Landlords sitting on an Unoccupied House

kenny_david

Hi all not sure if this is the right place but I was wondering if there is some sort of tax incentive for landlords just to sit on houses and not sell or rent??
The reason I ask is because I see a few houses around our area that are not lived in

myshirt

Yes there is. It's a 7 year CGT exemption. You will start to see properties release to he market next year and gains realised. Tax free. Yippee!

The_Conductor

myshirt wrote: »

Yes there is. It's a 7 year CGT exemption. You will start to see properties release to he market next year and gains realised. Tax free. Yippee!

Also depending entirely on location, of course, its suggested that some properties are rising up to 2k per month in value- it might suit some owners to sit on them- without the hassle of a tenant- and bank the capital gain at the end of the 7 years.

kenny_david

Does this apply to houses only bought between December 2011 to December 2014, Can the landlord have already owned the house and just sat on it for the last 7 years I know one of the houses was bought back in 2006

Baby01032012

In addition to the above, if properties are not let for 2 years they can charge market rent after the 2 years and not bound by the current rent caps.

The_Conductor

Section 604A (introduced by Finance Act 2012) provides relief from Capital Gains Tax for a property acquired during the period from 7 December 2011 to 31 December 2014 (inclusive).

The person who acquired the property must continue to own it for at least 7 years from the date of acquisition (between the above dates) to claim relief, and the relief is given in a way that is similar to the operation of principal private residence relief.

A proportion of the gain which represents the 7 year ownership period is exempt from Capital Gains Tax, so if the property is held for 10 years then 7/10 of the gain will be exempt.

I.e. if you bought the property between the 7th Dec 2011 and the 31st Dec 2014- and hold it for 7 years, any capital gain on its disposal is exempt.

If you sell it before the 7 years is up- you pay CGT on the entire gain.

If you hold onto it beyond the 7 years- the exempt portion diminishes- so if you hold it for 10 years- you are entitled to 7/10 relief on any CGT accruing when you dispose of it.

The window for disposing of these properties is thus from the 7th Dec 2018 to the 31st Dec 2021. A significant number of properties were bought when the impending closure of the scheme became common knowledge- there definitely is an overhang there that won't be cleared fully until the end of 2021.

kenny_david

Ok I take the all your points about the 7 year CGT. I don't thing all of the houses are involved in this scheme is there any other reason in your opinion a landlord might just sit on a property and not sell/rent?

pilly

kenny_david wrote:

Ok I take the all your points about the 7 year CGT. I don't thing all of the houses are involved in this scheme is there any other reason in your opinion a landlord might just sit on a property and not sell/rent?

For their children.

The_Conductor

kenny_david wrote: »

Ok I take the all your points about the 7 year CGT. I don't thing all of the houses are involved in this scheme is there any other reason in your opinion a landlord might just sit on a property and not sell/rent?

A landlord could sit on a vacant property- and net a grand a month after tax in property appreciation in the current market- and not have to worry about a tenant overholding or destroying the place?

I.e. Financially- it makes a certain amount of sense to keep a unit vacant- and simply mop up on the appreciation in asset value- even if you have to pay CGT on it.

Daft report this morning- suggests properties in Dublin are appreciating by 2k a month. Standard rate of CGT in Ireland is 33%- so the average owner could net over 1,300 a month- leaving the unit vacant, and have no tenant to worry about.........

pwurple

kenny_david wrote: »

Ok I take the all your points about the 7 year CGT. I don't thing all of the houses are involved in this scheme is there any other reason in your opinion a landlord might just sit on a property and not sell/rent?

Yes, because believe it or not, renting a place to a tenant can lose you significant amounts of money, and also cost you heartache and stress.

They can suddenly stop paying rent and you cannot evict. They can do huge damage to an expensive asset. They can be need Mammying to an unbelievable extent.

I've had a tenant who phoned me at 3am to ask me how to change a hoover bag. And to ask me to go buy them for them.

I've had tenants who ripped doors and the frames down, punched holes in them and made huge holes in the walls.

I've had tenants who lost their key on a Sunday afternoon, and asked could I put them up in a hotel overnight until the locksmith opened.

It's hassle. You're taxed through the nose on any rent. Why property income needs to pay PRSI I'll never figure out. It's not going to get dole if it stops earning.

Legal costs, repair costs, maintenance etc etc etc. It's a pain. AND add to that you are the bogeyman for every ill in the country. Greedy Landlord for providing a home.

Yeah, I can see why people leave a place unoccupied if it's rising in value as it is.

ted1

kenny_david wrote: »

Hi all not sure if this is the right place but I was wondering if there is some sort of tax incentive for landlords just to sit on houses and not sell or rent??
The reason I ask is because I see a few houses around our area that are not lived in

Rental income is heavily taxed, and landlords have little to no comeback againest tenants who refuse to pay , destroy the place or won't move. Sometimes it's not worth their while renting.

wordofwarning

I know a ton of landlords with their housing/apartments empty for the summer. Thanks to the Government protecting tenants in the new RTA amendments. A lot of landlords I know used to give tenants 3 month leases during the summer at a low rent as demand is lower in the Summer. Then give 9 month leases for the academic year. However this year, a tenant has the right to reside in a property for 6 years from day one which over rides the lease. Landlords are now better off leaving properties empty during the summer than rent them. There is no telling what will happen with laws next. I would not be surprised if there is lobbying to make part IV 10 or 15 years long. It does not make sense to let your property at times

OP you might be seeing property in receivership too.

wordofwarning

wordofwarning wrote: »

I know a ton of landlords with their housing/apartments empty for the summer. Thanks to the Government protecting tenants in the new RTA amendments. A lot of landlords I know used to give tenants 3 month leases during the summer at a low rent as demand is lower in the Summer. Then give 9 month leases for the academic year. However this year, a tenant has the right to reside in a property for 6 years from day one which over rides the lease. Landlords are now better off leaving properties empty during the summer than rent them. There is no telling what will happen with laws next. I would not be surprised if there is lobbying to make part IV 10 or 15 years long. It does not make sense to let your property at times

OP you might be seeing property in receivership too.

They don't have the reside from day one, they have to be there 6 months before they get part4 rights.

wordofwarning

Belen Plain Kid wrote: »

They don't have the reside from day one, they have to be there 6 months before they get part4 rights.

No it has been changed to day one now since the RTA amendments at Christmas

GGTrek

wordofwarning wrote: »

Belen Plain Kid wrote: »

They don't have the reside from day one, they have to be there 6 months before they get part4 rights.

No it has been changed to day one now since the RTA amendments at Christmas

Only for further part 4 tenancies.

wordofwarning

wordofwarning wrote: »

No it has been changed to day one now since the RTA amendments at Christmas

As above, is only that you can't end a further part 4 in the first 6 months. A new tenancy can be ended in the first 6 months and you can also end a tenancy before a further part 4 kicks in so aside from part 4 now being 6 years nothing has really changed.

4ensic15

Belen Plain Kid wrote: »

As above, is only that you can't end a further part 4 in the first 6 months. A new tenancy can be ended in the first 6 months and you can also end a tenancy before a further part 4 kicks in so aside from part 4 now being 6 years nothing has really changed.

The trouble is that the LL has to give 20 weeks notice expiring after the end to the 6 years. If there is a mistake it may not be discovered until the tenant refuses to move by which time it will be too late.

4ensic15

4ensic15 wrote: »

The trouble is that the LL has to give 20 weeks notice expiring after the end to the 6 years. If there is a mistake it may not be discovered until the tenant refuses to move by which time it will be too late.

It's not difficult to get the notice correct despite what some people appear to think. It's a simple set of guide lines that anyone should be able to follow.

Most people won't even question it anyway regardless, for every one person who comes in here asking is their notice valid there are most likely 10's if not 100's who just accept it as they don't know anything about the rules.

4ensic15

Belen Plain Kid wrote: »

It's not difficult to get the notice correct despite what some people appear to think. It's a simple set of guide lines that anyone should be able to follow.

Most people won't even question it anyway regardless, for every one person who comes in here asking is their notice valid there are most likely 10's if not 100's who just accept it as they don't know anything about the rules.

I don't know how many times you have attened RTB hearings and adjudications on termination notices. I don't know how many you have drafted (most likely nil). There is always a chance of getting a notice wrong. People have to get lawyers to do it for them. The notice being discussed here is the one to prevent a further part 4 coming into being. Tyhe High Court overturned the RTB in relation to one of those notices last year.
http://www.courts.ie/Judgments.nsf/0/7F4D66320A5B7A3880257F5C00349E68

If it was that easy you would think the board of the RTB would get it right.
The landlord has the risk that the notice will be challenged, he will lose and he is stuck for another 6 years.

Where are you getting fbout the percentage of tenants who don't challenge notices from? None published that i have ever seen.

4ensic15

4ensic15 wrote: »

I don't know how many times you have attened RTB hearings and adjudications on termination notices. I don't know how many you have drafted (most likely nil). There is always a chance of getting a notice wrong. People have to get lawyers to do it for them. The notice being discussed here is the one to prevent a further part 4 coming into being. Tyhe High Court overturned the RTB in relation to one of those notices last year.
http://www.courts.ie/Judgments.nsf/0/7F4D66320A5B7A3880257F5C00349E68

If it was that easy you would think the board of the RTB would get it right.
The landlord has the risk that the notice will be challenged, he will lose and he is stuck for another 6 years.

Where are you getting fbout the percentage of tenants who don't challenge notices from? None published that i have ever seen.

That notice didn't meet the very clear requirements. There is no way I'd be paying a solicitor to draft a termination notice I'd be 100% confident doing it myself. There are even templates on the RTB website which basically do if for you.

Why do I think tenants won't challenge notice? I know a lot of people who rent and basically none of them have a clue about tenancy rules. For example most think you need to sign a lease every year, many think is only a months notice to move out (from either them or the LL), the while 24 months for rent reviews was unheard of etc etc. If almost all of these got a termination notice (without showing it to me) they would just accept it, even if they were just told to move out without a written notice I reckon many would think that was fine.

Graham

Some landlords will be interested in keeping in top of legislation and comfortable writing their own termination notices. Others won't.

For the sake of €100, I'd probably fall into the 'let the solicitor handle it' camp, particularly as the consequences of getting it even slight wrong are fairly bad.

GGTrek

Graham wrote: »

Some landlords will be interested in keeping in top of legislation and comfortable writing their own termination notices. Others won't.

For the sake of €100, I'd probably fall into the 'let the solicitor handle it' camp, particularly as the consequences of getting it even slight wrong are fairly bad.

Please PM me the contact of an experienced tenancy law solicitor in Ireland that with only €100 will dispense me legal advice and the termination notice.

Graham

GGTrek wrote: »

Please PM me the contact of an experienced tenancy law solicitor in Ireland that with only €100 will dispense me legal advice and the termination notice.

I'm meant to be going into our solicitor next week, I'll ask out of curiosity if I think of it.

The_Conductor

For a hundred quid? Haha. No-one is going to give you official legal advice for 100 quid- much less put come care into writing you a termination letter, cognisant of the current legislative requirements.

Pity we don't have a consolidated version of all the regs that we could fall back on- this repealing certain provisions in a reg, but not others- and then updating the core and subsequent regs ad nauseum- makes it very difficult to figure the exact state of play- without cutting and pasting the original reg into excel and amending it article by article, until you end up with whatever is finally left at the end........

Graham

Graham wrote: »

For the sake of a few €100, I'd probably fall into the 'let the solicitor handle it' camp, particularly as the consequences of getting it even slight wrong are fairly bad.

FMP

Point remains the same though. Costs of getting it wrong could be multiples of doing it right the first time.

4ensic15

Belen Plain Kid wrote: »

That notice didn't meet the very clear requirements. There is no way I'd be paying a solicitor to draft a termination notice I'd be 100% confident doing it myself. There are even templates on the RTB website which basically do if for you.

Why do I think tenants won't challenge notice? I know a lot of people who rent and basically none of them have a clue about tenancy rules. For example most think you need to sign a lease every year, many think is only a months notice to move out (from either them or the LL), the while 24 months for rent reviews was unheard of etc etc. If almost all of these got a termination notice (without showing it to me) they would just accept it, even if they were just told to move out without a written notice I reckon many would think that was fine.

It was so clear the Board of the RTb couldn't see what you cpuld see?
Obviously you have never written a termination notice and gone through the procedure of challenging one. The RTB website has numerous challenges to termination notices. Many of them successful. Tenants didn't challenge much when rents were falling and it was easy to re-locate. Now with RPZs and a tight market they are pulling every trick in the book.
I know a solicitor who gets a barrister to draft his notices. What chance has the typical landlord?

Not alone is there a drafting issue, there are service requirements and there are tenants now claiming that notices were not served on them.
Even getting the date of service right can be a minefield and calculating the notice period is also quite technical.

astrofool

Man, there's got to be an opportunity for an app/service to handle that for you, input start/tenant details, then it tells you when to send notice, and drafts it for you.

Or, were the government to get pro-active, use the PRTB registration mechanism as the only way to send notice to a tenant to quit, where the tenant has to register themselves on the site and notices through the site are deemed as delivered each way (also keeping a track record of all communication were a dispute to arise). You could even include start/ending photos with each tenancy.

Claw Hammer

astrofool wrote: »

Man, there's got to be an opportunity for an app/service to handle that for you, input start/tenant details, then it tells you when to send notice, and drafts it for you.

Or, were the government to get pro-active, use the PRTB registration mechanism as the only way to send notice to a tenant to quit, where the tenant has to register themselves on the site and notices through the site are deemed as delivered each way (also keeping a track record of all communication were a dispute to arise). You could even include start/ending photos with each tenancy.

Trying to keep such an app up to date would require considerable legal and technical expertise. The RTB haven't even got a system that can keep registrations up to date properly. The Government are not going to authorise the RTB to spend a cent on making things easier for users of the service. Letting agents are getting out of the business because of all the hassle of keeping up with regulations and laws in this area.