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press releases 2005
IPOA LAUNCHES PROPERTY CLASSIFICATION SCHEME AND ADVOCACY SERVICE
IPOA LAUNCH PROPERTY GRADE SCHEME & ADVOCATES SERVICE
RENTAL ALLOWANCE SCHEME AN ABSOLUTE FAILURE FOR TENANT AND PROPERTY OWNER
DISCRIMINATION TOWARDS IRISH PROPERTY OWNERS IGNORED IN TODAYS BUDGET
PRIVATE RENTAL SECTOR CRISIS DETERIORATE
GOVERNMENT BUREAUCRACY FURTHER THREATENS PROPERTY OWNER & TENANT ALIKE -
THE IPOA CALL FOR GOVERNMENT COMPLIANCE WITH LEGISLATION
PRIVATE RENTED ACCOMMODATION FURTHER THREATENED BY GOVERNMENT CONTROLLED RENTS
PENSIONS TIME BOMB
PRIVATE RENTAL MARKET COLLAPSING
PROPERTY OWNERS IN PRIVATE RENTED SECTOR BECOMING TOTALLY FRUSTRATED WITH BUREAUCRACY AND P.R.T.B. INABILITY TO COPE
15th December 2005
IPOA LAUNCHES PROPERTY CLASSIFICATION SCHEME AND ADVOCACY SERVICE
At the official opening last night of the Irish Property Owners Association’s new Conference & Workshop Centre, by Mr Brian Lenihan T.D. Minister Department of Health and Children and T.D. for the constituency of Dublin West, the IPOA also announced two new initiatives for the property industry.
The IPOA presented its members and the industry in Ireland with a preview of its new property classification scheme. The initiative called the PG Scheme, is a standards programme for its member’s rental properties. The initial phase of the Scheme will commence from mid-2006 and will allow members to apply for a certificate which will classify their property based on the level of accommodation which they are providing.
The PG Scheme is a voluntary self-assessment system that will be objective and fair to the provider and customer. Each unit must be graded on individual merit and will comply with Legislation. The Scheme will be developed to comprise different tiers of classification incorporating 3 levels; Standard, Superior and Premier. The accommodation will be branded accordingly with a stamp visible on site. The Scheme was introduced by Stephen Faughnan, Chairman of the IPOA, at an event in the new IPOA Conference & Workshop Centre in Dublin. Mr Faughnan announced the PG Scheme as being "..hugely beneficial to the private rental market, increasing the standards of properties that are available and thereby benefiting tenants and property owner alike.”
In addition the IPOA launched its new Advocacy Service. It was announced that from January 2006 the organisation will be in a position to provide trained advocates to attend the Dispute Resolution Service of the PRTB with its members. These advocates are familiar with the Residential Tenancies Act 2004 and have also been trained in mediation methods and the adjudication system. IPOA advocates will be available to assist members from the early stages and will be able to advise them of the correct procedures and steps required for them to bring their cases to a successful conclusion. This service will go towards ensuring that the property owner receives a fair outcome in a dispute.
13th December 2005
IPOA LAUNCH PROPERTY GRADE SCHEME & ADVOCATES SERVICE
The Irish Property Owners Association will, on Wednesday 14th December hold an event to preview their new Property Grade Scheme. The scheme called the PG Scheme, is a standards programme for its members rental properties. The initial phase of the Scheme will commence from mid 2006 and will encourage members to apply for a standards certificate which will grade their property based on the level of accommodation which they are providing. Each unit must be graded on individual merit and will comply with Legislation. The Scheme will be developed next year to comprise different tiers of grading incorporating standard, premier and superior. The accommodation will be branded accordingly and a stamp will be visible on site. According to Stephen Faughnan, Chairman of the IPOA "We are delighted to introduce the PG scheme to our members and the industry at large. Although we have always insisted that our members comply with minimum standards legislation this is a step towards ensuring total compliance and will show tenants that the properties that they are renting meet very important requirements that are reflected in the level of facilities provided."In addition the IPOA will launch its new Advocates Service. From January 2006 the organisation will be in a position to provide trained advocates to attend the Dispute Resolution Service of the PRTB with its members. These advocates are familiar with the Residential Tenancies Act 2004 and have also been trained in mediation methods and the adjudication system. Our advocates will be available to assist members from the early stages and will be able to advise them of the correct procedures and steps required for them to bring their cases to a successful conclusion. This service will go towards ensuring that the property owner receives a fair outcome in a dispute.
The event will also see the official opening of the IPOA's new Conference & Workshop Cantre which will be officiated over by Mr Brian Lenihan T.D. Minister Department of Health and Children and T.D.for the constituency of Dublin West, and will be attended by several illustrious guests from the Irish property industry.
9th December 2005
RENTAL ALLOWANCE SCHEME AN ABSOLUTE FAILURE FOR TENANT AND PROPERTY OWNER
Newly published figures have revealed that the Government appointed Rental Allowance Scheme (RAS) has proved thus far to be an absolute failure.
The RAS initiative, whereby property owners are urged to provide rented accommodation to tenants through local authorities, should in theory work to the benefit of tenant and accommodation provider. However it is riddled with flaws. Rent levels, for example, as negotiated by property owners and the local authorities are supposed to "reflect current market conditions". Social Welfare rent supplement levels were capped approximately two years ago to a figure lower than current market conditions and need to be increased substantially to allow recipients to afford any sort of decent accommodation and to encourage accommodation providers to participate in the RAS initiative.RAS is looking for further reductions in rents paid to private property owners, averaging15-20%, stating that "the average yield across the private rental sector is less than a full year's rent due to vacancies/tenant turnover". According to Stephen Faughnan of the Irish Property Owners Association (IPOA) "Our members supported the basic premise of this scheme and 40% of their accommodation is provided to those on the rental supplement scheme. However government intervention is forcing them to question the viability of getting involved and it points directly to rent control which is not acceptable".
In addition, although property owners are not in a position to choose who occupies their properties under the scheme, they are left responsible for manging it as set out in the 2004 legislation and are responsible for insuring the building contents. Any damages caused will have to be claimed under the Policy which in turn will lead to the owner being unable to get insurance cover after 1 or 2 claims being made. The Local Authority had reneged on any responsibility in this regard.
From the tenants point of view some of them will have to move away from their current area, leaving friends and family behind, leading to difficulties in accessing schools and other services and loosing their place on the local authority list.
Given all of these factors, it is entirely understandable why only 56 of the predicted 5000 households have been catered for. This is a scheme which requires the active participation of property owners but as they are required to take a substantial cut in rent, loose control over who lives in their properties yet be responsible for maintenance, insurance etc. it is one for the property owner who is prepared to operate a flailing business. The count is in and it is time for the Government to spend that rolled over €19m on a restrutured scheme that aids those on long term rent allowance while treating the compliant property owner with some respect.
Budget Statement
Irish Property Owners Association
7th December 2005
DISCRIMINATION TOWARDS IRISH PROPERTY OWNERS IGNORED IN TODAYS BUDGET
The IPOA are very disappointed with the results of todays budget. The Minister has ignored our Pre-budget Submission and again failed to address the obvious discrimination that exists towards Irish Property Owners by ignoring the Active Property Owner for tax purposes and excluding this business from Case V tax regime. Rental income is still in all instances treated as 'unearned income' or passive income instead of earned income. A person who devotes the majority of his/her time to the management of his letting business is discrimminated against in the tax system when you compare his/her tax position with that of a person active in a trade or profession. So many of the allowable tax deductions and tax reliefs available to other businesses are still denied to the Active Property Owner.
This budget has totally overlooked the private rental sector which is now the chief supplier of rental accommodation to rent supplement recipients and local authories. Due to the reduction of rents being paid by local authorities under the RAS scheme, coupled with high levels of taxation and compliance, many property owners in the traditional market are being forced out of the business. How then will the Government fulfill its remit to solve the housing problem in Ireland ? It is time the Irish property owner was treated with a level of respect reflective of the service he/she is expected and needed to provide.
6th December 2005
PRIVATE RENTAL SECTOR CRISIS DETERIORATES
Over a year after its inception the Private Residential Tenancies Board is still plummeting into a deep pit of administrative folly to the detriment of property owners nationwide.The legislation introduced to provide dispute resolution between landlord and tenant has proven totally ineffective to the extent there are over 1000 cases waiting to be reviewed and the entire administration structure remains inoperable – telephones unanswered, emails unanswered and property owners at risk of being in breach of legislation despite their best efforts to comply.
The IPOA have observed with great interest the problems created by yet another Government appointed unworkable scheme. For example delays of 6-8 months in the registration process during which time many tenancies have changed. The implications being that the registration fees presented by property owners as yet unregistered because of administrative delays has been retained by the Board and as we see unaccounted for. Furthermore the registrations that have been effective, 80,000 according to the PRTB, have generated income in the region of €5.6 million and the amount due to local authorities from this figure being €4m has not yet been paid over as provided for by the legislation. Thus the local authorities are denied the funding necessary to carry out inspections, a process which is to date nonexistent.
The dispute resolution mechanism, the heart of the legislation, has proved disastrous and has taken on the guise of the old resolution procedure i.e. the courts. There are still 1000 cases queuing up to be dealt with and only 47 cases with determination orders issued, most of which have to go before the courts for enforcement. Some of these will end up in the high court mainly where tenants are being asked to pay. So what we ask is different about this process than the old cumbersome route for resolution ?
Having previously called for action to address these problems we now demand Ministerial intervention to review the overall procedures and to put a balanced Board in place to ensure that the transformation of the private rental sector is carried out in an honourable and effective manner.
GOVERNMENT BUREAUCRACY FURTHER THREATENS PROPERTY OWNER & TENANT ALIKE -
THE IPOA CALL FOR GOVERNMENT COMPLIANCE WITH LEGISLATIONRecent reports, accusing property owners of providing low standard accommodation for those on rental allowances, together with the government's unworkable guidelines for property owners providing accommodation to tenants on rental allowance, are in danger of driving potential property providers out of the rental market.
In the 3 years up to the year ended December 2004 the local authorities have taken in excess of €3million from property owners for inspections that have not taken place. Since the introduction of the Private Residential Tenancy Act in September 2004 property owners have registered some 80,000 tenancies and paid €5.6 million to the Private Residential Tenancies Board (PRTB). Again no inspections were carried out as a result of this and it is unclear if the €50 per tenancy to the local authority has been paid. In addition, Social Welfare have capped the rental figure payable to recipients of rent allowance at a figure that is not near market rent. Furthermore, RAS (Rental Accommodation Scheme) the, newly introduced system for local authorities to take over the social welfare payments for long standing recipients, is further reducing the rents payable to property owners.Considering that, for example, out of 730 inspections in Cork in 2004 not one prosecution was made, imagine how positive the picture would be if all required inspections took place as legislation provides for.
The Irish Property Owners Association (IPOA) is calling for:
o the local authorities to refund the €3 million plus taken from property
owners under the 1996 legislation (and now repealed),
o the PRTB to pass on the €4 million collected and due to the local
authorities to carry out the inspections under the 2004 legislation,
o Social Welfare and RAS to pay the market rent for properties.IPOA Members who are trying to comply with legislation are being fleeced on an ongoing basis resulting in no service being provided to either owner or tenant.
PRIVATE RENTED ACCOMMODATION FURTHER THREATENED BY GOVERNMENT CONTROLLED RENTSRecent reports, accusing property owners of providing low standard accommodation for those on rental allowances, together with the government's unworkable guidelines for property owners providing accommodation to tenants on rental allowance, are in danger of driving potential property providers out of the rental market.
Under the government-appointed Private Residential Tenancies Board (PRTB), property owners are obliged to pay to register tenancies of properties that comply with certain standards of accommodation. Properties are then inspected to ensure that this is the case. For example, according to the Department of Environment Statistics, out of 730 inspections in Cork in 2004 not one prosecution was made which surely indicates that property owners provided a standard of accommodation which meets with government approval.
Initiatives such as the Rental Accommodation Scheme (RAS), whereby property owners are urged to provide rented accommodation to tenants through local authorities should in theory work to the benefit of tenant and accommodation provider. Overall, the scheme is positive for both parties but there are some flaws that may decrease the number of properties available to tenants. Rent levels, for example, as negotiated by property owners and the local authorities are supposed to "reflect current market conditions".
Social Welfare rent supplement levels were capped approximately two years ago to a figure lower than current market conditions and this cap enforced on rent supplement is totally out of line with market conditions and needs to be increased substantially to allow recipients to afford any sort of decent accommodation and to encourage accommodation providers to participate in the RAS initiative.
RAS is looking for further reductions in rents paid to private property owners under five headings one of which is "the average yield across the private rental sector is less than a full year's rent due to vacancies/tenant turnover". According to Stephen Faughnan of the Irish Property Owners Association (IPOA) "Our members supported the basic premise of this scheme and 40% of their accommodation is provided to those on the rental supplement scheme however government intervention is forcing them to question the viability of getting involved and it points directly to rent control which is not acceptable".
Is the Government serious in its initiative to supply good quality accommodation to tenants at realistic rents or is it simply reducing the housing waiting list and thereby disallowing the tenant the right to permanent local authority housing?
PENSIONS TIME BOMBThe Government is very worried about the pension time bomb, with Minister Seamus Brennan urging people to take out pensions and advising of the tax incentives. As usual, property owners renting property are being penalised by not having any tax incentives in the pensions market. A property owner actively managing his property with his only income derived from property, is not allowed any tax relief on his pension contributions. Every other business is allowed tax relief but property owners are not.
We are now into the 21st century and with all the regulations involved in the Residential Tenancies Act 2004, it is a disgrace that providing good quality rental accommodation is not considered a business. This inequitable and discriminatory treatment exists today, in an era when the Government is seen to be encouraging all citizens to provide adequately for their retirement. Letting property in a professional manner is a business and needs to be treated as such by Revenue. It is a hands on style of investment with high entry and exit costs, is very time consuming and carries a high degree of risk.
Property owners renting out property are treated as second class citizens and the Government is not considering the fact that more investors are leaving the Private Rental Market than entering the market, which is ultimately going to cause hardship and misery for people looking for accommodation.
PRIVATE RENTAL MARKET COLLAPSING
More investors are leaving the rental market than entering it due to poor rental returns and over regulation. Rents are decreasing and costs associated with lettings have increased. Managing properties is time consuming, frustrating and costly and with the recent registration changes and waste management charges many property owners have had enough. Income from rental property is treated as unearned income and is not treated by Revenue like any other investment.35% of vendors in the first quarter of this year were investors selling investment properties compared to 30% of purchasers buying for investment. This figure is misleading because the current trend is for houses with 10 or 12 units being sold and turned into private residences, and the investors coming into the market are purchasing single units. This results in a much larger loss to the lower end of the rental market than is apparent in the statistics.
This is a continuing trend where more investment properties have been sold than bought. Since 1999 houses in multiple units have decreased by up to 50%.
With rental income falling for the second consecutive year any investors coming into the market now will not be able to cover their mortgage payments. The Government has now successfully stifled the Rental Market, with unnecessary bureaucracy and an unfair tax regime, eg income tax on unearned income inclusive 44%, stamp duty at 9%, vat at 13.5%, capital gains at 20% and no relief on capital acquisition tax, like in a family farm etc., the government are ripping off the Property Owner and also the Tenant. Tenants are having to move out of affordable accommodation that is being converted from multiple units to private accommodation, and have to rent in costly apartment blocks instead. Someone somewhere must see the light and grab the nettle in the national interest. We have been preaching for years on this situation, especially during the Bacon Report period, and Commission Report period.
In spite of the Government being warned of this catastrophe and the fact that they will cause a huge void in the supply of rental accommodation, they still have not taken any action!
PROPERTY OWNERS IN PRIVATE RENTED SECTOR BECOMING TOTALLY FRUSTRATED WITH BUREAUCRACY AND P.R.T.B. INABILITY TO COPE
Some 70,000 applications for the registrations of tenancies with the private Residential Tenancies Board have been submitted. In excess of 20% have been returned for more information, most of which is the tenant's omission, e.g. incorrect or no PPS number, not wishing to give information etc. This as well as the huge backlog with the Board in dealing with registrations, up to eight months delay, has left IPOA members in severe difficulty with frequently changing tenants, non payment of rents, anti social behaviour, the property owner cannot now get any redress regardless of his most diligent efforts to comply with the Legislation.
Members may now mount a Legal Challenge to the unworkable Bureaucracy. It is time that Legislators listened to the people who supply Private rented accommodation and implement a workable system as was recommended by the Commission on the Private Rented Sector. This is causing members to resort to alternative agreement structures in order that they may have some protection against ever increasing tenant's rights.
Remember IPOA requested that registration be left with the Local Authorities who have the experience and staff in place to deal with the registration and the board would be available to deal with queries and disputes
A lesson not too late for the learning.