilemma is that in 2 properties at least , the tenants are not paying anything. Not only that , they are now extorting €100 pm from the landlord to stay in his property. Failure to comply with their demands will result in them vacating the property and simply moving to another HSE supported apartment ( no skin off their nose…right ? )

If it was me I’d help them pack but he reckons that it’ll cost him at least €2,500 if they vacate ie repainting , possible refurnishing , no rental income for at least 2 months and 1 month’s rental value as a finder’s fee to the letting agency.

Lowering property prices will tempt buyers out of the rental market which maybe offset by those wanting to rent due to foreclosures but where possible most individuals will move back to Mammy (temporarily of course) and live rent free.

I would be looking for my previous "finders fee"for the current blackmailing incumbents they installed…if it were me these chancers would be gone and their extortionate behaviour reported to their case officer.

That is a problem with Irish laws, there is no protection from landlords and they can be blackmailed by any tenant. It is too easy for those chancres to move out. Just like property owner need to go and register with PRTB, every one looking to rent should be chipped and tracked with GPS in case they would want to make a run. Let’s be frank, moving tenants just destroy the market. Do not even start me on negative equity, there is a lack of elementary justice that renter can stay in house and yet do not take a slightest responsibility for NE.