Rent is now a moral issue for landlords says Environment Minister

handlemaster

http://www.irishtimes.com/news/social-affairs/scale-of-rent-rises-by-landlords-a-moral-issue-says-kelly-1.2362011

Minister kelly says its a moral issue rent for landlord's. . No mention of revenue having any moral issues collecting 50% of rent received in tax. Or moral support of Landlords who except welfare tenants and fork out thousands for damage and lost rent.

Dr.Internet

They are gone mad for this modular housing

<mod snip>

In the time they have spent debating these modular houses, they would have bricks and mortar ones built

Pawwed Rig

Good grief.
Does this man think before he talks?

zl1whqvjs75cdy

I'm a tenant and I don't think my landlords morals have anything to do with rent. Its his asset, he wants to maximize investment. Does Alan Kelly actually understand economics?

Greenmachine

What a load of codswollop. Saying this as a tenant who thinks rents are ridiculous. Calling a moral issue really. Charging less for rent isn't going to change the supply issue. Plenty of other things could charged less. I think my standing charges + PSO for my electricity are something like 50% higher now than they were 2 or so years ago.( I know it is a while now since the increase kicked in.) Living in a small flat in summer months standing charges, can make up over 50% of my bill. How about beating on the utilities or even the government for their PSO tax.

April 73

Supply & demand seem to be dictating the upward rise in rents. Would Kelly have called it a tenant's moral issue when rents were falling for many years through the recession & asked them to pay more to protect hard-up landlords? A moral issue? Really???

The government has added enormously to lanlord costs by reducing the mortgage interest that can be offset & charging the USC & PRSI on rental income. The government can't increase costs & not expect a knock-on effect.

The whole RA system needs to be reworked. Private landlords are reluctant to take RA for many reasons & that contributes to the problem for those tenants.

As for Threshold - which Kelly praises - I heard just this morning from a reluctant landlord that Threshold advised his tenant to stop paying rent when he issued a legitimate eviction notice for anti-social behaviour. He is now in the prolonged PRTB nightmare & has had to engage a solicitor.

athtrasna

Mod note

Please focus on the A&P aspect on here. There's a politics forum for the other stuff.

handlemaster

I think this is a cross over between the forum for politics and the Accommodation and Property when a minister says something like this. The people it affects are users of this forum more so than the Politics forum

Pac2015

donkeyoaty0099 wrote: »

I'm a tenant and I don't think my landlords morals have anything to do with rent. Its his asset, he wants to maximize investment. Does Alan Kelly actually understand economics?

I rent and I know what I pay has nothing to do with my LL morals she is just in it for the business / money side of things she has 13 houses in total and all kips including mine she makes no repairs even if you ask her over and over again and if she does manage to fix something we get sent DIY Derek to the house and let me tell you he aint that good for her its all about money and no morals, me on the other hand am a landlord myself and an accidental one at that and my morals do come into it for me I dont charge the full amount I could be getting I take 740 from my tenant when I could be getting 1000 why you ask well its because her max amount is 800 per month, my costs are covered ie. mortgage and life assurance and maintenance fee.
I fix anything she contacts me about asap because I know what its like to have a bad LL and I dont want that to be me.

_Kaiser_

It's electioneering, nothing more. The Government is full of sound-bites and "revelations" lately on a whole host of issues they haven't given a toss about for the last several years - Property and the rental market is the same. They've been quite happy to sit back and watch prices (buy and let) surge over the past 18-24 months and watch people get turfed out or forced out into the surrounding counties like it's 2005 all over again!

Only now when there's votes to be had are they coming out with this "something must be done" populist nonsense in the hope of winning a few seats.

I'm conscious of the Mod note above but has Property not always been a political issue in this country? Indeed, isn't our economy (still!) built on the notion of buying and selling overpriced houses to each other?

handlemaster

Pac2015 wrote: »

I rent and I know what I pay has nothing to do with my LL morals she is just in it for the business / money side of things she has 13 houses in total and all kips including mine she makes no repairs even if you ask her over and over again and if she does manage to fix something we get sent DIY Derek to the house and let me tell you he aint that good for her its all about money and no morals, me on the other hand am a landlord myself and an accidental one at that and my morals do come into it for me I dont charge the full amount I could be getting I take 740 from my tenant when I could be getting 1000 why you ask well its because her max amount is 800 per month, my costs are covered ie. mortgage and life assurance and maintenance fee.
I fix anything she contacts me about asap because I know what its like to have a bad LL and I dont want that to be me.

when you pay your taxes are you covering your costs ?

Tarzana2

The solution is increasing supply, not capping rent. <mod snip>

athtrasna

handlemaster wrote: »

I think this is a cross over between the forum for politics and the Accommodation and Property when a minister says something like this. The people it affects are users of this forum more so than the Politics forum

This is the case but certain users jump at the chance to turn threads like these into political rants. That is not appropriate in this forum.

Villa05

handlemaster wrote:

I think this is a cross over between the forum for politics and the Accommodation and Property when a minister says something like this. The people it affects are users of this forum more so than the Politics forum

There is so much government intervention ( mostly negative) in the property/rental market, discussing it without mentioning politics is like discussing irish weather without mentioning rain.

Pac2015

handlemaster wrote: »

when you pay your taxes are you covering your costs ?

Yes I am I have a template that my boss uses for his properties he sent it onto me and I am covered.
The more rent you take in the more tax you pay and why should all LL be rip off merchants, I have seen it from both sides of being a renter and a LL and my LL is a nightmare and horrible to deal with plus is all about the money and I dont want to be like that nor is my property an investment it was a home for 4 years and no longer works for me so its rented till we can save the deposit needed for a house and then it will be sold.

Pawwed Rig

Pac2015 wrote: »

The more rent you take in the more tax you pay and why should all LL be rip off merchants, .

You do understand that many many landlords are not even close to covering their costs though right?
In addition charging market rent does not make someone a rip off merchant. It makes sound financial sense. In your case by charging significantly less than the market you are forcing yourself and family (if applicable) to remain in your current circumstances for longer. That is madness!!

Exiled1

Have been a landlord for over 15 years. Had long term tenants on relatively low rent in very good houses. You would need to own at least 10 houses to make money as a landlord.Getting out because of ludicrous regulatory demands. Essentially county councils terrified of potential legislation.

zl1whqvjs75cdy

I'm not a landlord but just curious about what the story is with profits/losses form the properties. If the landlord has a property with a mortgage of 1000 per month (for example) and the rent he/she can get is only 900, they are actually making a loss. Can that loss be written off against tax similar to other business, or is it tough ****e pay all the income tax on the 900?

CIARAN_BOYLE

donkeyoaty0099 wrote: »

I'm not a landlord but just curious about what the story is with profits/losses form the properties. If the landlord has a property with a mortgage of 1000 per month (for example) and the rent he/she can get is only 900, they are actually making a loss. Can that loss be written off against tax similar to other business, or is it tough ****e pay all the income tax on the 900?

75% of the interest on the mortgage is allowable as an expense.

Pac2015

Pawwed Rig wrote: »

You do understand that many many landlords are not even close to covering their costs though right?
In addition charging market rent does not make someone a rip off merchant. It makes sound financial sense. In your case by charging significantly less than the market you are forcing yourself and family (if applicable) to remain in your current circumstances for longer. That is madness!!

Many LL may not be even close to covering costs but that is not my case I have a low mortgage on a one bed apartment and what my tenant pays me covers everything I dont have to ad anything to it which is lucky as friends of mine have to add anything up to 300-400.

My costs are covered from mortgage, life assurance and maintenance fee I am not losing out nor making a profit.
We are debt free we chose to clear anything we owed this year from savings so we can save more we can put away anything up to 1500.00 per month and my tenant can only afford 800 max per month, for a great tenant which she is I will let her stay there till we sell and leave the rent as is, I had other tenants in before her charged more they wrecked the place costing me 1000 worth of repairs, sometimes you have to make a choice that is best for you whilst also making sure you are not at a loss.
I could be asking her for 1000 pm but I don't, we have a good relationship as LL & tenant go and its works for both of us.

An extra 200 per month to us is not going to change the world for us the tenant could not afford if I put it up then I would get some other tenant in and chances are they would annoy the hell out of me like the first ones did.

When I was showing the place to people and I knew some could pay alot more then my current tenant but I knew they would be alot of hassle she isnt, its a new apt built in 2006 and is in great conditon and she keeps it that way.

the goon

I think something which often gets overlooked is how much the government have changed the goal posts over the last 8 years in relation to owning rental properties.

During the good years, previous governments were incentivising people to purchase properties to let. It was a nice way to get the public to help deal with housing issues and was subsidised by a completely unregulated, wildwest style banking system.

When things got tough, they then turned on this group and have been penalising them ever since by way of extortionate taxes and regulation. It is a very different prospect now for someone considering purchasing a rental property than it was in the naughties.

I also believe people don't understand the tax system and the very basis on which your liability on a rental property is calculated. Hence you hear all these incorrect comments about landlords creaming it because their rental income covers the cost of mortgage.

Why should a landlord not try and make a profit if they can cover all costs/tax liabilty and the market can take it? Why should they be penalised for trying to make some money on their investment?

Bearing all of the above in mind, I do believe that tenants should be entitled and afforded the rights to live in premises that are fit for habitation and not tenement style stuff. If there is a moral obligation on a landlord, it is to ensure you are providing the best standard of service to your tenant, be that in terms of accommodation or how quickly you address repairs and maintenance. Greed can be an issue and so I do think rent should be in line with what the market dictates but if you are in a position to strike a balance between market rent and an affordable rent, why not? Not because the government tells you to, but because it is a good thing to do.

*mod snip*

Exiled1

At present if you make €100 per week after expenses, repairs and tax then you are doing very well. This does not take into account any issues with tenants / capital improvements / mortgage etc. Down the country but I suspect not much different in Dublin, despite higher rents.

the_syco

April 73 wrote: »

As for Threshold - which Kelly praises - I heard just this morning from a reluctant landlord that Threshold advised his tenant to stop paying rent when he issued a legitimate eviction notice for anti-social behaviour. He is now in the prolonged PRTB nightmare & has had to engage a solicitor.

I wonder have any landlords sued Threshold for giving out such advice?

the goon wrote: »

Hence you hear all these incorrect comments about landlords creaming it because their rental income covers the cost of mortgage.

I laugh at this, because if the rent doesn't cover their mortgage, it sure as hell won't pay for the dishwasher/over/roof/boiler to be fixed!

April 73

Exiled1 wrote: »

At present if you make €100 per week after expenses, repairs and tax then you are doing very well. This does not take into account any issues with tenants / capital improvements / mortgage etc. Down the country but I suspect not much different in Dublin, despite higher rents.

I've read stats before that have said that the majority of landlords in this country own one or two properties. I think most them would feel blessed to make a profit of €100 a week. That's €5,200 a year! I'd say most of them are putting in their own money to keep the thing running.

Arbiter of Good Taste

The ludicrous thing about bringing "morals" into it, is that the idea of morals is subjective. What may seem wrong to me could be perfectly right to someone else.

Xenji

I must be lucky, only once I have had to call my landlord in 3 years, have not seen her since I got my keys and the rent has never gone up, actually hope she is not dead or I have been wasting a lot of money!

Gumbo

donkeyoaty0099 wrote: »

I'm not a landlord but just curious about what the story is with profits/losses form the properties. If the landlord has a property with a mortgage of 1000 per month (for example) and the rent he/she can get is only 900, they are actually making a loss. Can that loss be written off against tax similar to other business, or is it tough ****e pay all the income tax on the 900?

To give you an example.
My mortgage is covered by my rental income.

My monthly rental income is €410 above what my mortgage payment is.

So that's €410 "profit" per month.
I have to pay LPT, USC, TAX ETC same as everybody else and after expenses and repairs, my tax bill for the year is circa €4250.

Even with "profits" there are no profit.
It was my choice bough, it's an investment and I'm not expecting to make money on it straight away.

So if mortgage is €1000 and the interest portion is €700 you only get tax relief on €500ish so everything earned over €500 is open to all taxes.

sunnysoutheast

donkeyoaty0099 wrote: »

I'm not a landlord but just curious about what the story is with profits/losses form the properties. If the landlord has a property with a mortgage of 1000 per month (for example) and the rent he/she can get is only 900, they are actually making a loss. Can that loss be written off against tax similar to other business, or is it tough ****e pay all the income tax on the 900?

Losses from one rental can be offset against the profits from another, but due to the way these profits/losses are calculated it is common to make a personal loss but show a taxable "profit".

Losses from rental activity can not be offset against other types of income (there used to be tax reliefs which allowed this) but can be carried forward to future years. Losses carried forward are disregarded for the calculation of the USC liability, as are capital allowances.

Many people simply think the rent can be netted off against the mortgage and think they don't have a tax liability. Alas they are wrong!

antoinolachtnai

capital repayments are not an expense in any accounting system.

In calculating profit/loss you can never take the capital repayment into account.

That is why Revenue wants the tax on this money.

conorhal

If rising rents are such a moral issue for Kelly then why is the government driving their inflation?

1) LPT applied to the value of a property
2) USC applied to rental income
3) PRSI applied to rental income at 4% class S (but it doesn't get you the same benefits as Class A 4% employee contribution class.)
4) PTRB charges and per tenent registration.

And lets not forget that landlords were already paying out 52% tax on rental income.

If you're going to add three or four grand to the cost of managing a property then you can hardly be surprised when costs are passed on to customers.

If a landlord increases rent by €100 per month, and the tenant is a higher rate taxpayer, they must make over €200 per month in order to come out with €100 after tax.
Then the landlord receives the €100 and is forced to pay over 50% tax on that income.
So the tenant has to earn €200 for the landlord to receive a net of €50.
Of course we don't need to ask ourselves who the real net beneficary of this increece is now do we?

I can't decide if this statement from Kelly (and eariler in the week from Burton) is bluffing and obfuscation or a further example of an a-moral government demanding what it refuses to practice itself.
Either way, people aren't stupid, this bluffer will get his on the doorstep from me come March.

antoinolachtnai

Well, it's the same rate that is applied to all other income. The 75 percent allowance on interest is pretty mean, I grant you.

If tax were reduced on rental properties across the board, I can't see how that would result in a drop in rents.

It does seem to me that the government really has to introduce a tax break to encourage rental building and renovation, both on a large and small scale. A tax break is just a form of government borrowing of course, repaid over a long period through reduced rent.

Claw Hammer

The ridiculouos thing about rent is that someone in Dublin with two spare bedrooms can easily take in €12,000 per year, which is completely untaxed with no effect on social welfare. A non resident landlord is taxed left righ and centre even if his gross rent is much less that €10,000 per year. Why should one category of landlord be getting a handy €240 per week tax free when another category would even with no mortgage be luck to come out with a quater of that with the same income. Moreover when the non-resident sells he will have a CGT liability but the resident landlord has no CGT liability on selling.

Pawwed Rig

antoinolachtnai wrote: »

In calculating profit/loss you can never take the capital repayment into account. .

Not necessarily true when you consider things like the treatment of finance leases and industrial buildings capital allowances.

antoinolachtnai

I see what you mean, but strictly, a capital allowance is a tax break, it isn't anything to do with profit and a finance lease is a finance lease.

Pawwed Rig

Agreed but a mortgage would be very similar to a finance lease. Allowing it as such would only take the flick of a pen by the relevant minister. It would be a fairer way of taxing rent with a larger CGT charge on disposal thereby better matching the landlords income and expenditure rather than penny pinching and losses while renting and then a large windfall (potentially) on disposal.

antoinolachtnai

Pawwed Rig wrote: »

Agreed but a mortgage would be very similar to a finance lease. Allowing it as such would only take the flick of a pen by the relevant minister. It would be a fairer way of taxing rent with a larger CGT charge on disposal thereby better matching the landlords income and expenditure rather than penny pinching and losses while renting and then a large windfall (potentially) on disposal.

That would make it very difficult for owner occupiers especially FTB's to ever buy anything. They would be completely priced out of it by property funds.

Old section 23/27 for new developments was effectively like you describe though.

Butters1979

As a tenant myself who is obviously not happy with the rise in rents, I still cannot agree with this statement.
There is a shortage of good accommodation in the area I want to live, but if I am capable and willing to pay more rent than someone else, then I should be able to get the place I’m looking for. All this ‘landlords need to lower rent’ is not right, the demand, and tenants willingness to spend more on rent is what’s driving it up. Why should I miss out on a place I’m willing to spend the money on because the rents are artificially low.

It is a myth that artificially pushing down rents is good for all tenants, it is good for those with less money. There’s no point for me to have cheaper rents where I want to live if I can’t get somewhere in the first place.