Just 3% of mortgage approvals are buy to let

sk8board

Pretty pitiful numbers, just 155 B2L mortgages from over 5,100, which means almost zero new landlords coming into the market, backed up by the consistent drop in LLs in the RTB annual report last month.
Yes there are cash buyers, but I’m not convinced many of those are actually ‘intentional’ landlords rather than people looking to take cash out of deposit accounts and park it in property.

https://www.rte.ie/news/business/2019/0829/1071544-mortgages/

Salary Negotiator

How many properties have cuckoo funds bought in that period?

Aren’t there c. 20k new properties being built in 2019 so only about 1/3 are mortgaged, who is buying the rest?

I thought the 5,100 mortgages was drawdowns for the year but it's approvals for the month of July so my figures above are nonsense.

Roger_007

Perhaps the current belief that there is mega money to be made from buying and renting out property is just a myth.
Private landlords pay a substantial proportion of rental income in taxes and charges. They are on a hiding to nothing if their tenants don't honour their obligations to pay their rent and take reasonable care of the property. It's virtually impossible to evict tenants who default on rent or who damage the property.

It's not that surprising that fewer people are entering the market and existing landlords are leaving it. It's just not worth the hassle.

The_Conductor

Cuckoo funds? I take it you mean institutional buyers.

The 60% of new properties that are not mortgaged are a combination of social housing units- alongside units financed through mechanisms other than the formal lending sector (such as the local housing loans and the rebuilding ireland loans)- that don't feature in the Central Bank statistics.

Institutional buyers have been ramping up their activities this year- but todate, a majority of their market interventions (such as Green REIT) have been one institutional investor group selling blocks of units to another. The numbers of units of build to order blocks for institutional investors- has, up to now, remained quite limited- but is expanding rapidly.

Mad_maxx

Roger_007 wrote: »

Perhaps the current belief that there is mega money to be made from buying and renting out property is just a myth.
Private landlords pay a substantial proportion of rental income in taxes and charges. They are on a hiding to nothing if their tenants don't honour their obligations to pay their rent and take reasonable care of the property. It's virtually impossible to evict tenants who default on rent or who damage the property.

It's not that surprising that fewer people are entering the market and existing landlords are leaving it. It's just not worth the hassle.

We might end up with a situation where properties are bought but left vacant, happened in London with Russian and Chinese money, capital appreciation being the only thing sought, obviously only applies to cash buyers

beauf

This is not news, but I guess it's good to see some figures on it. I'm not sure why someone would enter the buy to let market at the moment. Brexit around the next bend, and the high risks of tenting out a property.

awec

Roger_007 wrote: »

Perhaps the current belief that there is mega money to be made from buying and renting out property is just a myth.
Private landlords pay a substantial proportion of rental income in taxes and charges. They are on a hiding to nothing if their tenants don't honour their obligations to pay their rent and take reasonable care of the property. It's virtually impossible to evict tenants who default on rent or who damage the property.

It's not that surprising that fewer people are entering the market and existing landlords are leaving it. It's just not worth the hassle.

There is great profits to be made, but it's equity rather than cash.

Given the current house prices it would be silly for anyone to buy a house with a BTL mortgage, expecting to make a cash profit on a month to month basis.

average_runner

Why would you want to become a landlord, the whole system is against them and no protection. I know alot of people who left the market.

You reap what you sow

sk8board

All fair points, but the market needs to be fixed, rather than abandoned. This is more hard data to show the market is broken and as an investment vertical, it’s not an attractive one.

Re house prices (be they high or low) if you’re entering the rental market with capital appreciation in mind rather than % annual yield, you’re just gambling not investing and simply adding to the problem of crappy landlords

rightmove

sk8board wrote: »

All fair points, but the market needs to be fixed

Who broke it and why ???..serious question. Landlords lose..tenants lose ...who wins??

Wesser

pitiful indeed. people buying property to live instead of makng money out of.

LiamoSail

Wesser wrote: »

pitiful indeed. people buying property to live instead of makng money out of.

And what about those that can’t afford to buy? People need places to rent

beauf

sk8board wrote: »

All fair points, but the market needs to be fixed, rather than abandoned. This is more hard data to show the market is broken and as an investment vertical, it’s not an attractive one.

Re house prices (be they high or low) if you’re entering the rental market with capital appreciation in mind rather than % annual yield, you’re just gambling not investing and simply adding to the problem of crappy landlords

I think you're about 5yrs out of date. While the odds of having a problem tenant are low. The risk is that one problem tenant, or problem with the property and years of rental profit (yield) can be wiped out overnight. So there has to be more return than just that.

But if you are entering the market now as a buy to let, for capital appreciation, you have low interest but peak market prices, and brexit looming, increasing supply. I don't think there is a risk of a crash in values, but there certainly a risk of rising rates, and further softening and slow down of the market. Really the only counter that is to spread the risk (cost) of a bad tenant over many properties. Also to invest in the high end to maximize rental returns.

But that does nothing for the housing crisis. As people who can afford the high end, aren't having a housing crisis. There's no incentive to invest in affordable housing.
Most of the people on the forums, who suggest there is, are renters, not investors. With the odd exception.

beauf

I think people have look at alternative life work balance, to avoid the housing problem in high demand areas.

handlemaster

The cuckoo fund term used by the indo and lapped up by the readers is BS

The_Conductor

handlemaster wrote: »

The cuckoo fund term used by the indo and lapped up by the readers is BS

+1

What the hell is a 'cuckoo' fund?
They are institutional investors who are buying property for the purpose of letting it out. They have every right to do so.

We need, we critically need, more rental property on the market. Rental prices are not going to fall- until supply meets demand. Deliberately tarring one category of residential property investors- to sell newspapers- is entirely counter productive- to say nothing of how stupid it is.

People want professional landlords in the country. You can't get more professional than these managers of hundreds or thousands of units.

However, it is a double edged sword- tenants are not going to get a personal level of understanding if they're a few days late with the rent or something untoward happens- that they expect from a private landlord- everything is precisely by the rulebook with an institutional investor- no ifs, no buts, no personal stories etc etc.

Be careful what you wish for, you just might get it..........

GGTrek

beauf wrote: »

Most of the people on the forums, who suggest there is, are renters, not investors. With the odd exception.

This is actually a massive issue for me in this forum.

Ireland does not have a forum like many other countries have just for BTL investors, this is probably due to the fact that Irish landlords associations are pathetically organised and weak.

The continuous interference (one case in this thread) from people who have no business interest but some moral judgement to shout out or even worse their own leftist political agenda to push forward reduces substantially the utility of this forum for a BTL investor.

L1011

GGTrek wrote: »

The continuous interference (one case in this thread)

If you have a problem with a post, report it. And stop with the constant attempts to guess at posters politics

As another poster has said, there may be some cash BTLs, but investors don’t usually pay cash for investment properties as it ties up too much capital. Surely it must b obvious that with rents at a historical high, small investors should be buying to rent, yet apart from funds that buy in cities, they aren’t.

Wesser

LiamoSail wrote: »

And what about those that can’t afford to buy? People need places to rent

part if the reason they were not able to afford a house was because of increased house prices due to demand from those who were investing.

the fact that this group, investors, is decreasing in size may be helping with the current stabilisation in prices.

rightmove

Wesser wrote: »

pitiful indeed. people buying property to live instead of makng money out of.

You live in communist Russia?

Assetbacked

This is more of a political issue. FG are all about Ireland, Inc. and listen to advisers and lobbyists who are backed by serious cash. Private landlords have it so tough and the supposed helpful measures brought it in to protect tenants have actually hurt them more by stifling supply from private landlords. E.g. the drawn out process to evict someone who doesn't pay rent. These people are hogging properties which could be taken by proper tenants. Another example is the tax private landlords pay versus institutionals with whom they share the same market.

Institutionals have paid no tax on the acquisition of the property via the use of s110 vehicles and pay no tax on the income they receive (ie the rent). These same institutionals who bought a lot of the Nama land around the Docklands have just been building offices and short-term let apartments - it is soulless and a poor use of land around the North Docks and Grand Canal Dock and anyone who works and lives around there can see in the evenings there is no community living there. But jobs, growth etc is all that mattered when the land was flogged to them.

The biggest thing for me would be to make it easy to kick someone out for non-payment, inadequate payment or delayed payment of rent. Shoot first, then have the option to appeal and apply for damages later. Also, the next budget must have some dramatic measures to tax institutionals more and to close any loopholes institutionals are using, eg a property tax aimed at apartment block owners who do not have occupation of long-term lease (12 month) tenants.

sk8board

rightmove wrote: »

Who broke it and why ???..serious question. Landlords lose..tenants lose ...who wins??

It’s an investment market, so no one person ‘broke’ it as such.
I’ve been a LL for 14 years and Here’s 2 big examples that were thought to be positive, but ultimately negative:

Example 1: and I remember well this really was a tipping point - in 2012 the Gov of the day made IMHO the right call by not building more social housing and moved into a rent allowance/HAP structure of using private landlords to house social tenants.
On the one hand, there were 23,000 properties to rent on daft in 2012 and on the other hand the state didn’t have the funds for capital projects.

That same rule today means that private investment landlords are now a critical part of providing state social housing, however we still haven’t restarted capital projects, but there are only 3,000 properties on Daft today.

Example 2: rent controls
I’m a LL - for me the rent control rules were a positive - all my places happened to have pretty recent tenant changeovers and as such we’re renting a tad below market rates. Rent controls effectively locked in those high rents.
However, I was lucky - many good honest LLs were locked in a rated MILES below market value and the best investment option was to sell, which is what they are doing.
Yes - Rent controls stopped rampant rent inflation, which I’m against anyway, but on the flip side they have locked the market at high rates

Those LLs will continue to leave and I think that’s a good thing for the market - the residential landlord market needs to professionalise - people renting multiple properties, as part of a company structure, in return for security for tenants and regular checks to ensure rules are being followed.

BDI

It’s not a time to buy for a landlord.

A month to month profit is madness not what you should expect.

You put in the deposit for a mortgage. Sometimes it costs a few quid sometimes you make a little profit, at the end you get a house.

If you fail to understand these things the bank manager will give you a big fake smile and promise to give you a call as he leads you out the door.

This section of boards has a few people who think they can change public opinion on landlord taxes by posting in a thread on a barely used section of the internet bemoaning how it’s awful that they have to work and be a landlord at the same time.

It’s not a bad thing if a few companies handle all the renting rather than a half a million people with half of them cowboys.

sk8board

BDI wrote: »

It’s not a time to buy for a landlord.

A month to month profit is madness not what you should expect.

You put in the deposit for a mortgage. Sometimes it costs a few quid sometimes you make a little profit, at the end you get a house.

If you fail to understand these things the bank manager will give you a big fake smile and promise to give you a call as he leads you out the door.

This section of boards has a few people who think they can change public opinion on landlord taxes by posting in a thread on a barely used section of the internet bemoaning how it’s awful that they have to work and be a landlord at the same time.

It’s not a bad thing if a few companies handle all the renting rather than a half a million people with half of them cowboys.

It’s a discussion and information board - no one expects to change the world from here

To correct some of your information - there aren’t ‘half a million’ landlords, it’s 168,000 (1 in every 21 adults), but only 14% of those have 3 or more properties and could be considered ‘intentional’ landlords.

You’re right that reducing the number of landlords is a good thing, as a full time LL I’m all for that, but having a small number of REITs would obviously be the worst possible scenario.
Best I correct you in case the minister for finance is reading this

Samuel T. Cogley

BDI wrote: »

It’s not a bad thing if a few companies handle all the renting rather than a half a million people with half of them cowboys.

Yeah as long as you've €500 a week for a one bed it's great.

beauf

BDI wrote: »

...It’s not a bad thing if a few companies handle all the renting rather than a half a million people with half of them cowboys...

We'll the market got all the changes it asked for.

So is the market better or worse?

If it's better then they have worked. If it isn't, then these changes have made no difference. If it's worse then they've made it worse.

BDI

That’s a supply issue not a who supplies issue.

beauf

Well the govt didn't built luxury high end apartments. The private market has no interest in social or affordable housing. So who supplies is very relevant to the shortage.

The Tyrrelstown amendment suggests there's no shortage of cowboys in multi unit "professional" landlords either. Not that "professional" means what you're implying.

Samuel T. Cogley

BDI wrote: »

That’s a supply issue not a who supplies issue.

It very much is the issue. The large REITs are able to come in in such a away that they can effectively ignore the RPZ rules initially which is why asking rates for rents are so much higher than the actual average rents. Furthermore they are able to distort the 'market rent' by sticking in a gym and calling it a luxury complex.


If we ever get to a point that REITs can't make an ongoing profit, exactly like the one you're suggesting a private LL should not be able to make, they'll sell up and invest else where. It's a myth these companies provide any stability.

zig

Silly question, but is it possible people are getting mortgages without telling the bank they intend to rent the house and this might skew the figures?

I would have assumed its harder to get approval for those kind of mortgages.

Samuel T. Cogley

zig wrote: »

Silly question, but is it possible people are getting mortgages without telling the bank they intend to rent the house and this might skew the figures?

I would have assumed its harder to get approval for those kind of mortgages.

It's possible but the figures show the number of LL's is declining so I doubt it's large numbers of people doing it.

BDI

Samuel T. Cogley wrote: »

It's possible but the figures show the number of LL's is declining so I doubt it's large numbers of people doing it.

Or that landlords are coining it so much they are buying the houses in cash.

Could do anything with the statistics really

Samuel T. Cogley

BDI wrote: »

Or that landlords are coining it so much they are buying the houses in cash.

Could do anything with the statistics really

The figures I mentioned are registered tenancies so they would incorporate properties bought outright. Most LL's are far from making huge amounts of money most have a negative cash-flow, if positive profit due to equity. Even if they did have the positive cash flow to purchase other properties - again not borne out by the stats showing most of us have one property - you're better off buying with a loan of some-sort for the tax relief.

beauf

BDI wrote: »

Or that landlords are coining it so much they are buying the houses in cash.

Could do anything with the statistics really

If there were so many doing it to distort the stats then there wouldn't be a shortage of accommodation. There would be huge amounts of complaints about it also. What you do have is complaints about LL selling up, or going bankrupt, and a shortage of places available.

There is also a huge increase in population and thus demand. That's what's causing the issue. Gallon into a pint pot.

I'm curious what you think cash buyer means when it comes to property. That it's unrecorded or something?

handlemaster

BDI wrote: »

Samuel T. Cogley wrote: »

It's possible but the figures show the number of LL's is declining so I doubt it's large numbers of people doing it.

Or that landlords are coining it so much they are buying the houses in cash.

Could do anything with the statistics really

Most likely. Been a landlord is a no lose game. I take it your trying to be a landlord as soon as possible, knowing this ? Money for nothing , money tree in the garden. No tax and no tenant issues.... I am sure you will have no problem picking up a very cheap property from a current landlord trying to get out of this great business. Dont forget you will also get the sitting tenants which is a double bonus... nothing could go wrong with that. ..

GGTrek

BDI wrote: »

Or that landlords are coining it so much they are buying the houses in cash.

Could do anything with the statistics really

This is what I was talking about in my previous post about interference in the threads: just moral judgments spouting or worse pushing forward baseless assertions (no data whatsoever to support it) that are part of the political propaganda of hard left parties like PBP.

Look how many reply posts were caused by just this post: I just rest my case that this forum utility for BTL investors is greatly diminished because of interference.

Graham

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