Sir, – The concept of the private rental market being subject to rent control, or as Senator Aideen Hayden puts it, “rent certainty” (“It’s time we felt at home with the idea of rent control”, Opinion & Analysis, February 28th), makes as much sense as saying the State should immediately put the money paid for accommodating over 30 per cent of the population into building social housing.
Housing is not built overnight and no-one wants to see ghettos being created to satisfy some spurious ideology, but private landlords are providing an essential service to the community and to their customers, who are their tenants. “Rent certainty” is no more than rent control in another guise. In any event, tenancy agreements and leases already prescribe the rent to be paid during the term of the tenancy or lease.
Landlords are business people who have their own costs to sustain the properties that are homes for some 800,000 people in Ireland – more than at any time in the last 50 to 60 years. These costs include 25 per cent of interest paid on mortgages and loans not being allowable as expenses (which can actually result in being taxed on a loss), local property tax (and the previous household charge and non-principal private residence charge) not being allowable against income, although landlords are charged for services provided to tenants. Other substantial costs include insurance, maintenance, registration, compliance, as well as the normal taxes levied on the population, such as the USC, PRSI and income tax. It is ironic that management charges in multi-unit developments are allowed against rental income, yet charges for services provided to tenants are not allowable.
Central Bank statistics show that landlords with arrears in their buy-to-let mortgage accounts rose from 39,948 (26.9 per cent ) to 40,426 (27.4 per cent) at the end of the third quarter of 2013, which disposes of the suggestion espoused by certain sectors that landlords have deep pockets and are somehow immune to the financial crisis in our society.
The mid-February report from Germany’s Bundesbank strongly supported efforts to encourage investors back into the market, and held the view that this would be more effective in moderating prices than rent control, which the Bundesbank described as “counter-productive”. How can people promoting rent control be treated seriously when its previous incarnation up to the early 1980s contributed to the ruination of many fine buildings throughout the country as rental income was controlled and property owners were unable to retain or maintain their properties?
It is easy to shout out that increased rents should be held back by legislative means. Yet those bald statements conveniently ignore the fact that the market forces causing rents to increase are the same market forces that caused a reduction in rent during the austerity years, and increases now originate from a very low base where rents decreased by some 40 per cent over the past five years.
Recent actions by the Government in making it easier for lenders to repossess properties will only cause further aggravation to the rental market through independent landlords exiting the business, and their properties being snapped up by so called vulture funds that will not have the same ethos as an independent landlord who values tenants. – Yours, etc,
STEPHEN FAUGHNAN,
Irish Property
Owners’ Association,
Ashtown Business Centre,
Navan Road,
Dublin 15.