There has been some discussion recently of the fear among property investors that Nama will soon begin ‘dumping’ properties, which will obviously contribute to the decline in property values [which it seems might still fall another 35%, if we go by the deposit required by Bank of Ireland for a mortgage on one-bed apartments – seems generous of them, actually]. Luc Philips, chief financial officer of the Belgian KBC Bank, which has a loan book in Ireland worth €17.4bn, is quoted in the Irish Times today on this topic. He’s ‘uneasy’ about the prospect of Nama hurting his bank’s loan book if it does indeed begin selling off some of its ‘assets’.

The prospect of the ‘grand dump’  is of interest to me in part because I’m a tenant. It actually came up recently when I was searching for a new apartment. I was chatting with a letting agent about the limited availability of rental property. He said his book is about the half the usual size: rather than having 100 properties at one time to let, he only had about 50 at the moment. His fear, he said, was that the apartment complexes in Nama will reach the marketplace. This would ‘destroy’ the market, he said. My reply was, ‘Good, I hope Nama does that, because it might help rents fall.’ We were obviously coming at the issue from very different positions: I want to see lower rents; he wants the market (or as I call it, ‘the madness’) to endure.

Now I’m not an economist and so I cannot model market changes such as this, but surely rents will fall if Nama does release properties onto the market, which will lower yields and therefore further deflate property prices. Isn’t this what’s needed if Ireland is indeed going to deflate the economy while paying back the debts and if public sector wages are going to be cut, which seems inevitable?

But maybe’s it’s that Nama won’t release the properties it’s holding back so it can keep an artificial floor on Dublin’s unsustainably high rents. There’s a certain logic to that, but it’s short-sighted: it’s the idea of squeezing tenants for all they’ve got and for as long as possible. This is certainly part of the property letting game, which agents know well. For example, one trick is to con potential tenants by pretending there’s only one property in an apartment block when in fact there are plenty; and another is to crowd all viewings into the one time so putting pressure on potential tenants to act quick and put down a deposit. And it’s part of the game that many landlords play, for example by not returning deposits, as the Threshold report released this week has noted; by failing to keep their properties in a good condition; or just by not doing what they’re legally required to do, such as providing a Building Energy Rating certificate, which the vast majority of landlords have not done, at least so far as I can tell [and who can blame them, because there is zero enforcement of that regulation and no way for tenants to compel their landlord to get one].

What’s short-sighted about squeezing tenants is that a vibrant, good quality, regulated, and fair rental market is a precondition for a successful capitalist economy (which landlords must want to see), especially an ‘open’ one such as Ireland’s which increasingly relies on footloose migrant workers, many of whom are in the ‘creative’ or ‘knowledge’ sector and won’t want to buy property. But even if Ireland isn’t ‘open’ and its economy is not about attracting Google’s new workers from around the world, a fair rental market is needed for permanent residents / citizens who do not want or cannot afford to get onto (and slide down?) ‘the property ladder’. Even better, in my view, would be a super-sized ‘market’ of high-quality public housing in which ‘yields’ are re-invested in new housing rather than consumed by landlords in Dalkey – but there doesn’t seem much chance of this happening any time soon.

Alistair Fraser

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