PropQueries wrote: » But what could they invest the proceeds in to get a similar return and also pay less tax? Also, how many landlords are selling because they bought between 2012 and 2014 and can now sell without paying CGT? There should be a lot more landlords selling up and leaving the market than there currently are based on those purchases between 2012 and 2014 alone which IMO would mean the returns of being a landlord in Ireland at the moment must be exceptional.
Graham wrote: » Given the volumes of landlords leaving the markets that doesn't appear to be a significant enough motivator to stay in the market. I assume it will matter even less to any landlord that's spent the guts of the last year providing private COVID support to tenant/s unable to pay rent.
PropQueries wrote: » I’d say it’s more to do with the landlords who purchased between 2012 and 2014 and can now sell without paying CGT. Even if a tenant hadn’t paid any rent for 10 months in 2020, the landlord would be still better off than if he had sold last January and placed the proceeds in the bank. He could have risked it in the S&P and got. c. 2% with significant more risk attached. The rental yields are so high in this country, a tenant would have to get away with not paying rent for at least the next 5 years to make it a problem for any landlord who purchased their RIP for cash IMO.
PropQueries wrote: » The rental yields are so high in this country, a tenant would have to get away with not paying rent for at least the next 5 years to make it a problem for any landlord who purchased their RIP for cash IMO.
Timing belt wrote: » If rental yields are so high compared to other asset classes then the institutional investors have the ability to develop property that was previously deemed to expensive to invest in or cut rents.... but don't see rents being cut.
Graham wrote: » And yet we're losing landlords and tenancies at a rate of knots. So either your hypothesis isn't reflective of the reality, or the landlords leaving the market have got it all wrong.
PropQueries wrote: » If they cut rents (real or perceived), the value of all their property investments falls so it wouldn’t benefit them either way IMO Rent of €20,000 at 3,5% yield values the property at c. €600k Rent of €15,000 at 3.5% yield values the property at c. €400k They could lose c. €200k just by lowering the rent by €5k. They really are better off keeping them vacant and pretending they’re worth something, in the short-term at least. Unless there’s an opportunity cost to keeping them vacant I.e. a vacant property tax
PropQueries wrote: » It 100% has got nothing to do with the “low” levels of returns in the Irish rental market IMO.
PropQueries wrote: » If they cut rents (real or perceived), the value of all their property investments falls so it wouldn’t benefit them either way IMO Rent of €20,000 at 3,5% yield values the property at c. €600k Rent of €15,000 at 3.5% yield values the property at c. €400k They could lose c. €200k just by lowering the rent by €5k.
mcsean2163 wrote: » Stock market, capital gains tax is less
PropQueries wrote: » If they cut rents (real or perceived), the value of all their property investments falls so it wouldn’t benefit them either way IMO Rent of €20,000 at 3,5% yield values the property at c. €600k Rent of €15,000 at 3.5% yield values the property at c. €400k They could lose c. €200k just by lowering the rent by €5k. They really are better off keeping them vacant and pretending they’re worth something, in the short-term at least. Unless there’s a very real upfront cost to keeping them vacant I.e. a vacant property tax
combat14 wrote: » always thought historic rental yields were at least 6% has that changed ..?
PropQueries wrote: » No, I think you're right in relation to the small BTL landlords. I think someone here said before that REITS operate under a smaller yield so when discussing the REITS I stuck with the lower figure.
schmittel wrote: » If 5-8k rentals have been leaving the market per annum, that's equivalent of about 10% of annual sales volume. But with supply at historic lows it is clear they have not been entering the sales market. What's happening to all these properties?
Graham wrote: » Some EAs have already reported a very significant proportion of their sales are a result of landlords exiting the market.
schmittel wrote: » Recently yes, but this has been going on for a few years. Were EAs saying this in 2018/9?
Graham wrote: » Can't say I've looked but previous landlord-exit figure were at the lower end of the scale and more likely to be mixed with higher volumes of standard residential transactions. If an EA is getting two-thirds of current listings as a result of landlord-exits, it's going to be a lot more noticeable.
fago wrote: » These properties don't disappear into the ether so surely they help the apt/starter home market. I read all of the 2021 predictions/shills and don't recall any of the same agents mentioning supply being helped by the increase in rentals for sale. I've seen one auctioneer in a local paper predict flat for 2021, but then 4% in a national paper. Even within Ireland there's a good few micro markets, in my opinion you re best off understand where you are buying what sells, what struggles and watch the PPR.
JimmyVik wrote: » One micro market is the council. Micro might be a bit much, they are significant. And I think a major cause of both rent and purchase price rises. Rent rising costs the govt a lot less than it costs the average punter. The govt get half the higher rent in tax for a start. Then when they pay out rent to a private landlord for social welfare, they get half that back in tax anyway. A nice little con they have going on. I know one person who sold their rental about 2 years ago. It was a 2 bed apartment. One of the couples who were renting it we were having a baby so moved out. The other couple moved out about 3 months later. As soon as it was empty he put it on the market. When he put it on the market the council contacted him and offered to buy it. He accepted. There is now one very noisy and annoying woman living in the apartment on her own. He also owns the apartment beside it and has decided to sell that as soon as the current tenants moves out, which he thinks will be soon, because the one next is making their lives hell. He will offer it to the council first. If not he will put it on the market.
schmittel wrote: » I agree. I suspect the volume will be large enough that govt has another problem on their hands here, knowing there is a record number of tenancies about to be terminated in one go. Very difficult for them to handle the fallout.
Graham wrote: » I've no doubt REITs are taking up some of the slack from departing private landlords and reducing the reliance on private landlords was one of the aims of the tax treatment. Problem 1 is private landlords are leaving faster than their rental properties are being replaced (by REITs). Problem 2 is the REITS are obviously concentrating on the most profitable cities. Problem 3 is the REITs are concentrating on the higher end of the market.
Villa05 wrote: » The article does mention tax as a factor. Do you think the perceived landlord/tennant imbalance would be cushioned if reits and private landlords had tax equality ie both pay 25% That would be significant gain for the private landlord
PropQueries wrote: » I’d say it’s more to do with the landlords who purchased between 2012 and 2014 and can now sell without paying CGT. Even if a tenant hadn’t paid any rent for 10 months in 2020, the landlord would be still better off than if he had sold last January and placed the proceeds in the bank.He could have risked it in the S&P and got. c. 2% with significant more risk attached. The rental yields are so high in this country, a tenant would have to get away with not paying rent for at least the next 5 years to make it a problem for any landlord who purchased their RIP for cash IMO.
Data from the US and UK show that millennials are financially worse off than their parents were at the same age after housing costs are factored into account. More diverse, liberal and better educated than any previous generation, they are also faced with the bleakest economic prospects and an increasingly greasy housing ladder. Covid-19 has had a disproportionate impact on them.
The increase in the average age of buying a home from 26 in 1991 to 35 today reflects the much harder path that young people must travel to own their own place. This is a demographic financial time-bomb when these households retire and need state support for their rent. The political implications of the age divide can be seen in a more profound crisis of democratic legitimacy.
PropQueries wrote: » Ok, according to the RTB, the number of registered private landlords in Q3 2020 was 166,615 and in Q3 2017, it was 176,251, so a fall of c. 20,000 over 3 years. Isn't it a real possibility that the investors who purchased properties between 2012 and 2014 to avail of the CGT tax exemption from 2018 onwards (i.e. they can now sell without paying CGT) are now a significant percentage of these sellers? i.e. it's not the "unfair" tax system, but more due to cashing in their profits from their investments during 2012 and 2014.
JimmyVik wrote: » There is no investment that is more risky than being a private landlord in Ireland. I had about €100k ready to invest 3 years ago. I wanted to invest it in an investment property in Ireland. While i did my research I left it in ETFs. S&P and world UCITS. I probably could have found a more tax efficient way to invest it, but that was nice and easy. Anyway I couldnt make the risk/reward on residential property work for me so i left it there. I am glad now that it worked out that way.
He said: "For about 20 years, every single year, the total number of rental tenancies registered with the Rental Tenancies Board [RTB] increased right up until 2016 — partly because there were tax breaks during the Celtic Tiger era. "What happened literally from quarter one of 2017, every single quarter since then — 2017, 2018, 2019, and 2020 — has seen a loss of tenancies."
MacronvFrugals wrote: » Darragh O'Brien: Ambitious aims and imaginative solutions can solve housing woes Darragh O Brien in the Examiner this morning speaking to the 18/35s demo - https://www.irishexaminer.com/opinion/commentanalysis/arid-40212971.html The increase in the average age of buying a home from 26 in 1991 to 35 today reflects the much harder path that young people must travel to own their own place. This is a demographic financial time-bomb when these households retire and need state support for their rent. The political implications of the age divide can be seen in a more profound crisis of democratic legitimacy.
