exodus of small investors from the Irish rental sector has reduced the number of available tenancies

Claw Hammer

https://www.irishtimes.com/business/economy/exodus-of-small-investors-shrinks-rental-stock-by-22-000-in-five-years-1.4705034

It doesn't look as if this trend will reverse any time soon. I notice a lot of apartments for sale and it seems many of them are ex rentals.

Muahahaha

Question is where will they end up. Anecdotal I know but a friend sold an apartment in Swords recently- there was 3 bidders comprised of one couple and two investment funds. The funds drove the price beyond their expectations and could easily outbid the couple. I was surprised myself that funds are buying individual units but I guess with their sweetheart tax deal the rental income is pure gravy for them whereas the tax situation for a small investor is crippling.

Sierra Oscar

Around half a dozen or so apartments in my development have gone up for sale over the last year, small landlords getting out and the local authorities have outbid everyone and handed them to Approved Housing Bodies. This is how the Dublin Local Authorities are delivering on their housing targets. It's a complete policy failure considering they're not actually adding to the housing stock and are just making the situation worse for private renters who are not eligible for HAP. At the same time they're also driving up the cost of housing by paying over the odds for units. Some ridiclous prices are being paid by Local Authorities for apartments. I think it will end up being a scandal when someone looks into the figures.

rob316

2 reasons, the value of the properties are at the peak of inflated prices so great time to sell. The other is its like the wild wild west in the rental market, desperately needs regulation.

MacronvFrugals

Was driving through Cabra the other day and seen a massive new development which looks to be not far off ready, upon further reading this seems to be a new BTR complex of around 450 apartments, there is countless sites like this around the city which will be coming on stream over the next 12-15 months.

If you're shelling out for the exorbitant rent it may aswell be from a professional REIT than a small time landlord imo

https://www.boards.ie/discussion/comment/118049103#Comment_118049103

More regulation?

JimmyVik

I wonder if anyone looked at what happened in other places where rent controls were brought in before bringing them in in Ireland.

Doubt it or they would have been able to tell the future.

I didnt think you could get worse than the previous ministers for housing but the one we have now is shocking. he just dopesnt have a notion what he is doing.

https://www.boards.ie/discussion/comment/118049156#Comment_118049156

Are you sure it's not the big social housing apartment development?

Along carnlough road

Edit, scrap that, just read about it, I was sure it was social housing! It probably will be anyway.

surrender monkey

https://www.boards.ie/discussion/comment/118049088#Comment_118049088

Work in a local authority and can confirm, what is going is nothing short of a scandal. Still the public demanded an end to the homeless crisis and this is how it's being dealt with. People complain about the institutional investors but the Housing bodies are at exactly the same thing. The government is paying huge rents each month to the AHB's for every unit they deliver. There will be a tribunal about this some day when it all comes out in the wash. I say it time and again in work, the housing crisis isn't only about social housing, young couples trying to provide their own starter homes are equally as important if not more so than people on the social housing lists.

mrslancaster

https://www.boards.ie/discussion/comment/118049103#Comment_118049103

The problem seems to be that any more regulation may push more small landlords to sell up which reduces the supply even more.

There's a lot of discussion about long term rentals and how many renters want that option. Is it not possible for the government to bring in some legislation that incentivises private landlords to provide 8/10/15/20 years fixed term tenancy contracts? If that's what renters want, why not encourage landlords to provide it instead of pushing them out which is what they are doing now.

It would seem to be a good option for landlords who buy investment properties, ie, they are assured of long-stay tenants which means they don't have regular turnover of tenants or months when their properties are empty. It seems it would be good for tenants to have certainity about where they live for a fixed number of years.

If it's not a long-term fixed lease then no incentives apply. It can't be beyond the imagination of the smart people in Revenue or Dept of Finance to come up with some scheme.

DubCount

https://www.boards.ie/discussion/comment/118049582#Comment_118049582

Its not about incentives. Long leases are easy to enforce on the Landlord, but difficult to enforce on tenants. How do you stop a tenant signing up to a 10 year lease and then walking away after 10 months? Thats why landlords dont want them.

listermint

https://www.boards.ie/discussion/comment/118049582#Comment_118049582

It's absolutely peak market right now. Small landlords are selling because of that. Huge return. They may then come in a few years and buy back when market falls. It's common sense for someone who knows what theyre doing.

JimmyVik

https://www.boards.ie/discussion/comment/118049576#Comment_118049576

This is how they shift the burden of the housing crisis not just onto the private landlord, but then on to the tax payer, and doubly onto the tax payer who is bidding for a house to live in.

Middle income Ireland being rode for all they are worth yet again.

Del2005

https://www.boards.ie/discussion/comment/118049156#Comment_118049156

Yes guaranteed rent increases every year and rigid rules. The REITs are leaving properties empty instead of reducing the rents.

People wanted professional landlords and now we have them they are complaining about the professionals buying up properties and keeping prices high. Wait till they drive the last of the small landlords out and see how soon they start lobbying for more favorable laws for landlords.

C14N

I don't really understand why people think small landlords are such a necessary group that they really need protecting in any way. Economically, I just don't see the case for small landlords, because for the services landlords are expected to do (maintenance, upkeep, repairs etc.) it is so much easier to provide them effectively at a large scale than a small scale.

jbv

There's a theory.

Behind the Investment Funds are the politicians. Most of the people will qualify for HAP. They own a lot of properties that can be kept unoccupied to keep the rents high because of the lack of supply. The rent is going up, the state is paying them indirectly the high rent through HAP. Small landlords can't afford to keep a place empty for too long, as mortgage needs to be paid. There's no competition from genuine buyers vs investment funds in buying properties.

Investments funds are the BIG winners.

Tax payers are the losers here.

DubCount

https://www.boards.ie/discussion/comment/118052637#Comment_118052637

That works fine for larger cities like Dublin, Cork, Limerick and Galway. There is enough of a rental market to make managing an entire apartment block sensible for large "professional" landlords. They get great economies of scale for maintenance etc., and they have a large pool of tenants moving into and out of the area. What happens if you want to rent outside of those areas? What happens if you want to rent a house in stead of an apartment?

I dont agree with incentives for small landlords either as it happens. Although providing a workable system for dealing with anti-social, non-paying or overholding tenants would be beneficial to the entire market (big and small landlords). With a pool of existing small landlords already in place, I dont get the desire to kill off the sector when anything that replaces them will not fill all the gaps.

Bass Reeves

https://www.boards.ie/discussion/comment/118052637#Comment_118052637

Everything shows that larger operations have larger operating costs. Smaller landlords carry out a certain amount of work and themselves. Cleaning and painting when a house between tenancies when a house is relet. Minor plumbing and other repairs. Economies of scale never account for that. Where larger operations have an edge is longterm in there willingness to consider breach of contract and following tents( such as students and there parents where they co-sign) for damage. There will be a hullabaloo then as well as all co- tenents may be responsible and end up paying the majority of the costs.

Claw Hammer

https://www.boards.ie/discussion/comment/118052637#Comment_118052637

What the big operators do is concentrate on specific sectors of the market such as high end apartments or, in social schemes on very favourable terms. the middle of the road tenant not being a welfare recipient or a high earning professional is suffering as they are almost exclusively dependant on the small operator.

C14N

https://www.boards.ie/discussion/comment/118053450#Comment_118053450

What is this "everything" that shows this? It doesn't make any logical sense to me. A bigger landlord can run an apartment block and bulk-purchase things like paint, flooring, appliances, furniture etc. and then even have more of the same in reserve for when they need to be replaced. This also means their handyman only needs to know how to fix one type of each of these appliances too. Compared to a landlord with one or two apartments who has to do everything piecemeal, this is a much more efficient system.

I've rented in a big block from a major landlord and did find this to generally be true. If there was a problem with something, they'd have someone who was on call out quickly to fix it, no questions asked. If I needed something replaced (like my hob in one case) they're up and have it done the next day, it was clear they didn't even have to wait to order one in, and they didn't give any hassle about it because it's a pretty trivial expense at such a big scale. From the experience of both myself and other friends who rented off smaller landlords, you can get a sound one who will try to get the job done quickly, but you can just as easily get someone who will slouch and fight it, and either way they just aren't as quick.

https://www.boards.ie/discussion/comment/118053582#Comment_118053582

I don't think that's always true. When I was renting previously from a big operator it was fairly expensive, but so were most things, and it wasn't luxurious. It was well kept enough and reasonably modern, but the fittings and finishings were not high-end. I don't know how everyone around was paying for their own rent but I never thought the place was dominated by council placements or HAP. If you take any given apartment or house for rent, I don't really see how it being operated by a small landlord instead of a big one really makes it any more suitable for the middle of the road tenant.

JimmyVik

https://www.boards.ie/discussion/comment/118053295#Comment_118053295

Reits etc dont tend to go for houses, though ive heard a few stories on that happening.

I reckon they are few and far between though.

All people will be able to rent are apartments at massive prices.

Ray Palmer

https://www.boards.ie/discussion/comment/118052637#Comment_118052637

Up until very recently they were the only group providing rental accommodation. How much maintenance and repair do you think a house needs that you have to have a team waiting to do repairs?

Given that an industry provided a service for decades and the government then let large organisations in with less tax to destroy the indigenous suppliers would you object? That is what is going on here letting large international companies come in and take the money out of the country. Small landlords pay tax the big companies don't. It is like an invasion as they buy up property.

There is a huge imbalance on tenant and landlord rights which want the government to bring in more restrictions to make it only viable for large landlords so they can allow big companies deal with lack of state provided accommodation. Ultimately it means the Irish people will be fleeced. The big problem is the general public can't see it as you have illustrated it

Claw Hammer

https://www.boards.ie/discussion/comment/118053715#Comment_118053715

Generally the big operators stay out of that level of the market. The high calibre tenants won't have it and it ends up being occupied by troublemakers.

The big operators are putting all the HAP etc in in building, not spacing them around.

C14N

https://www.boards.ie/discussion/comment/118053825#Comment_118053825

As I said, I've called in for plenty of things to get fixed or replaced while I've been renting. It doesn't have to happen that often, the main thing is that when it does happen, it's done quickly and easily, and it has.

If an industry was providing a service and doing a less effective job at it, I'd be plenty happy to let in more competitors who could do it better. It's a free market, you should have to compete with others, and if they can do it better then they should. I don't believe in giving another provider brownie points because they got there first. If I did I'd never shop in Lidl or Aldi, or get my electricity from anyone but Electric Ireland.

I don't think taxes should be applied preferentially to anyone, because that distorts the market, but that's an issue with taxes, not with the landlords themselves.

Ray Palmer

https://www.boards.ie/discussion/comment/118054101#Comment_118054101

Do you understand the vast majority of rental property is from small landlords?

How would you define less effective where it is made cheaper via tax to run property maintenance? People have also pointed out vacant property of large orgainsations. Effective for them to keep making money but not in providing property to people. That is not competition

Bass Reeves

https://www.boards.ie/discussion/comment/118053715#Comment_118053715

There are two element to services, materials and labour. In general large operations may seem to have the advantage but they seldom have costs controls in place until there ability to extract there costs from the market is outside there control. Your assumption that any REIT or rental providers carries a stock of materials is flawed. In general they will have a contractor in place who will service there requirements. In the case of a hob or oven needing replacement they will contact there electrician who will have quoted them a prices for such a job. He will collect the appliance from a supplier and go away and fit it. At the end of the months he will invoice for his time and materials. Some jobs will have set labour fees such as appliances. Some will be on time and materials. However there costs will always be higher than a smaller operator. Its the same in any industry, whether it building, motor repairs or or trades suppliers.

Yes in the area of retail there are advantages of size. In general this gives you the economy of scale to buy cheap and mass sell products. It grand for selling everyday item. However economies of scale do not apply in most other area's where all larger companies do is add there margins to there costs.

Tallaght_Sale

I would have rented my house but I was too afraid of the crippling laws that would have left me completely vunerable. So instead of a couple/family having a place to rent in that will realistically be available for nearly forever as I have moved elsewhere it will now go up for sale probably to an investment firm who can actually work around the law.

Crazy

Del2005

https://www.boards.ie/discussion/comment/118054101#Comment_118054101

The problem is the taxes. For a small landlord to cover a mortgage of €1,000 per month they need to charge nearly €2,000 as they are taxed at their marginal rate. A REIT doesn't pay tax yet it's still charging €2000 per month for apartments and they are willing to leave them empty. If you want competition and a free market you can't give massive advantages to one segment. Do you think the REITs would be buying up whole developments if they had to pay tax at ~50% on the rent?

Viscount Aggro

The problem is, small time landlords who borrowed to buy property to let out.

In investment rules, thats a no-no. You never borrow money to invest.

https://www.boards.ie/discussion/comment/118053719#Comment_118053719

Yes, they do. They are hoovering up properties(including my former house and houses in the same estate) which are suitable for renting to the local authorities on long term leases. If it is suitable, they'll be bidding.

JimmyVik

https://www.boards.ie/discussion/comment/118065479#Comment_118065479

Not as much as apartments though and definitley they wont be hoovering up rural houses to any great extent.

Pete_Cavan

Any existing small LL will have bought their properties at past prices (possibly decades ago). The cost of owning the property wont have changed much but they will be benefitting from the current high rents. I'd say those selling up are mostly those who covered most/all of the cost of the property and are getting a massive windfall due to high selling prices. The existence of REITs hasn't really changed much for the small LL, certainly not in terms of their costs. Some even claim the REITs have increased rents. It may prevent them acquiring more properties but given the complaints here about tax, that is unlikely anyway.

Despite what some have said, there are obvious economy of scale benefits to owning and operating a large number of units, particularly apartments. Maintenance costs and replacements are built in to the overall project. Assets are depreciated and written off over time. They also get better prices on appliances as part of an overall FM system than someone buying a single item.

I know this won't be a popular here but those exodusing are doing so because it is beneficial to them, it's not something to be lamented. They are not being driven out, rather opportunistically leaving at a good time (as is their right and likely a good business decision). If the small LL was so worried about tenants then they could remain in the game. It seems more like small LLs are angling for a tax break and if not they sell up, either way they win.

Bass Reeves

https://www.boards.ie/discussion/comment/118073153#Comment_118073153

Correct its even unlikely that the larger corporate REIT's will operate much outside Dublin and Cork

https://www.boards.ie/discussion/comment/118073153#Comment_118073153

What they hoover up depends on what the local authority has signalled to them that they are willing to long term lease off them.

Bass Reeves

https://www.boards.ie/discussion/comment/118073406#Comment_118073406

Incorrect, they are depending on a high property price who's yield can allow them an ability to get a return and cover there excessive costs. This idea that the savings that they might make on appliances will make a significant saving that allows them reduc d there costs versus smaller LK's is a F@@king delusion.

The government has indicated that LA will now stop leasing from Private entityand individuals. Therefore REIT's will depend on the private market. This means that they will need returns of 2k/ month to be able to generate enought income to cover costs

No you are mistaken. My former property was bought for 210,000 by one of these companies. Set a high water mark for the estate and the property beside it was bought for roughly the same amount by another one. I looked them up on land registry. They were bought piece meal, not in blocks.

They were being bought for the leasing to the local Authority.

The investment vehicles aren't choosey as to what they are buying as long as they can currently be rented and a market value for that asset made reckonable off the income that it can generate. They have small investors buying in to the housing funds. What separates these funds from junk bonds remains to be seen. They have value so long as the properties are showing as being rentable.

Are you scared yet?

Have you a link to that change in Government/LA policy? Have the LAs bought that many properties recently?

lawrencesummers

There is another side to this story, it might not be many people but a few fall into this:

Accidental of reluctant landlords exiting because the value of the property has for the first time in a decade brought them out of negative equity, or back to the original high price that was initially paid and they can cut their losses and not have to pay over half the rent in tax.

if they are lucky come out with a few quid to clear a loan or make a payment off their primary home. Any profits are subject to CGT so the gov get their pound of flesh as well.

Not every landlord is wealthy, many are just ordinary people working ordinary jobs trying to live.

JimmyVik

https://www.boards.ie/discussion/comment/118073488#Comment_118073488

It wasnt Bellevue Property Investments was it?

I found out that was who bought my house. It was all very cloak and dagger and done through their solicitor.

Davy Property ICAV investment vehicle.

Another by allied Irish Properties.

These may not be top tier REIT but they are operating matching "money" with "investment opportunities".

When the tide goes out we will see who was swimming naked. Some may be better than others.

Claw Hammer

https://www.boards.ie/discussion/comment/118073275#Comment_118073275

The cost of ownership has risen from decades ago. Maintenance costs are higher, insurance is higher and there are more regulations to be complied with as well as registration fees. Taxes on rents are higher as well. Those who had PAYE income did not have to pay PRSI and one time and many also had S23 allowances.

Many are also rent capped and can't avail of the current high rents.

People are getting out because they are sick of it. This is perfectly normal. There are always people who try being a landlord and find that they are not temperamentally suited to it. The real problem is that people who leave are not being replaced. At a time of record low interest rates, having a residential investment should be a no-brainer for a lot of people but in the current environment they prefer to leave the money in the Post Office.

Pete_Cavan

https://www.boards.ie/discussion/comment/118073936#Comment_118073936

Of course some costs have risen over time, that is pretty standard in every business. People may be getting out because they are sick of it but also because the current prices which can be achieved by selling make it more attractive. The properties are either bought by occupiers or those who will let them out again so there isn't a negative impact on the overall property market (properties removed from rental are put up for sale which is also under supplied).

The cost of buying, as well as the lack of financing for buy to let properties means there are very few new small LLs. I don't really see the negative in the shift from small LL to large funds. The funds are actually building units which increases the supply. Small LL would be competing with occupiers and I see no longer having that as a positive. Yes there are issues around funds and the tax they pay but these really need to be addressed after they have built enough units, not before which would act as a disincentive to develop.

Bass Reeves

https://www.boards.ie/discussion/comment/118073488#Comment_118073488

Your property was purchased for direct leasing to a LA. LA are stopping this practice at present. You also made my point that they are not buying one off properties to rent. This will mean that outside of large urban centers you will still be dependent on smaller scale LL's

https://www.boards.ie/discussion/comment/118073489#Comment_118073489

It has been discussed on the 2021 property thread. Some LA are already stopping long leases from LL's. Meath has stopped completely according to one poster and some Dublin LA has stopped taking apartments which was there mainstay.

https://www.boards.ie/discussion/comment/118077613#Comment_118077613

They bought one property. Another investment vehicle bought another property. How did you misunderstand that?

Bass Reeves

https://www.boards.ie/discussion/comment/118077629#Comment_118077629

I did not what I posted was that the practicing is stopping. They purchased them from direct leasing to a LA. They will not buy them to lease to Johnny that is working in the meat plant in Rathkeale or Mary that has a job in the Kerry Co-op plant in Listowel unless it is through a LA longterm lease.

I do not know what part of that you do not get. REITS will only operate in areas where there are high gross rents or where they are gauranteed long LA leases

The rest of the country is dependyon smaller LL with 2-3 properties.

You really aren't getting the point. There is money to buy through property investment funds of which some aren't top tier REITs. I make reference to junk bonds and while I'm not yet calling them equivalent to junk bonds they might be soon.

Most people look at the movie "The Big Short" and think that mustn't be allowed happen again. The sociopaths in the audience look it and think "They made out like bandits and got away without consequences. I want some of that.".

I was aware for quite a while that from 22 no more long term leases were to be entered in to and I believe I mentioned it here on the forum but I'm not going to trawl my old posts. Personally, I'll believe it when I see it as the Government still needs to keep housing provision off the books and recorded as current spending. They'll find another way to work around it because they simply can't provide enough social housing to meet demand.

cruizer101

Dublin Council seeking exemption from plan to end end long term leasing so could well be with us for a good while more

https://www.irishtimes.com/news/social-affairs/dublin-council-to-seek-exemption-from-plan-to-end-long-term-leasing-of-social-housing-1.4711199

JimmyVik

https://www.boards.ie/discussion/comment/118079099#Comment_118079099

Maybe they could seek an end to the difference in taxation between normal landlords and REITs.

Claw Hammer

https://www.boards.ie/discussion/comment/118074105#Comment_118074105

Rented properties tend to be used less efficiently, as in having fewer occupants than owner occupied. The result of rental units being sold off to owner occupiers means there is less accommodation available generally. Having a tihght supply drives up rents which mitigates against renters being able to buy eventually.

the funds are the only players who can build at the moment. It doesn't mean that this should continue. The funds are generally only interested in specific sectors and also trying to get the highest possible rent.

Pete_Cavan

https://www.boards.ie/discussion/comment/118079575#Comment_118079575

It may have been the case historically (although I'dalso query that) but I seriously doubt rented units are used less efficiently than owner occupiedunits now.

I know plenty of individuals and childless couples who own two/three bedroom units. There's also lots of empty nesters out there with permanently empty bedrooms. I also know plenty of pairs/groups of individuals renting properties and every bedroom is occupied, it has to be to cover the rent. Very few families can afford to rent a property with an additional occasionally used bedroom.

Claw Hammer

https://www.boards.ie/discussion/comment/118079778#Comment_118079778

I meant the opposite. Rented units are used more efficiently. The more which leave they system the worse it gets for the remaining renters.