In Stockholm,10 year wait for long term tenancies thanks to rent controls. Lessons for Ireland?

Patslatt1

Well-known member
Joined
Nov 18, 2009
Messages
4,188
See Rent control will make housing shortages worse (Subscription paywall after opening paragraph).
Sweden's advanced welfare state generally respects the role of markets but an exception has occurred in rental housing. Over 600,000 people had to queue in Stockholm last year for a scarce supply of rental housing, with a waiting time of ten years for long term tenancies.
Given the abundant supply of land, this scarcity is down to strict rent controls. It is politically expedient for politicians to impose rent controls instead of removing politically motivated red tape planning permission sagas designed to please NIMBY home owners. Rent controls please tenants in the short run until landlords no longer have an incentive for good maintenance standards and let the housing become shabby.Controls also reduce the supply of new rental housing compared to an uncontrolled situation.
The shortages of rental housing would be a lot worse if consumer price inflation wasn't so low,removing the threat that rental housing would become devalued by a drop in rents after inflation adjustments.
The lesson for Ireland would be to remove strict controls of rent pricing in a year or so as housing supply catches up to the roughly 30,000 a year needed in the long run. At present, reasonably high gross rental yields (gross rent dividend by property valuation price),very low inflation expectations and confidence that the government won't screw landlords on rent increases keep investors in the market, though not necessarily small investors and accidental landlords.With tower cranes dominating the skyline in Dublin, the government should be confident that the market is increasing supply enough to get rid of controls as promised years ago.
Another factor that will improve supply is the the government's increase in the allowable height limits to 21 stories from 7 for rental only housing. Such a sensible increase was prevented in the past by the social failure of high rise housing in Dublin's Ballymun. That failure was down to an excessive concentration of the lowest income people and lack of council building maintenance for the initially well constructed buildings.
 


carlovian

Well-known member
Joined
Jun 20, 2008
Messages
5,304
The rent certainty measures in Ireland are easily got around and not policed so I wouldn’t worry too much about it.

Current average rent in Dublin is about 2,000.

It’s a landlords dream.

And if you are a reit you can ignore paying tax.

So it’s all good.
 

Patslatt1

Well-known member
Joined
Nov 18, 2009
Messages
4,188
The rent certainty measures in Ireland are easily got around and not policed so I wouldn’t worry too much about it.

Current average rent in Dublin is about 2,000.

It’s a landlords dream.

And if you are a reit you can ignore paying tax.

So it’s all good.
As a condition of tax free status,REITS are obliged to pay out most of earnings in dividends which are taxed in the hands of individual shareholders at half or more for typical high incomes. That's more than the 12.5% corporate tax on profits.
Lack of enforcement of rent controls tempts landlords to increase rents more than allowed. While this might help balance supply and demand in the rental market, it is disrespects the rule of law.
 


New Threads

Popular Threads

Most Replies

Top