Property Market 2019

The Student

AlmightyCushion wrote: »

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.

Perhaps I did not explain it sufficiently the example I gave was for a property for rental of €2000, it could easily be for a property for rental of €1600 a month and the tax credit would be for €800 (ie the credit equates to 50% of the rental amount).

To break a property up into flats you need planning permission, which is not always easy to get, especially if you want to change a three bed semi into flats is nigh on impossible.

Recent reports suggest we don't need three bed properties rather we need an increase in one and two bed properties because of the falling family sizes and the increased single parent family make ups.

As it currently stands we have a dysfunctional property sector which if it continues on as it is the HAP will become the norm for people who will never be in a position to purchase. Landlords wont improve properties if rent caps stay.

Landlords wont enter the market because of the interference by Govt and the only landlords will be the institutional landlords who when they have sufficient control of the property sector will dictate the rules to the Govt.

So unless we do something now the situation will get worse rather than better.

scheister

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.

I agree that a flood of money will hit the market over a short period of time under SSIA scheme. It does give builders the time to plan for the market and aim to have house hit the market around the same time as the funds hit the market

AlmightyCushion

The Student wrote: »

Perhaps I did not explain it sufficiently the example I gave was for a property for rental of €2000, it could easily be for a property for rental of €1600 a month and the tax credit would be for €800 (ie the credit equates to 50% of the rental amount).

To break a property up into flats you need planning permission, which is not always easy to get, especially if you want to change a three bed semi into flats is nigh on impossible.

Recent reports suggest we don't need three bed properties rather we need an increase in one and two bed properties because of the falling family sizes and the increased single parent family make ups.

As it currently stands we have a dysfunctional property sector which if it continues on as it is the HAP will become the norm for people who will never be in a position to purchase. Landlords wont improve properties if rent caps stay.

Landlords wont enter the market because of the interference by Govt and the only landlords will be the institutional landlords who when they have sufficient control of the property sector will dictate the rules to the Govt.

So unless we do something now the situation will get worse rather than better.

We do need 3 and 4 bed properties for rent. Also, those properties can be rented on a room by room basis so even with falling family sizes it makes sense to have those.

Using a residential property for short term letting requires planning permission yet there are plenty that have done it without planning permission. Plenty are renting those log cabin style buildings in their back gardens without planning permission. I could see plenty of landlords trying to split a property up even without planning permission if it meant getting a lot more money for it. Regardless, they can just sell up and buy 1 bed properties instead.

If a landlord is currently renting a place for €2,000 a month, why would they keep that instead of selling it and buying a couple of 1 bedroom apartments or splitting the property up?

Your plan would massively incentivise just smaller 1 beds in large urban areas and hugely dis-incentivise every other type of property. We need a mix of property types, small and large, house and apartments.

The Student

AlmightyCushion wrote: »

We do need 3 and 4 bed properties for rent. Also, those properties can be rented on a room by room basis so even with falling family sizes it makes sense to have those.

Using a residential property for short term letting requires planning permission yet there are plenty that have done it without planning permission. Plenty are renting those log cabin style buildings in their back gardens without planning permission. I could see plenty of landlords trying to split a property up even without planning permission if it meant getting a lot more money for it. Regardless, they can just sell up and buy 1 bed properties instead.

If a landlord is currently renting a place for €2,000 a month, why would they keep that instead of selling it and buying a couple of 1 bedroom apartments or splitting the property up?

Your plan would massively incentivise just smaller 1 beds in large urban areas and hugely dis-incentivise every other type of property. We need a mix of property types, small and large, house and apartments.

How is renting a three bed property on a room by room basis different to converting a three bed semi into flats and renting them out. What am I missing as the difference.

If an existing landlord is breaching planning laws than that's what the planning enforcement teams are there for.

AlmightyCushion

The Student wrote: »

How is renting a three bed property on a room by room basis different to converting a three bed semi into flats and renting them out. What am I missing as the difference.

If an existing landlord is breaching planning laws than that's what the planning enforcement teams are there for.

It's a lot more versatile as a 3 bed. A family could rent it or a few people could rent it on a room by room basis. Also, once you split it up there is a cost to put it back as a 3 bed property that would discourage its use as a 3 bed.

Even if it properties don't get split up landlords will still start selling up and buying one beds as they will make renting them. So the amount of larger properties in urban areas available to rent would drop off pretty significantly.

beauf

Different Tenancy rules, for licensees vs tenants.

voluntary

AlmightyCushion wrote: »

It's a lot more versatile as a 3 bed. A family could rent it or a few people could rent it on a room by room basis. Also, once you split it up there is a cost to put it back as a 3 bed property that would discourage its use as a 3 bed.

Even if it properties don't get split up landlords will still start selling up and buying one beds as they will make renting them. So the amount of larger properties in urban areas available to rent would drop off pretty significantly.

Are you serious? 3 studio apartments vs 3 bed house to share. Nobody sane would opt for a house share if price wise would be no different from a studio.

Plus, there's no need for 3 or 4 bed rental places. There's enough of them. What's needed is studios, one and two bedroom apartments. Rentals of 3 beds are very rarely going to families, they go for house shares.
Families with more then 1 child are likely to be interested in buying rather than renting anyway.

Franz Von Peppercorn

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.

Firstly the tax take is off. Landlords don’t pay 50% on all rent. They keep saying they do but that’s because most have another job and the rent income is therefore at the marginal rate. For landlords with no other income the total tax is the same as all taxpayers, about 35% on average.

Secondly (assuming 50% for now) how does the landlord advertise the property, at 2000€ or 1000€? The former I assume, but he only gets 1000€. Can’t you see that the incentive here would be for landlords to price at 4000€. The landlord gets a tax free 2000€. The renters pay what they would have paid under the old scheme but get 2000€ credit per month.

Thirdly the government loses all tax revenues on rent but owes the same amount in credit. A double whammy to the taxpayer.

Fourthly the only thing giving every renter 24-48k or more credit when buying a house will do is increase house prices by 24-48k or more.

Franz Von Peppercorn

Back to the property market - I see 1 bedroom asking prices falling here (north county Dublin) on daft. Generally the canary in the mine.

voluntary

Franz Von Peppercorn wrote: »

Firstly the tax take is off. Landlords don’t pay 50% on all rent. They keep saying they do but that’s because most have another job and the rent income is therefore at the marginal rate. For landlords with no other income the total tax is the same as all taxpayers, about 35% on average.

Secondly (assuming 50% for now) how does the landlord advertise the property, at 2000€ or 1000€? The former I assume, but he only gets 1000€. Can’t you see that the incentive here would be for landlords to price at 4000€. The landlord gets a tax free 2000€. The renters pay what they would have paid under the old scheme but get 2000€ credit per month.

Thirdly the government loses all tax revenues on rent but owes the same amount in credit. A double whammy to the taxpayer.

Fourthly the only thing giving every renter 24-48k or more credit when buying a house will do is increase house prices by 24-48k or more.

You basically left market forces aside with your assumptions.

1. Any extra margins/profits landlords could initially make would immediately trigger new supply of rental properties (new landlords) up to the point where profits go to the profitability breaking point.

2. The cost to the state would be way lower than that. Less taxes collected but also less social housing, HAP etc to support. This is huge money, I bet it's bigger money then the private landlords tax take.

Franz Von Peppercorn

voluntary wrote: »

You basically left market forces aside with your assumptions.

1. Any extra margins/profits landlords could initially make would immediately trigger new supply of rental properties (new landlords) up to the point where profits go to the profitability breaking point.

What now? The landlords aren’t making any more profits in his insane scheme. Nor does giving more profits to landlords guarantee more supply. Supply is driven by many factors.

2. The cost to the state would be way lower than that. Less taxes collected but also less social housing, HAP etc to support. This is huge money, I bet it's bigger money then the private landlords tax take.

That’s also not costed or mentioned in his scheme.

If you wanted to get rid of HAP the best way is to build social housing and not have private landlords deal with it.

tomfoolery60

Franz Von Peppercorn wrote: »

Back to the property market - I see 1 bedroom asking prices falling here (north county Dublin) on daft. Generally the canary in the mine.

Or just overenthusiastic sellers/agents getting ahead of themselves! Wonder if the recent news showing what an even greater shambles that Celtic Tiger apartment builds have turned out to be re. fire safety is having an impact.

terrydel

We are looking for something semi rural or north west/north east wicklow and starting to see prices dropping. One we looked at last year went for 45 under asking, seen one today in wicklow town that we are thinking of viewing dropping by 30k.
I think outside of the sought after areas of Dublin, things have peaked or are very close to it, and in some cases are on the slide.

guppy

AsianDub wrote: »

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.

It depends on your price range. I've just gone SA today, but was looking Glasnevin/Finglas.

I found a huge amount of properties were in serious need of refurb, but not priced accordingly. Anything within my budget that didn't need much work went too high for us very quickly. Some properties over my budget are sitting there for months on end not going SA, so if you've a higher mortgage (€500k+), you've way more options.

Interested Observer

AsianDub wrote: »

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.

I've been looking in Glasnevin, Drumcondra and Phibsborough for over the last year, went sale agreed in Phibsborough in Jan. Imo things are definitely softer now than at this time last year. Attendances at viewings are down and places seem to be going for closer to asking price, at least from what I've seen.

Agree with the above comment too, have seen a lot of places that either were lived in by elderly people and hadn't been touched in decades, or had been chopped up to cram in as many tenants as possible. In both cases huge amounts of work needed to turn them into a family home.

The Student

Franz Von Peppercorn wrote: »

Firstly the tax take is off. Landlords don’t pay 50% on all rent. They keep saying they do but that’s because most have another job and the rent income is therefore at the marginal rate. For landlords with no other income the total tax is the same as all taxpayers, about 35% on average.

Secondly (assuming 50% for now) how does the landlord advertise the property, at 2000€ or 1000€? The former I assume, but he only gets 1000€. Can’t you see that the incentive here would be for landlords to price at 4000€. The landlord gets a tax free 2000€. The renters pay what they would have paid under the old scheme but get 2000€ credit per month.

Thirdly the government loses all tax revenues on rent but owes the same amount in credit. A double whammy to the taxpayer.

Fourthly the only thing giving every renter 24-48k or more credit when buying a house will do is increase house prices by 24-48k or more.

Lets have a look at your points

Very few private landlords are on the low rate of tax, with our low entry point to the higher tax rates most if not all of the rental income is subject to the higher rate of tax.

Secondly the landlord continues to advertise the property at the market rate, this proposal I put forward is between the landlord, tenant and Revenue. As my suggestion is based on a tax credit to the tenant they are still paying the €2000 per month but receive a tax credit at year end that goes towards purchasing their own property.

Very few if any people will have €4000 cash per month to pay in rent and still have enough to pay day to day living expenses. If anybody has this type of disposable income each month they should be capable of getting a mortgage (as they would be earning a high income).

Thirdly the Govt only loses tax revenue in the short term, when these renters have enough credits built up they can purchase properties to live in themselves. This then releases the rental they were renting into the available rental properties thereby increasing supply which will help reduce price.

Fourthly, the credits will not increase house prices, all it is doing is creating the deposit that the central bank requires to meet its deposit requirements. All the Govt does is allow the credits be used against the mortgage and it gives the bank a tax credit equivalent to the value of the credit and then closes off the credit on the renters tax account. Effectively it has transferred the tax credit from the tenant to the bank on foot of the drawdown of the mortgage.

voluntary

Interested Observer wrote: »

I've been looking in Glasnevin, Drumcondra and Phibsborough for over the last year, went sale agreed in Phibsborough in Jan. Imo things are definitely softer now than at this time last year. Attendances at viewings are down and places seem to be going for closer to asking price, at least from what I've seen.

Agree with the above comment too, have seen a lot of places that either were lived in by elderly people and hadn't been touched in decades, or had been chopped up to cram in as many tenants as possible. In both cases huge amounts of work needed to turn them into a family home.

Remember, the transaction amounts from property price register really represent historical sale agreed sums. The transaction from March would represents SA from October-December likely when the sentiments had not been that bad yet.

Today's market demand will only translate to transactions in September-November. Even large Sale Agreed price drops will not be seen immediately in this market where every action takes ages to complete.

Franz Von Peppercorn

The Student wrote: »

Lets have a look at your points

Very few private landlords are on the low rate of tax, with our low entry point to the higher tax rates most if not all of the rental income is subject to the higher rate of tax.

Secondly the landlord continues to advertise the property at the market rate, this proposal I put forward is between the landlord, tenant and Revenue. As my suggestion is based on a tax credit to the tenant they are still paying the €2000 per month but receive a tax credit at year end that goes towards purchasing their own property.

Very few if any people will have €4000 cash per month to pay in rent and still have enough to pay day to day living expenses. If anybody has this type of disposable income each month they should be capable of getting a mortgage (as they would be earning a high income).

Thirdly the Govt only loses tax revenue in the short term, when these renters have enough credits built up they can purchase properties to live in themselves. This then releases the rental they were renting into the available rental properties thereby increasing supply which will help reduce price.

Fourthly, the credits will not increase house prices, all it is doing is creating the deposit that the central bank requires to meet its deposit requirements. All the Govt does is allow the credits be used against the mortgage and it gives the bank a tax credit equivalent to the value of the credit and then closes off the credit on the renters tax account. Effectively it has transferred the tax credit from the tenant to the bank on foot of the drawdown of the mortgage.

All of those points are wrong (except maybe the 4K one) but in the end you are asking the government to subsidise the deposit which is basically a 100% mortgage. The renters could have zero savings. And where is the government getting the money back?

Interested Observer

voluntary wrote: »

Remember, the transaction amounts from property price register really represent historical sale agreed sums. The transaction from March would represents SA from October-December likely when the sentiments had not been that bad yet.

Today's market demand will only translate to transactions in September-November. Even large Sale Agreed price drops will not be seen immediately in this market where every action takes ages to complete.

I wasn't really referring to the PPR, just going by what I'd seen and the many houses I've been outbid on in the last year, compared to similar houses I've been looking at this year. Also from speaking to estate agents. So just anecdotal.

whatever76

never heard of these cuckoo funds before - https://www.independent.ie/business/personal-finance/property-mortgages/rents-to-soar-again-as-cuckoo-fund-housebuying-hits-record-37992104.html

Bluefoam

whatever76 wrote: »

never heard of these cuckoo funds before - https://www.independent.ie/business/personal-finance/property-mortgages/rents-to-soar-again-as-cuckoo-fund-housebuying-hits-record-37992104.html

The Indo seems to have coined the phrase a few weeks ago... They think they are some sort of David McWilliams, with their fancy explanitory terms...

https://www.independent.ie/opinion/comment/donal-odonovan-wouldbe-buyers-left-stranded-in-cloud-cuckoo-land-37973744.html

Doodoo

Just did a search on asking prices nation wide on myhome.ie
There is certainly a trend with prices dropping with only an odd one increasing. Maybe people were just unrealistic with their original asking prices.
https://www.myhome.ie/pricechanges

Hercule

Think what we're seeing is more a trend of dreamers who didn't get any bites at their original price marking them down towards a more realistic cost

Franz Von Peppercorn

Even in a boom some asking prices fall due to over optimism but the number does seem to be increasing at the moment.

Bluefoam

Hercule wrote: »

Think what we're seeing is more a trend of dreamers who didn't get any bites at their original price marking them down towards a more realistic cost

Either that or a kartel or over anxious estate agents egging the market on in desperation... Upward trends are good for estate egents, flat or downward, not so good...

I'd imagine that estate agents are selling the dream to sellers, without much to back it up, then having to back down on their estimations.

Doodoo

Franz Von Peppercorn wrote: »

Even in a boom some asking prices fall due to over optimism but the number does seem to be increasing at the moment.

Just did a count there and of the 261 properties that changed their asking price so far in April, 53 rose in price (20%) with 208 having dropped in price (80%)

Graham

While I've no doubt there's evidence of overly optimistic agents/vendors, to get the full picture we'd need to know the properties that have received offers over asking.

beauf

Do we know if people normally don't drop their asking except when the market is softening?

beauf

If you had a house, would you gamble on selling now and buy back in a couple of years at a lower price?

Personally I don't think we will see the drops of the Celtic tiger to make it as worthwhile as it was then. But I'm wondering how many would make this brave play at the moment.

Jaster Rogue

I wouldn't read too much into asking prices. 2 different EAs will price an identical property at 2 vastly different price points depending on their strategy and on the client's targets (quick sale vs. ability to wait a year, ex-rental property vs. family home, no outstanding mortgage, etc.) EAs who have loads of time to deal with many bidders can price low to attract attention. Other EAs with a lot of properties on their books can price high to attract a single bidder as close to asking price as possible

I'm following properties in a particular area of Dublin at the moment and noticing some selling for way over asking, some selling for way under asking, and anything and everything in between. Even recent transactions (March 2019.) They kind of average out though overall. The property price register really is the only source of truth on the market. I don't get the opinion trotted out regularly that it's stale data either, some of the properties published there in March I'm following only went on the market in Dec/Jan. Barring a one-off economic or financial catastrophe, the market doesn't move by any significant amount in the space of 3 months. If there was such an event it would be top of the news headlines anyway.