Sunday 22 September 2019

Tantrum from landlords ignores need for reforms in rental sector

Fintan McNamara from the Residential Landlords Association. Photo: Mark Condren
Fintan McNamara from the Residential Landlords Association. Photo: Mark Condren

Paul Melia

It is hard to know whether the threat by landlords to withdraw from State rental schemes and pass on a raft of charges to tenants is posturing, or a reality the Government will have to face.

Housing Minister Simon Coveney's rent control measures outlined this week, which are expected to become law before Christmas, have certainly raised the hackles of the Irish Property Owners Association (IPOA), which has 5,000 members across the State.

It said some members have threatened to withdraw from State-sponsored rental schemes, despite in many cases signing legally binding leases with local authorities. It has also proposed charging a payment to collect keys, imposing service charges and registration fees, obliging tenants to pay for parking and documents, and even asking tenants to contribute towards the Local Property Tax - which the Revenue Commissioners have said must be paid by owners, and not those renting.

The IPOA's claims that its members are "hard-pressed" and "victims of the newest onslaught on the sector" ring hollow. As far back as 2009, it was saying the same thing, yet the number of people renting and the amount being charged has since increased. The fact that tenants living in almost 150 locations across the State have experienced double-digit hikes in recent years means there is little or no sympathy for landlords. But the IPOA appears to be of the peculiar view that throwing a tantrum is the best course of action to stop these measures from becoming law.

But here's a wake-up call. Fianna Fáil and Fine Gael have agreed the measures, so they are coming into force. Threatening to impose a raft of additional charges as a means to circumvent the rules is counterproductive.

While many TDs are landlords - including Housing Minister Simon Coveney, Foreign Affairs Minister Charlie Flanagan, Government chief whip Regina Doherty, as well as John McGuinness and Timmy Dooley from Fianna Fáil - to say our politicians are in thrall to landlords is a stretch. If so, why introduce the concept of rent pressure zones and effectively cap rents for the next three years?

There's little doubt that the rental market as it currently exists is dysfunctional, serving neither the landlord nor tenant well, and changes are needed. There is no security of tenure, and landlords are not treated fairly by the taxation system - a point acknowledged in the Government's 'Strategy for the Rental Sector'. There are not enough inspections of rented properties, and landlords who breach the rules are rarely punished.

But this cohort are in the minority. Most landlords are far removed from the greedy money grabbers they are often branded, but the actions of those who seek to increase rents at the first available opportunity paint them all in a bad light.

The majority own one, two or three properties, and many are servicing hefty mortgages. Many are accidental landlords, stuck with a house or apartment which their family has grown out of but which they cannot sell because it is in negative equity. Others have been left high and dry by tenants who refuse to pay but won't leave the property. And there's no doubt that many renting are paying less than the market rates, because their landlord is happy to keep them in the property. Some have genuine concerns about the cap being introduced, and a major bone of contention is the 4pc limit on all tenancies, which will leave many out of pocket.

"I didn't realise the extent of the controls which would be assigned to new lets too," said Fintan McNamara (inset), from the Residential Landlords Association.

"If you have a tenant where you didn't put up the rents and they paid below-market rents, that rent applies to new lets too. It means landlords will have to charge 4pc every year just to keep up. The ones charging large rents will be rewarded.

"It wouldn't be so bad if it only applied to existing tenancies. It's very rigid. If they don't relax on that I could see a problem."

The measures will be subject to further Dáil debate next week, but major changes are unlikely.

While the focus has been on the imposition of the rental caps in Dublin and Cork, to be followed by the other cities and commuter towns early in the new year, there's a raft of other proposals in the strategy which must be implemented to improve the lot of landlords and tenants alike.

But the rental strategy only forms one part of the overall package of measures needed to return rents to sustainable levels. The basic problem is one of supply. There are not enough houses and apartments being built to keep pace with demand from those hoping to purchase or rent a home.

So far this year, fewer than 12,000 have been completed - not even half the number needed to meet demand. A more telling figure is the number of properties on which work has commenced. So far this year, that stands at fewer than 10,000.

Unless the other strands of 'Rebuilding Ireland' start to bear fruit, rent controls may end up being in place for longer than the three years envisaged. And that could pose a bigger headache for government than a tantrum from the landlord sector.

Irish Independent

Also in Business