Property Market 2019

Assetbacked

AlmightyCushion wrote: »

You're leaving out that REITs must distribute at least 85% if their income to shareholders. Those shareholders will then pay tax/PRSI/USC on those dividends.

These shareholders are for the vast majority of cases, not based in Ireland and therefore are not subject to tax on their dividends, meaning REITs are a vehicle to harvest money from the Irish economy. The REIT regime has been toxic and completely destroyed the housing market in Dublin. Maybe in a stronger economy they have their benefits to a housing market but in a crisis like we are in, they exacerbate the problem.

jay0109

Amirani wrote: »

We're in a better situation now than we were previously with respective to the variety of landlords. This is being masked somewhat by the lack of supply across the board, which is causing all the main issues we're seeing.

Like the outcome of French revolution, it's too early to say.

Lets see in 10 years time, especially if the REITs/Foreign Funds keep buying up whole blocks at a time.

beauf

jay0109 wrote: »

Like the outcome of French revolution, it's too early to say.

Lets see in 10 years time, especially if the REITs/Foreign Funds keep buying up whole blocks at a time.

...and units in villages, and farms etc.

BBFAN

AlmightyCushion wrote: »

You're leaving out that REITs must distribute at least 85% if their income to shareholders. Those shareholders will then pay tax/PRSI/USC on those dividends.

Same as employees in private limited companies do and they still pay tax at 12.5%??

voluntary

Amirani wrote: »

Are all private landlords tax resident in Ireland?

Rental income is taxed here no matter what residency of the landlord is. All double taxation agreements treat rental income differently from any other income. Property related taxes, including rental income and capital gains tax are to be paid where the property is located (and possibly in the other country too).

voluntary

jay0109 wrote: »

Like the outcome of French revolution, it's too early to say.

Lets see in 10 years time, especially if the REITs/Foreign Funds keep buying up whole blocks at a time.

On the other hand, REITs buying the whole blocks in bulk provide a superb demand to builders and pay no delay cash so the same builder can immediately start building more and more blocks instead of trying to offload one by one to the public first. We will get more builds in less time due to REITs.

jay0109

voluntary wrote: »

On the other hand, REITs buying the whole blocks in bulk provide a superb demand to builders and pay no delay cash so the same builder can immediately start building more and more blocks instead of trying to offload one by one to the public first. We will get more builds in less time due to REITs.

I wouldn't be so certain on that

LotharIngum

voluntary wrote: »

On the other hand, REITs buying the whole blocks in bulk provide a superb demand to builders and pay no delay cash so the same builder can immediately start building more and more blocks instead of trying to offload one by one to the public first. We will get more builds in less time due to REITs.

Theres going to be more of that to come.
My other half works in the coco office and she told me that they are now going direct to REITS and telling them that they will rent as many houses as they can buy off them on very long leases. They are trying to encourage the REITS to buy houses as well as apartments.

Great deal if youre are a REIT. Buy 50 houses in bulk for a discount. And be guaranteed before you even buy them that you can rent to them to the council with no input for 30 years or whatever the lease is. They cant lose.

The loser there is the tax payer and the normal house buyer.
Tax payer pays for the houses.
Normal buyer has to compete with super power when looking to buy.
When the normal buyer does buy it turns out they are a private owner in a majority council estate.

The middle income worker is just so screwed in this country.

The Student

LotharIngum wrote: »

Theres going to be more of that to come.
My other half works in the coco office and she told me that they are now going direct to REITS and telling them that they will rent as many houses as they can buy off them on very long leases. They are trying to encourage the REITS to buy houses as well as apartments.

Great deal if youre are a REIT. Buy 50 houses in bulk for a discount. And be guaranteed before you even buy them that you can rent to them to the council with no input for 30 years or whatever the lease is. They cant lose.

The loser there is the tax payer and the normal house buyer.
Tax payer pays for the houses.
Normal buyer has to compete with super power when looking to buy.
When the normal buyer does buy it turns out they are a private owner in a majority council estate.

The middle income worker is just so screwed in this country.

This does not surprise me at all. We don't have the capital to build so its cheaper in the short term to rent with the REITS for the Council, however in the long term it is more expensive for the Council.

And yes the middle income worker not entitled to any State Support is screwed yet again. Isn't Ireland just a great place to live!

voluntary

There will be a breaking point at some stage. The sooner it happens the milder the correction/crash, but less housing built. The later it happens, the more severe correction, but also more homes built for the people.
The breaking point will be triggered by the economy slowdown. When can this happen? Nobody knows.

LotharIngum

The Student wrote: »

This does not surprise me at all. We don't have the capital to build so its cheaper in the short term to rent with the REITS for the Council, however in the long term it is more expensive for the Council.

And yes the middle income worker not entitled to any State Support is screwed yet again. Isn't Ireland just a great place to live!

Just having a chat with a colleague about that now and he made some very good points.

He said that's going to have a lot of consequences.

House prices for normal buyers are going to be inflated.
Rents are going to go up because unless you are on hap you aren't getting a house in the near future. Because now landlords wants to invest now anyway and then you have the Reits being the only ones owning houses for rent, and those are rented to the council.

So now you have majority council estates with a minority of suckers who bought in them.

We have central bank rules to cool housing prices but we have the government/councils inflating purchase prices now by buying up the available houses by proxy and then also getting their 10% allocation on top of that.

Its the government again going to overheat the property market.
All just to cover up mistake after mistake that they have made with trying to push social tenants to private landlords. Its going to be an unmitigated disaster.

beauf

This basically...

https://www.youtube.com/watch?v=Z4fBbhyzE9A

The Student

LotharIngum wrote: »

Just having a chat with a colleague about that now and he made some very good points.

He said that's going to have a lot of consequences.

House prices for normal buyers are going to be inflated.
Rents are going to go up because unless you are on hap you aren't getting a house in the near future. Because now landlords wants to invest now anyway and then you have the Reits being the only ones owning houses for rent, and those are rented to the council.

So now you have majority council estates with a minority of suckers who bought in them.

We have central bank rules to cool housing prices but we have the government/councils inflating purchase prices now by buying up the available houses by proxy and then also getting their 10% allocation on top of that.

Its the government again going to overheat the property market.
All just to cover up mistake after mistake that they have made with trying to push social tenants to private landlords. Its going to be an unmitigated disaster.

I think you may be right for new houses but I don't see it happening to second hand houses. The Council don't have the manpower nor the time to retrofit old houses. By renting off the REITS the houses meet current Regs and are ready to go with a relatively low initial outlay.

The REITS are responsible for upkeep etc.

I would expect Councils would favor apartments over houses as they get better value for money with apartments. it cheaper to rent a two bed apartment then a two bed house.

I am not sure about the overheating of the property market. Institutional landlords are here for the long term and even if one goes their property will be sold to another institutional landlord or even the State. I don't see them selling apartments one by one it would be to expensive for them.

The Central Bank were indeed cooling the market but I think the landscape has changed in Ireland. Expect more and more people to spend their life renting and less people will own their own property in the future.

barrier86

Just thought I’d throw this in here. I saw a house today go up for sale. Estate agents first line in the description is Cash Buyers Preferred.

How do first time buyers even have a chance anymore?

awec

barrier86 wrote: »

Just thought I’d throw this in here. I saw a house today go up for sale. Estate agents first line in the description is Cash Buyers Preferred.

How do first time buyers even have a chance anymore?

Cash buyers would probably be preferred in every single sale. It's nothing new, they are the least amount of hassle.

barrier86

awec wrote: »

Cash buyers would probably be preferred in every single sale. It's nothing new, they are the least amount of hassle.

I agree. But this is pretty much saying mortgage buyers are not welcome, it doesn’t sit right with me at all. That’s just me, mind.

voluntary

barrier86 wrote: »

Just thought I’d throw this in here. I saw a house today go up for sale. Estate agents first line in the description is Cash Buyers Preferred.

How do first time buyers even have a chance anymore?

Either someone wants a very quick sale or there are issues with the property which the seller knows banks may not like.

Bluefoam

barrier86 wrote: »

awec wrote: »

Cash buyers would probably be preferred in every single sale. It's nothing new, they are the least amount of hassle.

I agree. But this is pretty much saying mortgage buyers are not welcome, it doesn’t sit right with me at all. That’s just me, mind.

Are you annoyed that someone else has made more money than you and can afford to buy things you can't? Cash buyers have cash... Therefore they have more power in any market, not just property... What the seller is saying is that a speedy and efficient sale is more important to them than reaching an absolute top price... Sounds positive to me. Btw, the estate agent might be suggesting that they'd prefer buyers without another property to sell, therefore you shouldn't be afraid to make an offer if you are genuine.

Nevermindnow

The Student wrote: »

The opt in tax treatment would be unfair as it would act as a disincentive to make repairs/improvements as it could not be written off against tax.

I have suggested extending the rent a room scheme to the Minister via the housing forum last year.

I'm out of touch. Do you mean the 14k tax free rent a room relief? I didn't realise that it had an end date in the near future. I could be picking up this wrongly though.

L1011

Nevermindnow wrote: »

I'm out of touch. Do you mean the 14k tax free rent a room relief? I didn't realise that it had an end date in the near future. I could be picking up this wrongly though.

It has no end date.

I think they are suggesting that an equivalent relief should be allowed for landlords with one (or more?) rental property that isn't a PPR; with the expectation that it'd reduce rents. It'd also reduce tax income but presumably they think it'd reduce HAP expenditure equivalently. But I may have interpreted it entirely wrong so don't take this as putting words in their mouth!

Realistically very hard to work out the state revenue impact of such an idea due to an obvious loss of income vs a potential reduction in expenditure.

AsianDub

Does anyone have any insight into how things are in the Clontarf/Raheny/Killester/Drumcondra/Glasnevin markets these days in terms of asking vs selling price, amount of people at viewings etc.? 3-4 bed houses.

FernandoTorres

As well as REITs you also have the lesser publicised Qualifying Investor Alternative Investment Funds (QIAIFs). These are completely exempt from Irish taxation and there is no withholding tax payable at all by the investor as long as they're an overseas resident.



These funds mean Ireland has vast amounts of property owned by foreign companies, with foreign investors to which there is no taxation benefit to the Irish taxpayer. There are currently around 500 billion of assets in these funds.



The "benefit" seems to be that they create some jobs in the IFSC.
Meanwhile Irish investors get slugged with very high income taxes on rental income as well as high capital gains taxes on disposal.



Some more light reading here: https://en.wikipedia.org/wiki/Qualifying_investor_alternative_investment_fund_(QIAIF)

The Student

L1011 wrote: »

It has no end date.

I think they are suggesting that an equivalent relief should be allowed for landlords with one (or more?) rental property that isn't a PPR; with the expectation that it'd reduce rents. It'd also reduce tax income but presumably they think it'd reduce HAP expenditure equivalently. But I may have interpreted it entirely wrong so don't take this as putting words in their mouth!

Realistically very hard to work out the state revenue impact of such an idea due to an obvious loss of income vs a potential reduction in expenditure.

Correct I am suggesting extending the rent a room model to landlords.

An example may help, assume a couple is paying €2000 per month in rent. The Landlord sees €1000 after tax and Revenue get the other €1000. Instead the tenant pays the landlord €1000 and the landlord has no tax liability on that. The tenant gets a tax credit of €1000 equivalent to the €1000 the Revenue were receiving.

After one year the tenant has €12000 in tax credits, after two years they have €24000. These tax credits can be used as a deposit on a property. The tenant is then out of the rent trap and can afford to purchase a new property for a lower monthly repayment then the rent. Ultimately they will not need to be housed by the State in the future.

Taking this onwards the property the person was renting now becomes available for the rental market so the supply of rental properties has increased by one which can be used to house those who will be renters for life (either by choice or financial reasons). As supply has increased and demand remains the same (in this scenario) the rent price will decrease.

L1011

The cost of that would be utterly unfeasible. State would be losing twice what it currently takes in (the landlords tax payment + the additional tenant credit)

Any changes would have to be as close to revenue neutral as possible

scheister

The Student wrote: »

Correct I am suggesting extending the rent a room model to landlords.

An example may help, assume a couple is paying €2000 per month in rent. The Landlord sees €1000 after tax and Revenue get the other €1000. Instead the tenant pays the landlord €1000 and the landlord has no tax liability on that. The tenant gets a tax credit of €1000 equivalent to the €1000 the Revenue were receiving.

After one year the tenant has €12000 in tax credits, after two years they have €24000. These tax credits can be used as a deposit on a property. The tenant is then out of the rent trap and can afford to purchase a new property for a lower monthly repayment then the rent. Ultimately they will not need to be housed by the State in the future.

Taking this onwards the property the person was renting now becomes available for the rental market so the supply of rental properties has increased by one which can be used to house those who will be renters for life (either by choice or financial reasons). As supply has increased and demand remains the same (in this scenario) the rent price will decrease.

I like the above idea but it might not be feesable cost wise. What about an SSIA type product where the bonus is only paid if account is used as part of a property purchase.

My mind is also thinking the solution is not to put more money in the purchasers hands as that will only increase prices but find a way to make buildings the houses cheaper.

q85dw7osi4lebg

scheister wrote: »

I like the above idea but it might not be feesable cost wise. What about an SSIA type product where the bonus is only paid if account is used as part of a property purchase.

My mind is also thinking the solution is not to put more money in the purchasers hands as that will only increase prices but find a way to make buildings the houses cheaper.

Get rid of vat on new builds. Job jobbed.

whampiri

Increase the property tax on owning multiple properties (to take a number, say any more than 3)while eliminating tax avoidance status for large landlords.e.g reit.

Independently value property that's rented and cap ROI at 5% increasing with the rate of inflation on an annual basis.
Higher penalties for non declaration of rental income to revenue.

Longer lease contracts while making the process of evicting bad tennants easier and less costly with legal fees being enforced against the unsuccessful applicant.

Make repossession easier. I understand that people fall on hard times but freeing up housing stock is essential.
Re-home persons in council houses to the outskirts of the city, knock the house and build apartments in a public private partnership. A prime example of where this could be done is East wall in Dublin.

Bluefoam

So should small landlords charge less than reits? Should there be a different tiered system on who is allowed rent at the lower rate? Why are you proposing that all of this money is given to first time buyers? Is the future plan that everyone should own a house?

The Student

scheister wrote: »

I like the above idea but it might not be feesable cost wise. What about an SSIA type product where the bonus is only paid if account is used as part of a property purchase.

My mind is also thinking the solution is not to put more money in the purchasers hands as that will only increase prices but find a way to make buildings the houses cheaper.

I am not sure about an SSIA type situation as all it will do will put a flood of funds on the market at a given point in time. If the new builds are not there to meet this flood of money prices will just rise equivalent to the way they did when the first time buyers grant was issued where purchases got 5% from the Govt and only need to find 5% themselves to meet the 10% deposit requirements.

With my suggestion the release of these funds would be gradual with renters continuing to rent until they had sufficient "credits" to fund the deposit on the property they want rather than on what they can afford.

AlmightyCushion

The Student wrote: »

I am not sure about an SSIA type situation as all it will do will put a flood of funds on the market at a given point in time. If the new builds are not there to meet this flood of money prices will just rise equivalent to the way they did when the first time buyers grant was issued where purchases got 5% from the Govt and only need to find 5% themselves to meet the 10% deposit requirements.

With my suggestion the release of these funds would be gradual with renters continuing to rent until they had sufficient "credits" to fund the deposit on the property they want rather than on what they can afford.

Your suggestion would cost the state an absolute fortune. Also, what happens with properties over 1000 a month? Landlords have to pay tax on the whole amount. What knock on effect will that have on the rental market? You'd have landlords trying to split properties up to turn them into separate units. So, instead of renting a 3 bed house for €2000 which they would pay tax on, they would split it up in two 1 bed flats and rent them for €1000 each which they would pay no tax on. Landlords would have little interest in larger properties as they are tax inefficient. They'd sell the 3/4 bedroom apartments and houses and use the funds to purchase small 1 bed properties. It would lead to a massive decrease in the amount of rentals in the €1000 - €3000 a month range which in larger urban areas is most of the housing stock that most average people would be looking at and this would cause the rent on these properties to increase massively.

Basically, your idea is great for landlords, terrible for the state as it will cost a fortune and make the renting experience pretty terrible. Renters will mostly be stuck in a shoe box (because that's all landlords will be offering). You want anything better than that, well tough shít because it's either going to be stupidly expensive or there will be feck all available.