Rental crisis gets worse after government inaction - time for link with CPI ?

carlovian

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Jun 20, 2008
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Last year the previous government rejected calls to link rents to the CPI as families
faced spiralling rents.

Instead they offered a piecemeal solution of fixed rents for 2 years which many predicted
would make things worse as Landlords upfronted huge Rental increases.

Rents in Dublin 3.9% higher than 2007 peak - RTÉ News

The result is that rents have increased by 10% since last year and now are 3.9% higher
than the peak of the 2007 boom figures.

Since the government got it so wrong last year, shouldnt they link Rents now to the CPI ?
 


GDPR

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Jul 5, 2008
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217,782
Last year the previous government rejected calls to link rents to the CPI as families
faced spiralling rents.

Instead they offered a piecemeal solution of fixed rents for 2 years which many predicted
would make things worse as Landlords upfronted huge Rental increases.

Rents in Dublin 3.9% higher than 2007 peak - RTÉ News

The result is that rents have increased by 10% since last year and now are 3.9% higher
than the peak of the 2007 boom figures.

Since the government got it so wrong last year, shouldnt they link Rents now to the CPI ?
Long term supply is the only way to fix the problem.
 

Toland

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www.aggressive-secularist.com
Last year the previous government rejected calls to link rents to the CPI as families
faced spiralling rents.

Instead they offered a piecemeal solution of fixed rents for 2 years which many predicted
would make things worse as Landlords upfronted huge Rental increases.

Rents in Dublin 3.9% higher than 2007 peak - RTÉ News

The result is that rents have increased by 10% since last year and now are 3.9% higher
than the peak of the 2007 boom figures.

Since the government got it so wrong last year, shouldnt they link Rents now to the CPI ?
They need to do something, alright. It's not an easy issue to fix, though. Simply linking rents to the CPI might be okay in the short term, but will eventually lead to the market getting twisted unsustainably.

I think where the government need to act is on the supply side. The first step is to remove obstacles to the creation of new builds for rental and conversion of existing property to the rental market. The second step is to introduce positive incentives to make property available for rental and the third step is to start building off their own bat.

They should be careful to ensure that any tap they turn on in pursuit of a well-defined policy objective can be turned off immediately and without giving anyone a shock when and if the policy objective is achieved.
 

carlovian

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5,274
I agree with Supply being the solution.

But it takes time and in the meantime its a crisis and also a block
on companies coming into Dublin and recruiting.
 

Civic_critic2

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Since the government got it so wrong last year, shouldnt they link Rents now to the CPI ?
They haven't got it wrong, they've got precisely the outcome they were aiming for, which helps the valuation of the banks and everything associated with it.

They need to do something, alright. It's not an easy issue to fix, though. Simply linking rents to the CPI might be okay in the short term, but will eventually lead to the market getting twisted unsustainably.

I think where the government need to act is on the supply side. The first step is to remove obstacles to the creation of new builds for rental and conversion of existing property to the rental market. The second step is to introduce positive incentives to make property available for rental and the third step is to start building off their own bat.

They should be careful to ensure that any tap they turn on in pursuit of a well-defined policy objective can be turned off immediately and without giving anyone a shock when and if the policy objective is achieved.
I wish the Irish would put 10% of the effort and thought into developing nanotechnology that they put into ridiculously convoluted schemes around the simple act of building a shelter. The whole thing is preposterous and unworthy of allegedly intelligent adults. There is a new industrial revolution occurring much more powerful than before and with much greater accessibility for all including the Irish - opportunities abound. What do we have? A bunch of 18th century minded bores and clowns warbling on about the minutiae of how to make bricks and mortar more profitable as a speculative enterprise and how to increase land prices - LTEV to the establishment Irish.
 

Roll_On

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Long before you start resorting to socialist policies that ultimately will never work, you need to sart tackling some elephants in the room:

-The cost of a new apartment is 40% tax
-Basement car parking must be provided, even for largely carless households adding considerably to the construction bill
-Heights are effectively limited to 4 floors, making small sites unprofitable
-There hasn't been any serious social house building in 20 years
-There is still a social housing tenant purchase scheme
-We have next to no student accommodation
 

Disillusioned democrat

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The problem with most analysis on the homeless/rental crisis is that it assumes that this isn't part of the plan.

The government/parliament - 25%+ of whom are self-declared landlords - have done pretty much everything they can to stall real development, while simultaneously serve up the NAMA portfolio to REITs.

Since 2011 the government has sat on a vast property empire of homes, apartments, partially completed development and property. In 2011 it was paying 100k brickies, sparks and chippies the dole..it has the means and the motive to build homes for the future. Did it though - like fµck it did. If sat on the property until prices recovered, it rushed REIT legislation thru the Dail one fine Christmas week and then it finally began to sell off the property - at 2011 prices mind - to the REITs.

There's been a whole lot of talk about building programmes, etc., but it has all been down to how the developers can't make enough money from the developments. Simple solution - take NAMA land and contract some large international engineering firm like Hyundai (https://en.wikipedia.org/wiki/Hyundai_Engineering_&_Construction) to come in and develop 100k homes for half nothing on publicly owned land.

Instead....PPPs (which never end well - remember NTRs anyone?) have been gifted public land (e.g. Odevaney Gardens · TheJournal.ie) to build a handful of "affordable" homes.

That previous governments insisted that developers build 20% "affordable" homes indicated from the very start that it was always happy with the concept that 80% were, by default "unaffordable".
 

carlovian

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Long before you start resorting to socialist policies that ultimately will never work, you need to sart tackling some elephants in the room:

-The cost of a new apartment is 40% tax
-Basement car parking must be provided, even for largely carless households adding considerably to the construction bill
-Heights are effectively limited to 4 floors, making small sites unprofitable
-There hasn't been any serious social house building in 20 years
-There is still a social housing tenant purchase scheme
-We have next to no student accommodation
You do realise that your last 3 solutions are "Socialist policies"
 

Disillusioned democrat

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I agree with Supply being the solution.

But it takes time and in the meantime its a crisis and also a block
on companies coming into Dublin and recruiting.
It has been a looming crisis since 2011, but the government has continually poured petrol on the flames to get to a point where a "crisis" means we'll accept almost any solution. Yesterday's headline was that first time buyers would get €10k of tax payers money to give developers for new builds - wow, some imagination there.
 

sic transit

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In another IT piece it mentioned high development cots in Dublin. Anyone able to quantify what exactly these are?
 

sic transit

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It has been a looming crisis since 2011, but the government has continually poured petrol on the flames to get to a point where a "crisis" means we'll accept almost any solution. Yesterday's headline was that first time buyers would get €10k of tax payers money to give developers for new builds - wow, some imagination there.
Not having money to spend and few developers to take risks on a moribund market is also part of the story. Do you have anything more than let me tell you what they've all been doing wrong?
 

Hunter-Gatherer

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i wish to make an investment in a business in ireland. will it be
1. a sweetshop ?
2. a farm ?
3. a factory ?
or
4. a buy-to-let property ?

guess which one gets crucified with bureaucracy, red tape and taxes ? tons of customers and still nobody wants to invest in this. Unlike pubs who now have no customers, landlords are running a loss-making business because everybody still believes its 1840 and we have a potato famine to deal with.
 

sic transit

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You do realise that your last 3 solutions are "Socialist policies"
Even socialists agree with free marketeers from time to time!
 

EoinMag

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so, let's be clear.

NAMA was created to engineer a situation where we have less properties on the market either as sales or rentals.

This restriction on 1/building and 2/supply of pre-built properties is now causing supply issues because the demand outstrips this supply. This engineered situation has gotten some developers off the hook and the purchasers now get higher prices for their rentals as well as sales due to restricted supply.

So it's a total mystery as to what could be done to help this situation which arose out of nowhere and to be honest if the engineers of NAMA can't come up with a solution, what chance would I have?
 

Disillusioned democrat

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Not having money to spend and few developers to take risks on a moribund market is also part of the story. Do you have anything more than let me tell you what they've all been doing wrong?
Really - for the past 3 years property has been a pressure cooker.

But basically it's a shame that our well paid elected leaders cannot see an alternative to "well paid developers" in achieving building projects.

Let's look at 2011.

We owned largest property portfolio in the world and were paying 100k+ brickies, sparks and chippies the dole.

NAMA sat on property - didn't offer a sausage to Joe Bloggs - just sat on the property patiently to avoid the fire sale...but then 3 to 4 years later went mad and sold it all off at 2011 prices anyway (see Project Eagle, for example).

We did seem to have enough money to pay the two top NAMA lads €1m each a year, and a bunch of developers €250k a year, so it's not 100% accurate to say there was NO money.

Now...if they had sold off some choicer chunks and used whatever money it got for those to seed some public development on public owned land using a "jobsbridge" type scheme for the 100k builders I suspect we would have got a long way down the supply road.

But now it's too late - prices and rents are higher than EVER and we're back to seeing "developers" as the only solution....basically we've missed a huge opportunity to fix the problem and are now back to Celtic Tiger levels of cost and profit for developers....an economic miracle it has to be said.
 

sic transit

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so, let's be clear.

NAMA was created to engineer a situation where we have less properties on the market either as sales or rentals.

This restriction on 1/building and 2/supply of pre-built properties is now causing supply issues because the demand outstrips this supply. This engineered situation has gotten some developers off the hook and the purchasers now get higher prices for their rentals as well as sales due to restricted supply.

So it's a total mystery as to what could be done to help this situation which arose out of nowhere and to be honest if the engineers of NAMA can't come up with a solution, what chance would I have?
No, NAMA was designed to take bad debt off bank balance sheets. That most developers were up the creek to start with was really not their fault. NAMA the developer is a fairly recent concept, mostly because of the money and land they have.
 

EoinMag

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No, NAMA was designed to take bad debt off bank balance sheets. That most developers were up the creek to start with was really not their fault. NAMA the developer is a fairly recent concept, mostly because of the money and land they have.
It was also intended to put a floor on property prices and stop fire sales, are you saying that it has no effect on the property market?
 

stakerwallace

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I have an empty property nowadays but will not rent it. Too many hassles tbh.
 


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