Property Market 2017

The_Conductor

The_Pretender wrote: »

The issue is that these large investment funds have access to very favourable tax arrangements that smaller landlords and property companies can't avail of.

Arguably the issue is that debt and the servicing of debt- is a tax deductible cost. Even 'The Economist' argue that in an international context this should be stamped out- however, no one country wants to take this step- as it immediately puts them at a disadvantage vis-à-vis their competitors.

In the absence of dealing with how debt is treated for tax purposes- and as there has already been so many rules and regulatory changes specifically for residential property- the only fair manner of treating rental income in a clear and equitably manner- is by ignoring all deductions and taxing it at a flatrate for all landlords- the 25% rate sounds fair to me. So every penny of rental income is taxed by 25% at source- and the landlord is free to do with the remainder as they will (obviously payment of any bills and costs would be top of the list). If they are in a loss situation- of their own making or otherwise- they should behave responsibly and get out of the market.

The most perverse aspect of the current situation- is the fact that landlords are actually incentivised to load as much debt as possible on property- and sure why wouldn't they- when the cost of the debt is tax deductible. So- someone who prudently pays down their debt- is punished for their prudence. Talk about no good deed going unpunished............

The_Pretender

The_Conductor wrote: »

Arguably the issue is that debt and the servicing of debt- is a tax deductible cost. Even 'The Economist' argue that in an international context this should be stamped out- however, no one country wants to take this step- as it immediately puts them at a disadvantage vis-?-vis their competitors.

I agree, the world would absolutely be a better place if people couldn't expense the cost of borrowing debt. It's hard one to argue though as someone's income statement shows their income minus their expenses - you're borrowing to grow your business, and the cost of borrowing is a business expense, so you're always going to have a hard case fighting for it to not be deductible.

In the absence of dealing with how debt is treated for tax purposes- and as there has already been so many rules and regulatory changes specifically for residential property- the only fair manner of treating rental income in a clear and equitably manner- is by ignoring all deductions and taxing it at a flatrate for all landlords- the 25% rate sounds fair to me. So every penny of rental income is taxed by 25% at source- and the landlord is free to do with the remainder as they will (obviously payment of any bills and costs would be top of the list). If they are in a loss situation- of their own making or otherwise- they should behave responsibly and get out of the market.

Again, I agree. Would it deter landlords from investing in their property though? I'm referring to items that would keep the tenant happy rather than increase value overall, such as buying a new couch because the one the tenant has isn't in great shape and they're complaining about it.

Obviously this would mainly be a consideration in a healthy functioning property market - in today's market I think it would be even harder to encourage investment in somewhat discretionary purchases.

Samuel T. Cogley

The_Pretender wrote: »

Again, I agree. Would it deter landlords from investing in their property though? I'm referring to items that would keep the tenant happy rather than increase value overall, such as buying a new couch because the one the tenant has isn't in great shape and they're complaining about it.

Obviously this would mainly be a consideration in a healthy functioning property market - in today's market I think it would be even harder to encourage investment in somewhat discretionary purchases.

While we're all talking pie in the sky - a move to long term, unfurnished lets would negate this and would be a win win. However far too many LL's see the tenants as a temporary nuisance looking after 'their home' until they can dump it at a profit.

rsynnott

Jan_de_Bakker wrote: »

So just heard Pat Kenny talking about those new houses in Portmarnock that sold out (people were queing) at €430,000.
Allready some are up for rent at €2,500 per month.

Can't believe this **** is happening again ...

Happening a bit differently now, and arguably worse. The rents on a house costing 430k wouldn't have been that high during the last bubble, I don't think?

The_Conductor

rsynnott wrote: »

Happening a bit differently now, and arguably worse. The rents on a house costing 430k wouldn't have been that high during the last bubble, I don't think?

Depends entirely on the location- but yes, some houses in the 450-500k range were let for 2,500 last time round.

Yourself isit

rsynnott wrote: »

Happening a bit differently now, and arguably worse. The rents on a house costing 430k wouldn't have been that high during the last bubble, I don't think?

No there was a disconnect between rent and house prices during the end of the last boom.

Yourself isit

The sense of panic is interesting because this is all the government's doing. We are all extrapolating to a future where most people have to commute from cavan based on this year's increase in demand but.., prices stagnated in Dublin last year.

OttoPilot

I think we need to incentivize companies more to set up outside the Dublin commuter belt. The pressure coming from UK businesses relocating some jobs to Ireland will only make things even crazier.

I was working on a client site in Tullamore this week which is only an hour from the M50. There's a large IDA business park there with good facilities. Plenty more potential for residential development than in Dublin, where I think even public transport is reaching capacity.

SunSeeker101

Yourself isit wrote: »

The sense of panic is interesting because this is all the government's doing. We are all extrapolating to a future where most people have to commute from cavan based on this year's increase in demand but.., prices stagnated in Dublin last year.

This is why the government brought in the "Help to Buy" scheme or more accurately it should be called the help to sell scheme. I believe it is also why the Central Bank reduced the deposit requirement for first time buyers. I think they noticed the market was slowing down, even with the supply restrictions and they needed to get more first time buyers to stop the stagnation in prices. Also, they did nothing to help people who want to move because they don't want them to move, as this would increase supply of second hand houses on the market.

myshirt

What you do is set up two companies, or to be more specific two corporate vehicles. Company A borrows at 2%, and lends money to Company B at 15% to buy property. Getting charged 15% causes Company B to suffer a loss on all the rental​ income they got, so they pay no tax. Company A sails off into the sunset with the rental profits.

That's a non technical summary.

For a technical summary, it can get, well, technical! Related parties, tax domicile, interest to participators, witholding taxes, blah blah blah. Nothing that can't be mitigated with the right brains at the table.

Graham

myshirt wrote: »

Nothing that can't be mitigated with the right brains at the table.

And sufficient scale to make it financially viable.

Even a pre-packaged equivalent structure would cost too much to be of any benefit to most Irish landlords.

myshirt

Graham wrote: »

And sufficient scale to make it financially viable.

Even a pre-packaged equivalent structure would cost too much to be of any benefit to most Irish landlords.

Yes, apologies, I agree. Important point.

listermint

OttoPilot wrote: »

I think we need to incentivize companies more to set up outside the Dublin commuter belt. The pressure coming from UK businesses relocating some jobs to Ireland will only make things even crazier.

I was working on a client site in Tullamore this week which is only an hour from the M50. There's a large IDA business park there with good facilities. Plenty more potential for residential development than in Dublin, where I think even public transport is reaching capacity.

The airport and transport links to and from it are key.

Other countries have rail to their airports here we have lols

Taylor365

listermint wrote: »

The airport and transport links to and from it are key.

Other countries have rail to their airports here we have lols

Someone has to keep the taxis on the road :pac:

Glen_Quagmire

Heard this on Newstalk this morning.

Interesting plan, but how long will it take to implement is the big question...

http://www.independent.ie/business/personal-finance/property-mortgages/state-to-offer-more-than-800-sites-for-at-least-50000-new-homes-35658572.html

Samuel T. Cogley

Glen_Quagmire wrote: »

Heard this on Newstalk this morning.

Interesting plan, but how long will it take to implement is the big question...

http://www.independent.ie/business/personal-finance/property-mortgages/state-to-offer-more-than-800-sites-for-at-least-50000-new-homes-35658572.html

3 - 5 years easily.

Glen_Quagmire

Samuel T. Cogley wrote:

3 - 5 years easily.

I wonder what the price of a house in Dublin would be by the time they are released!

jamesthepeach

This will never happen.
It will just be another never ending promise like metro North for example.

Graham

jamesthepeach wrote: »

This will never happen.
It will just be another never ending promise like metro North for example.

How does spending untold billions on a transport project compare with selling land?

jamesthepeach

Graham wrote: »

How does spending untold billions on a transport project compare with selling land?

Wait and see.how it goes.
Anything that is planned past the life of one government will be the same.

zl1whqvjs75cdy

jamesthepeach wrote: »

This will never happen.
It will just be another never ending promise like metro North for example.

Agreed. Dont see the point of this. It's a list of land for sale. There's no one to build on it!

Glen_Quagmire

Amaris Rich Clown wrote:

Agreed. Dont see the point of this. It's a list of land for sale. There's no one to build on it!

I don't get what you're saying. This is land being sold purposely to build properties on therefore developer's will surely buy this land if it's in their interest and there is a demand for properties in that area which there most definitely is.

zl1whqvjs75cdy

Glen_Quagmire wrote: »

I don't get what you're saying. This is land being sold purposely to build properties on therefore developer's will surely buy this land if it's in their interest and there is a demand for properties in that area which there most definitely is.

I was under the impression that the land was always for sale. This is just a list of it in one place?

myshirt

I have to give the thumbs up to Coveney, albeit through gritted teeth.

He is probably the most competent of them all.

Really hope all stakeholders grab this initiative by the balls and propel it forward.

Muff Richardson

myshirt wrote: »

I have to give the thumbs up to Coveney, albeit through gritted teeth.

He is probably the most competent of them all.

Really hope all stakeholders grab this initiative by the balls and propel it forward.

yes, that FTB scheme has been a roaring success. The only thing that has helped cool the market has been the CB rules which Coveney and Co had nothing to do with and were opposed to which resulted in them introducing new measures specifically designed to circumvent CB rules which once again kickstarted the overheating.

The_Conductor

Muff Richardson wrote: »

yes, that FTB scheme has been a roaring success. The only thing that has helped cool the market has been the CB rules which Coveney and Co had nothing to do with and were opposed to which resulted in them introducing new measures specifically designed to circumvent CB rules which once again kickstarted the overheating.

The CB have already stated they are reviewing their rules and propose a thorough overhaul to try and take the heat out of the FTB market in particular- however, they're holding off until their autumn meeting, as they say to do their review before then 'would be seriously unstabilising towards the market' (their term, not mine).

I.e. the government reforms their current mess- or else the CB will step in and do so themselves.

zl1whqvjs75cdy

I don't know if I'm happy or fearful of what the cb are going to do. I'll be a ftb this time next year, and while the intervention would presumably slow price growth (good for me) the only way they can really do it is to make it harder to borrow, potentially bad for me. Anyone have any thoughts on what they will try? Remove exemptions all together maybe? A hard and fast 3.5 times income and thats it? That would suit me as that's all I want anyway.

jamesthepeach

If they encourage people who have already bought tlto buy then that will leave the house they are leaving to the next buyer.
As it is they have only incentivised buying new houses for first timers.
So look at the huge part of the market that is now left static.
A friend from school was telling me.the other day he came home from Germany because he is now able to earn €200 a day on the sites as a labourer. When it goes below that he is going back to Germany.
I think it will go up, therefore the prices new houses will go up too.

AsianDub

Ha! The CB. They lowered the FTB deposit rule bringing more into a market of low supply. It's war out there. I'm trying to buy. Second hand.
The volume of bidders is up along with the bids. 8-10 couples fighting it out and 100k+ over on some properties. Look at myhome and add 10-20%

It wouldn't shock me one bit if they increased the borrowing limit to 4.5 times in line with the UK in November. They're all the same, CB and the government.

Peter File

AsianDub wrote: »

Ha! The CB. They lowered the FTB deposit rule bringing more into a market of low supply. It's war out there. I'm trying to buy. Second hand.
The volume of bidders is up along with the bids. 8-10 couples fighting it out and 100k+ over on some properties. Look at myhome and add 10-20%

It wouldn't shock me one bit if they increased the borrowing limit to 4.5 times in line with the UK in November. They're all the same, CB and the government.

They are not the same. The CB is trying to cool the market while the Government is continuing to pour petrol on the fire