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The much put-upon landlord… September 22, 2016

Posted by WorldbyStorm in Uncategorized.
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I’m indebted to JP here for pointing in the direction of Karl Deeter’s column this last weekend. As JP notes:

There’s a tremendous piece from Karl Deeter lurking deep within the SBP. It concludes that landlords are unfairly maligned and are only making the price of a pint if they’re making anything at all. And also that it’s bus drivers who are the real rentiers we should be worrying about

Lurk it does. Deeter (quite apart from the risible, though predictable, line about bus drivers)complains about:

A common narrative, in particular among the often misguided political left in Ireland, is that landlords are fundamentally greedy and desirous of breaking the backs of the people they house i order to enrich themselves.

But… but…

That the same group can’t spot obvious rent-seeking behaviour in the unions they tend to align with is worth contemplating the next time you can’t catch a bus to work. the meme exists by taking one bad landlord, any tragic story of that landlord’s client, and then extrapolating this across the entire rented sector while being oblivious of virtually other factor at play….

And so we are treated to an outline of the costs that are incurred by landlords.

Though before that we are also offered this nugget of wisdom:

It’s worth noting that even if, as a nation, we do a near-perfect job of housing, we’ll still have homelessness and other problems. There have always been bad outcomes in housing. It doesn’t mean we shouldn’t strive to minimise them. But ‘conquering’ the problem has been elusive in all of human history. All of it, no exceptions.

Makes you think, dunnit? The Irish housing market in 2016 is to Deeter a problem – essentially the same problem – as insoluble as that of the tenements in the early 20th century or that of the time of the Penal Laws or indeed all the way back to Babylon where no doubt a landlord pondered the sheer intractability of solving the housing ‘problem’ there in 2300 BC. All of it. No exceptions.

Yeah. Okay. Anyhow.

He offers us the example. An example based on the assumption of a landlord getting €1,200 a month who ‘wants to fraise the rent to the extent that the tenant says they have to move out’. But the landlord – who Deeter assumes is so evil they don’t care about a tenant leaving has a mortgage and taxes and upkeep as well to pay.

Rents taxed under Schedule D, Case V, mortgage interest, risible (to him) offset rates against income, tax return costs, property tax, and on and on. They ‘jack up the rent’ to €1,400. They must advertise for new tenants (hmmm… really? Really? That’s a big problem?) and letting agency fees. Vacancy between tenants. Etcetera…

Costs that leave said landlord with a net profit of about €5.77 per week. That’s all they make.

And yet, and yet, I couldn’t help thinking that quite apart from the rather expedient example given – and the one-off nature of some of those costs, if that were indeed the case then why on earth would anyone go into buying accommodation to let? What selfless folks these landlords are. Sure they’re practically a social service in and of themselves. And… really, those incredibly high rents… well, what can they or anyone do (particularly in a time of incredibly low interest rates – natch!).

Meanwhile back at the Residential Tenancies Board there’s a rather different story playing out…

The Residential Tenancies Board (RTB) has seen complaints over unfair rent hikes increase by almost 70pc in the space of one year as tenants struggle to meet the demands of international rental agencies and private landlords.
There has also been an increase in the number of illegal eviction cases the agency dealt with during the same period.

But…

In 2014, the RTB dealt with 185 disputes over rent being higher than the market rate.
This jumped to 313 cases last year and already 66 disputes have been lodged in the first three month of this year.
However, housing charity Threshold says this is just the tip of the iceberg as most tenants do not lodge disputes with the RTB.

Which makes sense. Not least because…

The charity believes there is a lack of awareness among renters of their rights and they also fear taking on rental agencies which have lawyers and economists to back up their claims.
It has also emerged some rental agencies are breaching the strict new tenancy rules and issuing rent increase notices outside the timeframes set out in legislation.

Well I never.

And the article linked to above makes a very important point too…

Mr Large [Threshold Dublin Coordinator] said the “big players” in the rental market “lawyer up” when rent disputes are lodged with the RTB which puts the average tenant at a huge disadvantage.
“The intention when the legislation was being drafted was maybe of two equal partners sitting down over a latte and a cappuccino and discussing the terms of how they are going forward but I don’t think it’s built for the current market conditions,” he said.
Figures supplied by the RTB show an increase of almost 20pc on the number of disputes lodged with the agency in the first three months of 2016 when compared to last year. Six out of 10 cases are lodged by tenants, while landlords account for 40pc of the disputes.

Not all landlords are bad. Most are okay. But there’s sufficient to cause serious problems for individuals, and this is no delusion of the ‘often misguided political left’. Indeed there’s a much broader perception of same societally than our somewhat thin ranks. Though it serves Deeter well to presume that such a critique is restricted to those of us who follow that line.

But again, why rent out a property? Well this useful column in the Irish Times suggests to a person who is toying with buying a new home and renting out the old that it comes down to mortgage position and how much they owe their lender. Moreover:

…you need to look at your personal circumstances. Do you have the time to devote to a residential investment? Are you satisfied to take a long term view on the return? Are you comfortable with the risk associated with the investment?

That…

The rental market is quite strong at present and with interest rates at such a low level, the attractiveness of keeping and renting the property is appealing. Whilst the Central Bank rules have caused certain problems in the residential property market, one positive outcome is the likelihood of less volatility in future and more sustainable increases in property prices. Coupled with consistent demand for rental properties in Dublin, “keep and rent” could well be prudent. Any investment decision requires careful consideration and obtaining proper professional advice.

Isn’t that a surprise given what Deeter writes. And an equal surprise is that companies, let’s pluck one from the net at random, such as mortgagebrokers.ie still offer “investment” mortgages to people who want them. Indeed there’s a whole section on their website that offers mortgages to Irish investors… indeed as seen here they take pride their work. And good for them.

But surely that can’t be right, not if the costs are so great that the humble landlord makes next to nothing. Can it? Surely there should be warnings placed on any such ‘investments’ given that said investor is going to wind up with the price of a pint per week – at best – for their troubles?

If only Karl Deeter was in a position to send out that warning to all and sundry. To push back against this wretched process which leaves landlords with next to nothing.

But wait, who is this who works for this same mortgagebrokers.ie that seems to see mortgage as a solid investment?

It can’t be… one K. Deeter? Can it?

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