Thinking of renting out house....

josiegrosie

Bit of advise please!

I am considering renting out my two bed house in Dublin 15 - I don't want to sell it because I wouldn't get a great price for it and I'd rather leave it for a few years. We need to move south of the river because of OH working hours - the commute is killing him.

Out problem is that when we bought it we were first time buyers and would have to pay the stamp duty claw-back if we "officially" rented it out before October 31, 2008. I have absolutely NO PROBLEM registering with the PRTB after that and losing the TRS, but before then, we'll have to rent if out "under the table".

I've sent out emails to friends to gather some interest - but am hearing nothing back.

Our only other option is to take a risk and rent to strangers - and run the risk of them ratting us out to the Revenue.........

Thoughts?

Should we just stick it out till the end of the year and do it above board or start right away?
We're not looking to make a profit - just cover the mortgage...

beeno67

josiegrosie wrote: »

Bit of advise please!

I am considering renting out my two bed house in Dublin 15 - I don't want to sell it because I wouldn't get a great price for it and I'd rather leave it for a few years. We need to move south of the river because of OH working hours - the commute is killing him.

Out problem is that when we bought it we were first time buyers and would have to pay the stamp duty claw-back if we "officially" rented it out before October 31, 2008. I have absolutely NO PROBLEM registering with the PRTB after that and losing the TRS, but before then, we'll have to rent if out "under the table".

I've sent out emails to friends to gather some interest - but am hearing nothing back.

Our only other option is to take a risk and rent to strangers - and run the risk of them ratting us out to the Revenue.........

Thoughts?

Should we just stick it out till the end of the year and do it above board or start right away?
We're not looking to make a profit - just cover the mortgage...

Are you serious here? You want to illegeally dodge tax meaning the rest of us have to stump up more and not only that, but you want help doing so. Get lost. Pay your way like everyone else.

iguana

josiegrosie wrote: »

I don't want to sell it because I wouldn't get a great price for it and I'd rather leave it for a few years.

Why do you think waiting a few years to sell will get you a better price? It is very likely that in a few years prices will have fallen further.

gazzer

Why not stay in the house until Oct 31st and then rent it out. You say your OH has a commute that is killing him. Would the fact that the schools will soon be closed for the summer help in the commute. Does he travel by public transport or drive?

josiegrosie

Beeno67 - thanks for you kind words! I'm just trying to figure out what's best to do.

Iguana - I spoke to the broker who arranged our mortgage and he was saying for years tops for prices to starting coming up again. I'm in negative equity now, so I can't sell. At least if I rent it out, and cover the mortgage it can tick over.

Gazzer - OH works in Dublin 14 so it's the M50 all the way - he goes in at 5am now, and invariably doesn't get out after 8 hours because he can't just leave if there's an office crisis. No one's fault, but he ends up staying till 6/7pm. If he were to try and get in for 9am, he'd be leaving at 7am anyway. By his logic, if he gets out most days at 3pm, the 5am starts are worth it, for the situaiton we're in...

mikemac

This isn’t advice so don’t bother flaming me over it or picking holes in it

I’m know a couple in a similar situation to this.
They bought as FTB but are looking to rent the house but it’s under two years so they’d be liable for loadsa tax.

They reckon they can rent the house for under €10,000 a year under rent a room scheme and even though they won’t be living there they will still get post delivered there. So if anyone asks they just rented out a room and they were living there all along.

Btw it’s bad form to say a tenant will “rat” you out OP. There was a long thread on this last week if you search back one or two pages.

Problems with a long commute? Buy a scooter, the solutions to traffic problems in Dublin.
Don’t tell me your OH needs a car if he is at the office all day

josiegrosie

That's a great idea...Yeah I know that it's bad form to refer to someone as a rat, and I will look for that other thread, but I think a healthy paranoia is probably a bit wise in my situation.

PS no scooters on the M50 and he does site visits so not sure the high viz equipment would fit anywhere...

Stephen

You can drive a scooter on the M50 if its over 50cc. Plenty of decent 125cc models or even get a proper motorbike! He could wear the hi-viz stuff on the scooter/bike anyway

PopeBuckfastXVI

Either pay the stamp duty or wait until you don't have to.

It's only a few months anyway.

If you are already in negative equity then I am guessing you bought inside the last couple of years. Do you really think the rent will cover the mortgage, including vacant periods, maintenance and any fees? Even if you wait until you don't have to pay stamp duty.

What are similar properties in your area renting for? Would this cover the mortgage if you got the same?

If you already have an LTV of >100% what makes you think you will get a mortgage to buy on the south side?

Abusing the rent-a-room scheme is illegal.

josiegrosie

Yeah that's what I am edging towards that now - leaving it all until Oct - sounds like too much of a risk...
As for the mortgage - yeah it'll be covered by the rent, even with no TRS which of course I will be relinquishing if I rent out the property as a proper landlord.
I am confident about getting a mortgage and it wouldn't be more than 85% of the property because of inheritance savings.

PopeBuckfastXVI

So why do you want to keep this property if you can get out now with savings intact?

As regards your broker next time your onto him and he's looking into his magical crystal ball, checking up on the housing market in four years, can you get him to find out the following:

1. Who will win the next grand national
2. Next weeks Euro Millions numbers
3. What will be the best Web 3.0 company to invest in
4. When will the war in Iraq end
5. Will we ever have world peace
6. Which way will the Lisbon treaty vote go
7. Who will win the U.S. Presidential Election this year
8. Will 'Lost' ever come to a satisfying conclusion
9. Is the new Batman movie as good as I hope it will be, and will there be a 3rd
10. Whats the grand theory of everything and when will it be discovered

MysticalSoul

Also, if you are renting and were then to sell, you need to be aware of any Capital Gains Tax implications. There are certain time limits involved I think, so best to check all that out. Also it is always best to declare everything, as these things can come back to haunt you down the road.

astrofool

I think the broker is probably in a better position to comment on the property market than most people on this board, as long as they are acting in their clients best interest (and not holding off remortgaging due to clawback). We know nothing of the type of property, the % return on rents, whether the location is upcoming or not.

Now, they asked the broker for advice based on current market conditions and gave it, whether right or wrong.

For example:

1. Who will win the next grand national
Check with the bookmakers for likely winners as they have most experience in this area

(btw, I'm not saying that the broker is right, but that without knowing more details, the advice given here should not carry much weight).

On the OP's question, you have a few options:

1. Rent a room for now, live there yourself and have your OH rent closer to work and move in with him till October
2. Stick with it till October and rent it out
3. Sell, take the hit, and rent/buy closer to work (rent recommended at the moment).

Under no circumstances would it be recommended to try and cheat the system and hope the tenants don't claim, as they can claim 3 years back if they want to, and get you in a lot of trouble paying clawback, tax and interest on that amount.

PopeBuckfastXVI

Astro:

'I spoke to the broker who arranged our mortgage and he was saying for years tops for prices to starting coming up again.'

That's not an opinion or advice, that's a statement of fact.

Also to the OP, even if that were true, how much further would the achievable price of your current house have dropped before it started rising again. How long before you would get the price you would get today? 4 years of drops + 4 years of rises to get back to where you are today? or longer when taking inflation into account?

Don't let yourself become an accidental landlord.

Out of curiosity, what would be the yield on the property, at current market rates?

beeno67

josiegrosie wrote: »

Beeno67 - thanks for you kind words! I'm just trying to figure out what's best to do.

.

No you are trying to get as much money for yourself even if it is illegal. Lets face it you are not short of money if your mortgage is so small it will be covered by rental income. At the same time you feel you have enough money to only need an 85% mortgage on a second property. This is simple greed on your part so let me repeat. Get lost and pay your way like everyone else.

astrofool

PopeBuckfastXVI wrote: »

Astro:

'I spoke to the broker who arranged our mortgage and he was saying for years tops for prices to starting coming up again.'

That's not an opinion or advice, that's a statement of fact.

Without going any further, firstly, that's the OP paraphrasing the broker, secondly, unless the broker wrote the above statement on a sheet of paper and signed it, then it's an opinion and not a statement of fact. You cannot put future predictions as a statement of fact, they become fact after the event, and I'm sure the OP realises this. My issue was that you went off in a tangent of random predictions to belittle a broker who has access to more details of this case than you do, and probably has more knowledge of the current market place (actual selling prices for one), than 99% of the people in this country.

scaldybelt

astrofool wrote: »

....a broker who has access to more details of this case than you do, and probably has more knowledge of the current market place (actual selling prices for one), than 99% of the people in this country.

It's obvious to the 99% of us out here that nothing is selling, and that the magical 'selling price' (because it's not a selling price until it's sold!) is as elusive as a flying unicorn these days.

I'd say sell that house ASAP.....take the hit on neg. equity now and rent for a while to save on the next purchase (hopefully what your neg.eq might be at least).
There's nothing to prove that this downturn is going to be shortlived, and there's more and more rental properties coming onstream every week. Especially with the number of people leaving the country.

Rant over.

DonJose

astrofool wrote: »

I think the broker is probably in a better position to comment on the property market than most people on this board

LOL that reminds me off this gem by Marian Finnegan who by your words, "is probably in a better position to comment on the property market than most people on this board"!!!

Sorry Astro but NOBODY KNOWS how things will fan out, not even in the short term!!!

"Economist Marian Finnegan predicted prices to rise by "low single digits" with higher rates in Dublin.

She wasn't alone. CBRE forecast price rises of 3 to 5 per cent, Douglas Newman Good predicted "single-digit growth". IIB was bullish with a forecast of "6 to 7 per cent" growth. Hooke & McDonald plumped for a 5 per cent jump.

Prices fell about 20 per cent, making their weighty economic forecasts among the worst in living memory."

http://www.independent.ie/business/irish/from-hate-mail-and-lost-pjs-to-porn-and-bogeymen-1360428.html

astrofool

People have been calling the top of the market for years, a lot of them sold and rented hoping to make a killing and have missed out on large appreciation, some of them sold at the right time, eventually in a market people saying it will go up or down will be right, but no one knew that it would be 2006.

Now that its going down, people are jumping on the going down bandwagon, some people will sell early and not lose too much, some will sell right at the bottom, and lose on capital appreciation again, and the cycle goes on.

I'm not saying that the market is going to rebound, anything but, but I have no qualifications other than reading news reports, watching the market, and reading other opinions. In this case the broker, if being honest, is in a better position than us to make that call, as they have more access to the data needed to do it.

Marian Finnegan works for a vested interest that makes large gains from house price increases, as do the others quoted, a broker should be acting on their clients best interests.

Anecdotally, I have a search on myhome.ie, it has about 8 new properties a week appearing, and has hovered at the same total of ~120 for the last 4 months, with a low of 111 and a high of 127. Of 30 houses which I saved brochure of or had went to look at, 18 have now sold since last November.

PopeBuckfastXVI

http://daftwatch.atspace.com

as regards your ridiculous assertion that you can't make a statement of fact using your mouth, carry on living in your own wee world kid...

whizzbang

So the Broker said prices will pick up in 4 years. I'm probably in agreement, they will continue to go down for 4 years, then may start to increase. The problem is, the prices will have gone down 30% - 40% from now before they start to rise again.

I think people might be assuming when the broker said they will increase they assume he means they will increase more than todays prices.

For example

Today price is 250k
May 2009 price will be 225k;
May 2010 price will be 200k;
May 2011 prices will be 180k;
May 2012 price will be 160k;
May 2013 price will be 170k <---- price picks up in 4 years time.

(Example only, I dunno the real price)

astrofool

PopeBuckfastXVI wrote: »

http://daftwatch.atspace.com

as regards your ridiculous assertion that you can't make a statement of fact using your mouth, carry on living in your own wee world kid...

Of course you can, you can't make a statement of fact about something that hasn't happened yet though, only an opinion

The daftwatch data is freely available to everyone, and everyone has different opinions on what it means. Also, Dublin for sale is only back near the high it hit last November, added to the fact that Daft.ie is a growing site in market share (which skews the figures), and is not the main property site for Dublin (myhome.ie is, and doesn't release figures).

PopeBuckfastXVI

astrofool wrote: »

Of course you can, you can't make a statement of fact about something that hasn't happened yet though, only an opinion .

Yes... exactly that was my very point!

The broker said that prices will be growing in 4 years tops which reads as a statement of fact.

What he should have said was in my opinion... or probably... but when you say tops it stops being an opinion and starts being a statement of fact. The word tops leaves no room for wiggling, it means, there is a zero percent chance that prices will not be growing after four years.

The broker was passing off opinion as fact, which is why I reckon he must have a crystal ball.

And even if he meant it as an opinion, the OP has taken it as fact and is basing her decisions on it!

beeno67

PopeBuckfastXVI wrote: »

Yes... exactly that was my very point!

The broker said that prices will be growing in 4 years tops which reads as a statement of fact.

What he should have said was in my opinion... or probably... but when you say tops it stops being an opinion and starts being a statement of fact. The word tops leaves no room for wiggling, it means, there is a zero percent chance that prices will not be growing after four years.

The broker was passing off opinion as fact, which is why I reckon he must have a crystal ball.

And even if he meant it as an opinion, the OP has taken it as fact and is basing her decisions on it!

PopeBuckFast will have 4 more posts on this topic, tops. There we go a statement of fact. How could anyone think that was my opinion. No way that is a statement of fact:D

Supercell

whizzbang wrote: »

So the Broker said prices will pick up in 4 years. I'm probably in agreement, they will continue to go down for 4 years, then may start to increase. The problem is, the prices will have gone down 30% - 40% from now before they start to rise again.

I think people might be assuming when the broker said they will increase they assume he means they will increase more than todays prices.

For example

Today price is 250k
May 2009 price will be 225k;
May 2010 price will be 200k;
May 2011 prices will be 180k;
May 2012 price will be 160k;
May 2013 price will be 170k <---- price picks up in 4 years time.

(Example only, I dunno the real price)

Indeed, add in inflation to those those figures and 170k in 2013 terms is probably about 140k in 2008 terms.
If they start going up then..that's a huuuuge amount they have to gain to be the same place you are now inflation adjusted.

whizzbang

Supercell wrote: »

Indeed, add in inflation to those those figures and 170k in 2013 terms is probably about 140k in 2008 terms.
If they start going up then..that's a huuuuge amount they have to gain to be the same place you are now inflation adjusted.

Bingo! Broker is just trying to get a commission out of the OP. The will tell you whatever you want to hear if they think it will get you to take out a mortgage with them.

How do you tell if a saleman is lying?
His lips are moving.