Should we sell or leave property vacant?

PropertyHunt

Recently vacated a property we own and have painted it up etc but due to the Covid situation and what I perceive to be risks to renting due to the ‘emergency’, I am wondering if I should leave it empty until the start of next year?
It is in Dublin, would get a good rent according to a couple of estate agents who have viewed it in the last two weeks, one of whom claims it would sell for approximately 5% less than what we would have gotten pre-Covid. Obviously as a glance through this forum indicates sales are falling through as people are on pandemic related payments.
So our options appear to be to sell at less than what we would have gotten six months back, or rent it out, and on the renting I am quite apprehensive.
The mortgage on the property is relatively low, less than 100k, and at one of those unbelieveable interest rates from years ago, but I’ve done the sums, and between tax payable and management fees I’d lose 50% of the gross rent we’d get from any perspective tenant.
Furthermore, I’m reading here about RTB not sitting, tenants being given additional rights, and worried we could get some sort of dodgy tenant who could sit in the property for a long period of time without paying rent.
One estate agent has suggested short term letting, for 2-5 months at a time, as these tenants would not have the same rights as those in the property for six months plus.
Is this accurate?
Long term we figured we’d rent the property for the next 20 years or so, get an annual income and pass it on to our children, but I am starting to have doubts.
My personal circumstances include secure employment in my job, touch wood, so we don’t ‘need’ the money for anything, and even if we sold the property and paid off the PPR property, savings remaining would generate very little interest.
Is anyone else in a similar boat? The estate agent is saying demand for rental income is coming back, and I’m wondering is that the reality, or should we just steer ourselves away from any risk, and try to sell now. Or leave vacant til end of year and review?

redarmyblues

I would leave it empty.

The Student

PropertyHunt wrote: »

Recently vacated a property we own and have painted it up etc but due to the Covid situation and what I perceive to be risks to renting due to the ‘emergency’, I am wondering if I should leave it empty until the start of next year?
It is in Dublin, would get a good rent according to a couple of estate agents who have viewed it in the last two weeks, one of whom claims it would sell for approximately 5% less than what we would have gotten pre-Covid. Obviously as a glance through this forum indicates sales are falling through as people are on pandemic related payments.
So our options appear to be to sell at less than what we would have gotten six months back, or rent it out, and on the renting I am quite apprehensive.
The mortgage on the property is relatively low, less than 100k, and at one of those unbelieveable interest rates from years ago, but I’ve done the sums, and between tax payable and management fees I’d lose 50% of the gross rent we’d get from any perspective tenant.
Furthermore, I’m reading here about RTB not sitting, tenants being given additional rights, and worried we could get some sort of dodgy tenant who could sit in the property for a long period of time without paying rent.
One estate agent has suggested short term letting, for 2-5 months at a time, as these tenants would not have the same rights as those in the property for six months plus.
Is this accurate?
Long term we figured we’d rent the property for the next 20 years or so, get an annual income and pass it on to our children, but I am starting to have doubts.
My personal circumstances include secure employment in my job, touch wood, so we don’t ‘need’ the money for anything, and even if we sold the property and paid off the PPR property, savings remaining would generate very little interest.
Is anyone else in a similar boat? The estate agent is saying demand for rental income is coming back, and I’m wondering is that the reality, or should we just steer ourselves away from any risk, and try to sell now. Or leave vacant til end of year and review?

Being a landlord is not easy nowadays. Do you want/need the hassle. If the answer is no but you want to keep the prooerty you could rent it to the council on the longterm lease option and just forget about it.

You need to decide what's best for you. No one can tell you what to do.

pwurple

I don't really get what you mean by risks renting due to COVID? What kind of risk?

Risk of someone working from home?

The one other thing I would note, is that your mortgage rate would change, if you rent it out. Owner occupier rate no longer applies.

perfectkama

Its not your property if you get the wrong tenant lot of sleepless nights
Anybody who has not properly vetted is not professional or has not prepared for the new elimination of rental property rights era, hard luck, wait till they start on PPRs welcome to communist Ireland, Green party thx

Manion

You're only exempt from CGT tax on your principle primary residence (to the best of my knowledge). Your couple months of rental income could cost you significantly if your property has appreciated in value since you purchased it. I think this would be the deciding factor unless there is something specific to your circumstances meaning you're liable for CGT regardless.

You should get financial advice.

Pkiernan

Sell it my friend.

Marcusm

Manion wrote: »

You're only exempt from CGT tax on your principle primary residence (to the best of my knowledge). Your couple months of rental income could cost you significantly if your property has appreciated in value since you purchased it. I think this would be the deciding factor unless there is something specific to your circumstances meaning you're liable for CGT regardless.

You should get financial advice.

The last 12 months are always treated as PPR for a mixed use property. Beyond that, the taxable gain is calculated on a time apportioned basis.

redarmyblues

pwurple wrote: »

I don't really get what you mean by risks renting due to COVID? What kind of risk?

Risk of someone working from home?

The one other thing I would note, is that your mortgage rate would change, if you rent it out. Owner occupier rate no longer applies.

The risk is you could potentially have somebody in your house for years without them paying rent. There is proposed legislation in front of the Dail would makes it impossible to issue a Notice To Quit is they "self declare" they have suffered financially from Covid until next January, this period may well be extended. Even if it is not, standard Overholding tactics should see you good for a couple of years given the backlog that will build up in the RTB system, so any landlord that signs a residential lease any time soon needs their head examined.

Manion

Marcusm wrote: »

The last 12 months are always treated as PPR for a mixed use property. Beyond that, the taxable gain is calculated on a time apportioned basis.

Ah yes, this rings a bell...

guyfawkes5

PropertyHunt wrote: »

Obviously as a glance through this forum indicates sales are falling through as people are on pandemic related payments.

While still a risk, I think the odds of this have receded a lot in past month or so. This was a big problem to sales during lockdown as people didn't know they were on the subsidy and banks were unsure how to react.

The rules are a bit more settled now, buyers are more aware, and EAs are vigilant about checking recent bank approvals at even the viewing stage.

davindub

redarmyblues wrote: »

The risk is you could potentially have somebody in your house for years without them paying rent. There is proposed legislation in front of the Dail would makes it impossible to issue a Notice To Quit is they "self declare" they have suffered financially from Covid until next January, this period may well be extended. Even if it is not, standard Overholding tactics should see you good for a couple of years given the backlog that will build up in the RTB system, so any landlord that signs a residential lease any time soon needs their head examined.

I don't know if replacing a small risk of lost rent with actual lost rent is in anyway a solution to mitigating that risk.

beauf

PropertyHunt wrote: »

.... Obviously as a glance through this forum indicates sales are falling through as people are on pandemic related payments.....

Do your own research.

These forums are not a good indicator of the housing market, especially not sales. According to these forums the market would have crashed and burned about 10 times since March.

redarmyblues

davindub wrote: »

I don't know if replacing a small risk of lost rent with actual lost rent is in anyway a solution to mitigating that risk.

What exactly the risks are will emerge in the next few weeks, anybody who let's now without knowing the exact implications of the new legislation would need their heads examined.

kerry_man15

Stop being greedy and sell now. So what if it's 5% less than what you could have got pre-covid, I'm sure you've made a great return on it already.
It's not always possible to get out at the top of the market.
Remember...pigs get eaten!

Smouse156

PropertyHunt wrote: »

Recently vacated a property we own and have painted it up etc but due to the Covid situation and what I perceive to be risks to renting due to the ‘emergency’, I am wondering if I should leave it empty until the start of next year?
It is in Dublin, would get a good rent according to a couple of estate agents who have viewed it in the last two weeks, one of whom claims it would sell for approximately 5% less than what we would have gotten pre-Covid. Obviously as a glance through this forum indicates sales are falling through as people are on pandemic related payments.
So our options appear to be to sell at less than what we would have gotten six months back, or rent it out, and on the renting I am quite apprehensive.
The mortgage on the property is relatively low, less than 100k, and at one of those unbelieveable interest rates from years ago, but I’ve done the sums, and between tax payable and management fees I’d lose 50% of the gross rent we’d get from any perspective tenant.
Furthermore, I’m reading here about RTB not sitting, tenants being given additional rights, and worried we could get some sort of dodgy tenant who could sit in the property for a long period of time without paying rent.
One estate agent has suggested short term letting, for 2-5 months at a time, as these tenants would not have the same rights as those in the property for six months plus.
Is this accurate?
Long term we figured we’d rent the property for the next 20 years or so, get an annual income and pass it on to our children, but I am starting to have doubts.
My personal circumstances include secure employment in my job, touch wood, so we don’t ‘need’ the money for anything, and even if we sold the property and paid off the PPR property, savings remaining would generate very little interest.
Is anyone else in a similar boat? The estate agent is saying demand for rental income is coming back, and I’m wondering is that the reality, or should we just steer ourselves away from any risk, and try to sell now. Or leave vacant til end of year and review?

If it’s 5% less now pre Covid (estate agents are bullish) it is likely to be 10-15% less this time next year with the job losses, rental drops (which effect capital values) and likely property tax increases (Covid will have to be paid off somehow and it won’t be through income tax rises). I would sell personally unless you wanted to become a long term landlord and all the hassle associated with it.

silver2020

Smouse156 wrote: »

If it’s 5% less now pre Covid (estate agents are bullish) it is likely to be 10-15% less this time next year with the job losses, rental drops (which effect capital values) and likely property tax increases (Covid will have to be paid off somehow and it won’t be through income tax rises). I would sell personally unless you wanted to become a long term landlord and all the hassle associated with it.

The doomsayers have been on about this for ages and it simply does not bear out.

There will be job losses in certain sectors, but substantial job opportunities in others. Still plenty of job announcements about.

Remember our main industries are tech, pharma and food - three areas that have seen growth.
Tourism is affected, but its not as big an employer as many will make out. Most of the jobs are poorly paid and part-time - not the type looking at mortgages.

Property market is about cost of ownership. Interest rates are not going to be increasing for a long time. A €400,000 mortgage is costing €1600 a month. You could even fix that in for 10 years at €1670 a month.



For the OP, get professional financial advice. There is a far better way to minimise tax.

Sell the property, drip feed the excess cash into your normal expenditure and increase pension contributions from your wages.

No property hassle, huge tax benefits and reap it all on retirement

Smouse156

silver2020 wrote: »

The doomsayers have been on about this for ages and it simply does not bear out.

There will be job losses in certain sectors, but substantial job opportunities in others. Still plenty of job announcements about.

Remember our main industries are tech, pharma and food - three areas that have seen growth.
Tourism is affected, but its not as big an employer as many will make out. Most of the jobs are poorly paid and part-time - not the type looking at mortgages.

Property market is about cost of ownership. Interest rates are not going to be increasing for a long time. A €400,000 mortgage is costing €1600 a month. You could even fix that in for 10 years at €1670 a month.



For the OP, get professional financial advice. There is a far better way to minimise tax.

Sell the property, drip feed the excess cash into your normal expenditure and increase pension contributions from your wages.

No property hassle, huge tax benefits and reap it all on retirement

There is no doomsaying, it’s just simple facts! There has been lots of job cuts and not just in hospitality/retail as many falsely believe. There has also been hiring freezes and salary reductions in many firms. All this effects demand.

Plus as you can see from Owen Reilly’s data on rents, the drop has been significant for such a short period. These rental drops will effect the capital values of rental properties as investors won’t accept lower yields.

I agree he should sell if he wants out and personally I believe prices over the longer term (5y+) will rise due to low interest rates but in the short term (1-2 years) I can’t see anything but falls (not huge falls 10-20%)

beauf

You won't be selling to people who have lost their jobs. Some people did ok during covid, some are busier than ever. Some people got mortgage approved during covid. There are still people looking for houses. The demand is still in some areas. If the house is not in a in demand area that's a different story.

From the properties (starter homes and smaller family homes) I've been watching prices are not falling anything like this forum keeps predicting. They are still getting decent prices. Because there is very little supply in this segment.

It will fall as we come out of the covid support payments. A good guide is how far it fell the last crash. It's likely to be similar. But last time it took a few years to fall to it's lowest. Whereas people on this forum were predicting a massive fall in a few weeks. Which didn't happen.

But no one takes the obsessive interest in it that some people are unless they are in the market to buy or sell. There seems to be a lot of people on these forums waiting to buy.

The market was softening before the lockdown. So if you were going to sell now would be a good time to do it. Imo.

beauf

If it's a rental. I would sell. Then wait and see what legislation they bring in. Unless you have good long term tenants and are getting a decent return.

The_Conductor

Honestly- if its currently vacant- put it on the market and sell.
If you get a tenant in it- it doesn't matter one iota that an estate agent is suggesting short-term lets, the likelihood is that you're not going to get them out.

Sell- you're going to pay >50% tax and deductions on any rental income- its not worth the stress involved.

Sell.

PropertyHunt

Hi all,
Many thanks for all your replies. We clearly need to get some financial advice and crunch the numbers, and any Revenue implications.
We are certainly not going to rush into getting a tenant in.
My gut is telling me we will attempt to sell, in times previous we would have held on for 20 plus years and had for our children in time, but in light of the fact that things are so stacked against landlords, we will get out I think.
The Conductor likely summed up the reality there…
Fingers and toes crossed.

GreeBo

Leaving it idle will also have insurance implications, I'd sell up.

YOu can always use the proceeds to get back into the market.

Varik

Even if you are fine with leaving it empty there's no harm listing it to gauge interest.

silver2020

Interesting to see that many of the properties in today Bidx1 auction that had tenants did not attract bids.

Almost all the vacant possession properties sold - many well over the amv.

Basically it suggests that having a tenant devalues the property considerably.

The_Conductor

silver2020 wrote: »

Basically it suggests that having a tenant devalues the property considerably.

Basically it makes the property zero interest to anyone who wishes to live in the property- and zero interest to a prospective landlord- given the regulatory regime.

Houses with tenants in them- are basically unsaleable - pretty much at any price.

guyfawkes5

With the eviction freeze, it means any purchaser should envisage having that tenant in situ for at least the next six months.

Even in normal times, having a sitting tenant is almost certainly a detriment to the property as it means mortgaged purchasers are almost certainly out due to not having vacant possession, and for cash buyers there's the myriad of problems that can happen with auction sales (irregular lease paperwork, non-market rate rent for ex-owner's relations/friends, etc).