Renting V Buying

stevedublin wrote: »

Even if they do go down short term, it shouldn't matter too much if they go up long term (unless the buyer intends to sell again in the short term).

Do I have to spell it out for you, i keep having to repeat myself! By waiting a few years you're potentially savings thousands, potentially hundreds of thousands of euro. so it does matter. My figures are illustrative but the point seems to go over your head, it's basic economics/maths. Why buy something today for €5 when in 2 days it will mostly likely be less.

if you don't accept we're within a property crash then there's no point in discussing it with you.

yeah prices are going up buy buy buy :cool:

stevedublin wrote: »

Thats fine if you know for sure that it would be worth less in two days, but people dont know for sure what way property prices will be going.
Even if they do go down, it may be harder to get a mortgage in two years time (very few people are wealthy enough to be cash buyers).
Finally, your calculations have failed to take into account the money saved by not renting. By renting you are paying more to stay in the same place you would be paying less for the mortgage. Also, if you buy now over waiting 2 years, you would have 2 years of your mortgage paid off.

Ah i give up, most of that post is pure nonsense.

StillWaters wrote: »

Bottom line is if you believe that house prices will drop 20% in 2 years, as in your illustrative figures, then yes renting makes more sense.

Yes I agree.

Theboinkmaster wrote: »

I'm not proposing to rent for an entire lifetime, just to hold off buying a couple of years whilst we're in the midst of the nation's worst property bubble collapsing. Everyone will have a differing view on what stage of the collapse we're at.

And that's a silly example made just to support your argument. Instead of a 5% drop do it with a 30% drop and do it on a €0.7m property :P

Because ftb are just queuing up to buy properties at €0.7m. Some would say a silly example to support your argument. The average ftb isn't going to be looking at houses in that league. One of the reasons houses in the upper price brackets are falling at a faster rate is because there are feck all buyers for them full stop.

Milk & Honey wrote: »

Supply and demand is a very simple concept. Higher overheads will deter investors, hence lower supply. Couldn't be simpler. It has nothing to do with prices rising or falling. It has nothing to do with individuals deciding on their own charges without reference to the market.

So if landlords exit the rental market what do you think will happen to the properties?
Yes, they will be sold -reducing the number of tenants. These markets do not operate in isolation.

StillWaters wrote: »

No, that doesnt happen. There isn't a strong relationship between house prices and rental prices. If there was, rents would have collapsed since 2005, they havent. In fact as the Rental report out yesterday showed, as house prices fell, people moved towards rental and rents rose, so there can be an inverse effect.

Rent prices have dropped a lot in the past few years, at leastin a lot of areas they have (cant speak for Dublin, but trends in Dublin usually don't reflect the rest of the country).

Galego wrote: »

House prices will keep falling. This year they have fallen even though all the attempts made by the current government to keep them up. There is a 14% unemployment in the country and the economy is stuck in a deep recession so dont expect house prices not to be affected by the current economic events.

Generalise much?

Germany has falling house prices in some regions and rising house prices in others, so does the UK, US and on and on.

Ireland is smaller, but don't think the property market won't become highly regionalised there too, as people begin to realise the folly of living in the middle of nowhere and commuting to a one horse town for a job in the only factory there.

Living in cities makes redundancy easier to mitigate against as you have a much greater chance of finding a job that doesn't force you to move house. Anecdotally at least, people are moving to Dublin in numbers now to find work.

Do you really think that house prices and rents in Dublin are proportional to those on Achill Island? Houses in locations with poor employment prospects may continue to fall (I would expect it in fact) to the point that they are abandoned (happened before), whilst houses in cities see increased demand.

In previous decades people just left the country, but these days we do actually have some decent employment in our urban areas for those with the skills, so people can be expected to try their luck there first, rather than leaving the country completely.

You see the same in rural Denmark come to think of it...houses (many of which are empty) can be had for next to nothing near the German border or across much of Jutland, but Copenhagen prices would make your eyes water!

MMAGirl wrote: »

But i really think that the tax payer is subsidizing landlords on the rent a room scheme. Even though I used to be one of them. But there are people making healthy profits that are totally tax free.

Hmmm, not sure what to make of that relief any more. It is a very generous allowance (10k I think these days) alright.

I would have concerns that closing it would convince many to cease taking in lodgers as it wouldn't be worth it any more and that means increased demand for "proper" rentals and increased rents. Not a problem for me personally as I am on the other side of the fence, but worth thinking about.

We need to decide if the rent a room scheme is intended to increase the supply of rentals or to allow people to subsidise otherwise unsustainable mortgages and hence prop up the property market. It currently does both, but if its only intended to the do the latter it should be abolished.

Could easily pay your entire mortgage on a 3 bed in some areas if you took the single room.

MMAGirl wrote: »

If they dont pay tax on the income now, and they get away with paying tax on the income if/when it is actually taxable then there can only really be a net gain to the revenue if any portion at all pay tax on their income.

It would be much like landlords refusing to declare income. Make the home owners register for the PRTB and that problem is close to solved too.

I dont think any extra income should be exempt from tax. If I work for an extra €10,000 in a year I gets taxed at 41% + USC etc on that income.

Rent a roomers are earning income without handing any of it over to revenue.

It's a tricky area IMO.

You can't really force people who take lodgers under the PRTB system as there is no tenancy. A lodger has as much legal right to remain as a guest in the home. They can be thrown out at a moment's notice.

If legislation was changed so that lodgers became tenants, it could have huge legal implications for ordinary home owners...what if a visitor decides they are a tenant and you can't prove otherwise? That's why lodgers have no rights in an owner occupied home.

I would be in favour of abolition of the relief before I'd favour the idea of considering lodgers as full on tenants in the eyes of the law.

MMAGirl wrote: »

The new branch of the PRTB, the PRLB would solve that problem. No need to change anything.
If a guest is paying you rent then you have to register them.
You already have to declare the income, even though you arent required to pay tax on it.

Define a guest paying you rent.

What if someone comes to a party and brings a crate of beer?

Payment for time spent at your house or not?

The current system could require you to pay tax on the income from lodgers without making them tenants, which is my main point. I would favour abolition of the relief before I'd favour making lodgers tenants as it's a can of worms for normal home owners and that's why it'll likely remain the way it is: lodgers = guests and no more.

MMAGirl wrote: »

Somebody who rents a room in your house for a monthly fee.
Clearly if you give them the room for a case of beer its a different relationship than what we are talking about.

Again, nobody said they are to be made tenants in the same way as people renting houses or apartments.

The amount of money that revenue is leaving on the table here is obscene.
Where else could someone earn €10,000 completely above board and not be taxed on it.

I'm not defending the relief!!

I'm merely pointing out that it is not a solution to define lodgers as tenants (you clearly implied that when you said they should have to register with the PRTB, the 'T' stands for "Tenancies"!!) as it has implications for normal home owners.

What happens when your slightly dodgy cousin comes up to the big smoke and sleeps on your couch for a few weeks while looking for work, giving you €50 of his dole money for using your heat and light? If he was defined in law as anything other than a guest, you might have huge problems getting rid of him if he decides he's staying put on your sofa

figs666 wrote: »

I'm in the same boat myself Sully , i was at the Kilkenonics festival last weekend and i was talking to David Mcwilliams , i asked him " are we at the bottom of house prices" he said we have a long way to go . banks aren't lending so no buyers

I was able to get a mortgage rather easily... by looking for a realistic amount of money.

Most of the people who aren't being lent to are not in a position to borrow and should never have been given mortgages - but would probably have got them with ease during the boom.

There could easily be a long way to go in prices purely because there's not enough people who can actually afford to buy.

figs666 wrote: »

very true , exactly what mcwilliams was saying

also people who should get mortgage can't also .

no buyers = lower demand for purchase price = lower price .

There are relatively speaking very few buyers for German property. Per capita far fewer property transactions per anum take place here than say, the UK, but German property is increasing in value in many places (ok, largely due to people looking for somewhere safe to invest, but even before the crisis, German property just "held" its value, even though relatively few people were actually buying and selling it).

So, in Germany at least, few buyers did not equate to cheap houses. It just meant that houses were unattainable for the majority. A house can sit unsold for months or years, until someone in a position to buy comes along and takes it. The seller, unless distressed, typically won't slash the price to get rid of it at a rate that someone who can't really afford it can buy it at.

If banks weren't lending at all, prices would not reduce to zero There are people who already own property who can sell and buy elsewhere, without needing a bank at all. It'll take a decade to filter through that the days of getting easy credit are over and that people wanting to purchase for the first time, will need to save up a substantial deposit like it was in my parents' time.

Irish people are too emotionally attached to property ownership (which has some positives, granted) to simply "give up on the dream" so to speak. They will go back to saving up a deposit and buying a basic home (for life, not to "get on the ladder") in their mid 30's and adding to that home as finances allow. It's a healthier way to home ownership if home ownership it is to be. House prices went up in the boom, but were cheapened at the same time by easy credit.

I'd say we're at the bottom in some areas, but not in most (geographically speaking).

Properties in silly locations tens of miles from the nearest job are going to keep falling (hopefully until the land they sit on is returned to the agricultural use it should always have had)

I don't believe the lessons about sustainable development will sink in until buildings are razed.

In South Dublin however (and likely other desirably urban locations), it's arguable that the bottom has been reached (may not be true, but I think it is)