Irish Property Market chat II - *read mod note post #1 before posting*

Bargain_Hound

https://www.boards.ie/discussion/comment/118154747#Comment_118154747

A certain Irish sports person stands out in that list of entities ;)

SmokyMo

Katie loves milking government plebs for money... cant blame her.

Even slime balls Zakay brothers are on it. Were they not done for property fraud in UK?

Send the whole DCC to gulags.

Mad_maxx

Looking at results of this week's Bidx1.com auctions and prices outside Dublin are really shooting up.

Villa05

Does the move away from long term leasing reported here only apply to individual landlords. Is it still open season for commercial entities.

I know DCC were looking for a reprieve from the policy. Why work when you can outsource your work at maximum cost and still collect your pay cheque with no questions asked and even go on primetime and proclaim how your saving the country a fortune by ltl over emergency accomodation.

Bargain_Hound

https://www.boards.ie/discussion/comment/118155537#Comment_118155537

Based on the linked doc above, doesn't appear to be any slowdown for commercial, only increase in leasing.

DCC Lease Rent paid:

2020 €4,614,806 

Based on the number of proposals due to be delivered during 2021 the estimated rent payments for 2021 for approximately 330 units is €6.3m.

Amadan Dubh

https://www.boards.ie/discussion/comment/118154747#Comment_118154747

From what I can tell from the free information online as I don't really care enough to pay for company reports, most of those commercial entities are Davy run and connected entities - just going to mention in this context that DCC's Owen Keegan used to work with/for them - it's not that anything obviously illegal is happening but it is a cosy little number that these parties are involved in and won't want to give it up easily;

• Davy Platform ICAV.
• Elm Long Income ICAV.
• Obsidian ICAV.
• Basalt ICAV.
• Herbert Park ICAV.
• ELIREF Blackhall s.a.r.l (Aberdeen are the investor but they are a client of Davy).
• Red Rock 1920BS Ltd (Keith Craddock runs this entity and seems to have at least on one occasion sourced funding via Aberdeen which as mentioned above are a Davy client).

KW PRS = Kennedy Wilson Private Rental Sector.

6541

A lot of discussion on here is based in Dublin. I wanted to share a regional story. So Castlebar is crying out for housing. Planning for a big development in Mayo terms has now been rejected.

I am scratching my head at why planning got rejected. Surely we should build like feck at this stage.

link to local paper.

https://www.con-telegraph.ie/2021/11/14/plans-for-65-new-mayo-homes-are-rejected-council/

markodaly

I saw this in another thread and thought I would post it here. Although its an American polical viewpoint, there is a bit about housing that overlaps with our situation.. The first few minutes especially.

https://www.youtube.com/watch?v=hNDgcjVGHIw

What we see are people in Ireland who would say they are kind, caring, progressive, and want to help those in need especially with housing, turn around at almost every opportunity and curtail, object, stymie, block, and obstruct measures that relieve housing issues.

I like the way the person says, 'They are not living their values'.

I think that is Ireland to a tee. We talk a great game about how great little country we are with great people... but to be honest we are out for ourselves. It is a cod and a myth that we perpetuate and we should be honest about it at least.

Villa05

How many people actually object to housing within reason. Is it a case of numbers or those that make the most noise get heard most.

Bass Reeves

https://www.boards.ie/discussion/comment/118167935#Comment_118167935

Technically neither. You have to give a reason for your observations/ objections. Whether these are valid or not is then decided.

The basic trick with an objection is throw as much sh!the as possible and see what sticks. There is professionals you can pay to do it.

Amadan Dubh

Pat Farrell with his typical gaslighting paid-for piece in the IT this morning. The usual "we aren't the bad guys, we are actually the good guys who are key to fixing the problem". He talks about needing to be less emotionally led in the discussion while the bulk of the article is an appeal to emotion rather than logic and reason.

https://www.irishtimes.com/business/construction/housing-debate-dominated-by-irrational-solutions-and-nonsense-private-sector-critiques-1.4727101

In addition to the funding for home builders to develop houses for sale, much of what institutional investors are providing now in Ireland is private rented accommodation, stepping in where there is a massive exodus of individual private investors. This acutely-needed housing is dismissed as “developer led”, “built to shoebox standards”, (for the record, Ireland now has one of the highest space standards in Europe, for sale or rent) along with a completely false rhetoric that delivery of private rented apartments and houses is somehow bad public policy and does not provide any social dividend or taxes.

This is nonsense.

I don't think it is unreasonable to think that institutional drove the policies in some way which lead to the smaller landlords getting shafted and moving on. Which would make his argument a perfect example of gaslighting. Ask Pat if dramatically increased supply with materially lower rents; or increasing tax on institutionals and lowering it for smaller landlords is something his members would get behind.

The reality is that HAP is a payment made to help people secure housing that would not otherwise be available to them, in light of the acute housing supply.

They're loving HAP as it guarantees 85/90% of current market rents over 20/25 years - essentially acting to set a floor on rents when really the rental crisis demands a solution where rents drop 30%+ which would leave the government holding the bag on leases above market rent. The HAP system is an institutional investor lead guarantee of income by the State (see Davy connection to DCC outlined above).

Our sector has been variously described by some as “cuckoos” and “vultures”. This unnecessary characterisation indicates a stunning ability to deny the reality of the world around them – there is a housing crisis, and institutional investment is an absolutely essential part of the solution.

"stunning ability to deny the reality of the world around them" - very emotive there Pat.

Institutional investors will continue to do what they do best – provide much-needed supply, to help address the housing crisis based on a funding model that seeks a moderate, long-term sustainable return.

"Sustainable" - there's nothing sustainable about the situation of institutionals herding young people into the PRS and working to ensure rents are sufficiently high versus salaries that there is no viable way to exit the PRS and buy a home. There is a great greenwashing going on at the moment in the investment world and I think that word "sustainable" thrown in there is part of the great greenwashing.

Bass Reeves

https://www.boards.ie/discussion/comment/118168282#Comment_118168282

I would not disagree with a lot of what he says. At the end of the day the only solution to the housing crisis is supply.

He make a good point about the furore over the purpose build rental development out near Croke Park. Yes its a build to rent.

As David McWilliams says ''we should not let the perfect prevent the good''. There is no perfect solution supply is the only solution. Just like these that have defended vested interests in stopping housing supply. Last year we had SF and other left politicians prevent a PPP development from going ahead as not enough were social and affordable.

The only solution is build houses and apartments and we should try to stop those that want to prevent peogress

Wanderer78

https://www.boards.ie/discussion/comment/118167791#Comment_118167791

modern political and economic ideologies depict us to be individuals, for us all to be 'self interested', this is true, but only partially true, humans in fact are not only self interested, but we also have a very strong want to bond into communities. from this depiction, we have become almost largely self interested, we do this in order to survive, as by not doing so, our chances of survival are decreased, or our perception is....

Amadan Dubh

https://www.boards.ie/discussion/comment/118168397#Comment_118168397

It would not suit his interests that the thousands of small landlords come back to the market as it would cause rents to drop meaningfully. Or what would he say to an accusation that the tax regime disproportionately favours large investors rather than small landlords. This is my problem with his platform if it is given too much prominence; these investors will not accept lower rents if supply increased dramatically. Therefore, they are part of the problem, not the solution if we are told they have a significant part of the solution - they are buying up something like 90% of all new apartments which allows them to dictate the new apartment market - in a functioning market they have a part to play but the few super large entities should not be the dominant players in the market.

The FT had a good opinion piece yesterday on the attractiveness of the property market for investors in developed economies. It's not really surprising and isn't news per se but important to reiterate the correlation between low interest rates on the asset bubble; and how productive cash is ending up in property in a disproportionate manner.

https://www.ft.com/content/99a3cf9b-0ab8-45b9-bbc5-7e88c08f9ea5

...a new study from the McKinsey Global Institute...found that two-thirds of net worth is stored in residential, corporate and government real estate as well as land. For all the talk of digitalisation, it seems that bricks and mortar are the new bricks and mortar. How did this happen? And what are the implications?

The McKinsey study found a strong inverse correlation between net worth relative to gross domestic product and five-year rolling averages of nominal long-term interest rates. The authors believe that declining interest rates have played a decisive role in lifting asset prices of all sorts, but particularly real estate prices. Constrained land supply, zoning issues and over-regulated housing markets also helped push up values. The result is that home prices have tripled on average across the 10 [developed economy] countries.

The ramifications are troubling. For starters, asset values are now nearly 50 per cent higher than the long-run average relative to income. Net worth and GDP have traditionally moved in sync with each other at the global level, with some country-specific deviations. Now, wealth and growth are completely disconnected. This is, of course, behind much of the populist anger in politics today. Affordable housing in particular has become a rallying cry for millennials who can’t afford to buy homes and start families as early as a previous generation did. That, in turn, generates a headwind to consumption growth, since they aren’t buying all the things that you put in a house, either. But it also fuels inflation in rents, since so many people can’t afford to buy. That supports the idea that we could be heading into a 1970s stagflation era.

What lessons should we take from this? First, it seems increasingly clear that low interest rates haven’t done much for business investment. Second, and more encouragingly, the big government spending programmes of the post-Covid era present a new opportunity to try and push money into more productive sectors, which could ultimately bring wealth and growth back into alignment.

The above is obviously just an extract due to the paywall, but as with most FT articles, the value is found in the comments section. The third highest rated comment stands out for me;

The tax system favours investing in housing over equity. I can rent out my house for up to £7000 a year tax free. I can pass on my house to my heirs utilising £500k worth of allowances (unavailable to equities).

If a first time buyer is looking for a deposit, the government will give them £1000 a year every year towards a housing deposit.

There are so many more government schemes aimed at propping up the housing market it is beyond belief. It breeds inefficient capital allocation and is absurd on every level

Amadan Dubh

https://www.boards.ie/discussion/comment/118165408#Comment_118165408

http://www.eplanning.ie/MayoCC/AppFileRefDetails/21985/0

I'm not entirely sure how the search system works but when I click into the "Submissions" tab of the planning details on the Mayo CoCo site and see the names of two individuals, is that to be interpreted as the names of those who might have objected to the development? Can anyone make a submission or do they need to be resident near the site? Curious given a quick Google search of the two names listed in the submissions tab.

Pussyhands

Another bleak report this morning, prices up over 12% in the year to September. Absolutely depressing for non owners. Disgusting how someone who was lucky enough to buy even only a year ago is saving tens of thousands of euros compared to someone buying today. Makes me sick thinking about those who bought 5/8 years ago....they're literally better off than the likes of my by hundreds of thousands.

Amadan Dubh

This won't end well. The brief window at the end of 2019, to try to cool the market after supercharged growth in the preceding years has been closed and the problem of high house prices significantly worse. In 2016 you had 80% of 25-34 year olds not owning homes, which is a growing demographic and will extend further the longer the situation continues. This is 80% of people who would welcome a market crash as opposed to efforts aimed at gradually cooling the market - this will contrast with many people (i.e. homeowners) who welcome price increases and would balk at the thoughts of a market crash.

The polarisation of classes is going to have severe ramifications in our politics going forward as populists propose extreme measures which claim they will do this - it will just keep growing worse as it is generally older people that own homes while younger people rent; unlike the last few decades we do not have younger people (ie under 40s) buying into the "your mortgage is your savings for retirement" system which means the system is seemingly only moving more towards the side of the younger/non-home owning demographics. We're lucky that SF, as the main opposition party by a long way, are not as extremist as they could be, for now at least that maybe prevents too extreme a change happening in our politics and economy.

JimmyVik

https://www.boards.ie/discussion/comment/118168947#Comment_118168947

I think you are right apart from about SF, but thats another argument.

We are seriously thinking what country will we retire to (used to be what county), because we can see Ireland just going down the toilet over the next few years.

Timing belt

it would not suit his interests that the thousands of small landlords come back to the market as it would cause rents to drop meaningfully.

Small Landlords would not accept lower rents.... The reason for small landlords not entering the market is due to the central bank rules of Loan to Value required for buy to rent required a 30% deposit accompanied by the fact that the current market rents would not cover their mortgage and maintenance costs as it used to prior to 2008. If you are getting 4% yield then you have 2% spent on mortgage and maintenance, tax of 3% (assuming higher rate of tax) meaning that you would need to top up the mortgage repayments. There is no way that small landlords would accept lower rents. The only reason they did in the past was because they were stuck in negative equity and their was a surplus of rental accommodation back in 2008-2012.

Add on top all the legislation on renting and you have a major headache on your hands unless you are very lucky with getting a good tenant.

The same individual could invest elsewhere and get a better return. And before you start taking about the tax on small landlords they would pay the same tax if they invested in a REIT. If the REIT was taxed and the Investors income was also taxed then the rental income would be taxed twice and hence why the changes were introduced to the taxation of REIT's.

Timing belt

https://www.boards.ie/discussion/comment/118168790#Comment_118168790

What is interesting is that the majority of the price increases are for existing dwellings (86% of total sales) which rose by 13% whilst the new dwelling rose by 3.3%

JimmyVik

https://www.boards.ie/discussion/comment/118169417#Comment_118169417

Dont forget the cheaper porperties leaving the market are going to increase the average.

Amadan Dubh

https://www.boards.ie/discussion/comment/118169367#Comment_118169367

On the investment yield point, I suppose the question I would have is that is it not an attractive investment unless it pays for itself? Meaning; small landlords, despite owning the asset, have no appetite to invest where they would need to top up the mortgage in some way? Because to me that would still be an appealing investment considering the equity being built up.

On the legal point, in terms of the rental legislation; one of the things that would be needed to get small players back in the market would be to make it more attractive not just financially but also legally. So that would entail, for example, strict rules around non-payment of rent and evictions (ignoring political will to do this, I feel it is an essential part of getting small landlords back in the market).

On the taxation point, investing in a REIT does not give the REIT investor any ownership rights to any property, they just receive an interest in the REIT. So it is comparing apples and oranges. REITs don't pay tax on their income subject to certain conditions and the investors in REITs are majority based outside of Ireland so we have a situation where essentially we have absentee landlords harvesting productive cash from the pockets of workers (renters) and sucking it out of the country with no tax going to Ireland - at the point the renter transfers the rent out of their own bank account and into the bank account of the REIT's agent that cash is gone out of the country tax free (due to double taxation treaties which would not enable the Irish authorities to tax the money if the investor is taxed on it in their own country). And that is just REITs; which are at least transparent. There are numerous other institutional investor structures which acquire the properties without paying tax. Usually foreign investors invest in non-Irish funds which invest in Irish funds which use some form of underlying vehicle to transact in the property and take income from it - we can't publicly see how these vehicles are structured but throw in some tax structuring magic and again we have rental income not being subject to any sort of tax and moving from renters straight out of the country.

Timing belt

https://www.boards.ie/discussion/comment/118169956#Comment_118169956

Yes they would still have capital appreciation but could also achieve this via a mixed portfolio of assets and not have exposure to just one asset class.

An investor in a REIT owns a share in all the properties of the REIT and as the properties appreciate in value so should the share price. It's not like they miss out on the property appreciation and its not comparing apples and oranges as their is a very strong link between the value of the property and the share price.

Yes you are right about the tax can be avoided if an investment is structured properly. This is the reason why Ireland have such Assets under management as investors are using Ireland for this structuring which creates jobs in Ireland.

Thestart

https://www.boards.ie/discussion/comment/118170196#Comment_118170196

I don’t believe for a second that investment vehicles in Ireland are remotely balancing the taxes lost with the jobs they create. Reits just suck all the money out of the country to already very wealthy individuals. We would be far better with smaller resident landlords with better legislation for renters and landlords. I am looking forward to seeing the RTBs data on rents prices/ increases and who is gouging the renter when they get around to collecting it. They just give out basic headline grabbing information to justify their existence.

Timing belt

https://www.boards.ie/discussion/comment/118170602#Comment_118170602

Regardless of whether it is a Reit, Institutional investor or a small landlord they will all try and get the highest rent they can.

The very 'wealthy individuals' are actually mainly pension funds and investments from the man on the street 90% of the time

Villa05

https://www.boards.ie/discussion/comment/118169417#Comment_118169417

Are new homes loosing their appeal with increased social housing allocations?

Better to pay for what you know than what you don't know

Thestart

https://www.boards.ie/discussion/comment/118170888#Comment_118170888

The problem is the 90% man on the street is not on an Irish street so the tax is lost. It makes no sense to just let this happen. I know we need housing built and outside money is required. So let the funds finance the developers but not bulk rent the stock.

i just can’t see this ending well. I know we have ok lending rules but if a few of the big players decided they needed to leave the market quickly it could be like 2008 again and that’s no good for anyone. 40,000 units up for sale with and without tenants. Developers finance stopped mid build!

or they stay and continue to increase rents.

look at what villa05 is saying above re new builds, it’s such a different landscape out there. New builds was were FTB’s wanted but that’s a riskier situation now. it doesn’t make sense.

JimmyVik

https://www.boards.ie/discussion/comment/118170196#Comment_118170196

I had a nice sum of money myself that I wanted to invest.

My first choice was rental properties and I did a lot of research on them. In the end it wasnt for me.

So I bought ETFs and shares with it. That was a few years ago now and the returns are better than I would have got with rentals. Also no work involved. And no new legislation working against me being piled on top twice a year.

If I was advising anyone with money to invest now, I would definitely say dont invest it in rental property in Ireland.

Looks like the vast majority are aware if that now anyway, with even current investors pulling their money out of it and selling up.

Leave it to the REITs.

JimmyVik

https://www.boards.ie/discussion/comment/118172686#Comment_118172686

100% they are. I know I would never buy in a new estate now. Lots of people I know feel the same way. I even know some who pulled out of a purchase when they found out about the social housing allocation around them (especially where more houses were bought by the council). Though some people will just buy wherever they can and have to roll the dice on the amount of social housing around them.

Amadan Dubh

https://www.boards.ie/discussion/comment/118173169#Comment_118173169

We've abandoned the idea of buying a new build if we buy and will hold off a few years (not in a rush) to get a bigger deposit for something more mature.

The problems we have with new builds are that they are on top of one another with little privacy in the gardens, social housing neighbours risk and then the third reason being that the estates are generally not serviced well in terms of amenities; they are usually at the edge of towns and along busy roads (I'm talking about the ones in Wicklow btw). Even though they are generally lovely homes and there's Help the Brickie, it's not worth it for the hundreds of thousands of euro being handed over!