Ranting about Renting
For a short time, decades ago, I was an accidental landlord. During my brief diplomatic career, I spent almost three years in Washington DC from 1987 to 1989. While we were away, house prices in Ireland began to “take off”. Nothing like the rampant inflation of the Celtic Tiger era or more recently, but by the standards of the sleepy decade that was the 1980s, it was a genuine boom. So, expecting to be back in Dublin soon, I arranged to buy a house there, just in case the boom pushed prices beyond reach.
But, as Forrest Gump said, life is like a box of chocolates. You never know what you’re gonna get. We ended up coming to Clare, so the house in Dublin was let for four years until we eventually sold it. The first two tenancies, both annual ones, were fine.
The third was different. The delays in paying the rent got longer and longer until eventually it stopped coming at all and we were obliged eventually to pursue eviction to the Circuit Court where the judge ruled decisively in our favour and the tenants duly left the property immediately. We were left with a year’s lost revenue, legal and other costs plus the chastening knowledge that, if the tenant had chosen to ignore the court order, it would have taken more time and money to secure the assistance of a bailiff to force him out — and more futile time and money again if we were foolish enough to pursue the unpaid debt.
So, I have the personal scars to prove that being a small-scale domestic landlord is not always sweetness and light even though it can be sometimes.
But I have deeper indirect scars from witnessing my parents’ experience as amateur landlords. In retirement, their children scattered to the four winds, they retired to the Dublin suburb of Killiney. The first storey of their new home was a spacious, self-contained flat with independent access. Having no need of the space themselves, they decided to let it. Within months, the tenant stopped paying the rent and didn’t afford them even the pseudo-courtesy of empty promises.
My father took matters into his own hands, changing the locks one afternoon when the tenant was out. Within days, the tenant had secured an injunction restoring the tenancy and he re-entered the flat the same day. I visited my parents that evening. For the first time in their lives, they looked truly old — depressed and defeated. A few days later, solicitors on both sides reached agreement under which my parents waived the unpaid rent and paid the tenant a four figure sum to vacate the premises quickly, which he duly did. Such is the law, but it was doubtful justice.
But then came a happier story. A few months later, they decided to have another go. The new occupant quickly became a friend and neighbour as well as tenant, paid promptly, minded the place and stayed for many years until the house had to be sold after my parents died within a short interval of each other.
I also know from indirect experience that being a tenant isn’t always smooth either. For the first half of his Erasmus year in Mannheim, Germany, my son shared a house in which each of the occupants had their own individual lease with the landlord and paid their own deposit. Rather than renew his lease, my son decided to move elsewhere for the second half of the year to the disgruntlement of his landlord who withheld a large portion of the deposit on pretty flimsy grounds, knowing full well that it would not be worth my son’s while to attempt to litigate the issue. My son’s experience is a routine occurrence in Ireland.
So, while plenty of tenancies in Ireland are happy experiences for both landlord and resident, plenty more are not, and whether things turn out well or badly for either party is something of a lottery. Too often, the landlord–tenant dynamic is an inherently hostile relationship played out in an atmosphere of mutual suspicion, grudging mutual tolerance rather than cheerful collaboration, conducted in a regulatory environment that does little, in practice, to impose order, efficiency or predictability on it but, instead, fosters a “wild west” culture around the sector.
Though their numbers are diminishing, Irish landlords are still too often “mom and pop” owners for whom their rental properties represent a major rather than incidental investment. So, many of them want to sweat their properties for maximum yield at minimum running cost. Tenants want to hoard capital for the deposit on the home they aspire eventually to buy. So they resent paying what they see as “dead money” in exorbitant rents for what is very often poor quality accommodation. No less important, tenants want to escape the insecurity of the rental “trap” as soon as they can because landlords have lots of legal cover to force them out even if they are fully compliant with their lease.
My increasing doubts that this government just doesn’t “get it” on housing (and will pay for this obtuse deafness at the next election) were reaffirmed by new legislation ostensibly to give renters the right to tenancies of “unlimited” duration. The headline over The Irish Times’ report of 16 November last of Minister Darragh O’Brien’s announcement of his intention to introduce this legislation trumpeted:
Renters to get right to ‘unlimited’ tenancies under new legislation
Under which came the more revealing sub-headline:
Minister says all tenants will gain new rights over time but landlords can still end leases
What the Minister giveth with one hand, he taketh away with the other.
The legislation gives renters the right to tenancies of “unlimited” duration once they have occupied a property under a tenancy for a minimum of six months. Previously, six months’ occupancy automatically extended the term to six years, even if the term originally agreed between landlord and tenant was less than that.
However, the existing grounds under which landlords can terminate the lease earlier than the aforementioned “unlimited” term remain as they were.
Those grounds include the following:
- The landlord requires the property for own or family member occupation
- The landlord intends to change the use of the dwelling
- Vacant possession is required for substantial refurbishment; and
- The landlord intends to sell the dwelling within the next three months.
A minister and, indeed, his colleagues in government would have to be remarkably tone deaf to state that a tenancy hedged by these qualifications is meaningfully “unlimited” or that this measure constitutes to any degree a “reform” of housing policy in Ireland. In effect, the tenancy is an option arrangement for the landlord to extract value from his investment by rent unless and until he determines that there is more value to be extracted through capital appreciation by selling it. A rising market makes for a climate of opportunity for the landlord and more insecurity for the tenant. Indeed, the term “landlord” is a misnomer. They are “real estate investors” who may, according to their whim, choose to seek return by way of renting or selling.
Remarkably, there are some who argue that landlords should have even wider discretion to give tenants the heave-ho. Here is former Tánaiste Michael McDowell in The Irish Times of 14 June:
…private landlords can no longer decide to end a tenancy on any notice period to, say, re-let the property to a more distant relative or to anyone else of the landlord’s choosing (for instance, a prospective employee, a deserving friend, a cousin or an in-law other than a parent-in-law, or a business partner, or some other relative or person whom a farmer-landlord intends to make an heir).
If the law and public policy promoted and protected a few short principles, the rental sector would be a great deal healthier and more stable than it currently is, not fixed maybe but much improved.
First, cut out all the guff about “unlimited” duration. Both the tenant and the landlord should enjoy the stipulated rights and adhere to the stipulated obligations for whatever lease term they mutually agree. The tenant should be reassured that the place is theirs for the term, but that if they leave before the end of the term, they must be liable to compensate the landlord for any reasonable losses arising. One can imagine two broad categories of term; genuine interim leases to bridge a short gap between moving out of one place and into another for the longer term, and longer leases for longer living and rental horizons where terms of, say, 5–8 years might apply with an inbuilt bias towards renewal rather than termination of the relationship as the contractual default.
Second, contracts should routinely afford tenants the right to so-called quiet enjoyment of the property through the full term of the lease. That is, the landlord may only sell the property subject to the lease remaining in place and the new owner committing to respect its terms — or the tenant otherwise consenting to have the place sold from under him. Landlords should have to decide whether “landlord” is what they want to be or instead to be speculators or traders. They cannot expect to be both.
Third, the mechanism for adjusting rentals during the term should be specified within the contract, the default being linkage to the consumer price index but otherwise by whatever mechanism and at whatever intervals the landlord and tenant agree at the outset.
Fourth, the more common arrangement in Ireland under which the landlord retains responsibility for maintenance and repair through the lease, right down to replacing a light bulb, is frequently a recipe for enduring friction between landlord and tenant as landlords resent being asked to fix small things and tenants often have to wait too long for landlords to fix anything. There is room for other models for longer leases including more unfurnished rather than furnished properties and which would sharpen the allocation of risk between landlord and tenant. Landlords should always bear the risks and rewards of ownership and, by corollary, the costs of major repairs and maintenance. But minor fixes fall within the risks and rewards of occupation and should lie with the tenant.
Fifth, the sector cries out for the introduction of brisker justice. If a tenant pays his rent, he should be secure in his occupancy, but the obligation to pay their rent should be absolute. If a tenant doesn’t pay, the landlord should be secure in being able to get rid of him, her or them — fast. Sleepy Dickensian redress and resolution processes are the enemy of stability and security for both parties. The still comparatively new Residential Tenancies Board has added a lot of regulation to the letting process without making it noticeably more effective for either party. Applying lipstick to a pig doesn’t make it any more attractive.
Sixth and most important, there needs to be a radical overhaul of public policy attitudes. “Anybody seen in a bus over the age of 30 has been a failure in life.” is a saying doubtfully attributed to Margaret Thatcher. Achieving home ownership is a similar badge of adulthood in our culture. Successive governments here have zealously promoted the ethos that buying a property is the only “right and proper” way to secure a home. This automatically consigns renting to a second-class form of occupancy, respectable only as an interim arrangement, otherwise subject to stigma.
It is a subject that deserves a blog in its own right but this policy is based on the flawed presumption that a society based predominantly on owner occupancy of homes is obviously superior to one based on a mix of owned and rented dwellings, whereas the opposite is the case. Ordinary people’s fundamental desire is for a secure home to which end ownership is currently the only reliable means. The social and cultural imperative to buy as the sole legitimate mode of occupancy is simply a recipe to fatten lenders and developers at buyers’ expense.
Minister O’Brien’s legislation suggests that he and his government colleagues remain unduly in thrall to those “mom and pop” landlords who, at this stage, are more part of the problem than the solution. During the term of the lease, landlording is essentially a servicing business, engaging with the tenant and managing issues in a transparent, consistent, reliable and timely way. Small scale owners of one or two leased properties are essentially dabbling amateurs operating ad hoc. Large scale financial institutions owning and renting multiple properties can only be more professional and predictable even if more anonymous. More institutional investment in the rental sector is better than less.
The rental sector would be more robust and both landlord and tenant would be more secure in the reliability of their rights if they were willing also to recognise the sanctity of their mutual obligations. More security requires more commitment from and allows less optionality to both parties. The law should support entering into a lease as establishing a rule-governed relationship not a “moment in time” transaction.
Of course, Minister O’Brien will say that these principles are easier to state baldly than to implement in practice and that it is impossible to map out a smooth transition from the “here and now” of the sector to this idealised future. But if the Minister is content only to dabble and tinker, the toxicity of the sector will only intensify. The exodus of disgruntled small scale landlords from the business will accelerate and tenants and landlords alike will vent their frustration through the only avenue left to them: the ballot box.