Vacant Properties in Ireland

PropQueries

schmittel wrote: »

My doubt re the investment fund theory ownership is that they are professional landlords - they don't have the same tax disincentives, are not frightened of the hassle of admin and maintenance, unlikely to be as concerned about problem tenants, unlikely to see STLs as a handy alternative etc etc

I just don't see as many understandable reasons for a REIT to keep their properties vacant in 2016 - 2020.

I'll agree for sure that I suspect there are vast swathes of empty REIT properties right now because of covid related upheaval in the rental market.

I think people regularly mistake REITS for investment funds. Of the €200 billion in property and business loans purchased between 2012 and 2016, about 1% - 2% of this figure were purchased by actual REITS. That leaves at least 98% left being owned by investment funds that would have no real long-term interest in the Irish property market.

Also, in relation to the 'Abandoned farm house' option, this shows that the vast majority of the vacant properties and none of the 123,000 that were uncategorised were near derelict rural properties or boarded up but habitable. All those 123,000 uncategorised units were indeed fully habitable at that time.

hometruths

PropQueries wrote: »

The option "Boarded up - habitable" is interesting as it does show that the properties they counted were habitable and not derelict at the time. Otherwise, there would have been a 'derelict' option. So most of the other 123,000 were most likely habitable in some form or other or would most likely require little investment to bring them back into the market.

Yes, if windows, door and roof are intact then it is deemed habitable. If not, it is not counted as a vacant property.

Thus presumably the boarded up category means it was clear boards were in place to protect windows rather than replace them.

hometruths

PropQueries wrote: »

I think people regularly mistake REITS for investment funds. Of the €200 billion in property and business loans purchased between 2012 and 2016, about 1% - 2% of this figure were purchased by actual REITS. That leaves at least 98% left being owned by investment funds that would have no real long-term interest in the Irish property market.

Also, in relation to the 'Abandoned farm house' option, this shows that the vast majority of the vacant properties and none of the 123,000 that were uncategorised were near derelict rural properties or boarded up but habitable. All those 123,000 uncategorised units were indeed fully habitable at that time.

On the investment funds I would lump these in with bank related vacancies. But whilst they undoubtedly represent some of the vacant stock, I doubt that they represent the lions share. Most of these property loans are on properties that are still occupied by the defaulters - that's a whole different discussion!

My point on this is it does not matter whether it is a bank or a foreign investment fund or some other financial entity - if the reason why it is vacant is because of some protracted legal process, then don't worry about who the owner is, just solve the problem by speeding up the legal process!

Yes, derelict is a totally separate category and ignored for the purposes of counting residential stock - just like Commercial Only and Under Construction

PropQueries

schmittel wrote: »

Yes, if windows, door and roof are intact then it is deemed habitable. If not, it is not counted as a vacant property.

Thus presumably the boarded up category means it was clear boards were in place to protect windows rather than replace them.

Which brings us back to the 123,000 vacant units that were uncategorised and not recorded at "Abandoned farm house" or "Boarded up - habitable", so were indeed habitable and proper homes.

So, maybe working backwards. If e.g. 50% or c. 60,000 of these habitable vacant homes in 2016 were indeed owned by these investment funds, that would mean they control the equivalent of at least 3 years supply of new build homes (c.20,000 units*3 years) that they could conceivably bring back into the market in a relatively short period of time. That's market moving power.

Timing belt

PropQueries wrote: »

I think people regularly mistake REITS for investment funds. Of the €200 billion in property and business loans purchased between 2012 and 2016, about 1% - 2% of this figure were purchased by actual REITS. That leaves at least 98% left being owned by investment funds that would have no real long-term interest in the Irish property

The 200 billion was loans that were purchased and not property. The only way these loans could impact the supply of housing stock is where repossession occurs.

PropQueries

Timing belt wrote: »

The 200 billion was loans that were purchased and not property. The only way these loans could impact the supply of housing stock is where repossession occurs.

No. They also purchased an additional €90 billion in mortgages on top of the €200 billion in property and business loans.

Timing belt

PropQueries wrote: »

No. They also purchased an additional €90 billion in mortgages on top of the €200 billion in property and business loans.

Ok so of the 290bn 99% of what was purchased was debt and not property

PropQueries

Timing belt wrote: »

Ok so of the 290bn 99% of what was purchased was debt and not property

The majority of this debt was secured on tangible assets i.e. properties, sites etc. They weren't primarily buying personal loans with no assets to secure in the event of default. The banks also weren't primarily selling non-property related performing loans.

If a developer owed the bank for a site with ten units on it, he couldn't sell them, so the owner of the debt can now secure the site and the already built units. Once they own the debt, they control the assets secured on that debt until the borrower repays. If they're a small developer, there's a very good chance they didn't repay the debt.

hometruths

PropQueries wrote: »

The majority of this debt was secured on tangible assets i.e. properties, sites etc. They weren't primarily buying personal loans with no assets to secure in the event of default. The banks also weren't primarily selling non-property related performing loans.

If a developer owed the bank for a site with ten units on it, he couldn't sell them, so the owner of the debt can now secure the site and the already built units. Once they own the debt, they control the assets secured on that debt until the borrower repays. If they're a small developer, there's a very good chance they didn't repay the debt.

Sure, there are a ton of bad property secured loans floating about, but very unlikely that they translate into 50,000 vacant properties because of bank and or investment funds involvement.

Most of the properties are either occupied, in court, or already sold. Cannot imagine there is 50,000 in the courts.

PropQueries

schmittel wrote: »

Sure, there are a ton of bad property secured loans floating about, but very unlikely that they translate into 50,000 vacant properties because of bank and or investment funds involvement.

Most of the properties are either occupied, in court, or already sold. Cannot imagine there is 50,000 in the courts.

I would guess that many of the assets that backed up many of the non-performing property and business loans (€200 billion) they bought were just handed over to avoid the whole legal side and associated expenses.

If I was a developer with 20 unsold houses in an estate back in 2015 and the investment fund asked me to hand them over and walk away, I would have.

It does bring into the equation how long it has taken the investment funds to get through this €200 billion in paperwork. I would guess that they are through the paperwork at this stage and this is where my assumption comes from that these are about to re-enter the market in significant numbers in the very near future.

hometruths

PropQueries wrote: »

I would guess that many of the assets that backed up many of the non-performing property and business loans (€200 billion) they bought were just handed over to avoid the whole legal side and associated expenses.

If I was a developer with 20 unsold houses in an estate back in 2015 and the investment fund asked me to hand them over and walk away, I would have.

It does bring into the equation how long it has taken the investment funds to get through this €200 billion in paperwork. I would guess that they are through the paperwork at this stage and this is where my assumption comes from that these are about to re-enter the market in significant numbers in the very near future.

Sure, and if I was an investment fund and I got possession of these properties in 2015, I would have sold or let them pretty quickly. (Assuming they're in Dublin, not Leitrim.)

Don't get me wrong, I agree there are far more bad loan related vacancies within these numbers than there should be, I just don't think it is anything like the sort of number you are talking about.

PropQueries

schmittel wrote: »

Sure, and if I was an investment fund and I got possession of these properties in 2015, I would have sold or let them pretty quickly. (Assuming they're in Dublin, not Leitrim.)

Don't get me wrong, I agree there are far more bad loan related vacancies within these numbers than there should be, I just don't think it is anything like the sort of number you are talking about.

Of course we can disagree on the interpretation of the data. That's what creates the market. We both look at the same data and interpret them differently and come to different conclusions on what it means for the future direction of the market.

That, of course assumes neither side is involved in insider trading

hometruths

PropQueries wrote: »

Of course we can disagree on the interpretation of the data. That's what creates the market. We both look at the same data and interpret them differently and come to different conclusions on what it means for the future direction of the market.

That, of course assumes neither side is involved in insider trading

Absolutely. What a refreshing attitude compared to some of my previous discussions on interpreting data!

Been a pleasure disagreeing with you!

Timing belt

PropQueries wrote: »

I would guess that many of the assets that backed up many of the non-performing property and business loans (€200 billion) they bought were just handed over to avoid the whole legal side and associated expenses.

If I was a developer with 20 unsold houses in an estate back in 2015 and the investment fund asked me to hand them over and walk away, I would have.

It does bring into the equation how long it has taken the investment funds to get through this €200 billion in paperwork. I would guess that they are through the paperwork at this stage and this is where my assumption comes from that these are about to re-enter the market in significant numbers in the very near future.

It’s a big assumption to suggest that these are all vacant and would not make commercial sense. The majority of properties that were acquired from defaulted loans would have already have been sold on to reits/property investment funds, pension funds etc. If the fund didn’t sell the property then they would have securitised the cash flow from the rent and sold on the debt via an issuance. These guys argue over about 0.0001% so won’t be sitting on a pile of vacant properties in a market where prices will not substantially increase over the short to medium term

PropQueries

Timing belt wrote: »

It’s a big assumption to suggest that these are all vacant and would not make commercial sense. The majority of properties that were acquired from defaulted loans would have already have been sold on to reits/property investment funds, pension funds etc. If the fund didn’t sell the property then they would have securitised the cash flow from the rent and sold on the debt via an issuance. These guys argue over about 0.0001% so won’t be sitting on a pile of vacant properties in a market where prices will not substantially increase over the short to medium term

That's what I mean. Ires Reits market cap is c. €750 million, so these REITs comprise a very small percentage of the owners of the debt secured on property and business loans that was purchased between 2012 and 2016.

What I would like to know is what this €200 billion comprises of and who owns or controls the majority of it. From the RTE documentary back in 2017, most of this €200 billion appeared to be controlled by very few international investment funds and what they have done already or plan to do will decide on the direction of the property market in the very near future.

cnocbui

schmittel wrote: »

Dr Lorcan Sirr is a senior lecturer in housing at the Technological University Dublin and author of Housing in Ireland: the A-Z guide - so he sounds like an expert to me.

He has this to say on the vacancy rate:

What does he have to say about how many of that abnormal 3% might be incomplete and uninhabitable?

I think there is a considerable overhang from the CT years, of houses that are shells, which externally are complete and might give the erroneous impression that they should be included in the inventory of available housing stock.

PropQueries

cnocbui wrote: »

What does he have to say about how many of that abnormal 3% might be incomplete and uninhabitable?

I think there is a considerable overhang from the CT years, of houses that are shells, which externally are complete and might give the erroneous impression that they should be included in the inventory of available housing stock.

Shells weren't included. Of the c. 180,000, only 57,000 were recorded as one of the below and 123,000 were recorded as don't know i.e. they were indeed habitable but didn't fit into one of the below.

If they were derelict they wouldn't have been counted or if habitable but counted as "Boarded up - habitable" or "Abandoned farm house". This means at least 123,000 of them were actually considered habitable in the enumerators opinion. The main question, in my opinion, is who owned the majority of these 123,000 residential units at that time and my opinion on who probably owned/still owns many of them has already been stated.

For Sale
Deceased
Vacant Long Term
Rental Property
Nursing Home
Renovation
New Build
Emigrated
Boarded up - habitable
Hospital
With Relatives
Other personal use
Abandoned farm house

hometruths

cnocbui wrote: »

What does he have to say about how many of that abnormal 3% might be incomplete and uninhabitable?

I think there is a considerable overhang from the CT years, of houses that are shells, which externally are complete and might give the erroneous impression that they should be included in the inventory of available housing stock.

What is the abnormal 3%, I don't get it?

cnocbui

schmittel wrote: »

What is the abnormal 3%, I don't get it?

The overall vacancy rate in Census 2016, including holiday homes, was 12.3 per cent. If holiday homes are excluded from the housing stock the vacancy rate drops to 9.4 per cent. A vacancy rate of between 2.5 per cent and 6 percent is considered normal in a properly functioning housing market.

9.4 - 3 gets you into that normal vacancy range.

hometruths

cnocbui wrote: »

9.4 - 3 gets you into that normal vacancy range.

Now I get you - I'm not sure what he says, no doubt it's available online somewhere.

The article I linked was "A-Z highlights from a new guide to Irish housing which aims to demystify the jargon" rather than any specific analysis on the 9.4% figure.

hometruths

cnocbui wrote: »

What does he have to say about how many of that abnormal 3% might be incomplete and uninhabitable?

I think there is a considerable overhang from the CT years, of houses that are shells, which externally are complete and might give the erroneous impression that they should be included in the inventory of available housing stock.

Specifically on the 2016 vacancy rate I cannot find any comment by him of how many might be incomplete and uninhabitable, I guess because it is assumed to be zero.

He does however say the following:

Dr Lorcan Sirr, lecturer in housing studies and urban economics at the Dublin Institute of Technology, said that when holiday homes were taken out of the figures, the 198,000 vacant homes represented 9.7 per cent of the total housing stock. “The vacancy rate is roughly twice what it should be,” he said...

...Dr Sirr said the fact the capital had a vacancy rate of nearly 10 per cent was “outrageous”.

Fair comment I would say.

cnocbui

PropQueries wrote: »

Shells weren't included. Of the c. 180,000, only 57,000 were recorded as one of the below and 123,000 were recorded as don't know i.e. they were indeed habitable but didn't fit into one of the below.

If they were derelict they wouldn't have been counted or if habitable but counted as "Boarded up - habitable" or "Abandoned farm house". This means at least 123,000 of them were actually considered habitable in the enumerators opinion. The main question, in my opinion, is who owned the majority of these 123,000 residential units at that time and my opinion on who probably owned/still owns many of them has already been stated.

For Sale
Deceased
Vacant Long Term
Rental Property
Nursing Home
Renovation
New Build
Emigrated
Boarded up - habitable
Hospital
With Relatives
Other personal use
Abandoned farm house

Who do you think owns this? Is it habitable? What is it's current status?

PropQueries

cnocbui wrote: »

Who do you think owns this. Is it habitable? What is it's current status?

Go on. Show us the inside photos

hometruths

cnocbui wrote: »

Who do you think owns this? Is it habitable? What is it's current status?

No idea who owns it. No idea if it is habitable. No idea of it's current status.

But if I was a census enumerator standing at the gate looking at it, my first impression would be habitable.

cnocbui

PropQueries wrote: »

Go on. Show us the inside photos

I don't have any, unfortunately.

schmittel wrote: »

No idea who owns it. No idea if it is habitable. No idea of it's current status.

But if I was a census enumerator standing at the gate looking at it, my first impression would be habitable.

This has sat unoccupied for over a decade. It must be nominally habitable as 8-10 years ago, there was a family in it for just short of a school semester, and that's it. I suspect, from the painted old farm objet d'art in the garden that it most likely was built and owned by a farmer.

So here we have what is probably a good example of the likely problem. Given the history and brief occupancy, my best guess is that you can live in it in a rudimentary fashion, but that most people wouldn't want to so it's likely a long way short of finished internally.

if I were an enumerator, I too would probably mark that down as habitable, but I'd be wrong.

As an aside, I simply can't comprehend why someone wouldn't finish this off inside and rent it out long term. I understand demand is strong and supply is tight in the area. Perhaps they had more a plan to sell and that the total capital outlay wouldn't have been recouped from a sale so they saw no point in sinking more capital that couldn't be recouped.

While so many people on the property thread bleat and bleat about overpriced housing, this sort of thing is going on in the real world. It never seems to occur to people that significant parts of the Irish property market have been under priced for over a decade. Under priced being where the market value is below the replacement cost.

hometruths

cnocbui wrote: »

I don't have any, unfortunately.



This has sat unoccupied for over a decade. It must be nominally habitable as 8-10 years ago, there was a family in it for just short of a school semester, and that's it. I suspect, from the painted old farm objet d'art in the garden that it most likely was built and owned by a farmer.

So here we have what is probably a good example of the likely problem. Given the history and brief occupancy, my best guess is that you can live in it in a rudimentary fashion, but that most people wouldn't want to so it's likely a long way short of finished internally.

if I were an enumerator, I too would probably mark that down as habitable, but I'd be wrong.

As an aside, I simply can't comprehend why someone wouldn't finish this off inside and rent it out long term. I understand demand is strong and supply is tight in the area. Perhaps they had more a plan to sell and that the total capital outlay wouldn't have been recouped from a sale so they saw no point in sinking more capital that couldn't be recouped.

While so many people on the property thread bleat and bleat about overpriced housing, this sort of thing is going on in the real world. It never seems to occur to people that significant parts of the Irish property market have been under priced for over a decade. Under priced being where the market value is below the replacement cost.

The enumerator would be right to mark it down as habitable, because it ticks their boxes of windows, roof, doors complete.

To do anything else would require a value judgement, and lead to inconsistencies.

The whole point of it is too try and measure the entire stock of 2million odd houses by the same criteria. Sure you will get a few errors, but the way to minimise them is to strictly apply the criteria.

Say they get 0.5% of it wrong? Chances are pretty high that they got the same amount wrong in 2011, but it is valuable because it is consistent, and thus we can compare it.

hometruths

Some more sensible talk on housing stock:

One glance at the CSO’s 2016 census of housing stock makes clear that Ireland’s surplus stock is higher than it was in 1991 – then at 9.1 per cent. In 2016, the overall vacancy rate, including holiday homes, was 12.3 per cent. If holiday homes are excluded from the housing stock, the vacancy rate drops to 9.4 per cent. In 1991, Dublin’s surplus was 5.1 per cent of the total.

Irish house prices sky-high due to finance not scarcity

Perhaps we are not suffering a shortage of stock after all.

cnocbui

schmittel wrote: »

The enumerator would be right to mark it down as habitable, because it ticks their boxes of windows, roof, doors complete.

To do anything else would require a value judgement, and lead to inconsistencies.

The whole point of it is too try and measure the entire stock of 2million odd houses by the same criteria. Sure you will get a few errors, but the way to minimise them is to strictly apply the criteria.

Say they get 0.5% of it wrong? Chances are pretty high that they got the same amount wrong in 2011, but because it is valuable because it is consistent, and thus we can compare it.

Only 250m away from that house you have these, which I have previously mentioned:



Again, over a decade just sitting there. 4 houses an enumerator may well have marked as habitable and available housing stock, but which aren't.

That's 5 dwellings within 250m of each other on just one road. Sorry, but you have just found that 3-4% that might be marked as habitable where in reality they aren't, without a considerable capital injection and months of work.

By the way, those are in a really good location in a really nice village with significant amenity values locally. If they were in habitable condition, I think people would be climbing over each other to get them.

PropQueries

cnocbui wrote: »

Only 250m away from that house you have these, which I have previously mentioned:



Again, over a decade just sitting there. 4 houses an enumerator may well have marked as habitable and available housing stock, but which aren't.

That's 5 dwellings within 250m of each other on just one road. Sorry, but you have just found that 3-4% that might be marked as habitable where in reality they aren't, without a considerable capital injection and months of work.

By the way, those are in a really good location in a really nice village with significant amenity values locally. If they were in habitable condition, I think people would be climbing over each other to get them.

What site are you getting them from?

hometruths

cnocbui wrote: »

Only 250m away from that house you have these, which I have previously mentioned:



Again, over a decade just sitting there. 4 houses an enumerator may well have marked as habitable and available housing stock, but which aren't.

That's 5 dwellings within 250m of each other on just one road. Sorry, but you have just found that 3-4% that might be marked as habitable where in reality they aren't, without a considerable capital injection and months of work.

By the way, those are in a really good location in a really nice village with significant amenity values locally. If they were in habitable condition, I think people would be climbing over each other to get them.

How does a few photos of houses mean I have just found out that 3-4% of the entire housing stock is misclassified?

From the photos they look as they should be classified as habitable and rightly so.

If they should not be classified as habitable what should they be classified as instead?