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Irish Property Market 2020 Part 2

Graham

Continued from here:

https://www.boards.ie/vbulletin/showthread.php?t=2058041687

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handlemaster

brisan wrote: »

So people who do not own property pay the property tax.
I know that the landlord just adds the property tax to the rent ,but a tenant paying his landlords property tax would not go down well with a lot of people.
If the landlord reduced the rent accordingly then fair enough but it would be a cold day in hell for that to happen

You might want to read up on the tax norms in other countries. Its quiet normal for tenants and landlords to both pay tax for the same property. Like a habitation tax for the tenant and then a more formal property if you like for the landlord.

PropQueries

handlemaster wrote: »

Property was only and issue with a few countries it wasn't a real concern for the European Union mandate . The Germans and French the two big drivers from the eu and ultimately its policy couldn't give a monkeys about property prices. Its the irish who messed up there. You won't find the same property centric mentality on the continent.

You're right. It was a debate we had here a while back regarding future interest rate movements and their impact on Irish property values. Some posters believed we were all in the same boat and the ECB would continue to print money and keep interest rates low.

I disagreed and based on the relatively low levels of debt and good economies in most other eurozone countries, I believed interest rates will rise sooner rather than later.

But it does appear that the low interest rates up to now were a de-facto bailout of the countries most impacted by the property bubble. I believe the ECB will very soon leave us to make ends meet and start raising interest rates with a subsequent very negative impact on Irish residential property prices.

There was no reason for the ECB to lower interest rates to zero as only 5 or 6 countries in the eurozone had a debt problem. But, they did. Germany did gain from a lower valued euro but they're now seeing the impact on their pension industry, so they're most likely to change their tune a lot sooner than people realise.

Here's the list of eurozone countries with the biggest property price falls from peak to trough:

Ireland: -50.8%
Estonia: -47.4%
Greece: -42.9%
Spain: -41.7%
Netherlands: -30.4%
Slovenia: -27.9%
Italy: -25.4%
Lativa: -17.6%
Portugal: -13.9%

I put some numbers into a mortgage repayment calculator. As you can see below, if a couple that is approved for a maximum €300,000 mortgage and buys today, a similar couple with a similar repayment capacity would only be approved for a mortgage of €200,000 in 5 years time if mortgage interest rates did increase by 3%. This doesn't impact the buyer today but it does impact them if they wish to sell in 5 years times as most similar potential buyers with a similar repayment capacity would be approved for a significantly lower value mortgage. If interest rates rise, it will have a very very negative impact on Irish residential house prices.

Monthly repayments on a typical 30-year mortgage of €300,000 at 3% = €1,264.81

Monthly repayments on a typical 30-year mortgage of €200,000 at 6% = €1,199.10

As you said, the ECB shouldn't care about our property problems. I agree and that's why I think interest rates will rise a lot sooner than most people seem to believe.

brisan

handlemaster wrote: »

You might want to read up on the tax norms in other countries. Its quiet normal for tenants and landlords to both pay tax for the same property. Like a habitation tax for the tenant and then a more formal property if you like for the landlord.

Yes but other countries have that as part of a larger package of rights and obligations for tenants and landlords.
The rental sector in these areas are much more regulated and fairer to both landlords and tenants.
You cant just cherry pick out what suits.
I was a landlord both with my wife ( 3 properties ) and my brothers and in the main we had great tenants,but we heard some horror stories about landlords.
I know one landlord with 6 properties in one block and he is a right prick.

CertifiedSimp

handlemaster wrote: »

You might want to read up on the tax norms in other countries. Its quiet normal for tenants and landlords to both pay tax for the same property. Like a habitation tax for the tenant and then a more formal property if you like for the landlord.

Hardly comparable when it's in their culture to rent for life.

And hardly fair when there's an insane supply squeeze driving prices to mad levels.

Hubertj

CertifiedSimp wrote: »

Hardly comparable when it's in their culture to rent for life.

And hardly fair when there's an insane supply squeeze driving prices to mad levels.

In many other countries I believe the tax and regulations/laws around rental income are also stable which gives more certainty to landlords. And for tenants they get longer term leases and certainty of what their rent will be.
From reading on here ireland seems to be a basket case

brisan

Hubertj wrote: »

In many other countries I believe the tax and regulations/laws around rental income are also stable which gives more certainty to landlords. And for tenants they get longer term leases and certainty of what their rent will be.
From reading on here ireland seems to be a basket case

From my limited reading of the conditions in the rental market in Europe it seems that landlords in Europe want to make a living from renting out property.
Irish landlords on the other hand want to make a killing

fliball123

brisan wrote: »

From my limited reading of the conditions in the rental market in Europe it seems that landlords in Europe want to make a living from renting out property.
Irish landlords on the other hand want to make a killing

ah you cant say that about a lot of landlords remember most or any who are working will have to pay 51% back to the state straight away on tax and if they have a mortgage on it then they are getting little or nothing back from the rent

brisan

fliball123 wrote: »

ah you cant say that about a lot of landlords remember most or any who are working will have to pay 51% back to the state straight away on tax and if they have a mortgage on it then they are getting little or nothing back from the rent

I keep hearing about landlords not making money on a rental property.
If your business is not making money then sell up and do something else.
As I said I was a landlord by choice and all my properties washed their face and a bit more,otherwise why bother.
Seemingly landlords are leaving the business in their droves because they cant make money,if that's the case then at least those that are are facing up to reality
As to those who bought investment properties and are now in negative equity,every Investment advert reminds you that the value of your investment can fall as well as rise , and when you sign a mortgage agreement it states that you are at risk of losing the property if you fail to make repayments.
People will have to start taking responsibility for their actions and admit they made a mistake and suffer the consequences

fliball123

brisan wrote: »

I keep hearing about landlords not making money on a rental property.
If your business is not making money then sell up and do something else.
As I said I was a landlord by choice and all my properties washed their face and a bit more,otherwise why bother.
Seemingly landlords are leaving the business in their droves because they cant make money,if that's the case then at least those that are are facing up to reality
As to those who bought investment properties and are now in negative equity,every Investment advert reminds you that the value of your investment can fall as well as rise , and when you sign a mortgage agreement it states that you are at risk of losing the property if you fail to make repayments.
People will have to start taking responsibility for their actions and admit they made a mistake and suffer the consequences

Well you could have someone paying the mortgage or partially paying the mortgage for you and in 5 or 6 years you will have built up a fair bit of equity or you can keep going and paying it till the mortgage is gone and when you retire you will be able to keep most of the rent as you wont be paying much in tax and the mortgage is gone so its a good option for a pension and more secure than putting it into a pension pot that is at the mercy of markets and the government raids.

brisan

fliball123 wrote: »

Well you could have someone paying the mortgage or partially paying the mortgage for you and in 5 or 6 years you will have built up a fair bit of equity or you can keep going and paying it till the mortgage is gone and when you retire you will be able to keep most of the rent as you wont be paying much in tax and the mortgage is gone so its a good option for a pension and more secure than putting it into a pension pot that is at the mercy of markets and the government raids.

Exactly
And if you plan to do this and it does not work as you planned then thats a risk you take.
We sold our rental properties to open a business for my wife and to cut down on the hassle
Pension was not an issue .original plan was stepping stone for our kids

fliball123

brisan wrote: »

Exactly
And if you plan to do this and it does not work as you planned then thats a risk you take.
We sold our rental properties to open a business for my wife and to cut down on the hassle
Pension was not an issue .original plan was stepping stone for our kids

Well you go your way and others go theirs I mean you opened a business I wouldn't take that risk in my opinion that is a hell of a lot more risky than property but like I say everyone has their own plan. Then the other thing is after someone else pays the mortgage for you and after you gain when you retire from the rent to subsidize your state pension you leave your kids a substantial asset regardless of if prices go up or down your kids will get a nice tidy sum when you pass. I would rather control my own pension plan via property than give it to some wanna be wall street wiz kid not to mention the fact that the government raided private pensions before why would you put money into a black hole where the government can just take it on you.

Just out of interest what business did you open and how are you getting on through Corona?

PropQueries

Interesting Q&A article in today's Irish Times. It provides a good explanation of the fair deal scheme and it's impact on property assets.

I suppose the question is, given the state of the government finances over the next few years, will they attempt a further raid on pensioners assets to help meet their home care costs?

The Irish Times Q&A article is here: https://www.irishtimes.com/business/personal-finance/nursing-home-charges-could-leave-me-homeless-1.4342884

brisan

fliball123 wrote: »

Well you go your way and others go theirs I mean you opened a business I wouldn't take that risk in my opinion that is a hell of a lot more risky than property but like I say everyone has their own plan. Then the other thing is after someone else pays the mortgage for you and after you gain when you retire from the rent to subsidize your state pension you leave your kids a substantial asset regardless of if prices go up or down your kids will get a nice tidy sum when you pass. I would rather control my own pension plan via property than give it to some wanna be wall street wiz kid not to mention the fact that the government raided private pensions before why would you put money into a black hole where the government can just take it on you.

Just out of interest what business did you open and how are you getting on through Corona?

My wife opened a hair and beauty business about 10 years ago
We knew it was a risk so we set it up debt free .
Bought the premises for cash and set it up debt free.
She is now a silent partner in the business but still owns the premises
They were left with no option but to put all employees on PUP .
However since the lifting of restrictions after the initial surge business is back to about 90% of normal while costs have risen slightly due to PPE ,however other costs such as refreshments magazines ,and a girl to wash hair and clean up being let go are about back to normal.
Prices have stayed the same which has got them some new business as most in the sector increased theirs

brisan

fliball123 wrote: »

Well you go your way and others go theirs I mean you opened a business I wouldn't take that risk in my opinion that is a hell of a lot more risky than property but like I say everyone has their own plan. Then the other thing is after someone else pays the mortgage for you and after you gain when you retire from the rent to subsidize your state pension you leave your kids a substantial asset regardless of if prices go up or down your kids will get a nice tidy sum when you pass. I would rather control my own pension plan via property than give it to some wanna be wall street wiz kid not to mention the fact that the government raided private pensions before why would you put money into a black hole where the government can just take it on you.

Just out of interest what business did you open and how are you getting on through Corona?

Exactly ,everyone has their own plan ,but there is no point complaining if it does not work out .
You seem to be making the rental game work for you and that's great,good landlords will in my experience always do well
Granted we took a risk in opening a business but we knew the risks ,went in with our eyes opened (well my wife did ) if it did not work out well tough titty it was our misfortune or bad decision not anybody else fault

The_Conductor

PropQueries wrote: »

Interesting Q&A article in today's Irish Times. It provides a good explanation of the fair deal scheme and it's impact on property assets.

I suppose the question is, given the state of the government finances over the next few years, will they attempt a further raid on pensioners assets to help meet their home care costs?

The Irish Times Q&A article is here: https://www.irishtimes.com/business/personal-finance/nursing-home-charges-could-leave-me-homeless-1.4342884

I don't see how the 'Fair Deal' scheme will not be at least doubled in percentage terms on the call on property disposals. Its costing north of a billion a year- ontop of the funds coming in on the disposal of people's assets. It currently has a capacity of approx 23,500 and it is profiled to need to increase to 38,000 places (at any given time) by 2028 (without a change in funding this would represent an exchequer cost of over 3 billion a year).

The other aspect of all of this- is the larger number of properties left vacant while people are in nursing homes- often the properties aren't regularly heated and suffer all manner of damage. There has to be some sort of a scheme whereby the 23k properties out there are brought back into the available housing stock for rental or other purposes. Its nonsensical that they are, in the main, left vacant.

We have an aging population- and are very close to having a large cohort reach retirement age- these people have entitlements- someone is going to have to pay for the entitlements though.

handlemaster

brisan wrote: »

I keep hearing about landlords not making money on a rental property.
If your business is not making money then sell up and do something else.
As I said I was a landlord by choice and all my properties washed their face and a bit more,otherwise why bother.
Seemingly landlords are leaving the business in their droves because they cant make money,if that's the case then at least those that are are facing up to reality
As to those who bought investment properties and are now in negative equity,every Investment advert reminds you that the value of your investment can fall as well as rise , and when you sign a mortgage agreement it states that you are at risk of losing the property if you fail to make repayments.
People will have to start taking responsibility for their actions and admit they made a mistake and suffer the consequences

What other business would have the terms which they work under changed so often

handlemaster

brisan wrote: »

Yes but other countries have that as part of a larger package of rights and obligations for tenants and landlords.
The rental sector in these areas are much more regulated and fairer to both landlords and tenants.
You cant just cherry pick out what suits.
I was a landlord both with my wife ( 3 properties ) and my brothers and in the main we had great tenants,but we heard some horror stories about landlords.
I know one landlord with 6 properties in one block and he is a right prick.

You can't just say you know one LL who isn't nice and try to.paint all LL s like that.

mcsean2163

Connavar wrote: »

I think you might be highlighting the area that can be improved with good optics here.

Coming up with a way of speeding up the whole appeals process. It could be spun as a good thing for tenants who feel wronged with the added benefit of helping out landlords in the reverse situation

We rented our family home to a crowd for 4 months. Told them they could use the shed to store stuff in but not for parties.

They used the shed for whiskey parties, (there were about 50 - 60 empty whiskey bottles still there), and it looked like someone had urinated over my wife's baby couch. We took €50 off the deposit even though the couch cost €450 and my wife threw it out.

The guy contacted the prtb and harassed my wife at work until he got the €50 back. I was furious but another neighbor was dragged through the courts in a similar situation. It seemed to be all weighted in favour of the complainant.

The Belly

PropQueries wrote: »

Interesting Q&A article in today's Irish Times. It provides a good explanation of the fair deal scheme and it's impact on property assets.

I suppose the question is, given the state of the government finances over the next few years, will they attempt a further raid on pensioners assets to help meet their home care costs?

The Irish Times Q&A article is here: https://www.irishtimes.com/business/personal-finance/nursing-home-charges-could-leave-me-homeless-1.4342884

They will go for savings and increase cgt and pensions probably reduce the max tax free lumpsum threshold. In bad times they will tax by stealth.

brisan

handlemaster wrote: »

What other business would have the terms which they work under changed so often

Well if business conditions change you either adapt or leave the business if you cannot make it work
Plenty seem to be able to make it work

brisan

handlemaster wrote: »

You can't just say you know one LL who isn't nice and try to.paint all LL s like that.

I never did ,and as I said in my experience the good landlords ( which are in the majority ) will make the business work for them

fliball123

brisan wrote: »

My wife opened a hair and beauty business about 10 years ago
We knew it was a risk so we set it up debt free .
Bought the premises for cash and set it up debt free.
She is now a silent partner in the business but still owns the premises
They were left with no option but to put all employees on PUP .
However since the lifting of restrictions after the initial surge business is back to about 90% of normal while costs have risen slightly due to PPE ,however other costs such as refreshments magazines ,and a girl to wash hair and clean up being let go are about back to normal.
Prices have stayed the same which has got them some new business as most in the sector increased theirs

cool well I am glad its getting back to normal for you and her

The_Conductor

brisan wrote: »

Well if business conditions change you either adapt or leave the business if you cannot make it work
Plenty seem to be able to make it work

Thats just the problem- large numbers of landlords cannot make it work and are leaving the sector. There are large towns in many areas that have close to zero properties available to rent- in this forum we had a poster yesterday point out that there is nothing on DAFT or Myhome.ie for Portlaoise at the moment (other than 2 house shares). Thats the entirety of the available property in Portlaoise. This is being replicated all over the place. The RTB themselves have pointed this out to the Minister and suggested that any further regressive policies are likely to speed up the exodus from the sector.

brisan

The_Conductor wrote: »

Thats just the problem- large numbers of landlords cannot make it work and are leaving the sector. There are large towns in many areas that have close to zero properties available to rent- in this forum we had a poster yesterday point out that there is nothing on DAFT or Myhome.ie for Portlaoise at the moment (other than 2 house shares). Thats the entirety of the available property in Portlaoise. This is being replicated all over the place. The RTB themselves have pointed this out to the Minister and suggested that any further regressive policies are likely to speed up the exodus from the sector.

And its only by there being a shortage of properties to rent will the Government be forced to take action .
Irish Governments have always been reactive and not proactive
Hopefully the thoughts of a SF led government after the next election will focus their attention on the housing sector.
It was a major issue in the last election and has not gone away.
Covid 19 pushed it temporarily into the background but if and when the Pandemic is under control it will very much come to the fore again
Hopefully they will think outside the box for solutions

Mic 1972

Update report on asking prices is showing evidence of the current increasing trend
Asking prices have reached a new peak

https://bl.ocks.org/pinsterdev/raw/b52f2a466477d05576bc/?s=commuter

PropQueries

The_Conductor wrote: »

Thats just the problem- large numbers of landlords cannot make it work and are leaving the sector. There are large towns in many areas that have close to zero properties available to rent- in this forum we had a poster yesterday point out that there is nothing on DAFT or Myhome.ie for Portlaoise at the moment (other than 2 house shares). Thats the entirety of the available property in Portlaoise. This is being replicated all over the place. The RTB themselves have pointed this out to the Minister and suggested that any further regressive policies are likely to speed up the exodus from the sector.

That is amazing regarding Portlaoise. So, basically, even if a multinational or other big employer wanted to set up base in Portlaoise, they couldn't as there would be no where for their workers to rent.

That's economic mismanagement on a gigantic scale...

Hubertj

This place is near my home. For sale sign went up last week and sale agreed sign went up today. It must be unusual for something to move so quickly? And yea yea it’s only gone sale agreed, not sold

https://www.myhome.ie/residential/brochure/36-pembroke-gardens-ballsbridge-dublin-4/4447046

Mic 1972

fliball123 wrote: »

ah you cant say that about a lot of landlords remember most or any who are working will have to pay 51% back to the state straight away on tax and if they have a mortgage on it then they are getting little or nothing back from the rent

How do you work out the 51%?
Rental income is taxed the same way as any other income. You could be paying 20% or higher depending on your income bracket

The_Conductor

PropQueries wrote: »

That is amazing regarding Portlaoise. So, basically, even if a multinational or other big employer wanted to set up base in Portlaoise, they couldn't as there would be no where for their workers to rent.

That's economic mismanagement on a gigantic scale...

Big time.
There are two house shares in Portlaoise between Daft and Myhome - thats it.
This is rapidly becoming the situation in many other towns around the country.
REITs and large scale landlords are not interested in properties sprinkled like fairy dust around a region- any properties that are sold by landlords are being bought by prospective owner occupiers- and not re-entering the rental market. Certainly a number of these will be vacating rental property to take up their new homes- but even this has time lags and delays associated with it.

We're actually in a situation of shortage now- its not a future event- its right here, right now.

The current Minister cannot play mind games with the sector- like his predecessors- he needs to come up with a viable plan of action and put it into effect.

Best case scenario would probably involve local authorities mopping up secondhand units as they become available- which means they wouldn't be cutting First Time Buyers off at the knees- just because they can. It would involve staff recruitment in the local authorities though- to manage/renovate the units alongside administrative staff etc.

The units being sold by landlords- are increasing in number, and are not re-entering the rental market- there are not small scale landlords out there mopping up units like they once might have done.

brisan

Hubertj wrote: »

This place is near my home. For sale sign went up last week and sale agreed sign went up today. It must be unusual for something to move so quickly? And yea yea it’s only gone sale agreed, not sold

https://www.myhome.ie/residential/brochure/36-pembroke-gardens-ballsbridge-dublin-4/4447046

ITS Ballsbridge and its under a million
Certain areas will always attract buyers