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

Rooks

There are, and through their considerable experience they know better than to engage in debates with the know it alls who know nothing.

I have spoken.

27cyrix

https://www.boards.ie/discussion/comment/122724605#Comment_122724605

I am just saying facts based on the rates I see from BOI, AIB and PTSB and pass expriences

What you see is also true, a ~50% LTV has a better rate than a higher LTV

GalwayBmw

https://www.boards.ie/discussion/comment/122724688#Comment_122724688

Less risk for the bank cheaper product - you don't need to be an economist to comprehend it. Ultimate point is - mortgages specially the large ones need to very carefully assessed against incomes, this is interest of anyone as we will pay for the defaults, not banks.

arctictree

There should be a scheme for people who rent out one property like the rent a room scheme. I know a number of people who own a second property and just leave it idle as they are in the higher tax bracket and would be paying 52% on additional rental income. A scheme like this would suddenly bring loads of rental properties to the market.

Rooks

I think there's more to it than tax incentives. It sounds like an absolute nightmare to get rid of tenants who simply stop paying rent. The RTB seem like a useless organisation.

Of course this isn't the only downside to being a small scale landlord.

Is it worth the risks involved to earn a few grand in rental income?

DataDude

https://www.boards.ie/discussion/comment/122726070#Comment_122726070

This may sound sensible, but you’re just going to encourage more Joe Public money to buy up property. Do we really need more demand for existing houses? (individual demand don’t create new developments like institutional investors do)
There are apartments in our surrounding areas which sell for €300,000ish. Rent for maybe €2,100-€2,300. If your idea was implemented I would go buy one. Immediately. You’ve just doubled my yield. I wouldn’t really care if it went to €320, €330, €340. My net yield is so insanely high id take money out of equities where dividends are taxed at 52%
I’d almost certainly outbid some first time buyer. Who knows, maybe they’d rent it off me.

Is that a good outcome?

arctictree

https://www.boards.ie/discussion/comment/122726695#Comment_122726695

How about you have to have owned the property for more than 10 years to avail of the scheme?

DataDude

https://www.boards.ie/discussion/comment/122726814#Comment_122726814

Then you’re just giving a big tax benefit to a cohort of people who have vacant houses.

Tax policy is very important for influencing behaviour. I’d much rather see that particular problem tackled through aggressive taxation on unused properties. Stick makes much more economic sense than carrot here.

We shouldn’t reward 10 years of dereliction!

Villa05

I thought that was a troll. Imagine showing off food waste while children are starving

Housing has become a deposit account for some

Hontou

I have empty properties. The high tax I accept. The reason they are empty is because it is impossible to get rid of bad tenants. Good tenants cannot get properties because bad tenants have destroyed the market. Because the RTB enables them. Apparently you can wreck a house, grow drugs, sublet, have parties, stop paying rent and still be on the right side of the law. It must be the highest risk investment there is.

TagoMago

https://www.boards.ie/discussion/comment/122727212#Comment_122727212

None of my business of course but that seems like extreme risk aversion. You can vet potential tenants you know, get references from previous landlords, employers, etc. The vast majority of people are not going to turn your property into a grow house or stop paying rent and refuse to leave.

hamburgham

https://www.boards.ie/discussion/comment/122727212#Comment_122727212

Yes, reading the judgements of the RTB is truly chilling. House wrecked but if the landlord didn’t dot the ‘I’ on the eviction notice, then it’s the landlord who’s in the wrong.

hometruths

https://www.boards.ie/discussion/comment/122726695#Comment_122726695

If, like rent a room scheme, the amount of rent you could charge was capped in order to qualify then you probably would not rush out and buy a flat immediately.

Villa05

https://www.boards.ie/discussion/comment/122727212#Comment_122727212

In Ireland

Two minuses make a plus

Bad tennants are rewarded at considerable cost and billions of taxpayers money are spent ensuring that those that hoard critical infrastructure away from the economy are rewarded

Let's see where such policies take the economy

Imagine going into work trashing the place and sabotaging the power to the building and preventing access to the building for other staff and the company policy ensuring that you are rewarded the most while productive staff pay the price

DataDude

https://www.boards.ie/discussion/comment/122728045#Comment_122728045

You’d just have to purchase at a price point that the maths adds up. So this might distort more at the lower end of the market

Ireland already has some of the best rental yields in the world. The last thing we should be doing is further incentivising individual investment into property by making it more tax effective than every other asset class.

As someone else said, by all means tackle the issue of non-paying tenants etc. this seems like the bigger issue. And alongside that, aggressively tackle the issue of vacant properties. Use it or lose it style.

Potentially doubling net rental yields over night could be catastrophic for first time buyers.

RichardAnd

https://www.boards.ie/discussion/comment/122727212#Comment_122727212

Hmm, why sell the property on if it's not used? Better to put the money into something useful to you than to keep it in property that's not occupied. Personally, if I had an unused apartment or house, I'd sell it and use the proceeds to either improve my own house, buy some land or put into a fund for my nephews.

timmyntc

https://www.boards.ie/discussion/comment/122728241#Comment_122728241

Right now keeping your property idle for a certain amount of time actually increases the value of it - because buyers can qualify for vacant housing grants.

Also regardless of vacant grants, house prices are still increasing by almost 10% per annum so simply having a house idle or not you are making 10% just by owning it.

DataDude

https://www.boards.ie/discussion/comment/122728324#Comment_122728324

The vacant house grant is a great example of using the tax system to reward a behaviour you don’t want. It might seem to make sense in the context of bringing back currently vacant homes, but what message does it send

‘thank you for letting your house go derelict. We would like to reward you with a €50k payment for it from the taxpayer. Well done’

RichardAnd

https://www.boards.ie/discussion/comment/122728392#Comment_122728392

I was about to say this. However, I don't think that this is unwanted form the point of view of the state, or at least the people who run it. Leaving houses empty and derelict keeps them out of the market, which inflates prices. Furthermore, the work necessary to fix them if they are to be reused generates consumption and thus adds to GDP. This is what the government wants.

DataDude

https://www.boards.ie/discussion/comment/122728406#Comment_122728406

I’d see this as borderline conspiracy theory at this stage tbh. The government are well aware that their biggest barrier to continued election (salary/pension/power etc) is increasing home ownership.

It’s easy to find examples to suit your view in both directions, but if the government genuinely had some weird agenda to make housing more scare and more expensive (and lose them their jobs?). Why would introduce a 6% levy on properties above €1.5m? This is clearly aimed at cooling the top end of the market.

Throwing in the huge spend on housing leading us to top Europe for house building. Doesn’t fit with a narrative of an evil government trying to restrict supply and increase prices.

RichardAnd

https://www.boards.ie/discussion/comment/122728517#Comment_122728517

There's no conspiracy about it, nor did I use the word "evil". A system is what it does, not what it's said to do. Everything that the state has done in the last few years has been inflationary in nature. Also, no politician to my knowledge has every said that they aim to lower house prices. The closest that they come is to say that they want "affordability". This is ambiguous, and it invariably means giving people more money, which is just drives up prices.

Further, I think we need to separate politicians from the state as a whole. There are many civil servants who have enormous influence over what happens here who have no fear for their positions. However, that aside, why would we presume that driving up prices would be unpopular? The majority of people here own property, and rising prices makes their NET worth go up. I do think that this is starting to change, however.

Rooks

"This is ambiguous, and it invariably means giving people more money, which is just drives up prices."

But this is what the public wants. I remember when the CBI was debating whether to increase LTI restrictions from 3.5 to 4 and the general consensus I could see online and in the media was celebratory enthusiasm for this action, despite the obvious effect that this would have on house price inflation.

As I see it, the CBI and government are giving people what they want.

scrabtom

https://www.boards.ie/discussion/comment/122727212#Comment_122727212

Sell them so. I think it's pretty immoral to hold properties vacant when we have the housing crisis we have now.

BlueSkyDreams

https://www.boards.ie/discussion/comment/122728241#Comment_122728241

Why sell it now if it is still appreciating?

BlueSkyDreams

https://www.boards.ie/discussion/comment/122728392#Comment_122728392

https://www.boards.ie/discussion/comment/122728568#Comment_122728568

SF tell us constantly that they want to lower house prices.

BlueSkyDreams

https://www.boards.ie/discussion/comment/122728670#Comment_122728670

It's an asset. If you had shares that were rising in value, would you sell them straight away?

The moral point is important, but its not the posters fault that there is a lack of housing in Ireland and if there were a surplus of housing and prices went down, the govt would not be funding the shortfall in sale price for the poster.

Dont hate the player, hate the game and all that.

BlueSkyDreams

https://www.boards.ie/discussion/comment/122728392#Comment_122728392

How does the vacant property grant interact with the vacant property tax?

Personally, I think all vacant resi and commerical property should be taxed into oblivion, if it is left idle too long. Increase tax with each year that passes. Sell it or use it.

Villa05

https://www.boards.ie/discussion/comment/122728596#Comment_122728596

As I see it, the CBI and government are giving people what they want

I suspect the remit of the CBI is not to give people what they want and would be considered at best populist governance. Government should be working for the best interests of the nation and to @Richardand point of a few years government inflationary housing policies, we are very close to entering the 4th decade of housing inflation policies

What an enormous success it has been

DataDude

https://www.boards.ie/discussion/comment/122728755#Comment_122728755

My understanding of the vacant property tax is the property must be considerably habitable. Those who want the grant are likely intentionally leaving it in a condition that it is not habitable.

I agree. Dereliction and long term vacancy is bad. We should relentlessly tax it. Same mindset as cigarettes. Instead we give people money for it.

scrabtom

https://www.boards.ie/discussion/comment/122728740#Comment_122728740

It's an asset but it is also a home that is desperately needed.

I understand why people would keep a house vacant if it's the best financial option available to them but they should also be honest with themselves that it is not the right thing to do from a moral standpoint.

I would say it is actually partly the poster's fault that there is a shortage of housing in Ireland, as he has properties that could alleviate that shortage but he is leaving them vacant instead.

Regardless of whether it is his fault or not anyway, we live in a society and we have a duty to contribute positively to that society instead of just our own bottom line.