Property Investors are Scum

Horeb

This maybe a subject touched on before, but as I am new I thought I would look for opinions.

Now I am not a loneey lefty but a realist and I am getting sick of this culture of people buying houses for merely the purpose of investment.

Why, well I believe each couple, tax payer and person really in need should have there own home but not "2+".

It makes me sick with the government almost encouraging people to accumilate masses of houses to rip off poor tenants.

Now, I thought the 1916 rising and the subsequent War was to boot out all the landlords from this country but we have merely replaced them with big ba5tards that the previous occupants.

I amongst other people am sick of the sick price of houses in any part of the country especially here in Dublin.

What are peoples opinions off "Investors" and "Landlord Scum".

bonkey

Nothing to do with politics.

Horeb

It is a political issue....

It is something that would change an election vote...

DoctorEdgeWild

Are you suggesting that we curb the right to own property?

OfflerCrocGod

DoctorEdgeWild wrote:

Are you suggesting that we curb the right to own property?

Maybe make it easier for first time buyers and make it harder for third or fourth time buyers and progressively harder for people to make a buck out of houses the more they own, especially if the only purpose for owning extra houses is to rent them out. They are pricing people out of the market - first time buyers are not exactly helped by these people.

DoctorEdgeWild

This is true OfflerCrocGod, but it might be hard to implement. I do see the problem though, as a 23 yr old dude who has pretty much no chance of ever getting a house.

I dont however subscribe to the anti rich sentiment which sometimes surfaces during debates of this kind (not you personally btw) All too often, taxing of the rich is proposed as a solution to poverty but surely equal taxation for all regardless of monetary wealth. To me this is the same as taxing poor people. It's all just discrimination based on wealth.

Anyhoo, back on topic, I would like to see tax breaks for those buying property for the first time. Maybe fixed term loans with rewards along the way to reward savers? I dunno, any suggestions?

oscarBravo

OfflerCrocGod wrote:

make it harder for third or fourth time buyers and progressively harder for people to make a buck out of houses the more they own, especially if the only purpose for owning extra houses is to rent them out.

How?

rander00

Errrr,,,, if someone wants to buy houses to rent them out, thats their right.

My sister inheritated our grannys house, and has another house of her own.
She rents the 2 of them out, and has moved back home to the family house to do this. While she saves and works to get a 3rd house?

So before she even does her weeks work, she has 2 rents in the bag for tat week aswell.
Whats your problem? Should people not be able to use their inititive and make money? If you cant afford it, well tough shhit.

OfflerCrocGod

oscarBravo wrote:

How?

Well tax breaks or incentives for people selling houses to first time buyers and for first time buyers buying a house. So that if there are two people interested in a house the first time buyer can get it for cheaper, also if there are any costs associated with selling the house if it's sold to a first time buyer the costs are lessened for the seller. Just anything which makes it easier for first time buyers, maybe a national database which first time buyers can join and which builders have to register with and first time buyers are given preference on new houses built using the database to link property with prospective owner. Getting the goverment to set up it's own lending scheme with very low interest (or none) which first time buyers can use instead of relying on banks. Generally make it easier for first time buyers to enter the market.

SkepticOne

The problem with simply giving an increased first-time buyers tax-break is that it stimulates demand. If there isn't a corresponding increase in supply then prices will simply rise accordingly and things will be out of reach for first-time buyers once again. In itself this solves nothing.

You could have a corresponding disincentive to second or third house buyers. This might counter the increase in demand from first-time buyers, however the downside is that those renting (and there will always be those who need or want to rent) will be squeezed as things shift over to owner occupiers.

The only real answer is to increase supply - this would mean lower prices for both renters and first-time buyers. I think the problem isn't so much that there are those who own three or four houses, but rather that the overall price of a home for a first time buyer is too high. This is not simply due to landlords since if they were to be forced to put their extra properties on the market (and stop being landlords) you would have a huge batch of extra people (the former renters) now forced to buy homes thereby increasing the prices once again.

The problem is that there's more people with money now seeking accomodation and there aren't enough units to go around for the amount of money people want to pay.

The whole thing is complicated at the moment due to the fact that there's a speculative bubble. When this has sorted itself out as they always do, things will become a lot clearer. One advantage (at least for those trying to buy) of the speculative bubble is that, thanks to the builders desire to make as much money as possible, a huge amount of houses have been built in the last few years. When the bubble ends, there may well be a large amount of cheap housing for first-time buyers.

It is difficult to say when the burst will occur but there are signs (flats going unrented, houses going unsold) that it is fairly immanent. If it doesn't happen soon, however, then you will need to wait until after the SSIAs mature as these will give a temporary boost to the market.

impr0v

Why have you this burning desire to own an over-priced property of your own anyway? It's this illogical need for property that is as much to blame for the property lottery as the investors you are pillorying. Rent, and enjoy a higher quality of life (much more disposable income), the ability to change your scenery on a whim, and let the 'scum' worry about the risk.

Horeb

Thanks for the comments guys.

At the end of the day, first time buyers are getting screwed by greedy investors and as for people who invest houses that is a different matter, why because it was a gift given to them.

Sleepy

impr0v wrote:

Why have you this burning desire to own an over-priced property of your own anyway? It's this illogical need for property that is as much to blame for the property lottery as the investors you are pillorying. Rent, and enjoy a higher quality of life (much more disposable income), the ability to change your scenery on a whim, and let the 'scum' worry about the risk.

Well, given that by renting you're throwing money down the drain, whereas by buying your own place you're putting pretty much the same amount of money into your own mortgage (thereby increasing the percentage of the house that you own) you're not throwing that money away, it makes financial sense to buy your own apartment/flat/house.

I think far too much emphasis is put on the "Irish" obsession with land. Sure it's true we were obsessed with owing our own land when we were a predominantly agricultural country because then having land meant you had a livelihood. Now we're still driven to purchase our homes because quite simply it makes more financial sense to pump 12K into a mortgage than it does to hand it to a landlord.

Captain Trips

Horeb-Security wrote:

This maybe a subject touched on before, but as I am new I thought I would look for opinions.

Now I am not a loneey lefty but a realist and I am getting sick of this culture of people buying houses for merely the purpose of investment.

Why, well I believe each couple, tax payer and person really in need should have there own home but not "2+".

It makes me sick with the government almost encouraging people to accumilate masses of houses to rip off poor tenants.

Now, I thought the 1916 rising and the subsequent War was to boot out all the landlords from this country but we have merely replaced them with big ba5tards that the previous occupants.

I amongst other people am sick of the sick price of houses in any part of the country especially here in Dublin.

What are peoples opinions off "Investors" and "Landlord Scum".

There's definitely a hosue you could buy, but you want it in Dublin, the capital of an expensive country. If you can't afford it, go outside Dublin or get a job that pays more.

Realistically, I'd love a 2 bed in NYC, but so do a million other people, so it costs 800,000 for 700sqf in Battery Park. You want a 2 bed in Dublin, so does every body else, so how do you decide who gets it or not? A lottery? Citizen 2783474 you have won the right to live in Ballsbridge. Your sister, citizen 2783475, she got Donegal.

I mean, WTF? That's life, dude.

impr0v

Sleepy wrote:

Well, given that by renting you're throwing money down the drain..

I give money to my landlord and he lets me stay in a house he owns. He might throw it down the drain after I give it to him, but I still get the benefit of the accommodation either way. Personally I've never felt the need to dispose of money in that way.

Sleepy wrote:

..whereas by buying your own place you're putting pretty much the same amount of money into your own mortgage (thereby increasing the percentage of the house that you own)...

Hmm. So say I want to put my rent money into a magical mortgage rather than give it to my landlord so that he can indulge in flushing some more of it, I go the kindly local bank and say, so what can I get for this much? I can get a 68k mortgage over 30 years. Just enough for a well spec'd 5 series, but in terms of property it doesn't even entitle me to (switch to Don Wycherly voice) log on to myhome.ie. If I multiply my current rent by three and half times, then I could afford the repayments on the house I'm currently in, over 30 years. So I pay my landlord x amount to live here, or I pay my bank 3.5x to live here, the choice seems fairly simple to me. Sure using method B, I'll finally get to say 'I own this place' when I'm 56, but that doesn't really seem all that appealing to me, considering what a pain it would be to set aside that money each and every month between now and then.

you're not throwing that money away, it makes financial sense to buy your own apartment/flat/house.

Not to me it doesn't, I can do much better things with that 2.5x between now and my 56th birthday, or the 559x in total that I will be giving to the bank for their lending services.

If you are desperate to get that idyllic lifestyle choice pad that the models are playing around in on the scheme billboard, while it still looks like a greenfield site, then my advice is to wait until you can afford the repayments on a 20 year, rather than 30 year mortgage. This can save you up to 100k in interest, obviously depending on lump sum and the rate, which will get you a lot of rental time.

Sleepy

I don't know what kind of rent you're paying or what kind of accomodation you're living in improv but surely you can see my point.

Typical rent in Dublin is about €400 a month to share a house with a few others, €500 to share a 2 bed apartment with a friend/partner. So let's use the example of a couple living together (given that this is the most common circumstance in which someone buys a property). That gives a total of €12,000 a year which you can either pay a mortgage or pay rent with.

A mortgage for €250,000 can be paid back within 35 years at €1047.76 per month (granted that's an extra 47.76 a month but I think most people could find the extra fifty quid a month).

So, let's say you live in the apartment for five years. If you've rented, you've paid the landlord €60000 between the two of you. If you've paid the mortgage, you've paid the bank back €62865

You move out of the apartment, if you've been renting, you get your deposit back which has been depreciated by the time value of money. The mortgage you've been paying back at an APR of 3.65%. So, assuming you sell the apartment for the same €250K you paid for it (extremely conservative given that it will probably have appreciated in value). From a quick calculation on this, the balance of your mortgage after the five years will be: €231,117. Which leaves you a balance of €18,883.

Now, given that you paid an extra €2865 into your mortgage over these 5 years we have to subtract that from the €18,883. SO you're left with a value of €16,018. It's not much, but you're still 16K better off than the couple who rented for the 5 years (and this was worked out taking the massive liberty that house prices woudn't increase by a single percent over the 5 years).

NOTE: all percentage figures, monthly mortgage repayment figures etc taken from: http://www.bankofireland.ie/html/gws/personal/buy_house/index.html

Chalk

whats the deposit needed on a house/mortgage these days?
i assume around 10%
makes it quite hard for someone to whip together.
what about actually getting the mortgage.
ive been with aib for 6yrs
two in sc hool
one in colllege
never been out of work
they wontr even give me a laser card.
renting is alot easier as i all i needed was a job reference and the cash.

people talking about mortgages like its getting a pizza delivered always makes me wonder why its so easy for some and hard for others

Sleepy

Chalk, there's a lot of factors to consider. Obviously your income level plays a large part, however the nature of your employment is also of importance (for example, vets, doctors, dentists and solicitors can all get 100% mortgages) as different careers have varyind degrees of sensitivity to the economy of a country (e.g. a doctor's services will be required just as much in a recession as in a boom). Other factor's include your previous credit record (it's actually to your benefit if you've borrowed money before and paid it all back according to the schedule of the loan as opposed to someone who's never needed a credit facility. Again, a proven history of saving weighs heavily in your favour as it demonstrates that you have the ability to pay back the loan as you've been able to live without spending all your wages in the past).

Finally, having family in the bank is also a major factor in your favour if your Mum/Dad happen to work with one of the major banks

impr0v

Fair enough, your example makes sense as long as the bank allows one to buy back a mortgage as per the example, with no compensation for the amount of interest they would have made should the mortgage have run it's full term.

However, the situation is still as per my post, in that it dosen't make sense for me. Your example takes for granted the presence of a partner willing to play house, and a city rent, where when you combine the two rents the difference between that amount and the mortgage repayment is relatively small. Take one single bloke renting in a county town and the difference is a lot greater.

Also, have the rules about multiple of salaries changed, because the general rule of thumb was, and still is to my knowledge, that institutions will lend a couple 2.5 times their combined salary. This means the couple in your example would need a combined salary of 100k.

SkepticOne

impr0v wrote:

Also, have the rules about multiple of salaries changed, because the general rule of thumb was, and still is to my knowledge, that institutions will lend a couple 2.5 times their combined salary. This means the couple in your example would need a combined salary of 100k.

Thats where the fake P60 come in.

therecklessone

impr0v wrote:

Also, have the rules about multiple of salaries changed, because the general rule of thumb was, and still is to my knowledge, that institutions will lend a couple 2.5 times their combined salary. This means the couple in your example would need a combined salary of 100k.

They've changed, but how much I can't say. I know BOI will give a single applicant 4.5 times their salary, and I've just used their mortgage calculator to check how much a couple earning a combined total of €40000 (25k + 15k) would get. Answer? €180000, 4.5 times the combined total.

Sleepy

impr0v wrote:

Fair enough, your example makes sense as long as the bank allows one to buy back a mortgage as per the example, with no compensation for the amount of interest they would have made should the mortgage have run it's full term.

That's an illegal practice, the banks are no longer allowed to charge you a premium if you pay back the mortgage in it's entirety before the full term of the finance agreement.

However, the situation is still as per my post, in that it dosen't make sense for me. Your example takes for granted the presence of a partner willing to play house, and a city rent, where when you combine the two rents the difference between that amount and the mortgage repayment is relatively small. Take one single bloke renting in a county town and the difference is a lot greater.

Well, again buying a house/apartment in a country town is a lot cheaper and I would presume that the rent:house price ratio is hardly that much different. Yes, I do make the assumption that you have someone that's prepared to buy a house with you because quite frankly, that's the same situation you're living in unless you're somehow managing to rent your own house/apartment without sharing with others and for less than the price of a mortgage (e.g. a 1 bedroom flat in Dublin will cost upwards of 1K a month whether you're single or a couple).

Also, have the rules about multiple of salaries changed, because the general rule of thumb was, and still is to my knowledge, that institutions will lend a couple 2.5 times their combined salary. This means the couple in your example would need a combined salary of 100k.

As already pointed out by therecklessone, the standard is now 4.5 times your salary though the Banks are far more flexible on this than they used to be and if they feel that you've demonstrated that you can pay the mortgage amount (and these can be reduced by availing of the longer term mortgages now available - up to 40 years in some cases).

impr0v, don't get me wrong, there's no way I could buy my own property at present as I'm a single, 24 year old bloke at the bottom of the corporate ladder. That said, a friend of mine and myself have looked at the possibility of buying a two bed apartment together and getting some legal document drawn up that ties us in to the investment for a few years. Assuming that house prices were to continue to rise by at least the variable interest rate (which is normal for the last god know's how many years and we're still a growing economy) the end result would effectively mean that we'd get back whatever we would have spent on Rent over those five years (50/60K+ between us).

It's practically impossible to buy a house/apartment on your own in this country unless you're on an extremely good salary but with a little creativity, you can escape the rental market.

skywalker

impr0v wrote:

Why have you this burning desire to own an over-priced property of your own anyway? It's this illogical need for property that is as much to blame for the property lottery as the investors you are pillorying. Rent, and enjoy a higher quality of life (much more disposable income), the ability to change your scenery on a whim, and let the 'scum' worry about the risk.

out of interest. what do you intend to do when you retire and can no longer afford the rent?

MrPudding

For me the main reason to buy rather than rent is the old nest egg thing. I want to have a couple of properties by the time I retire, a nice little boost to the pension. Trouble is I can’t even buy 1. Myself and my partner pay over €19 000 per year in rent. That would be a fairly big mortgage. The problem is the deposit and until recently the stamp duty. It is hard to scrape 20 to 30 grand together when you have really high rent. We do save quite a bit of money but it is not happening fast enough.

For me, renting is a necessary evil. I would not say it is money wasted as it provides my family with a very comfortable house. I would call rent “money not put to the best use.”

MrP