FF, Housing & Landlords

Christian_H · 17-11-2004 12:12pm #1

Did anyone hear the new minister for the enviroment on the radio yestarday exclaiming in sheer bewilderment & puzzlement at the news House prices have risen 12-15% again even though 80,000 units are expected to banged out by the building industry this year!!!

Its my sincerest belief, which I have spent some time researching that the reason over 250,000 people pay high rents thus not being able to afford to buy a house is simply becasue 30,000-40,000 poeple own nearly 500,000 houses.

4 out of every 10 new houses is being bought by people who already have at least one other home, in some cases 2, or more... There are landlords out ther with 100s of houses.

There is a lot of lying between buyer & their bank, in order to buy that 2nd/3rd "investment property" whihc can only be paid for as long as the rental income comes in and is high.

Dangerous what happens if the market softens and people cash in and sell the "buy to let" properties.

If 20,000 rental proerties came onto the market in the same period 80,000 properties where being built your talkin 100,000 houses onto the market.

No one is eruope is building as many units as we are. We only have a popoluation under the 5 million mark. The Uk is well over 50 million people yet I don't think they have even built 30,000 units!!!

I'm calling it now, the property bubble is burst it will just take about 2 years for it to feel its effects!

Everyones still so intoixicated on there borrowed money!

SkepticOne · 17-11-2004 12:33pm

Christian_H wrote:

If 20,000 rental proerties came onto the market in the same period 80,000 properties where being built your talkin 100,000 houses onto the market.

No one is eruope is building as many units as we are. We only have a popoluation under the 5 million mark. The Uk is well over 50 million people yet I don't think they have even built 30,000 units!!!

I'm calling it now, the property bubble is burst it will just take about 2 years for it to feel its effects!

A lot of these landlords are suffering falling rents and dificulties finding tenants. I think they must be holding on purely for capital appreciation, however without some underlying income such capital appreciation will be short-lived. There needs to be something to back it up.

I don't think it's possible to predict exactly when the 'top' occurs; this can only be judged in hindsight, but when it happens I think it will be led by the landlords as they try to get out of a flat (no pun intended) market. If you're in for capital appreciation and this doesn't happen it makes sense to get out.

Gurgle · 17-11-2004 2:54pm

SkepticOne wrote:

A lot of these landlords are suffering falling rents and dificulties finding tenants.

The rents are falling towards the mortgage repayments. For several years there, the rents were up to twice the mortgage repayments for the value of the property, due to the massive shortfall in housing.

Monthly rent should level off at close to the monthly mortgage repayments. As the owner loses some of the rent in tax (as if they paid it :rolleyes: ), they will have to throw some of their own money in to make the payments. Then it will be a nest-egg / savings account.

What they have been doing is profiteering on the governments intrinsically corrupt approach to planning permission / land zoning. For that matter, if I had £200,000 to spare 5 years ago, I would have been at the front of the queue.

SkepticOne · 17-11-2004 3:57pm

Gurgle wrote:

The rents are falling towards the mortgage repayments. For several years there, the rents were up to twice the mortgage repayments for the value of the property, due to the massive shortfall in housing.

A lot of landlords, however, have bought in the last 2-3 years. These people may well find that they are already not getting returns and have to put their own money in (quite right too, imo). However if it was their intention to get rich with no work except landlording, then there could be a reversal. It only takes a small number of sellers to bring the prices down. I think this is where the action will take place in the initial stages of a housing correction should one occur.

Christian_H · 17-11-2004 6:20pm

Exactly, I was writing just what has followed in comments then I lost it...

What is important to note is that there are landlords who have there house pre-boom it could have cost them anything from £50 to £80,000, prices ranging from the 60 up to the early 90s.

So for e.g there is some landlord out there how bought their house for £2000 and renting it for 1600 pmoth so in one year he has recouped almost 10 times the original value, so in ten years they will make 100 times the original price ...... its these landlords who are riding on the recent lanlords who have no choice to charge massive rents becasue the mortgage repayments are so high, its the old landlords who are being truly greedy in a socisal devise way. These people are the source of rip off ireland, all cost relate back to land and who owns it.

The more land you own and the more you horde it, the more you call the pirce. End of story.

Of course the neo landlords who jumped in with the cheap credit are the ones who will be first out as things start to heat up.

We have become greedy and ts really ruling out most altenative lifestyles and way of living.

I predict the new energy ratings all houses will have to have with a growing decline of quality fof life issues in the Dublin communter belt (imagine a daily 2 hr communte for the next 10 years), continuing inability for couples to buy or individuals or small collective groups.

No one realises that this country is borrowed over 180bn and I don't think all the land or Ireland is valued more than 220bn. So in esscense the whole country is mortgaged to high heavan.

I'm just gonna sit here, rent (no choice) and watch... cause its never been a better time to rent.

ionapaul · 18-11-2004 11:42am

I (like many young people, particularly single people) have a vested interest in seeing a housing price crash. If there is no crash, I will be in Canada (assuming my visa application is accepted!) in 24 months time - even with a crash I will probably go. I don't think the current situation - first time buyers priced out and resorting to lying (about their wages and getting a deposit from the credit union) and relying on their parents to buy tiny places miles from where they work - can be tolerated for too long, particularly in a country where people are historically obsessed with owning their own place. I think the government may be forced at some point to provide for the needs of these FTBs.
Of course, FF are well in the pockets of the property moguls and would get a backlash if they did anything to reduce their profits, or indeed anything to affect the rental incomes of the important landlord class that has sprung up among us in recent years. I know many middle-aged people who own 3 or 4 properties - they are the people we should think about when we hear about the Celtic Tiger and Ireland being the best place to live in the world. It is for them! Not only are they sitting on a great revenue stream above and beyong their managerial salaries, but their property nest egg is worth millions. Any wonder so many Mercs and BMWs have been sold in recent years!
What worries me (in my hope for a price crash) is there is little letup in the movement of skilled foreigners moving to Ireland / Dublin for work and in need of rental accomodation. My IT consultancy company has hired 4 new IT technical consultants in the past two weeks - a Swede, a Pole, an Indian and an Australian. No suitable Irish workers applied, they obviously are getting more money elsewhere!

oscarBravo · 18-11-2004 12:16pm

Christian_H wrote:

So for e.g there is some landlord out there how bought their house for £2000 and renting it for 1600 pmoth so in one year he has recouped almost 10 times the original value, so in ten years they will make 100 times the original price ...... its these landlords who are riding on the recent lanlords who have no choice to charge massive rents becasue the mortgage repayments are so high, its the old landlords who are being truly greedy in a socisal devise way. These people are the source of rip off ireland, all cost relate back to land and who owns it.

Whoah. The old landlords are the cause of all these problems? What do you suggest they do, charge rents that will just cover their original mortgages? Where does that leave the new landlords?

Christian_H · 18-11-2004 12:45pm

If there is no crash, I will be in Canada (assuming my visa application is accepted!) in 24 months time - even

Isn't this the IRONY, I know so many people who are emigrating becasue its too expensive here, we now have so much but it is mostly in the hands of the few.
Of course, FF are well in the pockets of the property moguls and would get a backlash if they did anything to

Yea but when you look at the numbers 250,000 tenants in Ireland V 17K/40K (?) when it comes to votes no party can ignore this figure, but they do!

So what if you loose 40,000 votes when you could gain net 250,000 votes who may never have voted for you in the first place!

This issue is never a political issue, any election its insane!

reduce their profits, or indeed anything to affect the rental incomes of the important landlord class that has sprung up among us in recent years.

Again the tenant class is bigger than the landlord class. We are just divded and conquered.

Ironic again that Ireland suffered great famine and inequality because of the absentiee landlords from Britain and now the table have turn, the middle aged have enslaved the younger generations. Even more worrying these people are starting to invest in Turkey, Spanin, France Poland and truly becoming absentiee landlords themselves 150 years later. Its dangerous in the long term

I know many middle-aged people who own 3 or 4 properties - they are the people we should think about when we hear about the Celtic

I know many 20/30 somethings who also have the same, its a crazy feeding frenzy.. inter genrational canabalisim.

What worries me (in my hope for a price crash) is there is little letup in the movement of skilled foreigners moving to Ireland / Dublin for work and in need of rental accomodation. My IT consultancy company has hired 4 new IT technical consultants in the past two weeks - a Swede, a Pole, an Indian and an Australian. No suitable Irish workers applied, they obviously are getting more money elsewhere!

I think thouhg the job market will soften a little bit, but nt very much.

What will really hit demand is the huge supply form the building market. If people continue on buying these properties with a view of "buying to let" then rental market will first feel oversupply, then the houses will enter the "for sale" market and BAMM!!! well bamm over the next 2 years, slow but painful... and no one will have seen it comming, or so people will exclaim to cover their arse and probably quote some international terroist incident that might happen between no or a longer IRAQ war....

SkepticOne · 18-11-2004 1:17pm

Christian_H wrote:

What will really hit demand is the huge supply form the building market. If people continue on buying these properties with a view of "buying to let" then rental market will first feel oversupply, then the houses will enter the "for sale" market and BAMM!!! well bamm over the next 2 years, slow but painful... and no one will have seen it comming, or so people will exclaim to cover their arse and probably quote some international terroist incident that might happen between no or a longer IRAQ war....

Well, I'm going to stick my neck out here and agree with this. 2005 will be the year house prices in most parts of the country are seen to level off with falls being reported in the last quarter of the year though there will be denials and fudges in the media. Falls will continue through 2006 and 2007. The severity of the drop will depend mainly on the way interest rates go. I believe that the smart money has largely got out already (to move into Eastern Europe, South Africa and other countries) and the market is being held up by novices through heavily sold 'buy to let' mortgages.

ionapaul · 18-11-2004 2:14pm

If prices *are* inflated (I certainly believe so, though my good friends at Permanent TSB would disagree with passion!), one good thing is if there is a crash, prices will undershoot the 'true' (or historical) value by 10%. This is typical when speculatory bubbles burst. If the average home is currently overvalued to the tune of 120% of its historical value, a crash should knock it back to 90% of its historical value, as the panic to buy leads to an equal panic to sell.

Victor · 19-11-2004 6:48am

Gurgle wrote:

As the owner loses some of the rent in tax (as if they paid it :rolleyes: ), they will have to throw some of their own money in to make the payments.

Tax = % x (rent-(mortgage interest+other expenses)) which means very little tax is paid until the property is sold.

Gurgle · 19-11-2004 8:19am

Victor wrote:

Tax = % x (rent-(mortgage interest+other expenses)) which means very little tax is paid until the property is sold.

I checked on this a couple of years ago (when I was thinking of buying a second house to rent out

), the tax is paid as earnings (at 42%) so the longer you have the mortgage the less of the payment is interest and more is subject to income tax.

So if the rent charged is the same as the mortgage repayments, the owner will have to make up the difference lost to tax. If house prices (and therefore rents) stop rising then as the mortgage gets older a lot of people will find it difficult to hang on to their second house.

Sleepy · 19-11-2004 9:33am

I'm currently looking for a place to rent in the South Dublin area and I have to say from the look of things the rental market is certainly slowing down. There seems to be a load of houses sitting entirely vacant at present. I was up in an estate I used to live in and discovered that the house I used to live in is still to let after four months!

The beginnings of a crash are certainly there. For every house I've seen empty and to let, there's been another for sale. Most of these houses are seriously over-valued (approaching the half million mark for badly built 4 bedroom houses) and with a weakening rental market, prices can't help but start to slide.

Tuars · 19-11-2004 11:26am

Sleepy wrote:

I'm currently looking for a place to rent in the South Dublin area and I have to say from the look of things the rental market is certainly slowing down.

I've had the same experience in the west. Just looking for a place to rent at the moment and I have a huge list to choose from. Many of them have been idle for months.

ionapaul · 19-11-2004 2:04pm

It is even worse for those who bought section 51 (I think that was the tax break) apartments in Carrick-On-Suir over the last year. Supposedly almost all are empty, with no renters in sight. What a way to waste money!
On the flip side, a friend of mine is involved in the new development off the end of Lesson Street / Donnybrook which went on sale last weekend. The lowest price 3-bed is over €800,000 with many over a million. I think half of the units available sold last weekend. Some French billionare bought 4 units. Lots of rich people with money to spend.
Not sure this topic is particularly political...

Gurgle · 19-11-2004 2:09pm

ionapaul wrote:

Not sure this topic is particularly political...

Oh hell yes its political.
Do you think a 3-bed semi reaches €800,000 due to the natural to and fro of market forces ?

SkepticOne · 19-11-2004 3:06pm

Gurgle wrote:

Oh hell yes its political.
Do you think a 3-bed semi reaches €800,000 due to the natural to and fro of market forces ?

The one way politics can keep prices up is by restricting supply. Although this may have occurred in the past, it is hard to see how this is happening now, given the huge numbers of properties that are being built.

One thing to watch out for with house price indexes is the type of house being sold. It is quite possible for the standard semi to lose value but an increase in sales at the top end (such as the Leeson St development) keeps the overall index high.

Politics has certainly played its part, for example the Bacon reports initially followed by McCreevy but later reversed when it looked like they were having an effect. More recently there have been moves to allow councils to force purchase building land already with planning permission ostensibly being sat upon by speculators. I believe the real agenda, however, is to prevent too much land being dumped on the market in the event of a crash (which would be politically very unpopular). To prevent such a crash, a council might sieze land and sit on it themselves thereby limiting supply.

If the government really wanted to prevent a boom (and subsequent bust) in the housing market, they would have rezoned land at a much greater rate and increased the permissible density of dwellings per acre.

bonkey · 19-11-2004 4:45pm

Gurgle wrote:

Do you think a 3-bed semi reaches €800,000 due to the natural to and fro of market forces ?

It could, yes.

Part of the problem is that the government didn't intervene enough, or in the correct manner...depending on how you look at things.

From a capitalist perspective, the market is working perfecty. It boomed, it will peak, it will deflate or burst. The cycle will continue.

From a more social perspective, the market is not so perfect (or, indeed, disastrous, depending on how social you are!).

There's a really interesting law over here, which ties the rent of the house to the mortgage rates. Your rent is effectively fixed, and only varies year-on-year if there are significant moves in the mortgage rate...up or down!

Now...I know ppl in Lucan who bought a house there for somewhere around €100,000, way back when. The going rate in the area today for those houses is somewhere between €250,000 and €300,000. But....if my friends and their fictional "just bought yesterday" neighbour both wanted to rent their respective houses under Swiss law...their neighbour could charge between 2.5 to 3 times what they could...and they can't raise their prices.

Now, in Switzerland (where there is the lowest home-ownership percentage in Europe, I believe), this means that its very difficult to have a massive hike in market prices, supported by rented accomodation, because unless there's a shortage of housing, only the cheaper accomodation will be rented.

So buying in after a certain point doesn't make sense. And if the market goes up...you only get the benefit if you sell...not through increased rent. And if the market goes down...you're stuck with either expensive rent to offer, or taking in reduced rent and having to stump up the rest of the mortgage yourself!!!

Couple that with another law that basically taxes you on house ownership (i.e. you can offset it against your mortgage), and you have a situation where you either have a "permanent" chunk of mortgage which you just pay the interest on every month, or you own your house...which you pay a somewhat larger annual amount to the government in wealth-tax on...and all of a sudden, being a house-mogul isn't a get-rich-quick offer at all (but does offer a reasonable and stable return on investment)

Now, there's still money to be made in housing over here (someone obviously owns the stuff the remaining 70% rent), but it seems to be a very, very stable market. Like I said....its got the lowest house ownership percentage (or thereabouts, if its no longer on bottom spot)...and the system works partly because of that...but you have the effect that because of significant intervention, the market is relatively stable and flat.

So while I wouldn't rule out government intervention being somewhat responsible for the market explosion in Ireland, it surely wasn't the only cause, and there is an argument to be made that it was exactly the market forces which made the house prices reach €800,000.

jc

Victor · 20-11-2004 9:51pm

bonkey wrote:

From a capitalist perspective, the market is working perfecty. It boomed, it will peak, it will deflate or burst. The cycle will continue.

Actually, no. People are being have been given tax breaks to build houses in rural locations that might be occupied for 6 months of the year at best. On the other end of the scale there is hoarding of the limited amount of zoned land in Dublin.

Not very free market.

TomF · 21-11-2004 6:49am

I am guessing that when jobs start to move in earnest from Ireland to Eastern Europe, India and China, the housing bubble will burst with much damage here. It just doesn't seem reasonable to me that large American companies will continue their operations in Ireland when labour prices are so much cheaper in the above regions and countries. The present situation of Irish people borrowing heavily to buy houses in the hopes of getting high rents or large appreciation in prices seems to me to be nearly identical to the denial of reality and history mode that so many were in during the Dot Com bubble.

Cork · 21-11-2004 2:48pm

TomF wrote:

The present situation of Irish people borrowing heavily to buy houses in the hopes of getting high rents or large appreciation in prices seems to me to be nearly identical to the denial of reality and history mode that so many were in during the Dot Com bubble.

It was like the madness leading up to the wall street crash. People believe that if they don't buy today - th e cost in one years time will be greater. Never has there been more houses being built and never have people being prepared to fork out such large sums for them.

FF should have kept the property tax, that they introduced, but certain powerful interests of our society were aganist this.

Christian_H · 22-11-2004 12:23am

Something I forgot to mention which I think is the most overlooked part of the Rental market is TAX.

Your rental income is only taxed if you declare it as income and the Tax is charged there.

In hindsight, if people can avoid paying tax. They will.

Irelands history so far has proven this to be accurate as Revenue crack down on each sizable group they identify, for e,g, Dirt and offershore accounts etc. etc.

Now I think I can safely say that a <b>huge percentage of Rental income is not declared</B> you can bet on it!

If you own 5 houses and declare 1 as income to the Revenue then you can sure as hell bet also the revenue will be happy with this. The Revenue don't have the resources to check the validity of all declarations.

I have always wanted the Dept Of enviroment to ask the Dept of Finance how many individual citizens declare a 2nd house and so on as rental income.

i believe this would prove the point because i imagine its very low.

If it is very low then I propose since the foundation of the state that the Private Rental Sector is one of the largest sections of income in the Irish economy which goes undeclared.

In the last 10 years & itnot the future the state is possibly ignoring billions of potentially taxable income derived from the rental sector.

So not only are housing prices being artificially overvalued by a large minority retaining the majority of landwealth of this country but they are also avoiding paying tax on this income whihc we are paying.

I believe that the private rented market is one that almost entirely resides in the BLACKMARKET.

Not only that but in one year the government payed in the Eastern Health board area over 70million to landlords in the form of rent allowance, thsi money was then probably lost to the black market.

How many times over can the Irish state continue to subsidise these wealthy elite... this is the biggest political timebomb. I won't to call it, for the poeple who have in the past and for those that say nothing who know.

Prove me wrong and I'll be very happy...

Sleepy · 22-11-2004 11:08am

I assume that's why the tax credit for rental accomodation was introduced Christian H. If not, getting the landlords that don't declare their interests to pay tax on it is as simple as advertising the fact you can pocket €254 a year simply by registering for said credit.

Rental market's are certainly slipping. I got a room in a shared house on friday in the same estate as I moved out of 4 months ago. My rent is €113 cheaper a month than it was the last time I lived in that area.

bonkey · 22-11-2004 11:11am

Sleepy wrote:

I assume that's why the tax credit for rental accomodation was introduced Christian H. If not, getting the landlords that don't declare their interests to pay tax on it is as simple as advertising the fact you can pocket €254 a year simply by registering for said credit.

And when the landlord offers to drop your rent by €30 notes a month (giving a €360-yer-year reduction) if you *don't* claim.....

Personally, I'd register and claim regardless of what the landlord was offering for me to help him dodge taxes, but the reality is that most people would look at the 360 (or whatever is offered) and think "better deal..."

Rental market's are certainly slipping.

Well, in fairness....they had become ridiculous. Now they're just slipping back to "extortionate", from what I can see

jc

Christian_H · 22-11-2004 12:50pm

Sleepy wrote:

I assume that's why the tax credit for rental accomodation was introduced Christian H. If not, getting the landlords that don't declare their interests to pay tax on it is as simple as advertising the fact you can pocket ?254 a year simply by registering for said credit.

Thats a good point but it is ridiculous to expect a tax credit to indirectly weed out all the non tax compliant property owners. It puts the tenant in a compromising position adn most don't apply for it sue to a feeling it will somehow look bad! Crazy.

I propose that all landlords be issued with a licsence and for each respective property. All renwed annually. I.e. Just like all the taxis are on the road.

Imagine if 8000 of the 12000 plus taxis on our road didn't display signs and avoided paying tax. Do you think peoeple would stand for it... I suggest we transpose the system that governs Taxis to landlords, if it work there its gotta work in thsi sector of ireland. Its a proven systrem and all the fees are government controlled.

If it didn't work there wouldn't be any taxis on the road so any arguments against it are dishonest.

Its hard looking for a place when you are on Rent Allowance, its has improved but still there is this bigetted view of people on rent allowance I have come across it many times.

Victor · 22-11-2004 6:56pm

Christian_H wrote:

Not only that but in one year the government payed in the Eastern Health board area over 70million to landlords in the form of rent allowance, thsi money was then probably lost to the black market.

That would be difficult as the landlord needs to have a tax clearance cert for the tenant to get rent allowance.

Christian_H · 23-11-2004 10:16am

Victor wrote:

That would be difficult as the landlord needs to have a tax clearance cert for the tenant to get rent allowance.

Thats not the case any more and in my experience it was simply a matter of the landlord/agent signing the forms and providing their RSI number and even now they don't request the RSI number of the landlord.

Which is a relief as it make it easier to get rent allowance if you ever need it.

Boggle · 23-11-2004 2:48pm

I propose that all landlords be issued with a licsence and for each respective property. All renwed annually. I.e. Just like all the taxis are on the road.

Imagine if 8000 of the 12000 plus taxis on our road didn't display signs and avoided paying tax. Do you think peoeple would stand for it... I suggest we transpose the system that governs Taxis to landlords, if it work there its gotta work in thsi sector of ireland. Its a proven systrem and all the fees are government controlled.

If it didn't work there wouldn't be any taxis on the road so any arguments against it are dishonest.

Why bother? If you are getting a house for less, would you honestly give a sh1t if your landlord has a license or not? The result of this would be to drive the landlord with one or two houses out of the rental market as the licences would , no doubt, a) be dear and b) be too tightly controlled(limited). This would make it easier for larger companies to control the rental market and quickly lead to a price increase.

Your case with taxi's however is rather flawed... no signs means no business as no-one would get into a taxi with no sign and people would be less inclined to flag down a general passing car! If no plate meant no tax then it's an easy way for the guards to spot fraudsters (as they are picking people up in town and getting payed for it). Over-regulation in the taxi market has also led to inflated prices, which is the main reason the taxi drivers gave out about deregulation (aswell as the loss from having bought a plate in the first place) as more competition = lower prices.

In my opinion the current tax credit system, if operated properly, is an ideal system. The only flaw with is that you should get a form regularly to inform them(renew) of any changes of address. (I reckon I'm still claiming for an address I had in Dublin 5 years ago!!)

Christian_H · 23-11-2004 3:37pm

Boggle wrote:

Why bother? If you are getting a house for less, would you honestly give a sh1t if your landlord has a license or not? The result of this would be to drive the landlord with one or two houses out of the rental market as the licences would , no doubt, a) be dear and b) be too tightly controlled(limited).

You presuppose too much here.

If the house comes onto the market then someone who _needs_ it can try to buy it, instead of it being horded by a minority. This will keep house prices a distant memory.

This would make it easier for larger companies to control the rental market and quickly lead to a price increase.

I'm sorry but have we not witnessed the free for all unregulated exploitation of all sector of Irish sosciety. Tenants paying crazy rents, people buying houses at crazy prices, lying to their banks. Distorting the market.

I don't see how a regulated market would encourage massive coporations into the market?? What are you saying untracable landlords who could use this seector to launder money etc .. I don't follow you logic.

We liscence PUB, Taxis, Dogs etc. why not Landlords!?

Your case with taxi's however is rather flawed... no signs means no business as no-one would get into a taxi with no sign and people would be less inclined to flag down a general passing car! If no plate meant no tax then it's an easy way for the guards to spot fraudsters (as they are picking people up in town and getting payed for it).

Listen, all houses would have to have a licsence displayed lets say in the HALL or porch.

To find accomd. you look u p the internet or evening heradl for example. Its when you arrive that its important for the prospective tenant to know the landlord is straight up ligit!

Over-regulation in the taxi market has also led to inflated prices, which is the main reason the taxi drivers gave out about deregulation (aswell as the loss from having bought a plate in the first place) as more competition = lower prices.

You have no idea, what you have said is incorrect.

The TAXI fares are set by the Carriage office, which is Goverment. REGULATED. The fares only go up slowly and carfully and are all uniform not randmon and overpriced.

What we have now is a rental market where landlords charge whatever they think they can get.

Imagine if TAXIs tried to charge whatever they wanted!

In my opinion the current tax credit system, if operated properly, is an ideal system. The only flaw with is that you should get a form regularly to inform them(renew) of any changes of address. (I reckon I'm still claiming for an address I had in Dublin 5 years ago!!)

Listen TAX is TAX, its not suppose to regulate social life, it is merely a revenue generating dept. to fund the giovernment who works for US... does anyone have a clue as to what we should expect from Government.

Landlords should be brought to heel throuhg regulation and liscencing. Simple as that.

Christian_H · 23-11-2004 3:46pm

prices, which is the main reason the taxi drivers gave out about deregulation (aswell as the loss from having bought a plate in the first place) as more competition = lower prices.

I forgot to say also, there were less than 3000 taxis before regulation.

It was impossible sometimes to get a taxi. Ever wait 2 hours in a que.. well it was common.

So look now since deregulatio there are over 10,000 taxis. Its so easy to get a taxi now and I take more taxis now that I ever did.

The reason prices went up was to keep the hardcore pre-deregulation taxi drivers happy, appeasement I think they call it.

remember when the TAXI driver went nuts and stopped traffic around the Government buildings and streets one day, were actually very violent. All was captred on RTE news.

Did the Garda got nuts and beat the **** out of them "al la reclaim the streets...." oh NO.

Boggle · 23-11-2004 4:52pm

You presuppose too much here.

If the house comes onto the market then someone who _needs_ it can try to buy it, instead of it being horded by a minority. This will keep house prices a distant memory.

I do not presume too much. This is a govt who will rape you at every opportunity. If licences came in then it is the vested interests (as per usual) who would be able to succesfully lobby and bribe the govt into doing what they wish. The general joe soap who wishes to make a few quid from renting a second home or who needs to take in lodgers to pay for his own home would suffer as renting would now become a difficult thing to do. (I buy a house and decide I want to take in tenants so I can afford to live - this should be simple and not involve me having to apply for a licence and wait the usual 1-3 years for it to come through) Also don't forget that the costs are forwarded on to the consumer.

The wealthy landowner on the other hand is not deterred from hoarding houses as they have efficient systems for this procedure. Anyway, they'd just charge a yearly admin charge.

I don't see how a regulated market would encourage massive coporations into the market?? What are you saying untracable landlords who could use this seector to launder money etc .. I don't follow you logic.
We liscence PUB, Taxis, Dogs etc. why not Landlords!?

You dont get out much do you?? Regulation ightens markets, not the other way around! Pubs: artificially high prices as they are a controlled market. Taxis: Prices kept artificially high by the regulator to appease taxi drivers. Dogs: ??? What do they sell???

Its when you arrive that its important for the prospective tenant to know the landlord is straight up ligit!

Why? Is the house going to run away? All you care about is that the house is okay .. lets face it if they decide to stiff you, you have law on your side and his bank account number so he's easily traceable.

Imagine if TAXIs tried to charge whatever they wanted!

They do! They want more money, they pressure the regulator into increasing the price. As they all charge the same there is no need for competition.

Listen TAX is TAX, its not suppose to regulate social life, it is merely a revenue generating dept. to fund the giovernment who works for US... does anyone have a clue as to what we should expect from Government.

Why fund someone to spend his days running round in circles trying to figure out if a house is being rented out. What you gonna do? Go to every licensed house and ask if they are tennants? Its ore efficient to offer everyone a minor tax break on a made up tax if they provide you of details on who owns and benefits from each property. You know the rent, the no. occupents per house, no house per landlord i.e. you have all data on file to be checked against the revenue databases... no legwork!

Boggle · 23-11-2004 4:56pm

The reason prices went up was to keep the hardcore pre-deregulation taxi drivers happy, appeasement I think they call it.

So you admit that prices are artificially high because of the regulation of the market? How is this good for the consumer? (please tell me your not thinking about a career in politics!!!)

bonkey · 23-11-2004 5:02pm

Boggle wrote:

You dont get out much do you?? Regulation ightens markets, not the other way around!

Regulation can do both.

Boggle · 23-11-2004 5:18pm

Regulation can do both.

Regulation generally implies that you need permission to enter a market, which invariably deters competition. I am struggling to find an example whereby restricting access to a market has had good effects on the consumer... could you provide some examples?

SkepticOne · 23-11-2004 5:35pm

Boggle wrote:

Regulation generally implies that you need permission to enter a market, which invariably deters competition.

But regulation can simply mean the maintanence of quality and price and need not have anything to do limiting numbers. Somewhere along the line, vested interest groups got it into their heads that the purpose of regulation was protection against competition. The taxi drivers found out that this was not the case.

Boggle · 23-11-2004 5:48pm

But regulation can simply mean the maintanence of quality and price and need not have anything to do limiting numbers.

Regulation should solely deal with quality and nothing else. As long as something is safe to be sold then it should be sold - when you attempt to interfere with pricing or market entry conditions you always end up hurting the consumer.

bonkey · 23-11-2004 5:50pm

Boggle wrote:

Regulation generally implies that you need permission to enter a market, which invariably deters competition. I am struggling to find an example whereby restricting access to a market has had good effects on the consumer... could you provide some examples?

There's no shortage of them.

Would you suggest that we - the consumers - would be better off with a market that allowed highly flammable materials to be used in clothes? Sharp objects in kids toys? No quality-levels associated with what can, and cannot be sold as food or drink?

All of these are forms of regulation - they are the government intervening to dictate what is, and is not, permissable in a given market.

The abolition of child-labour, minimum working wage, Health-and-Safety in the workplace,etc. : These too are all examples of regulation. Would you suggest that we would be better off without them?

In terms of competition...BT had its hands tied for over a decade after de-monopolisation of the British network in order to allow competition to develop. That was regulation of the marketplace from day 1. The same approach is currently being used (although less well) with ESB. Similarly, the Monopolies Comission's very purpose is to ensure that a monopoly doesn't abuse its position in one market to gain an advantage in another....which means that the MC's job is to regulate monopolies to encourage competition.

The world is simply rife with examples of regulation being a positive for the consumer, examples of regulation being there to assist competition, and so on.

jc

jank · 23-11-2004 6:42pm

Aside from regulations, I strongly believe that when interest rates increase as that are forcast to do then it will be the final nail in the coffin of the housing boom. Too few people buying too many houses at huge prices. Many of these houses are miles from anywhere and are just commuter houses.

Christian_H · 23-11-2004 11:59pm

Boggle wrote:

I do not presume too much. This is a govt who will rape you at every opportunity. If licences came in then it is the vested interests (as per usual) who would be able to succesfully lobby and bribe the govt into doing what they wish.

Are you crazy! The TAXI market was de-regulated, i.e. No limits where placed on the amount of people who could apply for a licsence. It still has regulation regards rules of procedure & tariffs, but it is an open market for all to enter the market with an equal intial investment.

The problem that built up was that very irresponsible TAXI plate owner who know deregulation was comming very soon sold their plates at huge costs to a few stupid people who hadn't a clue. When de-regulation came in some of these people had their TAXI plates devalued by as much €75,000!!

These poor idiots had gone and gotten mortgages to pay for a public/council TAXI liscence.

The same is happening in the PUB industry, it so difficult to get a pub liscence that pubs sell for millions now. Exactly the same as did TAXi plates at one stage and just like Houses.

The general joe soap who wishes to make a few quid from renting a second home or who needs to take in lodgers to pay for his own home would suffer as renting would now become a difficult thing to do.

The only reson this "joe soap" would have difficulty affording a house is because they have just paid 300,000 or some other ridiculous price for a house.

(I buy a house and decide I want to take in tenants so I can afford to live - this should be simple and not involve me having to apply for a licence and wait the usual 1-3 years for it to come through) Also don't forget that the costs are forwarded on to the consumer.

Where are you going with these presumptions?!?! 1-3 years... do be stupid. In relaity to get a liscene it will take a matter of weeks not years.

the consumer is paying throuhg the Nose already here thus my demand to see proper and open regulation of the housing market. So your point is irrelevant.

The wealthy landowner on the other hand is not deterred from hoarding houses as they have efficient systems for this procedure. Anyway, they'd just charge a yearly admin charge.

What systems? MONEY? If you have loads of money you can borrow more and thus by more and so on... is this the magic system you talk of?

You dont get out much do you?? Regulation ightens markets, not the other way around! Pubs: artificially high prices as they are a controlled market. Taxis: Prices kept artificially high by the regulator to appease taxi drivers. Dogs: ??? What do they sell???

I do, I get out a lot. In fact I talk to hundreds of people a week. I have talked to many people o this issue and spend so little of my time virtually expousing this issue.

Yet as pointed out before the PUB sector is suffering from the same problem the TAXI sector has just been "shocked" out of overnight. There is such poor competition in the Drink sector thats its jsut not funny, agian their is a situation where a liscence has become a commodity. The home has become a commodity and this is a dangerous way of dealing with housing.

Why? Is the house going to run away? All you care about is that the house is okay .. lets face it if they decide to stiff you, you have law on your side and his bank account number so he's easily traceable.

No offence but you show complete ignorance on this issue. It is frightening how few right you have as a tenant. If you buy a TV you have more rights o recourse if things go wrong but if you rent, forget about it.. everything has to go to arbitration. Its protracted and longwinded. Over the decades so many judges have awarded judgement in favour of the landlords in
a manner that defies social logic of justice.

for e.g. Orignally, if you lived in a residence for 20 plu 1 day you had a right to remain there as a tenant for as long as you lived! (wow what security of tenure)

However if you conducted some amount of business there, perhpas you did accounts at home then. Then after 5 years you could claim permanent tenacy rights.

This issue came to court in one instance where a couple claimed that the wife did the books for the hubby at the weekend therefore they had a right to stay. Grand and dandy, but now if you look at all those pityful leases they throw at you there is a clause, indicating tha "you cannot practice or use the property in a professional", i.e so you cannot invoke the 5 year tenacy right as outlined above.

Oh there is more but I can't go into the details....

They do! They want more money, they pressure the regulator into increasing the price. As they all charge the same there is no need for competition.

WHAT???

Why fund someone to spend his days running round in circles trying to figure out if a house is being rented out. What you gonna do? Go to every licensed house and ask if they are tennants? Its ore efficient to offer everyone a minor tax break on a made up tax if they provide you of details on who owns and benefits from each property. You know the rent, the no. occupents per house, no house per landlord i.e. you have all data on file to be checked against the revenue databases... no legwork!

I'll tell you WHY!

So much of this money, billions is in the blackmarket and is not going into the tax system thus the greed and tax avoidence of the few, which turns out is so massive in value is causing us to pay higher tax and not have enough to pay for health or to infact build houses for poeple hwo need them.

19bn GDP/GNP (one or the other) a year in this country is paid in rents. If even 10% of this is going untaxed it causes a huge distortion.

Look if you want to go live in a world where the few own nearly everything and charge you for the privlege of living the go ahead! Enjoy your slavery to the wealthy but not on my watch. **** that!

Does anybody ever stop for a minute and think... WHY? Why property rights, why should people inherit so much property, why should peole be allowed to own LAND, is it not Land which underlines the strenght and security of the state its only wealth generating Asset, yet it in the hands of a private few?

Who Owns Ireland... well its not the public... its a bunch of old grubby Landowners. Thiefs... we should not repect inherited right of ownership except that of the people whom the government represents whos needs are first and not there to serve the needs of this eltiest parasites.

SkepticOne · 24-11-2004 12:31am

Christian_H wrote:

Listen TAX is TAX, its not suppose to regulate social life, it is merely a revenue generating dept. to fund the giovernment who works for US... does anyone have a clue as to what we should expect from Government.

Landlords should be brought to heel throuhg regulation and liscencing. Simple as that.

Of course, if landlords are taxed (as they should be, imo, no one should be exempt), the landlords will simply up the rents by a corresponding amount. It is, of course, out of the tenants pocket that this tax will ultimately be paid.

madmorphy · 24-11-2004 3:26am

I think a house price correction is definitely on the way.As others have said rents are dropping,rental prices around me are e150 pm lower than they were 12 months ago.If professional landlords start offloading houses on top of all the new supply,prices can only start dropping.
If this happens it will be the same edjits who bought eircom shares who'll be caught again,virgin landlords who recently bought second homes by releasing equity in their own home for a deposit but who have huge mortgage repayments.All because some person in the pub told them u couldn't lose,this was the same person who told u about the pyramid scheme that couldn't lose either.Remember the one where u put e1000 in and u get e7000 back,how i laughed at a girl one night who for 2 hours tried to convince me she could not lose

but still couldn't tell me where the e6000 grand was supposed to come from without ripping someone she knew off.

Boggle · 24-11-2004 11:04am

Are you crazy! The TAXI market was de-regulated, i.e. No limits where placed on the amount of people who could apply for a licsence. It still has regulation regards rules of procedure & tariffs, but it is an open market for all to enter the market with an equal intial investment.

Rules re tarifs = no real competition as they all charge the same. Dunno if you take many taxi's but they are extortionate, even compared to hackneys. While there are more taxi's around - there is still no competition in prices.

The only reson this "joe soap" would have difficulty affording a house is because they have just paid 300,000 or some other ridiculous price for a house.

Do you actually think a licencing system would actually change that? TWhat you propose places no barrier to large estate agents leasing hundreds of houses - the only people it would affect are the people leasing to pay for a second home or who need tenants to ppay the mortgage ... in which case it wouldn't change anything.

Where are you going with these presumptions?!?! 1-3 years... do be stupid. In relaity to get a liscene it will take a matter of weeks not years.

the consumer is paying throuhg the Nose already here thus my demand to see proper and open regulation of the housing market. So your point is irrelevant.

I love it when people dismiss points as irelevant.... Ever applied for a grant in college? Shouldn't take long, should it? I got my last years grant the summer after I finished college at which stage I was struggling to pay off a student loan as well as having had to work long hours while at college to survive.

What systems? MONEY? If you have loads of money you can borrow more and thus by more and so on... is this the magic system you talk of?

You sound like a politician anyway. You have no clue whatsoever. If you want to read the point and argue against it, please do so. Otherwise, dont be an idiot.

The home has become a commodity and this is a dangerous way of dealing with housing.

Your proposal will not go very far towards dealing with this issue. Better focus energies on dealing with the culprits. Anyone/ any company who owns 5 or more houses is in it for capital wealth. House prices are inflated by people hoarding property to keep the prices artificially high. It seems to me that a limit on the amount of property one could own would be a better approach to tackling house prices.

No offence but you show complete ignorance on this issue.... [tenants rights]

No offence, but your proposal doesn't address any of those issues. You are pushing a licensing system, to register landlords for tax purposes. While the few landlords who receive tax might feel aggrieved at being forced to pay tax, it wont deter people from letting .... and it wont ensure more money into the coffers either as it would be easier to dodge than even the current system (if used properly).

Look if you want to go live in a world where the few own nearly everything and charge you for the privlege of living the go ahead! Enjoy your slavery to the wealthy but not on my watch. **** that!

NOT ON MY WATCH!!! - I understand that you may want whats best, but in effect this proposal would make no impact whatsoever to peoples lives. Making people register as landlords and be licenced wont do very much for people. Better defined laws re housing and letting would. More efficient, cost effective systems would. Harsher penalties for landlords who abuse the law would.

Please note, in many cases you have just dismissed arguments and points you didn't like as waffle. If you are unwilling to debate something then at least dont be ignorant about it... but if you cant argue your point with some bloke bored at work then best stay away from politics mate!

RainyDay · 24-11-2004 11:24pm

Gurgle wrote:

I checked on this a couple of years ago (when I was thinking of buying a second house to rent out ), the tax is paid as earnings (at 42%) so the longer you have the mortgage the less of the payment is interest and more is subject to income tax.

So if the rent charged is the same as the mortgage repayments, the owner will have to make up the difference lost to tax. If house prices (and therefore rents) stop rising then as the mortgage gets older a lot of people will find it difficult to hang on to their second house.

You are missing one important point - the crazy anomoly in the current tax system whereby investors get uncapped tax relief for mortgage interest paid and home-owners have a fairly low cap (€6k iirc) on the interest relief available. This ensure that investors are able to outbid residential purchasers when they are competing for the same house, courtesy of the subsidy at the taxpayers expense.

It also means that it is the best interests of the investor to keep their mortgage interest high in order to minimise their tax bill. In fact, even when they have spare cash available to reduce their mortgage, they are better off putting this cash on deposit (at approx 2.6%) and keeping their mortgage high, as the state will pay out 42% of their mortgage interest bill via the tax relief. This is why interest-only mortgages are so popular with investors, as the state subsidises their interest bill. This needs to be addressed urgently, but I'd have little hope that the FF guys who depend on the builders to cough up their donations in the FF tent at the Galway Races will do anything useful here.

Christian_H · 25-11-2004 11:57am

SkepticOne wrote:

Of course, if landlords are taxed (as they should be, imo, no one should be exempt), the landlords will simply up the rents by a corresponding amount. It is, of course, out of the tenants pocket that this tax will ultimately be paid.

We as a People have a Government, that can regulate against this and has to some extent already so if the Revenue crack down on non-declared incomes while the correct laws are in place to tackle price hiking then it works.

You see the tax as it is not VAT like all other goods but on the income declared.

So the landlord could be a doctor, have a practice perhaps 5 apartments in Dublin and a house in Spain (on a golf course, ugh)

This Doctor/Lanlord could be earing the following,

500,000 (professional practice)
72,000 (rents 5 x ?14400 per year)

572,000

if he only declares one house, as income then to the revenue its going to look like this,

i.e. he has only 514,400, as taxable income.

So what about the lost 57600!!!!
#
Remember that house in Spain, yeah well the rental income from one back in Ireland probably paid for this house and next years rent will go towards houses in turkey, Budapest etc etc

Just imagine if there are 200,000 rented units in Ireland.

THE MARKET OVERALL

Now lets say only 40,000 are ever declared as income and the average rent is 12,000 p/year.

2,400,000,000 (Value of Incoem from Rental sector)
- 480,000,000 (declared rental income)

- 1,920,000,00= undeclared income

Potentially there is 1.92 billion of undeclared taxable money floating around and slipping out of the economy and not being declared and taxed and reintroduced for the civic good.

Ok these figures are hypothectical but I think it could be somethign close to this, what is true no one actually knows what the numbers really are...

The rental sector being one that is mostly in the black avoids being properly included in informed coverage/anlysis of the housing sector, is the reason prices are artificially high.

I think the Rental market is possibly one of the largest sectors of tax non-compliance and downright lies, cloak and dagger style.... its a big story, no one covers it and when the **** hits the fan in hindsight people will discover this truth.

Gurgle · 25-11-2004 12:32pm

SkepticOne wrote:

Of course, if landlords are taxed (as they should be, imo, no one should be exempt), the landlords will simply up the rents by a corresponding amount. It is, of course, out of the tenants pocket that this tax will ultimately be paid.

When the rents go up too much, more renters become buyers.

eg. landlord buys a house for €300k, mothly payments are about €1200 (ish) over 30 years.
So he charges €1200 per month rent ?
Even if he pays no tax he will still be out of pocket for all repairs and upkeep.

If the current rental-tax laws were enforced, then to cover costs he would have to charge at least €1500 per month.
Many tenants would go and buy a similar house for themselves, reducing their monthly bill to €1200 (minus a pissy little bit of tax relief on a tiny portion of the interest).

Sure, there are people who will just pay the €1500. Not indefinitely though, especially as the number of houses in the country is finally approaching the number needed.

I don't see a crash coming but I think prices will slow their increase rate.

If they slow to below the national inflation figure, thats an effective decrease in the property value and over a few years will bring the prices to a more reasonable level.

Gurgle · 25-11-2004 12:37pm

RainyDay wrote:

the state will pay out 42% of their mortgage interest bill via the tax relief.

Correct me if I'm wrong but isn't it 20% as its tax credits now rather than tax relief ?

bonkey · 25-11-2004 12:54pm

Gurgle wrote:

When the rents go up too much, more renters become buyers.

Is this just an opinion, or an established trend?

Ireland's high home-ownership seems to be independant of rent cost (i.e. it was always high, whereas rent costs are only recently beginning to become extortionate).

Many tenants would go and buy a similar house for themselves, reducing their monthly bill to €1200 (minus a pissy little bit of tax relief on a tiny portion of the interest).

Nice theory, but if thats the case, then surely it will apply whether the rent is 200/month or 2000/month, based on a house costing X or 10X) and so has nothing to do with raising/lowering/maintaining prices?

Sure, there are people who will just pay the €1500. Not indefinitely though, especially as the number of houses in the country is finally approaching the number needed.

The problem isn't the number of houses in the country. If you live in Cork, would the availability of a house for you in Donegal be much use? The problem is localised supply and demand, most focussed around Dublin.

jc

Gurgle · 25-11-2004 3:20pm

bonkey wrote:

Is this just an opinion, or an established trend?

Purely an opinion but based on experience

bonkey wrote:

Ireland's high home-ownership seems to be independant of rent cost (i.e. it was always high, whereas rent costs are only recently beginning to become extortionate).

Recently as it the last 5-10 years.

bonkey wrote:

Nice theory, but if thats the case, then surely it will apply whether the rent is 200/month or 2000/month, based on a house costing X or 10X) and so has nothing to do with raising/lowering/maintaining prices?

Rent is always going to be directly linked to the current market value of the property. On the day its bought, the landlord's repayment costs are set (provided interest rates remain the same). If the house fails to increase in value then he can't expect to get (much)more in rent than his repayments are.

With the last decade's rate of increase, a year after you bought a house you could rent it for significantly more than your mortgage, making the whole thing extremely profitable and enticing to investors - easy cash.

If the prices stop going up, the easy cash dries up. Property would still be a great investment as a nest-egg for retirement but not much use as a cash-cow business as it is now. You would have to put money into it every month. The return in 30 years when the mortgage is paid off is still excellent in comparison to the actual amount put in but this still rules out anyone who doesn't have the extra income to put into it.

bonkey wrote:

The problem isn't the number of houses in the country. If you live in Cork, would the availability of a house for you in Donegal be much use? The problem is localised supply and demand, most focussed around Dublin.
jc

I doubt if anyone living in Cork would be looking at the Donegal Democrat for houses. The availibility of houses isn't quite that limited.

Besides, Ireland is small, people move around a lot.
I've lived in Sligo, Dublin, Cork and Meath in the last 10 years.

Victor · 26-11-2004 2:01pm

Boggle wrote:

Rules re tarifs = no real competition as they all charge the same.

It's a maximum tariff, I have often had drivers round down the amount from say 6.40 to 6.00

Boggle wrote:

there is still no competition in prices.

There is competition in service (especially in the corporate market).

Gurgle wrote:

Correct me if I'm wrong but isn't it 20% as its tax credits now rather than tax relief ?

No, you seem tot be wrong. The landlord would be reducing the amount of tax he pays at the highest rate, which would be typcially 42%.

Boggle · 26-11-2004 4:43pm

It's a maximum tariff, I have often had drivers round down the amount from say 6.40 to 6.00

I know what you are saying but in effect its a guideline price . ... i.e. its what you'll get away with charging. It could be argued that if this was removed then they would be free to increase their charges further, but you would also remove their excuse for having such a price (i.e. its a deemed acceptable price).

And while there is competition, I dont believe their is a sufficient level of comp yet to give any level of price comp. (Anyway, there's no prices on display on the exterior of the taxi to encourage comp)

FF, Housing & Landlords

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