Landlords selling up - Rents rising

The J Stands for Jay

Property investment is already tax advantaged over other asset classes. Dividends or coupon payments are all taxable, with no deductions whereas rent has many allowable deductions in the calculation of tax. The source of finance for the purchase price of the assets is irrelevant, should there be interest relief available for anyone who takes out a loan to buy shares?

1874

https://www.boards.ie/discussion/comment/117763523#Comment_117763523

Well maybe the State should build more houses? if they arent going to invest in them for those that cant afford to purchase a home themselves, who does?

If rentals which can support greater occupancy than non rented property are in short supply, you think the state would be significantly encouraging turning property to that purpose, but Ive read where people say they leave domestic property vacant rather than be subject to increasingly one sided regulation. If the State wont build the houses, then surely when a private individual provides a rental, it cant be expected its is done without ongoing reward. The potential risks are significant due to delinquent tenants. If there is no reward, no one will opt for that route.

The only significant advantage is for REITs, for ordinary citizens taxation on rentals is high, given that a private person is taking the responsibility and saving the state directing state resources and funds to provide accommodation. The source of funding isn't irrelevant, if someone can get more return for money they have access to, then they will, if they have to source that funding through a mortgage, then it has to be viable.

The State could forgo the significant tax percentage, which in overall taxation is likely to be small and have a system that allows the tax not be due in line with that amount being deducted from the going rate. Tenants would benefit from reduced rents, landlords would still get the same amount, the value could be set down in terms of percents of market rates and recorded in tax returns.

I dont think the amount lost from taxation of rental income would be significant compared to the overall tax take, and the savings could be passed on directly to tenants.

The reality is, being a smalltime landlord is NOT viable, even when rents are high, the risks are higher, people are not clamoring to become landlords, people are clamoring to get out.

People still need places to live and the state cant or wont provided them, if those who sell formerly rented property invest their money elsewhere, that isn't likely to put a roof over peoples heads and certainly not at a reduced amount.

MBE220d

Small landlords are being made the scapegoat for housing crises for years now, every couple of months there is some new law or regulation brought in while the big REIT's get away without paying any tax, no surprise they can buy up apartment blocks and leave them empty.

You have know it all SF mouthpiece out every day on about renters and their rights, no one ever mentions landlords rights, it's all one way in favour of the tenant.

Claw Hammer

Regardless of profit or not, many small investors have a negative cash flow from the investment. In such circumstances there should be light at the end of the tunnel. Rents edging up, equity increasing over time. This is not happening in many cases and the light at the end of the tunnel is becoming more remote and dimmer.

Geuze

https://www.boards.ie/discussion/comment/117759340#Comment_117759340

I agree 100%.

Many landlords include the capital repayment as a cost/expense.

It is not.

It is saving/building up equity.

Given rents these days, the vast majority of landlords are earning huge rental profits, especially if they have a tracker mortgage.

I am sympathetic with them when I hear the stories of bad tenants, yes, but they are earning large rental profits.

Claw Hammer

https://www.boards.ie/discussion/comment/117766196#Comment_117766196

First of all many are cash flow negative. Secondly many are stuck with RPZ rents which are well below the current asking rents. Throw in the bad tenants and the level of regulation and it should be no surprise many are opting out.

exaisle

https://www.boards.ie/discussion/comment/117763523#Comment_117763523

Precisely what "many allowable deductions" are available?

A Shaved Duck?

https://www.boards.ie/discussion/comment/117766196#Comment_117766196

This is simply false, i already explained we are accidental landlords and we bought in 2006 which means we have been in negative equity for the lifetime of the mortgage.

Barely breaking even on rent in against the mortgage does not cover the losses we will incur when we sell up. Dont be under any illusion that we are making huge profits, but sure continue that the small landlords are the issue narrative if you must.

Successive Irish governments have thrown the small landlord under the bus to cover up their abject failure to address or solve an issue that has been around for decades. When Leo v is asked about the funds buying up entire housing estates and paying little to no tax his first response is to blame sinn fein for not coming up with a solution. This is the same sinn fein that will hammer landlords when they get in, there is no way on earth we are keeping our place and cant sell quick enough.

Flinty997

https://www.boards.ie/discussion/comment/117766196#Comment_117766196

Why if they are making huge profits. Are they leaving the sector.

handlemaster

https://www.boards.ie/discussion/comment/117766196#Comment_117766196

The vast majority are earning are earning huge profits!!! Can you provide any evidence of this ?

MBE220d

https://www.boards.ie/discussion/comment/117766196#Comment_117766196

Not every landlord in the country is getting huge rents, yet they are all tarred with the same brush.

I rent property in the west on average €700/750 pm for a 3 bedroom house I could get more but I am happy with the tenants I have now so it will be left at that.

Now, this is where the government interference in the private rental market comes into play, if I were in an RPZ area I would have been putting the rent up 4% every year but because I'm not I don't feel like I have to. I have one young couple in a house coming up on 4 years with no rent increase and no intention of doing it either until they leave, then I can charge the going rate if I want, my decision not something that I'm forced to do..

dave 27

Just checked Daft and it appears there are only 3 properties to rent in Limerick City, just shows how bad the situation is getting there!

Property to Rent in Limerick City | Daft.ie

MBE220d

https://www.boards.ie/discussion/comment/117767393#Comment_117767393

I bet you there is a lot more but left vacant because people don't want the hassle of renting anymore, all rights for tenants nothing for landlords.

JimmyVik

https://www.boards.ie/discussion/comment/117766963#Comment_117766963

Many landlords like you, who didnt increase to market rent for years because they had a nice tenant were left high and dry overnight when legislation for rent controls were brought in.

The same will happen to you when new legislation comes in faster than you can react to make the entire country an RPZ. Its coming.

So think about the repercussions of that happening.

You will no longer be able to increase rent above inflation.

If your current good tenant moves out, your new tenants will still be on the low rent.

If you go to sell your house, the low rent will be a factor in the price you get for it.

And then there is also the possibility of legislation coming in overnight, or at least before you can get notice to vacate out, that you cannot ask the tenant to leave, ever, including if you want to sell up.

And thats me being optimistic :)

I think any new legislation will be worse than that.

MacDanger

https://www.boards.ie/discussion/comment/117770143#Comment_117770143

"If you go to sell your house, the low rent will be a factor in the price you get for it."

How exactly will prospective bidders have the slightest idea of what rent the seller has been receiving?

agoodpunt

https://www.boards.ie/discussion/comment/117770272#Comment_117770272

You will see there are some adds on daft with the last rent roll and I can assure you investment buyers are asking I can reliablely confirm I am in the market atm agents are been up front it is a factor in the sale price.

If you buy an ex rental leave it vacant for two year and even do a couple of short rentals to students then sell as an rpz with no limits there may be a small profit if the market keeps going up but Int rate may bite u

MacDanger

https://www.boards.ie/discussion/comment/117770423#Comment_117770423

Would you have a link to one of these ads where the rent is mentioned? I'm also in the market and have never seen a single ad mentioning previous rent

agoodpunt

https://www.daft.ie/for-sale/apartment-apartment-40-the-lansdowne-block-pembroke-square-dublin-4/2879768

Ray Palmer

https://www.boards.ie/discussion/comment/117770272#Comment_117770272

Well how do you think the PRTB know? As it is a legal requirement I assume the solicitors have to know so while an estate agent may not advertise in each case they are going to give the information asked as it is part of the sale and the value of the house. They don't want sales falling through and delays cost them money.

If you only point is that the buyer will never know then you missed reality and the requirements of RPZ

JimmyVik

https://www.boards.ie/discussion/comment/117770272#Comment_117770272

Its the law.

Their solicitor will ask.

Its a standard question now.

Has it been rented?

When was the last rent review?

How much was the rent?

You could try lying. Im not sure what the punishment is if you get caught. Maybe there is none.

So if your rent is below market value then immediately your pool of buyers excludes anyone thinking of renting the property.

Geuze

https://www.boards.ie/discussion/comment/117766365#Comment_117766365

It is impossible to be in negative equity for the lifetime of the mortgage.

At some stage, after enough repayments, the mortgage balance will be below the house value. It must happen.

Surely there can't be anybody still in negative equity in Ireland, approx 12 years after the house price falls started?

(Maybe there is a confusion between negative equity and capital loss?)

Geuze

https://www.boards.ie/discussion/comment/117766277#Comment_117766277

Yes, they are cashflow negative, yes.

When I put 500 pm into savings, that is cashflow negative.

But I am building up an asset.

I have full sympathy with landlords regarding bad tenants.

Geuze

https://www.boards.ie/discussion/comment/117766632#Comment_117766632

There has been a large increase in rents over the last ten years.

Costs have not increased as fast.

Therefore rental profits have risen.

Especially if you have a tracker mortgage.

MBE220d

https://www.boards.ie/discussion/comment/117770143#Comment_117770143

I know where your coming from, but have these clowns not seen what happens when you interfere in the private market,

If they make the entire country into an RPZ all it going to do is to increase the rent, the dogs on the street know that, but if that's what they want, so be it.

If one of my tenants moves out tomorrow how does anyone know what rent they pay me, I can rent again for at least another €200/300 pm if I want.

The problem we have nowadays is we have too many smart ass college politicians running the country, who never ran or managed a business in their lives who just keep pandering to another shower of muppets who wouldn't survive a week in the private sector.

mrslancaster

Cousin & her OH had their own places & when they got married they rented hers. They are thinking of selling & EA said its unlikely an investor would be interested based on the rent so only first time buyers, the council or housing agencies would be interested. Probably better for FTB's & social tenants but doesnt it means less houses available for private renters who will have no option but to rent high-priced new build apartments from REITs?

Jmc25

Re the very common line on here of "small landlords being scapegoated for the government's failure to solve the housing crisis and regulation is now excessive."

Let's say the government had properly grasped the housing issue some years ago and we weren't were we are today. Would that landscape be more attractive for small landlords - more importantly, the type of Celtic tiger investor/accidental landlord who have left the market in recent years?

On the one hand, many regulations such as RPZs etc would not have been introduced and the rental market might look a bit more like it did when these people bought second properties in the mid 2000s.

But, in a functioning market you'd have to believe rents significantly less expensive than they are today.

So on the one hand, less regulation, but on the other, significantly less income. I don't believe that scenario would be more attractive to the particular type of landlord who have been leaving the market.

To landlords with a longer term view, yes it might be. But generally speaking, I think the LLs that have left the market entered it under false pretences of making easy money during the Celtic tiger and got stuck in a game they weren't cut out for. Similar story with accidental landlords from that time period.

MacDanger

https://www.boards.ie/discussion/comment/117770633#Comment_117770633

The PRTB know because it's a legal requirement to tell them but that information is not publicly available.

I wasn't aware that there was also a legal requirement to inform a prospective bidder of the previous rent charged?

MacDanger

https://www.boards.ie/discussion/comment/117770902#Comment_117770902

"It's the law"? What is the law?

Ray Palmer

https://www.boards.ie/discussion/comment/117770984#Comment_117770984

Not true and you assume rentals have mortgages. Prsi is now 6% to pay that increase alone rent has to go up over 12% to remain the same monetary value to the landlord. Insurance has also gone up too. Additional charges like LPT along with the RPZ restrictions. For ever €1 additional cost to the landlord the rent must increase by above €2 to remain the same without even considering inflation. You are also ignoring the period where many landlords were renting at a loss and have to recoup those losses.

Basically you haven't done your maths nor paid attention to the increasing costs. As pointed out additional costs means a greater cost to the tenant. The government can easily fool people by adding costs to small landlords and make the public think this is good while they don't notice it will be them paying it not the landlord. It was funny to watch the PRTB charge added to the landlord and the government saying they can't charge the tenant for it. All worked well while rent had dropped and there were plenty of places to rent. The minute rent started going up the tents rent started paying for the charge along with repaying for the loss from years it couldn't be passed on. All predicted and came to pass with people saying they deserve and extra charge. This is the same as people praising landlords leaving the market not seeing how this is bad for them and cheaper rent. Rents will go up as a result and there will be less choice

Ray Palmer

https://www.boards.ie/discussion/comment/117772150#Comment_117772150

You are fully aware that RPZs rules apply to renting a property that is the law. Now if you want to argue that the seller doesn't have to reveal this information how do you think the buyer can comply with the law? Even saying there is no legal requirement to give this information what landlord would buy in a situation where the seller won't say? I am pretty sure if you will go into the full legalities it is there but if not it doesn't matter because it will effect those interested in the purchase meaning less demand and a cheaper price. Your initial issue was how would they know and the point remains it effects the sale price. Do you really think many landlords are going to not want this checked out and check with their solicitors/accountants?

It doesn't matter if it is law and any seller would be foolish not to reveal relevant details to the value of their property to prospective buyer landlord or not.