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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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The_Conductor

fliball123 wrote: »

I know that I am talking to a different poster and you need to follow what was said, some people are saying landlords are making a killing I am simply pointing out the fact that 51% goes straight back to the state + property tax and if the landlord has a mortgage then in a lot of cases they making little or nothing on the property

I think that the entire manner of how income from residential property is taxed- urgently needs reform. My preference would be for a flatrate tax- on the gross rental income (of perhaps 25%) with no deductions for anything allowable- and this would be applied to all actors in the sector without exception- including the REITs.

The biggest issue I have with the taxation regime (and not just associated with the residential letting sector)- is that the cost of debt is an allowable expense. IMHO- debt should never, ever, be an allowable cost. It creates a perverse disincentive to ever pay down the debt associated with a property- sure why would you- when you'll be punished with higher tax if you do.

A possible manner of looking at this might include a rebate for any landlords who let property that has no debt secured on it- however, for numerous reasons- this would not fly.

Even publications such as 'The Economist' agree that in an international context- debt has to be removed from tax considerations- as aside from any other factor, it introduces system risk into economic systems- and is paid for out of general taxation by introducing additional burdens on those who are unable to avail of such mechanisms.

The_Conductor

PropQueries wrote: »

Interesting article / advertorial in the Irish Times today about Aviva seeking €80 million for Royal Hibernian Way in Dublin. They put forward a fairly decent sales pitch.

I’m sure it has nothing to do with Aviva stopping investors from taking money out of their €940 million Irish property funds back in January…

Link to Hibernian Way article/ sales pitch here: https://www.irishtimes.com/business/commercial-property/aviva-tests-strength-of-market-with-80m-sale-of-royal-hibernian-way-1.4343825

Link to Aviva blocking redemptions article here: https://www.irishtimes.com/business/commercial-property/aviva-stops-investors-from-taking-money-out-of-irish-property-funds-1.4157574

The price they're seeking seems to me to be highly speculative- it represents an ROI of only 3.16%
Even allowing for the fact that there are vacant units there- the sums just don't add up IMHO

fliball123

Donald Trump wrote: »

It's income. You pay income tax on it. It's not that difficult to understand.

I know that I am talking to a different poster and you need to follow what was said, some people are saying landlords are making a killing I am simply pointing out the fact that 51% goes straight back to the state + property tax and if the landlord has a mortgage then in a lot of cases they making little or nothing on the property

PropQueries

Interesting article / advertorial in the Irish Times today about Aviva seeking €80 million for Royal Hibernian Way in Dublin. They put forward a fairly decent sales pitch.

I’m sure it has nothing to do with Aviva stopping investors from taking money out of their €940 million Irish property funds back in January…

Link to Hibernian Way article/ sales pitch here: https://www.irishtimes.com/business/commercial-property/aviva-tests-strength-of-market-with-80m-sale-of-royal-hibernian-way-1.4343825

Link to Aviva blocking redemptions article here: https://www.irishtimes.com/business/commercial-property/aviva-stops-investors-from-taking-money-out-of-irish-property-funds-1.4157574

Hubertj

smurgen wrote: »

Well it makes sense and what others have predicted. Glad to see this type of thinking.

Unfortunately I’m sure the NIMBYs will be all over this cross the country. Very often the same people whining about a shortage of accommodation are the same people objecting to developments.

smurgen

PropQueries wrote: »

According to the Business Post "Developers to change plans as they seek to capitalise on demand for housing amid dramatic drop in hotel occupancy, according to report".

Sunday Business Post article here: https://www.businesspost.ie/property-insight/hotel-builds-to-be-cancelled-to-make-way-for-new-homes-7dd05a3e

Well it makes sense and what others have predicted. Glad to see this type of thinking.

PropQueries

According to the Business Post "Developers to change plans as they seek to capitalise on demand for housing amid dramatic drop in hotel occupancy, according to report".

Sunday Business Post article here: https://www.businesspost.ie/property-insight/hotel-builds-to-be-cancelled-to-make-way-for-new-homes-7dd05a3e

PropQueries

According to The Times two weeks ago "Plans by third-level institutions to bring international students to Ireland on chartered planes were abandoned last week due to “regulatory challenges”

Link to The Time article here: https://www.thetimes.co.uk/article/irish-universities-on-financial-tightrope-as-covid-hits-plan-to-fly-in-overseas-students-3s6kgqg6f 7

neutral guy

My vision of life
The government try to shake the property market taking of /reducing wage subsidy
The more people will of the subsidy the more will back to mortgage ( banks stopped give mortgages to people on wage subsidy )
Nobody cares about old people anymore,the more will die of the Covid the less pensions will be paid and more houses will come on sale
Recession ? The clear words been said :
https://www.irishtimes.com/business/economy/chances-of-another-recession-in-ireland-100-says-ntma-chief-1.3946583
All money paid by government for wage subsidies will have to be paid back ! By you for sure !
The UK government made first steps :
https://www.standard.co.uk/news/uk/tax-hikes-coronavirus-cost-a4536186.html
I am sure the Ireland government will be next the price of borrowing due with recession will be higher
Pretty sure there will be plenty property for sale for price of peanuts very soon
The only problem Nobody will have money for it !
Well,somebody says savings are growing
Lets see for how long !
Our company out from wage subsidy from next week Monday
I gonna grab my payslip and run to CU for biggest loan I can get
Before I will loose job and CU will not give me the loan for that reason.
Sorry,there is no property for rent in Laois and government does not worry about it ?
Government has no money to think about it guys.All spent for Covid already !

ebayissues

edjkdkjdhjkd wrote: »

Curious to hear about peoples situation on here, i assume most posters have some sort of stake in the property game or plan to. Perhaps in the format below:

Situation:

Couple, deposit of roughly 70k so far (could stretch to 110k) if we wait two year. Aim to purchase a house in either North Dublin (Cabra, Finglas area) Or South Dublin (Ballyfermot, Drimnagh). Max we will spend is 300k but ideally 240k/250k.

What we hope will happen:

Prices drop roughly 10-20% between now and 2022 and we get a good deal and max out on the deposit to ensure a low mortgage

What we think will happen:

After Covid payment is taken away, the economy will be devastated but it may take some time for the impact to hit the property market, we only plan to wait 2 years max and fear we may purchase before the bottom but that's something we will have to accept and move. We see drops of 10-15% more likely on the areas we are targeting.

How much rent would you have spent waiting for price drop in two years time? Will you get a mortgage in two years?

Donald Trump

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

It's income. You pay income tax on it. It's not that difficult to understand.

Hubertj

schmittel wrote: »

Personally I think the probabilities that you will see drops of that order within two years are worth the wait.

Edit to add: Apologies, I now see you weren't looking for advice but were laying out your situation and asking re others! Good idea, no problem laying mine out:

Situation:

Family with 2 kids, living in detached house, high value area, Dublin commuter belt. No mortgage. Looking to sell next summer (does not suit to sell pre summer for good reasons) to move to similiar property further from Dublin. We don't need the premium for being close to Dublin as I've WFHed for 20+ years. We are unlikely to move again unless for reasons related to old age.

What we hope will happen:

Property continues to go gangbusters and we get top whack for our house. Sure the property that we have to buy will have increased too but the relative change would be in our favour if market maintains momentum.

What we think will happen:

As above. If government supports are withdrawn economy is big trouble, real unemployment will rocket, property prices will collapse, ours more than most, certainly more than the property we would replace it with.

For me the only important thing is the net difference in price. Sale price of my current house and purchase price of the next one is only important in relative terms.

Nice plan but very unlucky with your timing. Your focus on the price differential makes sense instead of concerning yourself with house prices dropping by x or y.

fliball123

Mic 1972 wrote: »

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

well you have to pay full tax as its taxed as income to USC , Income tax, Prsi and of course I am not taking into account property tax

awec

Mic 1972 wrote: »

the tax bands are 20% and 40%,

I'm not aware of a 51% band rate

By the time you add PRSI and USC into the equation there are people paying an effective 51% rate.

Mic 1972

PommieBast wrote: »

Given how low the threshold is for >50% its gonna be pretty much everyone who works full-time.

the tax bands are 20% and 40%,

I'm not aware of a 51% band rate

thomasdylan

edjkdkjdhjkd wrote: »

Sheer desperation, most likely a couple who fear they will lose their jobs in the next year and don't want to keep renting. Which is insane in itself, make the biggest purchase of your life before losing your job but country is insane in fairness.

That or a cash buyer with more money than brains.

You're probably well off the mark.

I think it's unlikely that this house was bought by first time buyers who had been renting. There's not many first time buyers buying two beds at 600k+.

It's a lovely area and it's probably downizers from the area.

PommieBast

Mic 1972 wrote: »

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

Given how low the threshold is for >50% its gonna be pretty much everyone who works full-time.

Hubertj

edjkdkjdhjkd wrote: »

Curious to hear about peoples situation on here, i assume most posters have some sort of stake in the property game or plan to. Perhaps in the format below:

Situation:

Couple, deposit of roughly 70k so far (could stretch to 110k) if we wait two year. Aim to purchase a house in either North Dublin (Cabra, Finglas area) Or South Dublin (Ballyfermot, Drimnagh). Max we will spend is 300k but ideally 240k/250k.

What we hope will happen:

Prices drop roughly 10-20% between now and 2022 and we get a good deal and max out on the deposit to ensure a low mortgage

What we think will happen:

After Covid payment is taken away, the economy will be devastated but it may take some time for the impact to hit the property market, we only plan to wait 2 years max and fear we may purchase before the bottom but that's something we will have to accept and move. We see drops of 10-15% more likely on the areas we are targeting.

I think you’ve answered your own question and have though through different scenarios. With so much uncertainty at present, I Think it’s a good idea to hold off purchasing.

The_Conductor

schmittel wrote: »

Once again, rather than further meddling with more silly schemes, remove the RPZ rules and allow LLs more leeway in terminating leases/evicting problem tenants.

RPZs and PRTB tenant bias is simply compounding the problem of restricted supply.

Removing them will remove the main reasons properties are left vacant.

An increase in rental supply will solve the problems the of ever increasing rents and tenant protection, so they won't be needed anyway.

It may make perfect sense- and it may lead to an increase in the number of units available to rent- however, its not going to happen in a million years. The government would be hounded from office and the various media outlets would be spouting vitriol the such as we've not heard before.

Its completely implausible that RPZs will end and landlords given leeway to enforce tenancy terminations and deal with problem tenants.

Any politician who suggested actions like this- would be signing the end of their political career before they even left the room.

hometruths

edjkdkjdhjkd wrote: »

Curious to hear about peoples situation on here, i assume most posters have some sort of stake in the property game or plan to. Perhaps in the format below:

Situation:

Couple, deposit of roughly 70k so far (could stretch to 110k) if we wait two year. Aim to purchase a house in either North Dublin (Cabra, Finglas area) Or South Dublin (Ballyfermot, Drimnagh). Max we will spend is 300k but ideally 240k/250k.

What we hope will happen:

Prices drop roughly 10-20% between now and 2022 and we get a good deal and max out on the deposit to ensure a low mortgage

What we think will happen:

After Covid payment is taken away, the economy will be devastated but it may take some time for the impact to hit the property market, we only plan to wait 2 years max and fear we may purchase before the bottom but that's something we will have to accept and move. We see drops of 10-15% more likely on the areas we are targeting.

Personally I think the probabilities that you will see drops of that order within two years are worth the wait.

Edit to add: Apologies, I now see you weren't looking for advice but were laying out your situation and asking re others! Good idea, no problem laying mine out:

Situation:

Family with 2 kids, living in detached house, high value area, Dublin commuter belt. No mortgage. Looking to sell next summer (does not suit to sell pre summer for good reasons) to move to similiar property further from Dublin. We don't need the premium for being close to Dublin as I've WFHed for 20+ years. We are unlikely to move again unless for reasons related to old age.

What we hope will happen:

Property continues to go gangbusters and we get top whack for our house. Sure the property that we have to buy will have increased too but the relative change would be in our favour if market maintains momentum.

What we think will happen:

As above. If government supports are withdrawn economy is big trouble, real unemployment will rocket, property prices will collapse, ours more than most, certainly more than the property we would replace it with.

For me the only important thing is the net difference in price. Sale price of my current house and purchase price of the next one is only important in relative terms.

Islander13

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

Decent buy that. Can see why it went quickly

hometruths

The_Conductor wrote: »

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.

Once again, rather than further meddling with more silly schemes, remove the RPZ rules and allow LLs more leeway in terminating leases/evicting problem tenants.

RPZs and PRTB tenant bias is simply compounding the problem of restricted supply.

Removing them will remove the main reasons properties are left vacant.

An increase in rental supply will solve the problems the of ever increasing rents and tenant protection, so they won't be needed anyway.

edjkdkjdhjkd

Curious to hear about peoples situation on here, i assume most posters have some sort of stake in the property game or plan to. Perhaps in the format below:

Situation:

Couple, deposit of roughly 70k so far (could stretch to 110k) if we wait two year. Aim to purchase a house in either North Dublin (Cabra, Finglas area) Or South Dublin (Ballyfermot, Drimnagh). Max we will spend is 300k but ideally 240k/250k.

What we hope will happen:

Prices drop roughly 10-20% between now and 2022 and we get a good deal and max out on the deposit to ensure a low mortgage

What we think will happen:

After Covid payment is taken away, the economy will be devastated but it may take some time for the impact to hit the property market, we only plan to wait 2 years max and fear we may purchase before the bottom but that's something we will have to accept and move. We see drops of 10-15% more likely on the areas we are targeting.

edjkdkjdhjkd

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

Sheer desperation, most likely a couple who fear they will lose their jobs in the next year and don't want to keep renting. Which is insane in itself, make the biggest purchase of your life before losing your job but country is insane in fairness.

That or a cash buyer with more money than brains.

CertifiedSimp

Wonder what kind of people would buy that? Would it be cash?

Quite small. Someone able to afford that would probably be able own their own business. Buy out in the sticks for 300k and spend 300k on a couple holiday homes.

Browney7

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

Interesting to see what it's get up on the register for. 35 Pembroke gardens sold for 630k at the start of the year

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

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.

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

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