Why is the cost of property, esp renting, so high in Dublin?

J_1980

Just for reference Germany (booming economy, fiscal surplus, housing crisis of it’s own, similar building standards) currently has an annual housing completion rate of 283k.
If you scale this to the irish population 283k*4.8mm/82mm you end up with 16k houses.
So any politician promising to double that is just bs’itting

Denmark (record house prices, same issues) is 5.6mm population and annual completions of 23.4k.
Scaling to ireland is 20k housing output.

It will stay in 16-20k pa no matter what. Anyone expecting a different outcome is just fooling themselves.

Fritzbox

J_1980 wrote: »

Just for reference Germany (booming economy, fiscal surplus, housing crisis of it’s own, similar building standards) currently has an annual housing completion rate of 283k.
If you scale this to the irish population 283k*4.8mm/82mm you end up with 16k houses.
So any politician promising to double that is just bs’itting

Denmark (record house prices, same issues) is 5.6mm population and annual completions of 23.4k.
Scaling to ireland is 20k housing output.

It will stay in 16-20k pa no matter what. Anyone expecting a different outcome is just fooling themselves.

Germany does not have a booming economy, not compared to the Irish economy, certainly not compared to the Dublin economy.

Also, the population of Germany has not increased all that much since Reunification in 1990 - still hovering around the 80-82 million mark. Population of Ireland, on the other hand, has increased by about 40% since then, no prizes for guessing which country is eventually going to suffer from a housing crisis.

KyussB

J_1980 wrote: »

No one is “prioritizing” commercial building. They simply pay much higher rates (and it’s cheaper to build).
How to take labour away? Outbidding them? So house prices go even higher? All this state interference is just limiting supply. Half the irish builder who did my refurbishment 2y ago are now in the UK - higher pay, less tax etc.

You just restated that commercial building is prioritized over residential - only in a different way.

You know exactly how I stated residential could be prioritized - as it was right in my post - not yet another one of your straw man positions, that I didn't argue.

J_1980

Fritzbox wrote: »

Germany does not have a booming economy, not compared to the Irish economy, certainly not compared to the Dublin economy.

Also, the population of Germany has not increased all that much since Reunification in 1990 - still hovering around the 80-82 million mark. Population of Ireland, on the other hand, has increased by about 40% since then, no prizes for guessing which country is eventually going to suffer from a housing crisis.

I’m not arguing that the situation is worse here. But germany is also building at capacity. I was just comparing maximum housing output numbers. Only saying, It’s impossible for Ireland to output 30k homes pa.

J_1980

KyussB wrote: »

You know exactly how I stated residential could be prioritized - as it was right in my post - not yet another one of your straw man positions, that I didn't argue.

You can’t just repurpose someone private property by force. If it’s reasonably “commercial zoned” (city centre, historically always that use) and was bought as such, changing use to residential at a loss for the owner will take years in courts (Irish and European ones).

The Student

KyussB wrote: »

You just restated that commercial building is prioritized over residential - only in a different way.

You know exactly how I stated residential could be prioritized - as it was right in my post - not yet another one of your straw man positions, that I didn't argue.

The construction industry will build whatever makes it more money, they have not created a further hurdle to solving the housing crisis they are simply doing what any business does. it goes where it can make most money. Are you suggesting it should go to where it can earn less?

Nobody is saying the Govt should not be building social housing, I for one say let them at it (and I am a landlord) then at least I will regain some control of my investment and compete accordingly.

Ray Palmer

Nobody seemed to mention a huge factor in demand. People aged out of gettibg a mortgage due to the crash and prior fear of a crash.
Once you are passed 47 and have no large assets you pretty much won't get a mortgage. So if you were in your 30s in 2000 and you decided to wait as you saw house prices rising so much and thought they would. Price kept going up so they didn't buy then. Then the market crashed so they waited longer. Mortgage availability was gone then limits came in on deposits. So now there is a permanent group of renters that didn't exist before. Then supply constricted with an increasing population on top.

There are few other factors not mentioned like family break ups increased meaning 2 properties needed where 1 did before. The people on rent allowance also did this but they need to be 2 bed places to qualify so further constricting supply.

As for claim rent in Dublin is extortionate, nonsense rent is the market that is it. What is extortionate is the council telling tenants to over hold property. Literally extorting a service from landlords due to tenant laws

Browney7

Browney7 wrote: »

1600 per month equals 19200 per annum - how much mortgage interest have you offset to determine tax amount?

I honestly can't remember, this was a rough 'back of the envelope' type job.

Donald Trump wrote: »

Your post proves my point correctly. You should not be in this business as an amateur landlord. That is purely advice for your own protection.

You don't appear to understand the difference between nominal and real (I'm not even going to ask you to justify the discount factor you're applying here on the "income" side of your "analysis").

Real and nominal what? GDP? Enlighten us then, oh wise one. Show us your workings of how a landlord gets a free house

caff

It's the land cost. The value of land is been pushed higher by multiple factors.
commute times - driven by traffic congestion and poor supply of public transport
Land hoarding - driven lack of penalties for not using undeveloped land
Zoning / planning restrictions resulting in underused or low density development ( does not mean high rise you can have low rise high density too)

Donald Trump

Deleted User wrote: »

I honestly can't remember, this was a rough 'back of the envelope' type job.



Real and nominal what? GDP? Enlighten us then, oh wise one. Show us your workings of how a landlord gets a free house

You looked up some online calculator which gave you the total number of Euros paid back over the life of the mortgage (probably under the assumption of a fixed, or flat, rate) at nominal values. You are effectively counting the liability of a delayed 1 Euro spent in 30 years as being the same cost as if it were due today.

On the other side of the equation you are taking 1600 per month for the life of the mortgage. You are effectively discounting back to present value, at a discount factor which is equal to the growth rate, and summing up those values. You get 576k.

You have to be consistent on both sides of the equation. Either do both in nominal or both in some present value terms.

Taking an annual increase of 2% in rental value gives you about 780k in income over the 30 year life of the mortgage.
A 4% annual increase would mean 1.08 million. If you take this figure, then even allowing for 10% for expenses/maintenance, and taxing the rest at 50%, means your nominal income would be ~485.

And at the end of it, for a nominal ~60k input you end up with a tax free amount corresponding to the price you paid for the house (300k), plus say 70% of any inbuilt inflation increase on that price. Property as most people know, being a good hedge for inflation in the long run. Lets say that the house has doubled in price (which is conservative), then you will receive 600k, pay CGT tax of say 90k (30% of 300k) on it. Net nominal value to you will be 510k.

Luckily in this case, the misunderstanding is on the conservative side in the sense that you might be in for a pleasant surprise rather than a nasty shock. It is up to you to invest your money as you choose, but when one sees people making decisions wihtout full understanding, they might advise them not to make them. Even if it turns out in hindsight to have been a good "gamble", it doesn't change the fact that the person should probably not have been taking that risk given that they lack that understanding.


The above even ignores any relief for interest - 247k nominally in your example

Note, nominal is not really right to use in any case. But I used it seeing as you were using it.

Ray Palmer

For all the talk about profit and assets people are being very black and white about how it should be done. Yes the most landlords will accept they will have to keep adding in money on top of the rent to pay off the mortgage. They know this amount may increase at some point. They also know over time it will also likely decrease in value and amount due to inflation and rent inflation. All understood.

The problem is during the time rents dropped the government also increased charges and taxes. That was not foreseeable. The public laughed and we still have people talking about greedy landlords. People made reasonable investment plans and the government punished them. They said these charges couldn't and wouldn't be passed on to renters. It couldn't at the time but as soon as things picked up it was obvious the extra expenses were passed on. So the government passes RPZ regs to last for a limited period punishing landlords who didn't increase rent and effecting the sale price if the property too.
Then they extended the RPZ regulations even though they said they wouldn't.

For every €1 extra expense to a landlord it means rent rises €2 for the landlord to return to the same income level. So any additional losses take twice as much to recover from. If that happened for years then you would be mad not to raise the rent as often and as much as you can.

For all the talk of greedy landlords no talk of the greedy tenants that broke leases or threatened to without reducing rent. Landlords are forced to stick with rent levels but not tenants. That is simply unfair

The Student

Ray Palmer wrote: »

For all the talk about profit and assets people are being very black and white about how it should be done. Yes the most landlords will accept they will have to keep adding in money on top of the rent to pay off the mortgage. They know this amount may increase at some point. They also know over time it will also likely decrease in value and amount due to inflation and rent inflation. All understood.

The problem is during the time rents dropped the government also increased charges and taxes. That was not foreseeable. The public laughed and we still have people talking about greedy landlords. People made reasonable investment plans and the government punished them. They said these charges couldn't and wouldn't be passed on to renters. It couldn't at the time but as soon as things picked up it was obvious the extra expenses were passed on. So the government passes RPZ regs to last for a limited period punishing landlords who didn't increase rent and effecting the sale price if the property too.
Then they extended the RPZ regulations even though they said they wouldn't.

For every €1 extra expense to a landlord it means rent rises €2 for the landlord to return to the same income level. So any additional losses take twice as much to recover from. If that happened for years then you would be mad not to raise the rent as often and as much as you can.

For all the talk of greedy landlords no talk of the greedy tenants that broke leases or threatened to without reducing rent. Landlords are forced to stick with rent levels but not tenants. That is simply unfair

You are spot on. The govt is using the private landlord to fulfill the housing requirements of those who cant house themselves.

Landlords are not greedy they are business people, why is this so difficult for people to comprehend.

Nobody is being stopped from becoming a landlord, if a person can raise the finance then work away.

Based on some of the posts on this thread a landlord who is actually successful is scorned. Why ?

Donald Trump

Ray Palmer wrote: »

For all the talk about profit and assets people are being very black and white about how it should be done. Yes the most landlords will accept they will have to keep adding in money on top of the rent to pay off the mortgage. They know this amount may increase at some point. They also know over time it will also likely decrease in value and amount due to inflation and rent inflation. All understood.

The problem is during the time rents dropped the government also increased charges and taxes. That was not foreseeable. The public laughed and we still have people talking about greedy landlords. People made reasonable investment plans and the government punished them. They said these charges couldn't and wouldn't be passed on to renters. It couldn't at the time but as soon as things picked up it was obvious the extra expenses were passed on. So the government passes RPZ regs to last for a limited period punishing landlords who didn't increase rent and effecting the sale price if the property too.
Then they extended the RPZ regulations even though they said they wouldn't.

For every €1 extra expense to a landlord it means rent rises €2 for the landlord to return to the same income level. So any additional losses take twice as much to recover from. If that happened for years then you would be mad not to raise the rent as often and as much as you can.

For all the talk of greedy landlords no talk of the greedy tenants that broke leases or threatened to without reducing rent. Landlords are forced to stick with rent levels but not tenants. That is simply unfair

It was foreseeable. The same as an over-holding tenant is foreseeable. A professional landlord will be able to plan for, and manage, such scenarios better than the 9-5 office worker with a family who just took out a loan and bought a house to rent, hoping it would be a passive investment.


Nobody is saying a person cannot spend or invest their money how they would like to, but you have to manage the risks. That might include having more equity, or having a capital buffer set aside, or else access to an additional line of credit, to get you over a particular hump.


Here is a toy example:
Suppose there is a 10% random chance in any year of any landlord getting stung by a tenant for any given property. If you have one house, then you have a 90% chance that you will get all your money and a 10% chance that you will get zero. The issue here is that for the first scenario everything is rosy. For the latter, you might be fecked.

For the professional landlord, they might have 100 properties they are managing. They will expect about 10 of these to cause trouble. Statistically, they will be unlikely to have a situation where they get 100% of their money. But similarly, they will not be in a situation where they get zero.

the professional person can put aside, say 15%, to cover any default. The individual can also put aside 15%, but it is useless. If they actually need the buffer, they will need 100%.

Ray Palmer

The Student wrote: »

You are spot on. The govt is using the private landlord to fulfill the housing requirements of those who cant house themselves.

Landlords are not greedy they are business people, why is this so difficult for people to comprehend.

Nobody is being stopped from becoming a landlord, if a person can raise the finance then work away.

Based on some of the posts on this thread a landlord who is actually successful is scorned. Why ?

I don't quite agree with you as I believe the narrative of rent allowance schemes is not a huge draw on the private sector. There are plenty of people able to house themselves in private rentals and they are the majority.

Using HAP does have an effect but often overblown. Time will make the situation worse as private tenants retire and then may start looking for HAP. Right now a minor issue.

The financial restrictions are enough to say not everybody can be a landlord. It is a case of have and have nots. If you can never become a landlord in the normal course of events and the same applies to friends and family of course you will resent those that can. Hence you have idiotic statements like the landlord and asset classes. So people do see themselves as different along with the resentment.

They are why people complain about people making profit. That and the history in Ireland that gives us a post colonial chip on our shoulder. Don't here people complain about Tesco profits in the same way because they never encounter the board of directors. They will meet a landlord and already think they are scum

caff

No one complains about price setting for utilities such and phones or esb. Maybe it's time to treat accommodation as a utility

Dav010

Donald Trump wrote: »

The same as an over-holding tenant is foreseeable.

the professional person can put aside, say 15%, to cover any default. The individual can also put aside 15%, but it is useless. If they actually need the buffer, they will need 100%.

In your opinion, what does a tenant who is going to over hold look like? Just so LLs can identify them when they arrive to view a property Or, are you saying all tenants should be viewed as errant until proven otherwise?

15% of yearly rent covers 2 months rent, it can take a year or even longer to evict a tenant who has stopped paying. Your observation is nonsense.

Even “professional” landlords don’t leave aside 100% of every tenancy for contingencies. Effectively you are saying the first years gross rent should be parked. That is idiotic.

Donald Trump

Dav010 wrote: »

In your opinion, what does a tenant who is going to over hold look like? Just so LLs can identify them when they arrive to view a property Or, are you saying all tenants should be viewed as errant until proven otherwise?

15% of yearly rent covers 2 months rent, it can take a year or even longer to evict a tenant who has stopped paying. Your observation is nonsense.

Even “professional” landlords don’t leave aside 100% of every tenancy for contingencies. Effectively you are saying the first years gross rent should be parked. That is idiotic.

Jesus man. Did you not read all my post? Go back and read it again. The point is that the pros can manage the risk of those things better and they do not have to put aside 100%. If they put aside 15% then they are covered for a statistically worst-case-scenario. But for the amateur individual with one property, the worst-case-scenario is 100%. 90% of the time the individual will be grand but 10% of the time there will be a disaster (toy numbers for illustration purposes). Whereas the pro has it all built in.


You should not be in the business (for your own good) if you cannot manage the risk! (or if you can't grasp the concept of doing so)

Dav010

Donald Trump wrote: »

Jesus man. Did you not read all my post? Go back and read it again. The point is that the pros can manage the risk of those things better and they do not have to put aside 100%.


You should not be in the business (for your own good) if you cannot manage the risk! (Or even grasp the concept of doing so)

Tell me, outside of big apartment blocks in Dublin, do you think “professionals” are going to buy out the “amateur” landlords who provide 95% of the rental units in the country? I really would like to sell my properties to an institutional investor. But they don’t tend to buy one off apartments.

Donald Trump

Dav010 wrote: »

Tell me, outside of big apartment blocks in Dublin, do you think “professionals” are going to buy out the “amateur” landlords who provide 95% of the rental units in the country? I really would like to sell my properties to an institutional investor. But they don’t tend to buy one off apartments.

It doesn't have to be a REIT.

It could be a person with X properties that manages them full time. They might put some equity in and get interest only financing and run it like a business. They might not be concerned with having the property "paid for" by someone else like the amateur (although I am sure they would also like it if it turns out that way). They only need that the income from renting it out covers the administration and maintenance costs along with the cost of capital (which is the interest rate). The above expenses included losses for non payment etc.

Dav010

Donald Trump wrote: »

It doesn't have to be a REIT.

It could be a person with X properties that manages them full time. They might put some equity in and get interest only financing and run it like a business. They might not be concerned with having the property "paid for" by someone else like the amateur (although I am sure they would also like it if it turns out that way). They only need that the income from renting it out covers the administration and maintenance costs along with the cost of capital (which is the interest rate). The above expenses included losses for non payment etc.

Sounds like most property owners to me, using rent to cover costs. What is “manage full time”?

Banks rarely offer interest only loans to anyone, professional or amateur, and the benefit of paying off the capital is that it reduces the amount owed. Also, as loan amount decreases, a “professional” landlord has a better LTV and therefore may qualify for a lower interest rate, that would be better business than paying higher interest rates, wouldn’t you think?

Ray Palmer

Donald Trump wrote: »

It doesn't have to be a REIT.

It could be a person with X properties that manages them full time. They might put some equity in and get interest only financing and run it like a business. They might not be concerned with having the property "paid for" by someone else like the amateur (although I am sure they would also like it if it turns out that way). They only need that the income from renting it out covers the administration and maintenance costs along with the cost of capital (which is the interest rate). The above expenses included losses for non payment etc.

How many people do you think have that kind of finance? They would be taxed higher than REITs so why woul any savvy investor do this? The rent would be restricted by the current rent which REITs don't deal with.

Taking that into consideration there is nobody going to do that. What will happen is investors sell and they become private homes accommodating less further reducing supply.

What do you want to do punish landlords or increase supply to reduce rents?

Ray Palmer

Donald Trump wrote: »

It doesn't have to be a REIT.

It could be a person with X properties that manages them full time. They might put some equity in and get interest only financing and run it like a business. They might not be concerned with having the property "paid for" by someone else like the amateur (although I am sure they would also like it if it turns out that way). They only need that the income from renting it out covers the administration and maintenance costs along with the cost of capital (which is the interest rate). The above expenses included losses for non payment etc.

How many people do you think have that kind of finance? They would be taxed higher than REITs so why woul any savvy investor do this? The rent would be restricted by the current rent which REITs don't deal with.

Taking that into consideration there is nobody going to do that. What will happen is investors sell and they become private homes accommodating less further reducing supply.

What do you want to do punish landlords or increase supply to reduce rents?

beauf

Donald Trump wrote: »

It was foreseeable. The same as an over-holding tenant is foreseeable. A professional landlord will be able to plan for, and manage, such scenarios better than the 9-5 office worker with a family who just took out a loan and bought a house to rent, hoping it would be a passive investment.


Nobody is saying a person cannot spend or invest their money how they would like to, but you have to manage the risks. That might include having more equity, or having a capital buffer set aside, or else access to an additional line of credit, to get you over a particular hump.


Here is a toy example:
Suppose there is a 10% random chance in any year of any landlord getting stung by a tenant for any given property. If you have one house, then you have a 90% chance that you will get all your money and a 10% chance that you will get zero. The issue here is that for the first scenario everything is rosy. For the latter, you might be fecked.

For the professional landlord, they might have 100 properties they are managing. They will expect about 10 of these to cause trouble. Statistically, they will be unlikely to have a situation where they get 100% of their money. But similarly, they will not be in a situation where they get zero.

the professional person can put aside, say 15%, to cover any default. The individual can also put aside 15%, but it is useless. If they actually need the buffer, they will need 100%.

The term "professional" is meaningless in this context.

You simply mean a large landlord with multiple properties, essentially just risk diversification, spreading risk over multiple properties.

The only reason a landlord with lesser number of properties, or a single property is more exposed, is because the massive delays introduced over the past 15yrs into the process of regaining control of a property. It dramatically increases the cost to the LL, for no good reason. Its taking years.

Donald Trump

beauf wrote: »

The term "professional" is meaningless in this context.

You simply mean a large landlord with multiple properties, essentially just risk diversification, spreading risk over multiple properties.

The only reason a landlord with lesser number of properties, or a single property is more exposed, is because the massive delays introduced over the past 15yrs into the process of regaining control of a property. It dramatically increases the cost to the LL, for no good reason. Its taking years.

No.

It also applies to any major cost. The same logic applies to renovating a house or replacing a boiler.

Donald Trump

Ray Palmer wrote: »

How many people do you think have that kind of finance? They would be taxed higher than REITs so why woul any savvy investor do this? The rent would be restricted by the current rent which REITs don't deal with.

Taking that into consideration there is nobody going to do that. What will happen is investors sell and they become private homes accommodating less further reducing supply.

What do you want to do punish landlords or increase supply to reduce rents?

What kind of people have access to that finance? Presumably any professional person with a proper business plan and a record of competence.

I might not get a business loan to build a warehouse but a local business owner who has been running his business for years might be trusted by the Bank to build the same warehouse.

Donald Trump

Dav010 wrote: »

Sounds like most property owners to me, using rent to cover costs. What is “manage full time”?

Banks rarely offer interest only loans to anyone, professional or amateur, and the benefit of paying off the capital is that it reduces the amount owed. Also, as loan amount decreases, a “professional” landlord has a better LTV and therefore may qualify for a lower interest rate, that would be better business than paying higher interest rates, wouldn’t you think?

Individual amateur landlords, as shown by posts above, want their renters to pay enough to pay down the capital cost too. That is different than paying just the cost of capital (which is the interest).

Lets take a 10 year loan/mortgage. You can get a fixed rate of about 3% for this. On a loan of 300k, you would be paying back about 2900 a month to pay down the capital and interest. On a interest only basis, you only need 750 a month.

The problem is that the amateur demands their house to be paid for for them. They require a greater return. That is exacerbated by the fact that they are inherently in a riskier position anyway in relation to hedging their risks.

Gumbo

Donald Trump wrote: »

It doesn't have to be a REIT.

It could be a person with X properties that manages them full time. They might put some equity in and get interest only financing and run it like a business. They might not be concerned with having the property "paid for" by someone else like the amateur (although I am sure they would also like it if it turns out that way). They only need that the income from renting it out covers the administration and maintenance costs along with the cost of capital (which is the interest rate). The above expenses included losses for non payment etc.

Why do tenants expect cheap services like housing?
Don’t like it, you should Move out of Dublin.

That’s pretty much what you are saying.

Gumbo

Donald Trump wrote: »

Individual amateur landlords, as shown by posts above, want their renters to pay enough to pay down the capital cost too. That is different than paying just the cost of capital (which is the interest).

Lets take a 10 year loan/mortgage. You can get a fixed rate of about 3% for this. On a loan of 300k, you would be paying back about 2900 a month to pay down the capital and interest. On a interest only basis, you only need 750 a month.

The problem is that the amateur demands their house to be paid for for them. They require a greater return. That is exacerbated by the fact that they are inherently in a riskier position anyway in relation to hedging their risks.

Sounds like amateur tenants want cheap services to me.
These people need to look outside the capital.

beauf

Donald Trump wrote: »

It doesn't have to be a REIT.

It could be a person with X properties that manages them full time. They might put some equity in and get interest only financing and run it like a business. They might not be concerned with having the property "paid for" by someone else like the amateur (although I am sure they would also like it if it turns out that way). They only need that the income from renting it out covers the administration and maintenance costs along with the cost of capital (which is the interest rate). The above expenses included losses for non payment etc.

That will only happen on a large scale is if there is legislation to limit the profits you can make on housing. Do that and its likely a lot of these Larger LL with lose interest.

You might a tiny of % of people who will do this for altruistic reasons. But it will never be enough to satisfy demand.

Donald Trump

kceire wrote: »

Why do tenants expect cheap services like housing?
Don’t like it, you should Move out of Dublin.

That’s pretty much what you are saying.

Bit of a jump to come to that conclusion from what I said.

Something along the line of confirmation bias maybe on your part? Looking for something (that isn't there) because that is already your decision/view?