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

https://www.boards.ie/discussion/comment/120064499#Comment_120064499

Is what she said inaccurate? why is it stupid if it may be true?

If LLs are struggling to make repayments, what happens? They sell, then the institutional investors have to step up.

manniot2

https://www.boards.ie/discussion/comment/120065178#Comment_120065178

Its actually a very strange thing that happened - why were people so big into property during COVID? Was it because they werent able to travel, get married etc and so the money went into deposits? Very odd that in such a period of massive uncertainty, people rushed into their biggest ever investment. I know supply was down, but its been down since 2012!

kerrybyrne

https://www.boards.ie/discussion/comment/120065213#Comment_120065213

Exactly people just saved loads of money, some people moved out of their rentals and moved home to their parents so they saved huge deposits. Definitely didn't expect it either!

kippy

https://www.boards.ie/discussion/comment/120065213#Comment_120065213

A few reasons

1. Some people who were forced to "WFH"/School from Home etc were driven demented depending on their home environment. Were they sharing/renting, did they have outside space, were they near amenities etc
2. Moreso, people who would normally spend on lunches/coffees/drinks/holidays etc didn't spend that money and were able to save instead (in the case of people I know who bought during Covid, this was the main reason. They were able to significantly accelerate their savings plans.
3. People had a bit of time to stop/pause and review their situation and that of those around them.

kaymin

Expect BlackRock will need to start offloading properties to meet all the deferred redemption requests. Unlikely to be the only fund in such a situation.

BlackRock Halts Withdrawals From £3.5 Billion UK Property Fund

• UK Property fund is deferring requests made in September 2022
• Pension scheme clients have been rebalancing their portfolios

By Loukia Gyftopoulou and Jack Sidders

4 January 2023 at 15:45 GMT

BlackRock Inc. has suspended withdrawal requests from investors in its £3.5 billion ($4.2 billion) UK property fund, in a move that highlights the sector’s ongoing challenges when markets are volatile.

The world’s largest asset manager told clients in the BlackRock UK Property Fund in the past few days that it will defer redemption requests made at the end of September 2022 and due around now, according to a person familiar with the matter. 

The fund is based in Jersey and is only open to professional investors, including several pension schemes that in recent months have been shifting their portfolios into liquid assets after months of market volatility left them overexposed to holdings that are harder to sell. 

A spokesperson for BlackRock declined to comment. Reuters reported the news earlier. 

Read more: UK Property Funds Limit Withdrawals as Pension Funds Pull Cash

BlackRock and other asset managers previously limited withdrawals from UK property funds in October. At the time the firms said the move was unrelated to the sell-off in gilts following the UK’s “Mini-Budget” at the end of September. 

UK property funds have suspended redemptions at times of market stress in recent years, including during the coronavirus crisis of 2020 and following Britain’s referendum to leave the European union in 2016. Some funds have put properties in those funds up for sale to meet investors’ wish to cash out. 

Selling commercial real estate in order to raise cash to pay out departing investors can take months if managers want to avoid fire sales. Some property funds for retail investors that gated following the Brexit vote in 2016 managed to reopen within weeks while others remained shut for as much as six months.

mcsean2163

https://www.boards.ie/discussion/comment/120064021#Comment_120064021

These projects will deliver 60 MWh at Inchicore and 38 MWh at Aghada Generating Station, with the ESB also planning to develop further battery storage projects in South Wall and Poolbeg, both in Dublin.

All those batteries will need to be replaced in about 5 - 15 years if similar to solar with more child slave labour.

Versus turlough hill. 'four reversible pump turbines with a combined capacity of 292 megawatts.'

Right now we're 5.5 GW an hour.

https://www.smartgriddashboard.com/#all/generation

The plan is to have batteries that could supply the grid for about half an hour and I'm assuming the cost will be enormous never mind the child slavery.

Thanks for link. I wasn't aware of the level of stupidity and waste in the ESB.

Cyrus

https://www.boards.ie/discussion/comment/120065321#Comment_120065321

modern battery storage installations are 4 hours and above, and most of these projects dont get built unless there is an economic return, the systems tend to have a 20 year plus life span.

kaymin

https://www.boards.ie/discussion/comment/120060172#Comment_120060172

Not sure where you're getting your information that gas prices will not soften - they already have. That's not to say they won't go back up again but they're now down to pre-war levels.

Europe Gas Slumps to Lowest Since 2021 As Mild Weather Cuts Use

• Benchmark futures drop to lowest since November 2021
• Warmer-than-normal temperatures set to persist across region

ByVanessa Dezem and Anna Shiryaevskaya

4 January 2023 at 15:53 GMTUpdated on4 January 2023 at 16:31 GMT

Listen to this article

Natural gas prices in Europe fell back to pre-war levels, as a bout of mild weather reduced demand and eased fears of a prolonged supply crunch.

Benchmark futures fell as much as 11% as a warm spell curbs heating demand and blustery conditions cut use of gas in power generation. Mild weather has spread across the region, with temperatures breaking monthly records in several locations at the start of January. 

Prices have declined sharply since the second week of December, helping ease fears of a lengthy crisis crippling Europe’s economy. If prices stay low, it would bring relief to surging inflation across the region. Avoiding a harsh cold snap, would leave the bloc in a strong position when it comes to refilling gas storage after winter. Still, policymakers are watching closely for signs of lower prices boosting demand in case energy rationing is needed. 

Storage sites are still almost 84% full and subdued demand over the holiday season has even allowed for some gas to be put back into facilities. That buffer will help Europe withstand any cold snaps later in the winter and narrow a deficit in supplies from Russia. 

Wind generation has also increased, reaching a record in Germany on Wednesday, further reducing demand to burn gas for electricity.

Milder weather and ample wind has “eased concerns of supply shortages and potential blackouts as we head into 2023,” Inspired Energy Plc said in a note.

Dutch front-month gas futures fell as low as €64.22 a megawatt-hour, the lowest since November 2021, and traded at €64.30 at 5:30 p.m. in Amsterdam.

“As long as the forecasts do not show any winter weather, further losses appear likely,” analysts at trading firm Energi Danmark A/S said in a note earlier on Wednesday.

DataDude

https://www.boards.ie/discussion/comment/120065507#Comment_120065507

Now down 82% since it’s peak in August. Quite a remarkable drop.

Would be great if it fed into consumer prices sooner rather than later!

fliball123

https://www.boards.ie/discussion/comment/120065321#Comment_120065321

https://rethinkresearch.biz/articles/ireland-takes-first-step-towards-2030-7gw-offshore-wind-target/

it wont be overnight but its coming

mcsean2163

https://www.boards.ie/discussion/comment/120065375#Comment_120065375

20 years? I haven't seen anything to support that? 2% per year degradation is known.

https://www.energy-storage.news/grid-tied-battery-lifecycle-estimation-the-achilles-heel-of-energy-storage-project-development/

Batteries are useful for load balancing etc. I can't see them as efficient power supply. My point was that the planned storage is equivalent to about 30 minutes grid usage. You could supply 10% of the grid for 300 minutes or whatever. I'm assuming Inchicore is a Dublin only supply etc.

I'd be more enthusiastic if it wasn't an industry based off child slavery. I guess the Victorian's turned a blind eye to slavery too.

PommieBast

https://www.boards.ie/discussion/comment/120065213#Comment_120065213

I suspect low volumes of actual sales also helped to skew the figures. Ireland's A&P (especially Dublin) is so screwed up I long stopped even trying to fit a rational theory to it.

tom_murphy112

Looking at myhome.ie today there is only slightly over 14K properties for sale. I do recall there being over 17K around November. Where did they all go ? surely all of them couldn't have been sold based on narrative from some.

jimmybobbyschweiz

https://www.boards.ie/discussion/comment/120065291#Comment_120065291

There'll be state bailouts on the basis that these pension funds are run for the benefit of Mary and Joe, so the taxpayer will be on the hook for the whole charade. Notwithstanding that property is and should be an extremely risky investment. BlackRock will take their fees regardless.

amacca

https://www.boards.ie/discussion/comment/120066228#Comment_120066228

Sure couldn't 17k have sold and a new 14k replaced them?

How can you tell its the same 17k - 14k =3k that sold or delisted etc?

Does the site state its the original 17k etc....excuse my ignorance if it does!

Donald Trump

https://www.boards.ie/discussion/comment/120062464#Comment_120062464

Reads like a paid advertising feature.

How can someone who makes hysterical claims such as:

Rent Controls mean that no investor will buy a property that's been rented in the last two years at a low rent.

be taken seriously???????

Of course an investor would buy that property. Why wouldn't they. They might not be willing to pay as much as they current owner greedily wants to squeeze out of them, but it is silly to suggest that no investor would buy the property

Donald Trump

https://www.boards.ie/discussion/comment/120064557#Comment_120064557

Amazon to cut 7,000 more than expected.

https://www.independent.ie/business/technology/amazon-to-lay-off-over-17000-workers-report-42263149.html

Donald Trump

https://www.boards.ie/discussion/comment/120064567#Comment_120064567

How could the average landlord not be making a profit? Rents are so high and interest rates were so low. They'd have to be fairly crap at it not be be able to turn a profit.

Unless of course you deliberately, and incorrectly, ignore that part of the profit which the landlord later decides to use to pay off the capital portion of their loan. Which is effectively the same as putting money into a savings or investment scheme.................If landlords want to be able to do that, then should it not be the case that everyone can? If I'm on 500k a year income then should I not be allowed to take 450k of that, invest it in some government bonds and then pay income tax only on my remaining "income" of 50k? ..... then in a few years sell my 450k of bonds for 460k and pay 3,300 tax on the "capital gains" and put the rest into my pocket............

Cyrus

https://www.boards.ie/discussion/comment/120065643#Comment_120065643

This isnt a thread about battery storage so ill leave it after this but the projects have a 20-25 year economic life, degradation is assumed in the economic analysis obviously, but even the author of the study you posted said you cant take degradation in that way, gross simplification he called it!

https://eepower.com/news/bess-with-20-year-warranty-and-95-power-guarantee/#

Batteries will be come more and more important as the % of renewables increase.

realitykeeper

https://www.boards.ie/discussion/comment/120061400#Comment_120061400

So anyways there is a point to be made regarding the likelihood and reason for defaults. Defaults could happen because

a) people can't afford the higher interest rates.

b) because they don't want to pay for a house in negative equity (house prices fell 0.4% in December and could fall further).

c) because they know if enough people default, banks will be in difficulty and the ECB will likely lower interest rates again.

But, if the ECB does pivot, all of society will end up paying the difference in what the indebted would have to pay without the pivot. In other words, general inflation would increase and probably by quite a lot. Inflation is a lagging burden that can take up to two years to deliver it's punch but it always shows up eventually.

So, should the ECB pivot or stick to it's guns if defaults increase? Is the ECB even serious about fighting inflation or only pretending to fight it? After all, their interest rates are still negative in real terms given the level of inflation.

Bass Reeves

https://www.boards.ie/discussion/comment/120067357#Comment_120067357

You are waffling and blathering on again DT like your namesake carries on mudding the water

Property is like any other investment an investor puts capital into they expects a return investment and to be treated fairly by both the revenue and any other regulatory authority.

However the tax treatment of LL is managed totally different to most other businesses.

Any investors make scarfices they could just spend there money on holidays, in restaurants and on events. But they choose to invest.

I bought a farm 20 years ago. During the noughties my friends drove nice cars and followed Munster on there Heinken cup travails.

With the last ten years I have seen the return on my investment. I retired early I made other investments, when the lads that followed Munster were cribbing about the cost of college education I put mine through it tax efficiently.

Property investment involves scarfices as well. There is risk involved. Now investors are fleeing the sector government is panicking and punishing them again.

And we get the blatherers and wafflers on here who have absolutely no understanding of the sector making BS comparisons.

On any property investment you can write off most of the first month's rent on insurance, regulatory costs and property tax and if there is management fees a bit with the complete first month's rent.The next month will go on maintenance every year. On average you will lose two weeks between rental a year( a month every two years when tenants change).

After that you factor in other risks. 1% chance of getting a horror tenant, (no rent over holds, uses system to prevent you evicting them da ages the house) cost in the region of 20-50k. 5% chance of getting a problem tenant minor damages house, misses a few months rent and house requires fixing up after exit 3-5k.

Add to that smaller investors are more likely to have non market rents where they had long term relationship with tenants who they did not rise the rent in often for a decade or longer

Now they have a house that is not making an adequate return. Of you are in your 40/50/60's you exit the market.

If you are in your 70's or older you are trapped by the double capital gains and inheritance tax but even with that investors are leaving

tigger123

I feel like there is more coming on market over Christmas and now (the early part of January), than has done in previous years. There seems to be a lot of of daily alerts from myhome pinging my inbox a lot at the moment.

Is anyone else noticing this? Or is it just my confirmation bias?

This is it

I've alerts set up and got three on Tuesday, two were updated/re-advertised and one new house. I'm covering a large enough area, 5 different towns, so I was expecting more but it's still early after Christmas.

https://www.boards.ie/discussion/comment/120068085#Comment_120068085

Weren't we basically in lockdown in the last 2 Januarys?

FedoraTheAura

https://www.boards.ie/discussion/comment/120068085#Comment_120068085

Been getting several a day too. It could be the usual January bounce but a lot these places look like rentals that may have been held back from sale. Like you, hoping it’s not just confirmation bias.

Have also noticed some places that were up for sale just before Christmas reducing asking prices by about 5%.

I myself have been told I can probably expect to have an offer accepted on a place for nearly 5% under asking price that I placed before Christmas but am now considering withdrawing as it needs a lot of work and feel I could well get something for the same price without the work needed in a few months, admittedly with higher interest rates. Conflicted.

realitykeeper

I read today about the RTB issuing eviction orders for tenants accused of "overholding". While I do not disagree with this practice when it is justified I think the same should apply to mortgage holders in arrears. If more mortgage defaulters were evicted, house prices and rents would fall.

tigger123

https://www.boards.ie/discussion/comment/120068301#Comment_120068301

Our cultural memory doesnt sit well with evictions.

Donald Trump

https://www.boards.ie/discussion/comment/120067923#Comment_120067923

To be fair, you are the only one blathering on there with your wall of text which says nothing.

Lets take your own comparison of buying a farm 20 years ago. Would you recommend that to any of the have-a-go landlords on this thread? They can get a mortgage and either work it and pay it back from the profits, or rent it out and pay it back from the income and expect to also have a profit. Sounds realistic - right? They should be able to expect the after tax income would be able to pay it back over 20 years - right? Ironically, yours is the "BS comparison" as it invalidates your position. How many farms has your own son bought Bass? He must have a few there sitting around the country passively paying for themselves at this stage?

Your post does nothing to explain why an average landlord cannot make "a profit". Nothing. Interest rates are your cost of capital and have been on the floor for years.

There are no capital gains due on inheritance. You are going to have to explain that one. If you leave your property to someone, they are not assessed for CGT on your gains. They might be liable for CAT. Even then, it is not the previous owner who is liable. If you realise capital gains in any investment yourself then you pay capital gains on it. Housing is not unique in that regard.

fliball123

https://www.boards.ie/discussion/comment/120067357#Comment_120067357

The average landlord has 1 or 2 properties at most meaning they need other income. With other income it means they more than likely pay the full rate of income tax, along with property tax, home insurance, life insurance and in most cases a mortgage as well that is paid after tax. Compare that with the REITS and how they are treated. So they are not making much on rental. Then they have the real danger of a rogue tenant where some tenants can stay rent free for 3/4 years and reck it and leave with out any comeback. You don't have to take my or anyone else's word for it on here but the figures for landlords leaving the market speak for themselves. As you say rents are sky high and interest rates were so low yet the vast majority of small landlords are all getting out of dodge.

Donald Trump

https://www.boards.ie/discussion/comment/120068691#Comment_120068691

You can offset your interest against you income. Along with many other expenses. I don't understand why you think that the capital repayments should be tax free income.

Would you prefer the status quo - pay "net" now and then pay CGT on the difference between the purchase price and sale price. Or else prefer a scenario where you can write off 5% of the capital costs per year over 20-years, but when you sell the asset after that time the full sale price is treated as income? Because those would be the types of alternative that would make sense. You can't expect to write down the cost basis of an asset to zero and then pay CGT on the difference between what you originally paid and what you sold.

Stamp duty should really be increased too. It should be 7.5% for rental property in line with other commercial investments. They can keep the 1% for owner-occupied. That would also cool the market though so probably won't be done

A REIT is a company. Not a person. An individual will be taxed according to their local requirements when they take the money out. I think many posters on here think that if you set up a company in general to avail of corporate tax rates, that you as the owner only pay that tax on what you put in your pocket. The company and the person are different. Any favourable advantage granted to REITs was actually done for the benefit of other property owners. If I were the owner of a residential rental, I definitely wouldn't be calling for REITs to be driven out.