Technological University Dublin ARROW@TU Dublin

School of Surveying and Construction Media Management

2015-10

Rent Controls are very Different from the Forbidden Freeze

Lorcan Sirr Technological University Dublin, [email protected]

Follow this and additional works at: https://arrow.tudublin.ie/beschrecmed

Part of the Urban, Community and Regional Planning Commons, and the Urban Studies and Planning Commons

Recommended Citation Sirr, L. (2015) Rent controls are very different from the forbidden freeze. The Sunday Times 04.10.2015. doi:10.21427/5bbh-xw43

This Article is brought to you for free and open access by the School of Surveying and Construction Management at ARROW@TU Dublin. It has been accepted for inclusion in Media by an authorized administrator of ARROW@TU Dublin. For more information, please contact [email protected], [email protected].

This work is licensed under a Creative Commons Attribution-Noncommercial-Share Alike 4.0 License 04.10.15 / 15

ALAMY When a couple go The property their separate ways, working out how to sector is back divide a property — let’s not can be the toughest decision of all, writes break it again Grainne Rothery LINDA

isa Byrne (not her real name) DALY split up with her partner of seven years in July. The pair MARKET have a toddler, and on top of access issues that are fraught WATCH withdifficulties,they alsohad Lto deal with a property they bought together three years ago. Lisa’s former boyfriend, who ended the relationship, does not want to leave the house or his child, so they sleep in separate rooms and share childcare duties. “The tension is unbearable. We don’t talk to each other. We sit in different rooms at night and when we do talk we argue. I feel like my life is in limbo,” Lisa says. hen we set about planning The A solicitor advised Lisa to stay in the Sunday Times’s new residential family home. She approached her bank property supplement Move, a about getting a mortgage if the home was Wcolleague suggested a column sold, and was told to return after three entitled: “Have we learnt nothing?” Yes, months of saving. the market is bouncing back but while the The rise in Dublin house prices over speed of its return causes trepidation among the past couple of years has been good those who remember the excesses of a news, because in the event of a sale Lisa decade ago, the reappearance of a healthy and her former partner should walk property sector is no bad thing. away with more than their initial invest- Negative equity is still an issue for those ment. “Now I just need to convince him who bought homes in the mid-Noughties, to sell the house,” Lisa says. so many have warmly greeted a steady rise Breaking up is invariably hard to do, in prices. In some cases, they just want a big andformostcouplesdividingproperty— enough hike to let them offload what feels particularly a family home — is one of the like a financial noose around their necks. most difficult and complex elements of Yet if a novel were to be written about the split. Ireland’s resurgent property market, it In recent years it has been made worse would have to be A Tale of Two Markets. by negative equity. Time and time again, estate agents around the country stress that rural locations are THE LAW yet to feel Dublin’s upswing. Many agents Under Irish law there are no hard and fast test the market with their initial guide, then rules around entitlement and the divi- later reduce them to reflect the reality. sion of a property between separating As the scene returns to some level of couples, says Orlaith McCarthy, a family normality, estate agents, banks, developers, law solicitor at Byrne Wallace. homeowners, journalists and sellers alike “It depends on the means of the must take a sober approach to the market. couple, whether they get an order in There should be no more queuing overnight courtor they negotiatesomethingthem- for properties off plan — like this journalist selves,” she says. did, embarrassingly. Banks can’t lend The best-case scenario is for couples excessively and potential homeowners can’t to come to an agreement based on their cook the books. Sellers and agents should individual requirements rather than set realistic guides. Developers must be held venturing down the court route. Breaking up is hard to do accountable for lapses in fire safety — “We always like to start with media- Longboat Quay or Priory Hall cannot tion — the law requires that you advise happen again. Media reportage needs to be clients to begin with it,” McCarthy says. honest. Let’s discourage bidding wars, and “The advantage is that it’s not so much promote an open and transparent process. around entitlements or the law but that The government needs to show creativity you decide what’s going to work for your — especially with a home and intelligence to develop solutions to family, given your financial circum- tackle issues facing the market, such as the stances.” low supply of homes and overpriced rents. As chinks of light work their way TAKING IT TO COURT through the property crash’s rubble, it is up Cases that go to court will be judged on to every player in the market to prevent the their own facts, says Elaine Callan, a financial help from their family to buy one. “It’s very tricky because you’re instances where the changing financial roof from falling in on top of us again. partner at Carvill Rickard. out the other spouse.” relying on the consent of the banks,” outlook is allowing people to formalise Several options are available in the McGowan advises against going to Callan says. things further,” says Clodagh Murphy, classic scenario of the husband working court in the hope of getting a better deal, “You might have two people who branch manager ofQuillsenestate agents Price watch: South Co Dublin and the wife staying at home with small saying there is a “very strong miscon- want to transfer the property from one to in Ranelagh. children, and where the family does not ception” that family law courts do not the other and the bank is just blocking For estate agents, emotional, financial The Elms, Mount Merrion Ave have other major assets. order the sale of family homes. them. They’re leaving people as joint THE CHANGING and logistical aspects are associated with 2 bed apartment “They will sometimes leave the “The family home is treated differ- owners of properties because of negative the sale of a separated couple’s home. 2010 ¤185,000 mother in the family home until the ently asanasset,but to saythat somehow equity. That’s a real millstone around FINANCIAL OUTLOOK “The agent would work towards 1 bed top floor apartment childrenreach18—or23ifthey’reinfull- it’snotgoingto besold,andthattypically people’s necks; it means there’s no having a very good working relationship 2015 ¤250,000 time education — with the property then thewifeandchildren aregoingto getit,is finality and they can’t separate IS ALLOWING PEOPLE withbothpartiesto tryto ensurethatthis being sold, usually splitting the proceeds simply not the case,” he says. effectively.” part of the process goes as smoothly as Springhill Avenue, Blackrock 50/50,” Callan says. “At the moment “When you boil it down, the three David Hall, chief executive of the Irish TO FORMALISE possible,” Murphy says. 3 bed dormer that’s how it’s generally done.” scenarios are sale, buyout and holding it Mortgage Holders Organisation, stresses “We try to ensure that all of our com- 2010 Iftherearesufficientassetsorifthereis to sell down the road.” that co-borrowers are never liable for THINGS FURTHER munications with both parties are very ¤440,000 equity in the house, the court may direct Callan says the situation may be dif- only half a mortgage. Joint and several open and transparent, so both know 3 bed dormer that the property is sold to allow the par- ferent if one party owned the house liability means both are liable for the full where things are going with regard to the 2015 ¤506,751 ents to buy their own homes. before the relationship began. amount. back from negative equity, couples who transaction.” “If you’re married, it’s harder as it’s “There’s only one mortgage, one pay- split at the depths of the recession could The process is not without complica- Lower Kilmacud Road, Stillorgan BUYING THE PROPERTY deemed a matrimonial asset. The court ment between two people, and that look to finally make a clean break from tion and Murphy says a couple should 3 bed semi Another option is for one party to buy would probably look at it differently, doesn’t mean half and half,” Hall says. each other. appoint an agent with experience to 2010 ¤535,000 out the other, says Donagh McGowan, particularly if you had inherited it prior “That’s absolutely imperative in the However, they could find themselves work through the minefield that often 3 bed semi chairmanoftheLawSociety’sfamilyand to the marriage or relationship and event of being separated.” out of pocket if one is left holding down emerges. Examples include the property 2015 ¤620,000 child law committee and principal of transferred it into both names,” she says. If one party stays in the house, both the mortgage. not being shown to its best advantage Donagh McGowan & Co solicitors. In this case you could argue that rather parties must sign any restructuring because of an unwilling seller on one Beechwood Court, Stillorgan “Before the crash that was quite easy. than being split 50/50, things should be agreement. SELLING THE HOME side. Apartment Banks were lending money very easily, swayed in favour of the person who “It’s a monumental problem. One Where both exes have contributed “That’s not going to change. We as allowing one party to refinance and take inherited it. partycouldpaythemortgageforthenext equally to the mortgage over the past few agents have to just work with that and 2010 ¤224,000 over the existing mortgage, get addi- 20 years, and then it comes into profit years, an upturn in property prices is a make the best of it, as opposed to put- Apartment tional money on the equity in the house BUYING OUT ONE PARTY and the other party is entitled to half the good thing, allowing them to finally ting more difficulties into what may 2015 ¤268,327 and buy out the other,” McGowan says. Inthecurrent climateit ishard to transfer profit,” Hall says. move on. already be a very difficult scenario,” “Nowadays a lot of people are getting a mortgaged property from two names to As residential property prices bounce “We’re definitely seeing a few Murphy says. Rent controls are very different from the forbidden freeze

A GROWING number of people in unconstitutionality, mostly Can you see why a person might be the Holy Grail for renting because of its Controls made Berlin good for renters Ireland now rent. Up to one third of unchallenged. frustrated? decent security of tenure — rents urban dwellers live in rented The quip about rent control being the Rent control does not equal rent were for a long time limited. This accommodation and may never buy, fastest way to destroy a city is regularly freeze. Rather, it is a broad umbrella meant they couldn’t increase regulated, so why not in the according to the National Economic and trotted out as some sort of inarguable term for a range of potential measures by more than 15% over three rental market? Social Council. This is a for a variety of profundity. This is a sneaky one to use in which can be used to regulate the rent years. Since June this year, The market is just as crucial reasons that range from changes in an Irish context as many believe rent charged for a property. the mietpreisbremse (rent for Ireland’s economic household formation and immigration to control equals that pesky, Said regulation can happen at the control ) has been in effect, competitiveness. A market incomes, house prices and credit. unconstitutional rent freeze. beginning of a lease — where the initial meaning rent increases where rents can increase by The rental market, however, is not yet rent is determined by reference to a can be no higher than up to 50% at review is not suitable for such long-term living, as register or index, as is the norm in 10% above a state body an attractive proposition can be seen when it comes to the Stockholm. It can come into force when fixed price (per square for prospective foreign controversial issue of rents. the rent is being reviewed at the metre based on a census direct investment (FDI) The concept of rent control has a LORCAN permitted interval, as in Berlin, or at of rents). So, rent workers. I suspect the vocabulary fraught with both junctures, as in Paris. increases can happen, but current state of the rental misunderstanding, antagonism and SIRR Those who regurgitate the line that at a slower pace. market is a black mark on ignorance. rent control is unconstitutional should It is apparently working the Industrial Development It is very frustrating to a housing ON THE know this: rents are to some extent well in retarding rent Authority’s ability to sell person like me, for example, to hear a already controlled in Ireland as they increases and maintaining Ireland as a destination. Most programme such as Morning Ireland HOME cannot be reviewed more than once affordability. Funnily enough, FDI workers opt to rent rather discuss “rent freezes” as it did recently. every 12 months, and then cannot be set landlords aren’t fleeing the than purchase. A rent freeze, whereby rents cannot be above the current market rent. market either. Rent control, rent certainty, increased at all, has been FRONT Like many things in Ireland, that last Minister for the environment and rent regulation is part of a unconstitutional in Ireland since the condition is a bit vague, as how does one and community Alan Kelly wants to process of making the rental sector fit early 1980s. A landlord has a right to determine the “current” market rent? temporarily limit rent increases to for purpose and competitive. Some make a profit, and rightly so. The Private Residential Tenancies inflation. His opponents say rent landlords may well leave if it is Way back in 2000, the Commission on Board maintains a register of rents controls are a symptom of a broader introduced, but others will enter the the Private Rented Residential Sector but it’s not compulsory to refer to it. issue of lack of supply. Well yes, Regulating or controlling rent market seeing the value in predictability said “it is mistaken to think that rent In effect rent control can be perhaps, but while there is no supply increases is part of creating a desirable of income. I’d take a chance on it. control is unconstitutional”. pretty much anything in Ireland, should people really have to contend rental market, which is becoming Yet opponents of rent regulation except a freeze. with 50% rent increases, as we have increasingly important. Lorcan Sirr is housing lecturer at Dublin continue to regurgitate this line of In Berlin — which is often cited as seen recently? Affordability in the housing market is Institute of Technology