When I was a kid, a German guy moved in down the road and his dad said something that summed up his disbelief at the way Ireland worked and it has always stayed with me.
One day, talking to my Dad at the gate, he shook his head and laughed “In Germany we buy our TVs and rent our houses; in Ireland, you rent your TVs and buy your houses.”
That was true, we did rent our telly. Everyone on the road did, yet most of the houses were owned. The few renters came and went and mothers would refer to these people as “only renting”.
This “only renting” attitude prevails today, 35 years later, and it is causing enormous insecurity for hundreds of thousands of people.
One of the many by-products of the latest housing bubble – which the State could stop tomorrow if it wanted to – is that more and more tenants are getting evicted. Landlords are calling time on leases either to get new tenants who will pay more, or to sell their property because they believe that this mini-bubble will end soon and now it’s time to cash in.
The narrative of greedy landlords and needy tenants is an easy one, but mightn’t be altogether true. Yes, there are “rogue” landlords, but there are also “rogue” tenants. There are also many, many bankrupt buy-to-let, part-time landlords who are up the creek. These people, largely boom-time buyers of second houses, will argue that they need to charge higher rents to make ends meet.
Although this argument is understandable from the individual landlord’s point of view, raising rent dramatically is not the same – from a societal point of view – as raising the price of a car or laptop.
A home is different. Most people should understand this.
The trauma of being evicted and the prospect of being homeless are terrifying. While there are some laws to protect the renter, one of the endemic issues in our country is the way in which social attitudes (as opposed to the law) overwhelmingly support the land owner as opposed to the person who gives the land its value, the renter.
After all, investment properties have no value if there is no rent. Rent is the stream of income underpinning the value of the asset. Yet the person who pays this rent is seen as dispensable rather than essential.
This societal bias towards the landowner runs deep in the Irish psyche and as a result, the renter is almost a silent victim – renters are still seen as implicitly second-class families in our Republic.
This attachment to a type of neo-feudalism, where land ownership equates to status, is bizarre in an economic world where what is between our ears – rather than under our feet – is the most valuable commodity.
The Irish land obsession is feudal and the very antithesis of the modern economy. Do you think Silicon Valley entrepreneurs, the people who are changing the world, are talking about property values?
But property and the bias towards landlords is unfortunately an enduring and backward facet of our society and not even the most spectacular property crash in the Western world has diminished it.
As a result, the plight of thousands of families who are renting and who feel insecure is largely ignored. These are our neighbours, their children are in our children’s schools, they are part of the community, yet they can be uprooted with deleterious ease.
By law, tenants can be protected for four years if they claim what is called a Part 4 tenancy. This means that technically a tenant’s tenure is protected for four years. The only problem is that although these tenancies are supposed to rollover, there is a loophole which allows the landlord to throw the tenant out for no reason within six months of the expiry of the Part 4 agreement.
However, due to social attitudes that supports the landowner, tenants who look for a Part 4 tenancy are regarded as “difficult’ and many landlords and leasing agents try to force tenants into a simple one-year lease. This is the reality and many tenants are living in limbo waiting for the landlord to deliver news of a rent hike.
Even with a proper lease or Part 4 Tenancy, there is no real security because there are still three ways the landlord can end a tenancy. He can sell or claim that he is keeping the place for a relative or needs to refurbish. These are “get-out” clauses for the landlord and they are being cited all over the place to get rid of tenants. In many cases, the refurbishment is an excuse to put the place back on the market in a few months at a much higher rent.
During the bust, when there was an opportunity to change the status quo, nothing was done to enhance tenants’ rights and now the recent spike in housing demand, particularly in Dublin, has translated into an increased sense of power for landlords.
The Private Residential Tenancies Board (PRTB) statistics show monthly rents have increased in all Dublin areas this year, with Dublin 9 the hardest hit, by an annual increase of 12.7pc. The average rent across the city has risen to €1,089 per month.
This is causing what I would describe as a “renters’ panic” as people try to out-bid each other to find a place to live, so much so that the experts think that rents will go up by 20-25pc in the next 12 months.
One way of preventing the sudden knock on the door would be a stipulation, which is the norm in Austria and Germany, that the landlord can serve a notice to quit but must give 12 to 24 months’ notice. When families are involved, this notice period should be much longer. The long-term solution is to build many more social houses – or council houses as they were known when I was a boy.
The State can borrow for 1pc right now. This is the time to finance a massive social housing programme. The private sector simply isn’t up to the job of providing decent, affordable accommodation.
Out-sourcing this social responsibility to a two-bit buy-to-let sector that is using housing and other people’s rents to top-up their pensions, is political failure on a monumental scale.
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Referendum
Many referendums are being planned next year and there are NONE to protect the rights of Home Owners or Tenants .
… and what about doing away with the pornographic, Page 3-type property supplements that appear in our newspapers each week and which appear to be driven by the hacks, answerable to estate agents, desperate to increase their fees?
David, many years ago you stated that property is the dominant “industry” in the formulation of much of state policy. And that it gets overly accommodated. Well, we are seeing the results of this. Firstly, anybody from Europe driving around suburban Dublin, would be forgiven for thinking that it is NOT a city. Because Dublin is too “vertically challenged” to be a European city. Very little of what is seen goes above a third storey. Never mind a sixth story. Even walking around places like Rathmines, that are in walking distance to the city centre, there is a distinct “lack… Read more »
Social housing – a chance for Joan Burton to find her inner Bertie Ahern.
The “something for nothing” approach to reviving a political operation that is suffering from an income crisis at local level due to all the failed councillors.
The way to deal with greedy landlords, is to increase the overall market availability of what they supply.
The problem there is that the banks and NAMA are on the same side of the equation as the landlords.
The Irish land and property obsession is a result of listening to, and believing the shite that other people, including your beloved parents, ram down your throat every day since birth. If you free if your own mind you won’t get taken in by the scams that this cursed place throws at you each and every day.
I was about to comment on one of these contributions when it occurred to they are all essentially the same, and can be summed as “I told you so”.
As pointed out above we all know the problems, what we need are ANSWERS.
Please folks, try and bring forth suggestions that we just might get the hopeless governors to implement, I assumed readers of David’s column would be thinking people, show it.
Do the government and newspapers cheer when the price of bread and milk rise 50% over a couple of years? What about the price of water? But property… is different here. A sort of madness sets in that we seem unable to shake. Government policies should reward a tenant/landlord relationship as a win-win business relationship rather than a class war. Landlords now see tenant rights, health & safety laws and taxes as burdens which they either hide from or pass on to the tenants. Recent rent rises are not signs of a healthy economy, they are signs that new property… Read more »
Our rent went up recently for the first time in 5 years by 20%, which I thought was reasonable enough. The landlord was very open about it, told us he is in negative equity, asked us how much extra we think is fair to pay, and to come back to him with a figure as he wants to keep us on as tenants. The part which is not reasonable is he told us the bank he has his mortgage with has been telling him he should be raising the rent every year and it already should be much higher, even… Read more »
I don’t think that the problem is “greedy landlords”. Many of them are up to their necks in mortgage debt. And presumably they are up to their necks in worry also. In fact to be honest, I think that anybody who gets into the business of being a landlord is bonkers. It is NOT passive income. In fact it is an enormous amount of hassle, for SFA money. A proper definition of passive income is a job in a pillar bank which is not releasing any money, and sitting on massive loans. Or maybe a handy job in RTE. Or… Read more »
Some simple answers: Encourage large institutional landlords to build and manage residential property – we need landlords that are not personally invested in their properties and can treat this as a professional business.
Strengthen the laws of tenure (especially for families).
Penalise land & building owners that leave property vacant or unbuilt.
Bring in a register of both Landlords and Tenants and fix the PRTB so that it can respond quickly to disputes.
Bring in an escrow system for deposits.
The one thing that has been found to negatively effect the availability of good affordable housing are rent control regulations. If we want more affordable housing then we need to supply more housing. It is elementary economics.
@ Mike Lucey – Change corporation and income tax to 25% in Leinster, 5% in Connaught and somewhere in between for everywhere else, if you want to watch Dublin empty?
At the national level, housing, like energy, is a cost. We need spend our limited resources on new technologies and services that improve the lives of the many. Which means marshalling all the resources we can in the direction of new technologies – housing is little more than a man-made cave.
Great article David. WE should stop calling it “social housing”.
David I think you miss two key points in relation to the regulation of private rental market under the Residential Tenancies Act. Pretty much all leases are for a fixed period, usually 1 year, but they can nonetheless become a Part 4 tenancy by writing to the landlord of your intention to convert it into one on the same terms as the original lease. This must be done between 3 and 1 months before the end of the fixed lease. I’m not surprised that you are not aware of this as neither are most landlords or even Estate Agents. Secondly,… Read more »
Most of the comments suggest more regulation from one source of government or another. Zoning bylaws are a problem as are urban/rural planners who design regulations to provide some form of “social responsibility”. Mentioned are the lack of highrise construction in cities thereby reducing the use of the existing land base. Anther is not allowing residencies where there is commercial development. foolish. Cities thrive when people live where they work and are not forced to commute to the suburbs. Commuters drive up the price of suburbia. Country land is sold with no residential rights (says who?) and this prohibits habitation… Read more »
An example of how rules and regulations imposed distort and change the market places. If you want the best results one should free up the markets and not try to control them.
http://uk.reuters.com/article/2014/08/12/uk-ukraine-crisis-russia-egypt-idUKKBN0GC1AF20140812
The worst example and the mother of all interventions is the central bank fiat money system.
All the proposals for regulation of the housing markets will result in political decisions to the benefit of few and the detriment of the majority.
Free up the market places, everywhere. (this does not mean political union but dispersion of or removal of centralization)
Hi, |What a naive article. You would entrust the same gobshites who made a mess of the place to build social houses which already proved when done in the 60’s to turn into miserable shitholes? “This attachment to a type of neo-feudalism, where land ownership equates to status, is bizarre in an economic world where what is between our ears – rather than under our feet – is the most valuable commodity” You misunderstand the dynamic. The house owner was to save himself by owing his house not become a feudal landlord necessarily which is why he is so driven… Read more »
Excellent post. It’s amazing how difficult we find it to emulate what works abroad. Ever get the feeling that our politicians don’t travel? And if they do, they keep their eyes firmly shut…
Give me a break with the anti-Dublin/Leinster bullshit. Forget decentralisation and move towards regionalisation on a county or provincial basis. See if Leinster continues to subsidize your road networks, hospitals, schools,postal service and every other public service. If it wasn’t for tax revenue generated in the Dublin/Leinster region most of the rest of the Country would have the same standard of living as Bulgaria. We had the cute hoor attempt at decentralisation already and look what that cost the taxpayer. If you want a 40 bed hospital in Kenmare or a casino in two-mile-borris no problem just pay for it… Read more »
Mike speaking of an Ecosystem unable to sustain itself what about the ridiculous enforced “Shannon stopover” when airlines were forced to landed at Shannon long past the time when this was useful for refuelling? What about set-aside and reps and farm subsidies which has us beholden to Europe? These and other gombeen antics slowed inward investment and the development of the Dublin region to serve the narrow political interests of the country and western brigade. Meaningful and enforced decentralisation sounds stalinist hardly in keeping with a democracy. Let’s have strong regional Government on a provincial basis and you’ll soon find… Read more »
Having rented for years, there is nothing better than owning your own house. Now in m 11th year, 14 more years and this is mortgage free, I must say there is no comparison. I used to manage and live in a 21 unit apt building and I can tell you that most renters dont give a shit. I have done a lot of repair work over the years in rental housing of various types and most renters are, in my opinion, second class. I always felt that way about myself too while renting, second class even though I knew I… Read more »
A few years ago our family faced a pickle of a decision, to continue renting in a location that had provided us with a good quality of life or to buy a rare-opportunity of a house outright in a location that offered little quality of life beyond the functional. Just to emphasise I don’t mean quality of life in a snobbish way, but the beauty of the environment matched with quality facilities. In all likelihood this was our first and likely our only chance of ever owning our own house. In money terms there was no logical argument, it was… Read more »
So let me see if I understand you correctly. I take out a mortgage for a buy to let and all the responsibilities risk worry and headaches that go with it. That’s my choice and my risk of course. A tenant agrees to lease the property for a defined period pays the rent and when the contract ends walks away. You want a tenant to have a share of the profits (if any) risk free without making any investment or having any responsibilities for the property apart from paying the rent?
Meanwhile in London, cooler heads have prevailed thankfully:
http://www.theguardian.com/business/2014/aug/15/london-house-price-boom-halted-amid-fears-interest-rate-rise
What an awful idea.
So what about Tesco’s then? How much should they give me for shopping there?
I see this kind of crap in San Francisco, where it is nearly impossible to end a tenancy regardless of the actual lease agreement. Tenant buyouts of tens of thousands of dollars are the norm in order to gain vacant possession of a property. San Francisco has the highest rents in the US, and one of the lowest vacancy factors.
Just when you think we have gotten rid of the three stooges, Hurley, Curley and Mo, you find an article by Charlie Weston in today’s Indo which outlines how the Central Bank of Ireland are using re-structured mortgages on tracker rates to misrepresent the true interest rate of NEW MORTGAGES. For those not up to speed on these matters the average variable rate for Ireland is 4.5% while basket case Cyprus is next highest in the Euro-zone at 4.4% and this at a time “with Germany charging an average of 2.49pc, and France 2.66pc.” “The figures show that on a… Read more »
How does this square with David’s pet thesis of owners “equity sharing” with the banks? How would the shock to millions of owner-occupied mortgage holders suddenly becoming renters, register on the social Richter scale? What would the “equity sharing” rental agreements say about evictions?
If the scale of renters’ panic we have now is “a political failure on a monumental scale” what would it be like if David had his way?