STORMONT'S hokey cokey has distracted us from the most interesting southern story of recent months.
On November 10, after much leaking and debate, the Irish government announced tighter statutory regulation of the private rental market.
This was primarily in response to the ballooning number of landlords following the housing boom and bust - a phenomenon that can also be observed in Northern Ireland.
The new controls are relatively modest - longer notice periods for ending a tenancy, a doubling of the period between rent increases to two years and a requirement to keep increases in line with the market rate.
Many tenants’ groups are disappointed but reaction from landlords falls into two very revealing categories.
Large, established players are relaxed about the new restrictions and have even privately welcomed them. “The view is that this is probably a sensible compromise,” one industry source told the Irish Times.
“There would have been some concern about the introduction of rent controls and that might have put off some investment firms but this would bring a degree of certainty to the debate and it is something that I think most investors could live with.”
Meanwhile, smaller players have reacted with indignation and huge pre-emptive rent hikes. Between June and September, when the government’s plans began to leak, rents increased by 3.2 per cent - the sharpest three-month rise since 2007.
This beautifully illustrates the difference between good and bad landlordism.
Good and bad landlords come in all sectors and sizes, of course, but in wider economic terms good landlordism is about investing in a business, while bad landlordism is about speculating in an asset.
Good landlordism wants the same thing as most tenants - long term security at realistic prices.
The developers proposing to build thousands of student apartments in central Belfast are an example of good landlordism.
They will invest a fortune of new private money in increasing the supply of property in the city, for which they will expect a stable, reliable return.
Bad landlordism is typified by the negative equity ‘accidental landlords’ of the property crash, hanging onto their last house until the first moment they can sell it, while charging a rent heavily determined by their random debts.
As a result, tenancies are insecure and the rental market is distorted. No new housing is created – in fact, the supply of housing for sale is constricted.
Buy to let landlordism, a feature of the boom, is generally no better. Buy to let is not build to let so the new money it brings in simply goes into speculative hoarding, pushing prices up again and attracting further speculation.
This is the opposite of productive, profit-making enterprise. It is socially useless, to quote Bank of England governor Mark Carney’s famous insult against the City of London, while causing significant social damage and division.
Small landlords are now becoming numerous enough to count as an important electoral constituency, threatening to throw politics back two centuries. Dublin is correct to start reining them in.
All these factors apply in Northern Ireland and we have no excuse for ignoring them. Stormont already has a full set of powers to control the private rental market.
It can pass laws and regulations on rents and tenancies virtually without restriction and it can alter property taxes via the rates to deter speculation and hoarding.
Most intriguingly, it can reduce housing benefit (except for the next 12 months, when the DUP and Sinn Fein have returned that power to London).
Housing benefit levels are based on local market rents, yet local market rents are often largely based on levels of housing benefit.
Tackling this vicious circle would save Stormont a fortune, which it could give to housing associations to build more houses, instead of giving it to Northern Ireland’s estimated 45,000 small-time landlords, most of whom will never build anything.
DUP social development minister Mervyn Storey commissioned a review of the private rental sector last November, tasked with improving regulation and incentivising investment. This review is believed to be nearing completion.
Sinn Fein arranged a Stormont debate on the same subject last month during Storey’s hokey-cokey absence.
The assembly noted its “concern” at the “continued growth of the unregulated private rented sector, which is the biggest provider of socially rented accommodation, a sector that receives tens of millions of pounds in housing benefit” and called on the minister “to introduce measures to regulate this sector.”
Now that everyone is back at their desks, could they get on with it?
