rent hike!!

cute geoge

Over 3 years I am renting a house for under market rate but the landlord went bankrupt and there is no lease in place .I am paying 500/month while similar houses are making 800+ month .The house was sold at auction and the new owner wants to hike the rent at least 150 .Have I any right to keep the rent low ,the house is not in a rent pressure zone and I am up to date with rent

Dial Hard

I'd say count your blessings that the new owner is willing to let you stay at all. The vast, vast, vast majority of house sales require vacant possession as a condition.

Suck up the increase, I say.

Xander10

https://www.boards.ie/discussion/2058277294/rent-hike

if it's I a rent pressure zone , I would think the max is around €560 they could charge

accensi0n

Based on the info you've provided, they can increase the rent to 800+, count yourself lucky.

elperello

Try to look at it as a glass half full situation.

You have a rent hike but it's only half as much as it could be.

Just in the last year alone you have saved 3,600e compared to the market rental.

You can always look around and size up your options.

SwimClub

I think your new landlord might be asking a similar question here:

https://www.askaboutmoney.com/threads/setting-a-fair-rent.229731/

herbalplants

https://www.boards.ie/discussion/comment/120041921#Comment_120041921

And I can't blame his new landlord asking the question.

OP, you are quite lucky with the rent increase he asked for.

As there is no lease and its outside of the RPZ the landlord is free to do as they like.

It makes sense for the landlord to increase the rent to market values as the government could decide to extend rental controls in the future.

Your only option if you are not happy is to discuss the increase with the landlord and try and negotiate a smaller increase or move to a different location or smaller property thats within your budget. If you can afford the new rent it might be worth starting a new lease where rent increases are defined for the future so you dont face anymore large increases. Best of luck.

Ginger83

https://www.boards.ie/discussion/2058277294/rent-hike

You have had a cheap ride for a few years and with correct notice your rent could be 800+ in a few months if this is the market rate.

The options will be discuss a revised rent, pay the new rent or move.

iniscealtra

You’ve bean very lucky. Count your blessings. As its not in a rent pressure zone the landlord is just adjusting to market rate or maybe below it. What is the average rent for a house of that sise and quality in your area?

SwimClub

Lets take the 125k purchase price as an investment.

Rent is currently 6k a year, subtract some reasonable expenses, maybe 1200 per annum maybe over 2000 if there's a service charge involved.

Take the lower amount that leaves 4800, 52% income tax leaves around 2.4k a year of income.

Stick the 125k in a 2.5% savings deposit account, 2% after DIRT that's 2.5k a year of interest income.

Putting the money in an apartment means you can't get it back if needed (liquidity risk), there is a risk of non-paid rent for up to 3 years, then you have house price risk (property prices here are still way below what they were 15 years ago adjusted for inflation) and regulatory risk (forced to sell the place at a discount with tenants in situe).

Even at market rent of 800 it isn't appealing as an investment.

Mongfinder General

€800 a month for a house? Where are you living? Ukraine?

Donald Trump

https://www.boards.ie/discussion/comment/120043528#Comment_120043528

Can you give us a link for these 2.5% interest savings deposit accounts please? Euro denominated of course

(DIRT is 33% too btw)

Donald Trump

https://www.boards.ie/discussion/comment/120043543#Comment_120043543

Even worse I'd say. Probably Roscommon

whippet

https://www.boards.ie/discussion/comment/120043528#Comment_120043528

not totally dismissing your investment rational - you haven't accounted for any potential capital increase in the value of the property over the lifetime of the investment. Unfortunately there are boom and bust cycles and this can skew any forcasts to back up any opinion. However, if timed correctly a capital appreciation of 10-20% is easily achievable over the lifetime of the investment.

SwimClub

https://www.boards.ie/discussion/comment/120043641#Comment_120043641

I did account for it, the real return is negative over the last 15 years on Irish property, we are still waiting for prices to recover in nominal never mind real terms after the last crash.

The fact that there are boom and bust cycles just highlights that property here shouldn't be a low yield investment, Ireland is a tiny economy subject to massive risks, not least of which is political risk around property ownership at the moment.

Even if you add 1 or 2% per annum in capital appreciation to keep in line with inflation long term, it doesn't change the picture much in terms of the huge risks involved in Irish property, that's just negligible compensation if you are looking at being in the hole for 95-100k due to unpaying tenants and legal fees over 3 years as recently reported or losing 50% of the property value in a property crash, or 20-30% if they bring in forced selling with tenants in situe etc.

Massive downside risk and limited upside return capped by rent controls etc., if you can even sell to get your return out without a ban on selling being in place.

Q&A

https://www.boards.ie/discussion/comment/120043557#Comment_120043557

https://www.raisin.ie/savings-accounts/deposit-accounts/

Donald Trump

https://www.boards.ie/discussion/comment/120043687#Comment_120043687

What is this ban on selling you keep referring to? Is this something you believe is in place, or something you think could be put in place.

The Spider

Stop acting the eejit, you know well the eviction ban is effectively a ban on selling, no matter how you dance around it, or pretend that you can sell with tenants in situ (you can’t),

So c’mon enough of the nonsense you and everyone else knows you can’t sell a property with tenants, eviction ban means you can’t remove tenants therefore you can’t sell.

tom1ie

https://www.boards.ie/discussion/comment/120043687#Comment_120043687

Quick question- what would you recommend investing money in if not a buy to let? I know the government is making a balls of the rental market by persecuting landlords but isn’t there CGT of 33% on investment profit and then tax on the original amount you earned to invest in the market?

Seems very hard to make any extra investment profit in Ireland bar pay down your mortgage debt!

DataDude

https://www.boards.ie/discussion/comment/120043687#Comment_120043687

You’re cherry picking the very peak of the most almightiest property boom in history as your starting point there.

You could just as easily pick a 10 year time horizon and say that there has been a 135% capital gain over that period along with current gross rental yields running at over 20% of the initial investment.

Irish property has provided a ludicrously good (unsustainably so) return over the last decade.

SwimClub

https://www.boards.ie/discussion/comment/120045216#Comment_120045216

Paying down the mortgage depends on what rate you are on as to whether it makes sense, might make more sense now than in recent years.

I'm fixed very long term at a rate that is around the deposit rates you can get now so it doesn't make much sense to overpay, I'm also limited in terms of how much I can overpay also annually.

The first thing everyone should probably look at, is maxing pension contributions/AVC's, because the tax exemption on those is huge when you are paying the higher rate of tax and gives you the biggest bang for your investment buck.

REITs would give you a similar investment yield to a buy to let property but without the massive risk and hassle of owning a single property, e.g. the IRES REIT is an Irish residential one. Get the tax advantages the REIT gets instead of getting heavily taxed as an individual landlord.

Other than that investment advice is individual and depends on your specific circumstances it's worth talking to an advisor, normally these things are money well spent, an independent one rather than someone trying to hawk their products on high commission.

SwimClub

https://www.boards.ie/discussion/comment/120045402#Comment_120045402

My point was that the Irish property market is extremely volatile, pointing out a negative yield over 15 years is not cherry picking, it's just evidence of that. You can pick a recent 10 year period with 135% returns, that is also crazy volatility and just proves the point. The average return isn't much over inflation if it even beats it, massive volatility and low long term yields. Now maybe that has changed maybe it hasn't, it's high risk and investors demand high return for high risk or they sell up, which is what we are seeing.

DataDude

https://www.boards.ie/discussion/comment/120045448#Comment_120045448

Irish property has had about 5 negative nominal return years in the last 50 odd years. It’s been far less volatile than equities and has offered an insane yield pick-up in excess of the risk free rate for the last number of years in particular (8%+ yield vs a negative risk free rate) hence capital from all over the globe has been pouring into Irish Property until 2022. Granted that has shifted lately due to rising risk free rates.

I worked in a global investment firm a few years back and the portfolio optimisation tools (unconstrained by liquidity rules etc) at one stage were advising 100% investment in Irish property as the expected return relative to the standard deviation of returns blew every other asset class out of the water.

SwimClub

https://www.boards.ie/discussion/comment/120045494#Comment_120045494

And yet real return is negative over the last 15 years, what a conundrum.......unless you are familiar with something called crash risk!

SwimClub

https://www.boards.ie/discussion/comment/120045494#Comment_120045494

Your portfolio optimiser obviously must have been mean variance only, ignoring the massive negative skewness in Irish property.

Mean variance optimisers will do stupid things like 100% concentrated corner case allocations, it might be fine when you are playing with other people's money for a commission but when investing your own it's wise to take crash risk into account.

DataDude

https://www.boards.ie/discussion/comment/120046191#Comment_120046191

Compare the worsy single year & max drawdown of Irish Property vs Irish Equities and you’ll see the ‘crash’ was exponentially worse in equities than property during the financial crisis. Anyway, we’re derailing the intended purpose of the thread.

SwimClub

https://www.boards.ie/discussion/comment/120046665#Comment_120046665

I don't know why you are comparing to Irish equities, whether Irish equities are better or worse is a red herring, people can invest in global equity indices. I didn't pick the timeframe below, it's set to the max on globalproperty.com. If you think we are guaranteed not to get another dip that A. takes years to reach it's low point and B. years to recover from again in the future such that real returns are negative over a 15 year period (and you want to project forward the upward trend from 2013 only, ignoring the risk of a massive recession in the future) then I would argue you are being overly optimistic. I think most irish property investors are pricing in the possibility of another large dip that could take the order of decades to recover from in any investment decisions and that is a rational thing to do.