PropQueries wrote: » Workers are already taxed to the hilt so outside of carbon taxes, .
PropQueries wrote: » I would believe that paying 33% CGT or paying the current rates of inheritance tax and the relatively high thresholds will look like a bargain in about 5 years time. Many economists and governments are now suggesting that taxes on property and inheritance taxes are going to be the most looked at sources of future Government revenue around the world as it's one of the few assets/sources of revenue that can't be picked up and shipped abroad. The pre-covid pension crisis hasn't gone away (it's actually got significantly worse with the low interest rate environment) and they're going to be looking very seriously at both higher property taxes, CGT and inheritance taxes/lower thresholds over the next few years. Workers are already taxed to the hilt so outside of carbon taxes, there's not much left to tax to pay for both the future pensions and legacy debt built up over the past c. 15 years.
Timing belt wrote: » The age at which you get to draw a pension will change and people will be working longer.
PropQueries wrote: » I would believe that paying 33% CGT or paying the current rates of inheritance tax and the relatively high thresholds will look like a bargain in about 5 years time. Many economists and governments are now suggesting that taxes on property and inheritance taxes are going to be most looked at sources of future Government revenue around the world as it's one of the few assets/sources of revenue that can't be picked up and shipped abroad. The pre-covid pension crisis hasn't gone away (it's actually got significantly worse with the low interest rate environment) and they're going to be looking very seriously at both higher property taxes, CGT and inheritance taxes/lower thresholds over the next few years. Workers are already taxed to the hilt so outside of carbon taxes, there's not much left to tax to pay for both the future pensions and legacy debt built up over the past c. 15 years.
Bass Reeves wrote: » I think again like many you misunderstand the market. There are fewer accidental landlords and fewer landlords with 1-2 properties. As long as larger LL hold the line it easier for smaller LL's to hold for there price. In cities there is fewer LL's owning 1-2 properties compared to 10 years ago. Most accidental LL's from that period have exited the market in Dublin as prices reached a place where they could exit without losing money. Most larger LL's work on yield capital appreciation is not something they are concerned with in the short term. If you worry about the drop in value of property it is not something you should invest in Most accidental LL's now are people who will have inherit property from parents or relations. They may have undervalued the property to avoid inheritance tax. As there may be little or no debt they are not financially stressed the willingness to pay 33% on any gain will curb any tendancy to sell. We have been down this cul de sac before. Very few in the property game worry about capital value in the short term. Except for some specific properties most houses are valued as much by owner occupiers buyers as by LL's. Most larger LL's who are the most likely LL who will be buying can manage RPZ's limits by revamping a house
schmittel wrote: » I think the biggest impact of RPZs is with the small BTL investor/accidental landlord who is thinking of the capital value. Because of the capped rent increases if you want to sell a property that is currently tenanted or recently vacated the existing yield sets a ceiling on the valuation. In a strong market is far better to leave it vacant for long enough to reset the RPZ issues, and sell it without this burden. Property owners are incentivised to leave units vacant. This is also applies to situations where for whatever reason it does not suit to sell the property in the short term - eg probate. RPZ legislation (both rent increases and tenants rights) means it is better to leave it empty until such time that you are ready to sell. Of course this all only makes sense when prices and rents are rising or stable. If they start to turn down, you could see a lot of these properties come to the market in short order.
Timing belt wrote: » Yes they are private institutions and will try and maximise their profit.... they have planned financially for it and at the end of the period they either achieve their objective and lease all the units at the desired rent or have to decided to reduce the rent to fill. I am sure that on top of these there are other apartments that have become vacant during Covid and the landlord is reluctant to accept a lower rent because of the Rent Pressure Zones. You could say that RPZ's are manipulating the market as if they were not there landlords would accept lower rent knowing they could raise the rent in the future when economic conditions improve. Don't get me wrong we need RPZ's but there is a consequence to every action to manipulate the market.
PropQueries wrote: » Never said marina. Similar developments “may”.
TobyHolmes wrote: » i see - trying to manipulate the market- interesting
TobyHolmes wrote: » do you mean the lack of supply in affordable housing in Dublin?
Timing belt wrote: » Luxury apartments are empty they are trying to normalize a high rent so will release the units over a 12-15 month period. If there is demand at the price it will be quicker but we all know that those rents are top end.
TobyHolmes wrote: » this is what I'm seeing in real life- empty apartments- but im being told on here - its not empty #confused
mcsean2163 wrote: » Go down to islandbridge and marvel at the empty luxury apartments. Go to daft and observe there are maybe 4 typese of apartments listed for rent. They don't list all the empty apartments in a development...
schmittel wrote: » I think the problem is they are not coming to the market.
PropQueries wrote: » “Yes HAP has grown from something like 5m in 2014 to just under 1bn today. That is not a surprise when rents were rising by double digits every year and wages were not.” Would you not see a correlation between both the above i.e. HAP going from €5m to €1bn and rents doubling?
The rent rises were artificial and if the state makes any significant headway in reaching their targets and decides to pull back, rents could reverse by as much and much more quickly IMO
We’re still building residential units, we’re still building student accommodation units, homes are continuing to enter probate, we’re still refurbishing. It’s my viewpoint and I could be wrong but I believe this supply/demand imbalance has already been corrected and the patient sellers holding out in the background are in for a very unpleasant surprise in the very near term IMO
PropQueries wrote: » But occupancy is most likely only at 90% because of the state through HAP or other long term lease agreements. For example, according to RTÉ, Ires Reit back in 2018: “The company, which last week announced profits of €19 million for the first half of this year, confirmed to RTÉ's Morning Ireland that it has 303 tenants receiving a Housing Assistance Payment (HAP). It equates to 11% of I-RES's total portfolio of rental properties of 2,678. In 2017, just 4% of the company's properties were rented to State-funded tenants.” After RTÉ did a documentary on the rents they were charging the state, Ires REIT don’t seem to break down this data anymore, but one can assume the percentage is much higher today. If someone can find the data, please link it as I’m genuinely interested. Without the state back-stop, the majority of build-to-rent developments wouldn’t pull in any real money and wouldn’t achieve anywhere near 90% occupancy IMO. If the state pulls back and one small rise in interest rates and they don’t make any sense. My reason for thinking the state will pull back much sooner than many believe. I think they’re currently soaking up all that ex AirBnB and ex student rental supply in Dublin (outright purchases or long term lease agreements) and are much further along reaching their housing targets than many people believe. Link to RTÉ article here: https://www.rte.ie/news/2018/0809/983942-housing-social-tenancies/
Timing belt wrote: » No it will be based on a marketing plan and what they they think they can charge rent wise.... Sometimes it pays off other times not and they have to reduce rent or play the waiting game a bit longer. you keep using this as an example when it is different as these were not built to rent initially The funds don't give a monkey's who is paying the rent as long as they have established a rental price for the block of flights and occupancy is 90%+. The state are not going to stop paying unless they have an alternative.... i.e. social housing to put people in which doesn't look like it will happen anytime soon. With the exception of docklands most of these apartments will be occupied as people have no where else to live. As I said previously I would expect more and more funds to flood the market and buy more blocks of apartments or build them from scratch. I don't see them going belly up as the funds have generous margins that they could take a lower rent and still have a good return in this low rate environment. They won't choose to as there aim is to maximise profit.
PropQueries wrote: » Thanks for the definition. Actually interesting. But I assume these lease up schedules projections are based on the last development in the area that achieved a certain occupancy and at a certain price.
My belief is that developers saw the initial success of Cairn Homes Marianella development (selling) and said me too. Too many entered this segment of the market and there wasn’t enough buyers for these type of apartments. Basically, Marianella soaked up whatever limited buyer demand was there for these type of developments. Then, when there were no buyers for their completed apartments, they switched their completed units to build-to-rent. Maybe the first ones off the block managed to rent them to e.g. Google employees etc. but the ones following them didn’t given the limited demand. Then, hey presto, the state enters the fray using the funds as middle men to make it look like it’s not a back door bailout of these developers.
The funds are only interested in buying more of these built-to-rent units as long as the state is there soaking up all the significant excess supply in the background IMO The state will stop eventually (I believe sooner than many expect) and then whoever’s left is gone belly up IMO. That’s how I would sum up the past 5 years.
Cyrus wrote: » Explain how marina village would have ‘gone under’? Gone under what exactly
PropQueries wrote: » I’m not sure. If we take glenveagh’s marina development in greystones as an example. They were built and had no buyers. Then they dropped their prices by c. €100k. Still no buyers. Now, they’ve just sold them in bulk to a fund. The same fund that bought the Herbert Hill development in dundrum to lease to the local council at up to c. €3,000 per month over 25 years. If there was no state back-stop (buying or leasing them), a lot of these developments may have gone under IMO. So, I don’t buy the story that they’re somehow being smart and playing a drip feeding game at the moment. My experience is that developers don’t wait as they know and have experience of the market tanking unexpectedly and at very short notice and generally take what they can get for their units as soon as possible. Well, that was the old way.
Timing belt wrote: » If they did that they would not maximise profit.... "Lease up schedules assist real estate developers by providing a basis for forecasting when a property will generate income. Lease up schedules for multifamily properties generally last around 12-15 months from initial lease to stabilization. By the end of the lease up schedule, the property is determined to be “stabilized”, or operating at a regular vacancy level." p.s. This is industry standard when it comes to renting out a big apartment block.... Its not a story I am trying to sell you :P
Timing belt wrote: » No not at all this is how the properties would have been planned to be delivered when the plans for the project were drawn up. It is common practise that they drip feed the properties to the market. Whether there is someone willing to pay the price for them is another story. Yes if rates do rise without economic growth then there will be Armageddon but there is no sign of inflation yet... In fact Europe is still fighting deflation.
PropQueries wrote: » My guess would be they’re the equivalent of the zombie companies in the United States (I think I read somewhere it’s near c. 30%) and EU who are only still trading due to being able to borrow at low interest rates. If they sell the apartments, where can they park the proceeds? So, if the majority are wrong about interest rates remaining at current levels for the next few years and they do rise, it’s Armageddon. If they’re right and they remain at current levels, then they can keep them vacant at no real opportunity cost as long as there’s no real vacant property tax in the near future. I’ll refer to Timing Belt on that one to see if my viewpoint is in the ball park?
TobyHolmes wrote: » so how is it financially viable then? Deep corporate pockets?
