Hundreds of rental houses can be closed in Ireland

Hundreds of rental houses can be closed in Ireland
Hundreds of rental houses can be closed in Ireland

Owners of many rental houses in Ireland could lose their revenue due to the new law requirements. A special act, adopted by the government in 2009, requires owners of all types of rental properties built before 1963 to improve the quality of its services. In particular, each apartment in the house must have its own bathroom.

Deadline of the new law is February 1, 2013. Today, in Ireland there are in total 1,000 property objects, which do not comply with the new requirements.

Most objects are represented by condominiums, the legacy of the Edwardian and Victorian eras. Its premises are divided into apartments and rooms. In Ireland these houses has a specific term - pre-63. In 1963 a law was introduced, which made virtually impossible multiple separation of the house on many rooms for the further lease. An exception was made only for the above mentioned mansions.

Currently most pre-63 property owners are concerned about the situation. In order to modernize their facilities they need to seek for significant financial resources against the background of tougher credit conditions and tax increase in the real estate rental market.

Today, about 6,000 tenants live in pre-63 rental houses throughout Ireland. The total estimated value of pre-63 mansions is about 500 million Euros. If these objects will be simultaneously put up for sale, the Irish property market will again face with "dark days". The only consolation for the market (but not for the homeowners) may be the fact that not everyone can sell the property. The reason is the so-called "negative capital". In Ireland the owner has no right to sell the property bought on credit, if the current price of the property can not completely pay off the bank.

It is difficult to predict how the situation will be resolved. Owners rely only on the assistance of the Association of Irish homeowners. However, it is still unknown whether the organization has the influence to change the laws and give hope to the creditors.

Ireland is still not recovered from the collapse of the real estate market in 2007. Then the property prices in Ireland fell by almost 50%. Today there are over 2000 unfinished residential objects. The government managed to decide the fate of only 10% of them.

Ilya Kalachev

Date: 15/07/2012

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