Article: My Budget: ‘What did budget do for me as a landlord?

The_Conductor

https://www.irishtimes.com/business/commercial-property/my-budget-what-did-budget-do-for-me-as-a-landlord-absolutely-nothing-1.3250828

Note: Article is behind a paywall- if you are over your monthly allowance you may not be able to access it.

Its an interview with Stephen Faughan- a landlord who up to two years ago had properties capable of accommodating 120 people, but has now downsized, and is continuing to downsize- and can now accommodate only 28.

He laments- nothing done on property tax (its tax deductible for any other business- but not for landlords), nothing done on bedsits that are still available and could be quickly reintroduced into the market- but he does welcome the increase in HAP payments- as social welfare recipients are having difficulty functioning in the current market (so is everyone else, however thats not mentioned).

Its a short article- a lament more than anything else- that the budget was a wasted opportunity where so many different options could have been explored by the government- but for reasons of expediency- were not.

There is, of course, the traditional backdoor for introducing measures- the Finance Bill- which very often features a plethora of measures that hadn't been discussed or tied down on budget day.

All-in-all- personally- I found the budget to be too little- and spread far too thinly on the ground- no-one is going to try to hand back their fiver a week- but it really is too little to get anyone excited about either.

Speaking to two local landlords last night (Lucan Village)- they both say that the lack of action has hardened their resolve- and they will sell their final units in the coming months.

pwurple

It’s the attitude here though. He will get no sympathy.

If there was a clothing shortage, with clothing retailers closing because they were unable to make an income due to punative govt policy, I am pretty sure the policy would be looked at.

But housing suppliers? Oh No, they need another few years being kicked because obviously there are not enough people sleeping on the streets yet.

GGTrek

Stephen Faughnan is the president of IPOA. I wrote in a separate thread yesterday, this budget will do almost nothing to improve the housing crisis. The 1.83b for social housing are a drop in the ocean, to make a dent it should have been above 10b. The 149M for HAP will not increase housing supply, just more money chasing the same stock. The govvie simply does not have either the money or the will. They are kicking the can again.

GGTrek

Double post again!

Wheeliebin30

GGTrek wrote: »

Stephen Faughnan is the president of IPOA. I wrote in a separate thread yesterday, this budget will do almost nothing to improve the housing crisis. The 1.83b for social housing are a drop in the ocean, to make a dent it should have been above 10b. The 149M for HAP will not increase housing supply, just more money chasing the same stock. The govvie simply does not have either the money or the will. They are kicking the can again.

10 billion for social housing?

Are you off your rocker?

Lumen

The_Conductor wrote: »

He laments- nothing done on property tax (its tax deductible for any other business- but not for landlords)

Is it deductible for landlords operating through a limited company?

The_Conductor wrote: »

he does welcome the increase in HAP payments- as social welfare recipients are having difficulty functioning in the current market

Of course he welcomes the increase, it puts upward pressure on rents.

The_Conductor wrote: »

Thirteen years ago, Mr Faughnan owned enough properties to house 120 people, but he has downsized since: “I now can only accommodate 28. That’s the type of level of exit we’re dealing with,” said Mr Faughnan.

Landlords selling is not precisely correlated with reduction in housing stock. They could be selling to other landlords, but even if they're selling to owner occupiers, that only represents a diminishing of housing capacity if the utilisation decreases. It's possible that such decrease is offset by owner occupiers availing of RaR.

GGTrek

Wheeliebin30 wrote: »

GGTrek wrote: »

Stephen Faughnan is the president of IPOA. I wrote in a separate thread yesterday, this budget will do almost nothing to improve the housing crisis. The 1.83b for social housing are a drop in the ocean, to make a dent it should have been above 10b. The 149M for HAP will not increase housing supply, just more money chasing the same stock. The govvie simply does not have either the money or the will. They are kicking the can again.

10 billion for social housing?

Are you off your rocker?

It is simple accounting. Building a 2 bed apartment at the moment costs at least 300k. 1.83b will provide only around 4 thousand units (the govvie is even more conservative and puts the number at 3k). This is nothing when the social housing list is above 90k! If you invest at least 5 times the govvie planned amount then you have a chance of catching up in 5 to 7 years. Otherwise it is is a bad joke in bad faith. At the current investment rate, maybe in 20-25 years they will catch up. Maybe this is the intention of this bad faith incompetent govvie all allong: just showing they're doing something, when in reality they do not care.
More serious issue is that there is no way that with current tax receipts they can sustain a 10b investment in social housing protracted for 5-7 years (unless they massively change budget allocations, which is politically impossible I believe), but at least they should say it.

Wheeliebin30

GGTrek wrote: »

It is simple accounting. Building a 2 bed apartment at the moment costs at least 300k. 1.83b will provide only around 4 thousand units (I new the govvie is even more conservative and put the number at 3k). This is nothing when the social housing list is above 90k! If you invest at least 5 times the govvie planned amount then you have a chance of catching up in 5 to 7 years. Otherwise it is is a bad joke in bad faith. At the current investment rate, maybe in 20-25 years they will catch up. Maybe this is the intention of this bad faith incompetent govvie all allong: just showing they're doing something, when in reality they do not care.
More serious issue is that there is no way that with current tax receipts they can sustain a 10b investment in social housing protracted for 5-7 years (unless they massively change budget allocations, which is politically impossible I believe), but at least they should say it.

The list is 90k?

So what?

Should anyone who puts their name on a list get a house straightaway?

Should we all put our names on the list?

rawn

Wheeliebin30 wrote:

The list is 90k?

A lot of people are on the list to avail of HAP, and are not actually waiting for a house. The number of people actually awaiting a council house would be much lower, though not 3k.

Timothy Bryce

The_Conductor wrote: »

He laments- nothing done on property tax (its tax deductible for any other business- but not for landlords), nothing done on bedsits that are still available and could be quickly reintroduced into the market- but he does welcome the increase in HAP payments- as social welfare recipients are having difficulty functioning in the current market (so is everyone else, however thats not mentioned).

I'm above my weekly quota on the IT so I haven't read the full article.

Re the highlighted piece above, I find this really strange that as a landlord you can't deduct things like this.

Also, I know it was always coming, but eliminating mortgage interest relief over the coming years makes no sense to me. The country is awash with accidental landlords, taxed to the hilt on loss-making properties - you would think some incentives would be looked at to help move these people along.

It seems bizarre to me that I have to pay tax (from my already taxed PAYE income) on a loss making property I can't afford to live in. I can't increase rent in line with other properties purchased by funds over previous years, given the RPZ restrictions.

Who in their right mind would want to be a landlord in this country!

Ps. Apologies for the rant

GGTrek

Wheeliebin30 wrote: »

The list is 90k?

So what?

Should anyone who puts their name on a list get a house straightaway?

Should we all put our names on the list?

Look I agree with you. I personally know a few scroungers on that list, it is a policy problem (criterias to go on the list are way too soft) I was just pointing out that the numbers don't add up.
Personally I believe that rental stock will reduce further due to lack of incentives in the budget and Christmas "presents" for private landlords ready in the govvie pipeline (read the last thread I started).

DubCount

Lumen wrote: »

Landlords selling is not precisely correlated with reduction in housing stock. They could be selling to other landlords, but even if they're selling to owner occupiers, that only represents a diminishing of housing capacity if the utilisation decreases. It's possible that such decrease is offset by owner occupiers availing of RaR.

Old landlords moving out, and new landlords moving in, does not impact on the market.

However, I cant agree that landlords moving out and selling to owner occupiers has no impact. Globally, we have an issue with undersupply of property. The real issue is where that undersupply has its impact. Moving properties out of the rental market means the impact of that undersupply is felt in the rental market while its softens the blow in the buy to own market.

Let me give an example. Year 1 we have 120,000 tenants trying to fit into 100,000 rental properties. In year 2, we get 20,000 new tenants. If we maintain rental property stock, we have 140,000 chasing 100,000 rental properties and the problem has gotten worse. If in year 2 we sell 50,000 properties to former prospective tenants we now have 90,000 tenants chasing just 50,000 rental properties. While the "gap" is still 40,000 excess tenants, the % problem has deteriorated significantly.

Ignoring the private rental sector will mean more evictions, more homelessness, poorer standards in rentals and higher rent price inflation.

I'm a landlord and this makes no real difference to my life. I live in my own home where none of this impacts on my monthly mortgage payments. I can take the equity I have built up in rental properties out of the market and invest the money elsewhere. The impact on my tenants is massive however. When I leave the market, they will be the ones either becoming homeless or paying eye-watering rents for some run down shack. They wont have the deposit so they can become an owner occupier.

I just cant agree that moving property out of one section of the market into another is a zero sum game.

quadrifoglio verde

GGTrek wrote: »

It is simple accounting. Building a 2 bed apartment at the moment costs at least 300k. 1.83b will provide only around 4 thousand units (the govvie is even more conservative and puts the number at 3k). This is nothing when the social housing list is above 90k! If you invest at least 5 times the govvie planned amount then you have a chance of catching up in 5 to 7 years. Otherwise it is is a bad joke in bad faith. At the current investment rate, maybe in 20-25 years they will catch up. Maybe this is the intention of this bad faith incompetent govvie all allong: just showing they're doing something, when in reality they do not care.
More serious issue is that there is no way that with current tax receipts they can sustain a 10b investment in social housing protracted for 5-7 years (unless they massively change budget allocations, which is politically impossible I believe), but at least they should say it.

Can't be done with current social housing policy
If you were to go down the route you suggested, the only way to do it is to build the ballymuns, darndales and jobstowns again.
You can't have a mass increase in social housing with the low levels of private housing being built without building council estates that we know will be no go area's.

This isn't this government or the previous government's fault. It's due to bad policy over the past 20 years

Claw Hammer

GGTrek wrote: »

Stephen Faughnan is the president of IPOA. I wrote in a separate thread yesterday, this budget will do almost nothing to improve the housing crisis. The 1.83b for social housing are a drop in the ocean, to make a dent it should have been above 10b. The 149M for HAP will not increase housing supply, just more money chasing the same stock. The govvie simply does not have either the money or the will. They are kicking the can again.

The IPOA! Waiying for the old days of bedsit bliss to come back. No challenge to the rent restrictions law. No challenge to the LPT deductability. No challenges to the RTB decisions screwing landlords. What does he expect. Lie down and wait to be kicked and you will be.