Sir, – The piece on the flight of the small Irish landlord was interesting but hardly a surprise ("Flight of small landlords will worsen Dublin housing crisis, says –estate agent", Business, December 28th). At this stage we should note the passing of this particular species of landlord who, having put up a brave fight over the last number of years, has ultimately lost the battle, drawing a final breath under the brutal blows of Government legislation. Increased taxation reduced the supply of oxygen to the patient and the introduction and extension of rent pressure zones moved the victim from serious to critical. With rents now limited to the harmonised index of consumer prices, all hope is lost for the wounded party. I wish to express my sympathy to grieving tenants who will lose their homes as a result and indeed to the Government who will have to try and fill the gap – much grief and gnashing of teeth has yet to come. – Yours, etc,
NEVILLE SCARGILL,
Bray,
Co Wicklow .
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Sir, – By my count, the article “Flight of small landlords will worsen Dublin housing crisis” is the ninth article in the past three years, and fifth in the past seven months, sticking up for the plucky small landlord, not including letters from readers.
Not one of these articles has explained how exactly the phenomenon of landlords with a small number of properties selling those properties reduces the supply of housing. None of them explore the distinction between producing and distributing goods in a market.
If housing units are goods in a market, landlords are not producers of housing, but merely distributors of housing. We can distribute housing to consumers (ie occupiers of the housing) through multiple mechanisms, chiefly sale to owner-occupiers, rent by small landlords, rent by large landlords, and rent by the State. If a small landlord chooses not to rent out that housing unit anymore, he does not tear down the property; rather he will sell it to an owner-occupier or to another landlord, who will continue to provide the property for rent to an occupier. So no housing units are “lost” when a small landlord “exits the market” – either the property is still available for rent from a large landlord, or the new owner-occupier reduces the demand for rental properties by living in it.
Builders, property developers and the State produce housing. To do so, they need incentives (the prospect of distributing it for a return) and capital financing. Removing the prospect of small landlords distributing housing units would only reduce the production of housing if that meant those housing units would not otherwise be distributed.
Since small landlords have apparently found it more economically beneficial to sell their properties than rent them out, and the Irish property market is running red-hot, that cannot be the case. Moreover, small landlords do not provide capital financing to builders and developers. They compete with putative owner-occupiers and the State to purchase housing that was already built (in the process, driving up prices for occupiers and taxpayers).
There might be very good reasons concerning concentration of wealth and stability of the market to favour a proliferation of small landlords over a few large ones, in the same way we might prefer a variety of small corner shops to large supermarkets.
On the other hand, it might be easier to regulate large corporate landlords – not least because they seem to attract less sympathetic coverage in the media.
I hope the next article in your pages on the subject of the heroic small landlord will explore these distinctions, and explain why this particular mechanism for distribution makes the blindest difference to the production of housing units. – Yours, etc,
ALAN EUSTACE,
Marino,
Dublin 9.