Private landlords in Ireland have little choice but to exit the market

The Government is about to decide on whether to extend the ban on private landlords evicting their tenants. As we are in the middle of a housing crisis, there is little doubt that they will extend the ban if only in a desperate attempt to keep up poll ratings now that their term is more than halfway expired.

Private landlords are departing the market in droves for very obvious reasons. They are being restricted to rent increases well below the rate of inflation and they can only recover possession for a very limited number of reasons anyway because of the recent laws enacted by the Government.

Anyone who has been a tenant for six months has become entitled to be considered as having a tenancy of indefinite duration. Unless you want to sell the property with vacant possession, you are obliged to continue the tenancy indefinitely subject to a few exceptions. These include that you want to use the property for a close member of your family. If you want vacant possession to upgrade the house, you have to offer it back to the tenant. Alternatively, you may need vacant possession to redevelop the house in which case you will have to get planning permission.

[ Rents are at record highs — so why are private landlords fleeing the market? ]

Where a house or apartment is let to accommodate a number of people, the tenant is legally entitled to substitute occupants and they, in turn, have a right to be regarded as tenants of indefinite duration. The landlord can only object to such a substitution if it can be shown that there is a reason to refuse tenant status to such a substitute.

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In many cases, therefore, landlords are now faced with more or less permanent loss of the right to recover possession unless they want to sell the house with vacant possession.

This is where Sinn Féin leader Mary Lou McDonald and her housing spokesman, Eoin Ó Broin, enter stage left. They promise to amend the law so that the sale by a landlord of rented accommodation will, in future, have to be on the basis of a sale with sitting tenants of indefinite duration.

Anyone buying a property for letting purposes will be stuck with the tenants they inherit and be subject to further substitutions ad infinitum.

[ Tax breaks for landlords offering better terms to tenants should be considered, Cabinet advised ]

Coupled with a rent freeze which means that the value of rents is declining by 5 per cent every year at present, the various reforms already made and those promised by Sinn Féin leave rational small landlords of single premises with no choice but to get out of the letting market. They have little reason to hope that they will obtain a return on the market vale of their property.

Does this matter, you may well ask. Does it not mean that small private landlords will simply sell to people who want to own and live in the same house?

What it does mean is that those who, for one reason or another, cannot afford to buy their own homes and have to rent will find that the pool of rental properties is shrinking and rents of new lettings will inevitably rise.

[ Why landlords are selling up: Taxes, regulation and fear of a Sinn Féin government ]

In the case of a couple with two homes who want to live together, the option of renting out one home is extremely unattractive and akin to madness if things progress as planned politically.

There is a huge difference between a large commercial landlord acquiring a block of apartments and taking a 20-year view of its likely value as a long-term investment and a single dwelling often accidental landlord who lets a home fully furnished to a tenant carefully chosen by them.

The commercial landlord can deal with difficult tenants and can survive rental defaults.

A small landlord faced with insurance premiums reflecting rebuilding costs, local property tax bills, redecoration, fire alarms and extinguishers, repairs to white goods and furnishings, and the prospect of having to deal with tenants they never let to in the beginning, now realises that the Government is taking them for a ride – disposable casualties of failure to confront the consequences of a fast-growing population.

Offering small landlords accelerated depreciation on cookers and washing machines is a laughable response.

[ Be wary of crocodile tears of politicians over exit of private landlords ]

The exodus of landlords was as predictable as the consequences of banning bedsits 10 years ago.

The wonder of it all is that housing policy is still left in the hands of a department that has failed so abysmally to use its powers under the Planning and Development Acts and the Housing Acts to address the crisis we are in.

Why is that department allowing its Office of the Planning Regulator to dezone development land across the country – even in Dún Laoghaire/Rathdown? What is the economic effect of dezoning highly priced and scarce development land?

All the evidence is that our system of planning regulation is failing us. All the signs are that this Government is paddling in its housing canoe towards a foaming electoral Niagara.