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2021 Irish Property Market chat - mod warnings post 1

hometruths

Happy new year to all.

2020 was the year of pent up demand. I think 2021 will be the year the pent up supply comes to market.

I think the pent up supply will exceed the pent up demand and prices will fall. By how much I have no idea!

edit: Mod Warnings

This thread is about the Irish Property Market, it is not about:
* Immigration
* Refugees
* Welfare recipients
* Welfare rates
* General Irish politics beyond its impact on property
* General Irish economy beyond its impact on property
* How wonderful Country X is to buy in

Additionally, the specific issue of Geodirectory vacancy figures has been done to death and is not to be discussed again.

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[Deleted User]

[Deleted User] wrote: »

People in Germany all live spending in rented property
And finish them days in nursing home
Nothing wrong with that
Or you pay mortgage or rent and finish same way as in Ireland I dont see anything wrong
Please dont tell me about in Ireland you will have your own house when you pay mortgage
There is matter of time when those who has difficulties to pay mortgage in Ireland will be thrown trough the door on street and will finish them days in nursing home.
At same time when tens of thousands of those who cant pay has problem already

The issue with renting for life is that at the time when earnings decrease, retirement, rent will likely continue to increase. With increased life expectancy, that leaves a considerable amount of time that rent has to be paid out of savings. On the other hand, most mortgages do not exceed retirement age, so at retirement, mortgages are repaid, therefore decreased cost of living coincides with retirement if you own your own home.

hometruths

DataDude wrote: »

That said, if I was a median income FTB couple, and I could stop one thing to try give me a fair shot at buying a house in Dublin right now...I think it'd be the gifts. I reckon they have an absolutely unbelievable inflationary impact on prices. Probably more so than LA/AHBs given they push up the highest value houses as where as LA/AHBs are somewhat capped in what they can do (although the upper limit seems to be growing)

Fair point, but I think maybe you're looking at this again through the what's best for DataDude lens, rather than what's going on the wider market. I'm sure that family wealth has a far bigger impact in your segment of the market than LAs and AHBs!

If I was in your shoes it would not be the gifts that would bother me, it would be the arrears. There are 1000s of people living in houses that you would dearly love to buy and could comfortably afford yet they're not paying for them. You and I are through increased taxes and increased interest rates.

I suspect that has a far greater impact on your situation than the bank of mum and dad.

In the context of the wider market it also bugs me far more than the cuckoo funds. At least the cuckoo funds are making a net positive contribution to the economy.

DataDude wrote: »

Don't agree with your comment "there's always somebody richer than you" as it doesn't equate to "there's always somebody with richer parents than your parents" which is what in means in this context. One is in your control, the other isn't. I don't think people should be given the benefit on their parents success..because I don't think it's fair to punish people for their parents failures. Can't have one without the other.

I understand your points, but fundamentally disagree with this. It's an evolutionary realism that people reap the rewards of their parents success and vice versa. We are have arrived at the privileged position of debating whether parents should help their kids buy houses in SCD, precisely because the kids of the best hunter gatherers reaped the rewards of their parents success!

If you believe that people should not have the benefit of their parents success, the alternative is to confiscate all wealth at death which would have profoundly damaging unintended consequences.

KBH2020

DataDude wrote: »

To play devils advocate on this one..
I read a lot of people on this forum and the buying forum in the €200k-€500k range getting repeatedly outbid on properties and being very frustrated by this. Much of the angst is being focused on Cuckoo Funds but also AHBs and LAs likely being the outbidders and therefore someone who didn’t ‘earn’ the house getting it ahead of them. Very frustrating. I completely understand that, I’d be frustrated too. And I can completely understand the feeling of ‘we both have good jobs, we’re borrowing the max 3.5x. We’re not looking for a mansion. How can we keep being outbid. This ain’t fair’

However, statistically it is far far far more likely (if 70% of FTBers have gifts) that you’ve just been outbid by someone with a chunkier gift than you. But that doesn’t seem to bother people?
Is it better to ‘lose out your dream home to someone who didn’t earn it’ when that person has rich parents (gifted) vs when that person doesn’t have wealthy parents (AHB/LA).

If I was in that boat, I’d see it as the same. But the emotional response is far far stronger against the ‘undeserving owners’….without wealthy parents.

I think it is easier to digest if you think it was another FTB as most likely they too have worked hard, saved hard, etc, if they got the extra 5k that pushes them into winning bidder, so be it. You are in the same category as them and they have now been removed as your competition for future houses. You might be the person with the extra 5k on the next house.

To think of our own state (AHB/LA's) actively bidding against FTB is what I find hard to swallow. We are working professionals and we are being told the government "supports" our dream to buy a home. To know that the state is bidding against us and so playing an active role in keeping us out of homes is so horrendous...It is our income tax that goes into this kind of public expenditure. It leads many to think they would be better off not working and that is absolutely awful and in some cases, probably true. The state should be building their own houses and not buying from the private market or it should at least be restricted imo. Knowing you could have been outbid by the state/vulture fund is devastating, you are left thinking "will they outbid me on the next house I am interested in too, is there any hope"? They are super charged competition with a budget not even comparable to yours.

Bass Reeves

Idbatterim wrote: »

If you were in the usa, Germany, uk, anywhere properly run and taxed, you would be paying way higher rates of lpt. You also wouldn't be thieved at outrageous rates of marginal tax. At current rates here, I'd scrap it, scrap it or implement proper rates, worth collecting...

Yes but for that LPT you will get a certain amount of services. While you will have a lower marginal rate in the UK your will have to fund your children's education fees 5-7K/year more expensive than Ireland. If your kids work through college at the minimum rate like Ireland the rate is about 60-70% of the Irish rate and they will pay tax on it. Your OAP will only be about 60% of the Irish rate. Faraway hills always look green.

[Deleted User]

People in Germany all live spending in rented property
And finish them days in nursing home
Nothing wrong with that
Or you pay mortgage or rent and finish same way as in Ireland I dont see anything wrong
Please dont tell me about in Ireland you will have your own house when you pay mortgage
There is matter of time when those who has difficulties to pay mortgage in Ireland will be thrown trough the door on street and will finish them days in nursing home.
At same time when tens of thousands of those who cant pay has problem already

Bass Reeves

DataDude wrote: »

To play devils advocate on this one..
I read a lot of people on this forum and the buying forum in the €200k-€500k range getting repeatedly outbid on properties and being very frustrated by this. Much of the angst is being focused on Cuckoo Funds but also AHBs and LAs likely being the outbidders and therefore someone who didn’t ‘earn’ the house getting it ahead of them. Very frustrating. I completely understand that, I’d be frustrated too. And I can completely understand the feeling of ‘we both have good jobs, we’re borrowing the max 3.5x. We’re not looking for a mansion. How can we keep being outbid. This ain’t fair’

However, statistically it is far far far more likely (if 70% of FTBers have gifts) that you’ve just been outbid by someone with a chunkier gift than you. But that doesn’t seem to bother people?
Is it better to ‘lose out your dream home to someone who didn’t earn it’ when that person has rich parents (gifted) vs when that person doesn’t have wealthy parents (AHB/LA).

If I was in that boat, I’d see it as the same. But the emotional response is far far stronger against the ‘undeserving owners’….without wealthy parents.

TBH what you are spouting is a form of rubbish. The two main reason why people get out bid are that firstly we are not build enough houses and apartments and secondly the cost of building houses and particularly in Dublin is very high. What was a Dublin supply problem is transferring right across the country as excess supply build pre the 2008 crash is now used up.

There are a number of reasons we are not building enough houses and the demand is for houses mainly. Finance to build apartments and houses is hard to access for developers. Those that can access it can charge a premium for the product they supply. Demand is exacerbated by an issue we have with social housing. Councils exited the provision of it due to high maintenance costs which they were providing inhouse and having no recourse where tenants deliberately damaged houses. When houses were vacated refurbishment costs were astronomical. Councils transferred that work to private LL's through HAP.

Any parent will try to help there child in any way possible. Is it unfair that some parents pay for grinds in subjects that there children struggle at. Is it unfair that parents pay for extra curricular activities which may give there children an advantage maybe accessing work or it gives them extra skills later in life. Is it unfair that children in larger cities will finds it easier to access third level as accommodation costs will not be as big a factor as for parents not from these area's. Is it fair that maybe as business person you can put a 16 or 17 year old on the payroll to help fund there education. In general life can be considered fair or unfair but any parent will do what ever they can for there child. If that parent has saved that money by being prudent maybe not doing up there own house to the latest fad, driving an older car, being a moderate drinker, not going to expensive sports events or concerts surely its a choice that they make.

But b!tching about parent's that wants to help there children out by giving them help with a deposit or bridging the gap between what the bank will give them and the house costs will solve nothing as its a supply issue we have at preset. A few months there was a PPP housing scheme shot down by LA councillors in the Dublin as not enough houses allotted to social housing things like that are more o blame than anything.

Hubertj

Revolution 1917 wrote: »

What the problem ?
If you been outbid at 500K property in Dublin
Buy 230K property in County Louth and 2 Scoda Kodiaq saving another 190K for new furniture
You will spend same time on motorway as in trafic to your property in Dublin.
Ach,sorry,property in County Louth does not sound great in Dublin.Then we heading another problem there.
I have serious problem at the moment.I want buy Ferrari for 2000 euros and I cant find it.Something wrong with supply ! Government has seriously work on it !

Louth isn’t great to be fair &#55357;&#56832;

DataDude

cnocbui wrote: »

But I don't want to downsize. I'm very comfortable where I am, thanks. Why should REITs not pay tax on profits or CGT, but I should be unfairly taxed in order to suit your agenda?

But I don't want to pay over €100k in income taxes every year. I'm very comfortable taking my full gross salary. Why should I pay income tax when Amazon doesn't pay Corporation Tax. Classic whataboutery.

Because societies work on a collective decision on what's best for everyone, not the individual. I absolutely HATE the level of income taxes we pay here, I complain about them all the time and wish they were lower...but when property taxes are mentioned people go on as if it's a personal assault on their entire existence as people...nope, it's just another way of distributing wealth, we have tonnes of them and relative to peers we lag way behind on property taxes and are far ahead of income taxes. And the best thing about property tax, the only way you can avoid them is by selling up (grand) - whereas income taxes remove the incentive to work (bad).

Idbatterim

cnocbui wrote: »

But I don't want to downsize. I'm very comfortable where I am, thanks. Why should REITs not pay tax on profits or CGT, but I should be unfairly taxed in order to suit your agenda?

Describe how this improper LPT stick would work.

If you were in the usa, Germany, uk, anywhere properly run and taxed, you would be paying way higher rates of lpt. You also wouldn't be thieved at outrageous rates of marginal tax. At current rates here, I'd scrap it, scrap it or implement proper rates, worth collecting...

[Deleted User]

DataDude wrote: »

To play devils advocate on this one..
I read a lot of people on this forum and the buying forum in the €200k-€500k range getting repeatedly outbid on properties and being very frustrated by this. Much of the angst is being focused on Cuckoo Funds but also AHBs and LAs likely being the outbidders and therefore someone who didn’t ‘earn’ the house getting it ahead of them. Very frustrating. I completely understand that, I’d be frustrated too. And I can completely understand the feeling of ‘we both have good jobs, we’re borrowing the max 3.5x. We’re not looking for a mansion. How can we keep being outbid. This ain’t fair’

However, statistically it is far far far more likely (if 70% of FTBers have gifts) that you’ve just been outbid by someone with a chunkier gift than you. But that doesn’t seem to bother people?
Is it better to ‘lose out your dream home to someone who didn’t earn it’ when that person has rich parents (gifted) vs when that person doesn’t have wealthy parents (AHB/LA).

If I was in that boat, I’d see it as the same. But the emotional response is far far stronger against the ‘undeserving owners’….without wealthy parents.

What the problem ?
If you been outbid at 500K property in Dublin
Buy 230K property in County Louth and 2 Scoda Kodiaq saving another 190K for new furniture
You will spend same time on motorway as in trafic to your property in Dublin.
Ach,sorry,property in County Louth does not sound great in Dublin.Then we heading another problem there.
I have serious problem at the moment.I want buy Ferrari for 2000 euros and I cant find it.Something wrong with supply ! Government has seriously work on it !

DataDude

schmittel wrote: »

Hard for me to comment on FTB frustration, as I'm not in that market mayhem. But, hey, that's never stopped me yet...

I wouldn't have a problem with kids of wealth families outbidding me. That's life, there is always going to be somebody richer than you. My frustration with Cuckoo Funds/AHBs/LAs would be twofold -

1) The tax position is such an unfair advantage. I read some rough calculations that between lower taxes and interest rates the same property will ultimately cost an average FTB almost double. It's one thing to be outbid by somebody wealthier than me, but when they're essentially doing it with my money it's a real kick in teeth.

2) Re my previous vicious circle post, it almost feels like they are bidding higher, happy to push prices up, in some ridiculous Ponzi scheme, and again they're doing it with my money.

When you have AHBs using council funding to get into a bidding war with cuckoo funds to secure properties that the cuckoo funds will rent back to the same council, it is f8cking madness!!

Any concerns I might have about the well heeled folks giving their kids a leg up pales into significance compared to the above!

Fair points, and to be clear I'm completely against all the goings on with AHB/LA/Cuckoo Funds. It's mental as you've described and I have fairly extreme views on what I'd like to see done. I think the piece about it being a double whammy - "you're not only being outbid with unearned money...you're being outbid with unearned money that you're paying for via taxes" is definitely the strongest argument as to why it's more painful.

That said, if I was a median income FTB couple, and I could stop one thing to try give me a fair shot at buying a house in Dublin right now...I think it'd be the gifts. I reckon they have an absolutely unbelievable inflationary impact on prices. Probably more so than LA/AHBs given they push up the highest value houses as where as LA/AHBs are somewhat capped in what they can do (although the upper limit seems to be growing)

Don't agree with your comment "there's always somebody richer than you" as it doesn't equate to "there's always somebody with richer parents than your parents" which is what in means in this context. One is in your control, the other isn't. I don't think people should be given the benefit on their parents success..because I don't think it's fair to punish people for their parents failures. Can't have one without the other.

Deleted User wrote: »

I think its more likely that the people getting substantially bigger gifts aren't really statistically that much better off (two people in a wealthy area, looking at a pricey house, are likely to have similar backgrounds and thus, similar "gifts").

Don't think this is necessarily true. There's lots of gifting going on in the low to mid prices in not so expensive areas. And there's plenty of people without family money, who earned their own way, struggling to compete with family money in the good areas as well.

Deleted User wrote: »

Also, it'd be much more difficult to stop this than to tackle the investor/local authority issue.

That's for sure

[Deleted User]

There is matter of time when investors to coockoo funds will start taking money out once return will falling and amount of printed money reduced at same time when rates from centrals will brought up
This gona be great show on irish housing market and mortgage as well
I hope many first time buyers are not invested in similar already waiting for return
Because once this will happen they will stay in rented property forever

cnocbui

Idbatterim wrote: »

A proper lpt would encourage people to downsize for a start. You are right about the disgraceful lack of tax paid by reits. Thats a government decision...

But I don't want to downsize. I'm very comfortable where I am, thanks. Why should REITs not pay tax on profits or CGT, but I should be unfairly taxed in order to suit your agenda?

Describe how this improper LPT stick would work.

Amadan Dubh

schmittel wrote: »

Exactly it is a vicious circle.

As rents rise further more and more people need housing assistance.
|
V
As more people need housing assistance, govt enters into more leases, pays out more HAP, buys more units on private market etc.
|
V
As govt enters into more leases, pays out more HAP, buys more units on private market etc rents rise further
|
V
As rents rise further more and more people need housing assistance.

And so on and so on....

My concern is that the plan will be to "reform" the LPT and it will be used to fund this policy as executed by the councils. It will be argued that the LPT will be used by councils to deliver housing which is double speak as it is not delivering housing, in fact it is removing housing with this policy.

[Deleted User]

DataDude wrote: »

To play devils advocate on this one..

I think its more likely that the people getting substantially bigger gifts aren't really statistically that much better off (two people in a wealthy area, looking at a pricey house, are likely to have similar backgrounds and thus, similar "gifts").

Also, it'd be much more difficult to stop this than to tackle the investor/local authority issue.

hometruths

DataDude wrote: »

To play devils advocate on this one..
I read a lot of people on this forum and the buying forum in the €200k-€500k range getting repeatedly outbid on properties and being very frustrated by this. Much of the angst is being focused on Cuckoo Funds but also AHBs and LAs likely being the outbidders and therefore someone who didn’t ‘earn’ the house getting it ahead of them. Very frustrating. I completely understand that, I’d be frustrated too. And I can completely understand the feeling of ‘we both have good jobs, we’re borrowing the max 3.5x. We’re not looking for a mansion. How can we keep being outbid. This ain’t fair’

However, statistically it is far far far more likely (if 70% of FTBers have gifts) that you’ve just been outbid by someone with a chunkier gift than you. But that doesn’t seem to bother people?
Is it better to ‘lose out your dream home to someone who didn’t earn it’ when that person has rich parents (gifted) vs when that person doesn’t have wealthy parents (AHB/LA).

If I was in that boat, I’d see it as the same. But the emotional response is far far stronger against the ‘undeserving owners’….without wealthy parents.

Hard for me to comment on FTB frustration, as I'm not in that market mayhem. But, hey, that's never stopped me yet...

I wouldn't have a problem with kids of wealth families outbidding me. That's life, there is always going to be somebody richer than you. My frustration with Cuckoo Funds/AHBs/LAs would be twofold -

1) The tax position is such an unfair advantage. I read some rough calculations that between lower taxes and interest rates the same property will ultimately cost an average FTB almost double. It's one thing to be outbid by somebody wealthier than me, but when they're essentially doing it with my money it's a real kick in teeth.

2) Re my previous vicious circle post, it almost feels like they are bidding higher, happy to push prices up, in some ridiculous Ponzi scheme, and again they're doing it with my money.

When you have AHBs using council funding to get into a bidding war with cuckoo funds to secure properties that the cuckoo funds will rent back to the same council, it is f8cking madness!!

Any concerns I might have about the well heeled folks giving their kids a leg up pales into significance compared to the above!

DataDude

schmittel wrote: »

Fair play to the parents for giving the kids a leg up, but where is the money coming from? If it is profits from their businesses good luck to them.

To play devils advocate on this one..
I read a lot of people on this forum and the buying forum in the €200k-€500k range getting repeatedly outbid on properties and being very frustrated by this. Much of the angst is being focused on Cuckoo Funds but also AHBs and LAs likely being the outbidders and therefore someone who didn’t ‘earn’ the house getting it ahead of them. Very frustrating. I completely understand that, I’d be frustrated too. And I can completely understand the feeling of ‘we both have good jobs, we’re borrowing the max 3.5x. We’re not looking for a mansion. How can we keep being outbid. This ain’t fair’

However, statistically it is far far far more likely (if 70% of FTBers have gifts) that you’ve just been outbid by someone with a chunkier gift than you. But that doesn’t seem to bother people?
Is it better to ‘lose out your dream home to someone who didn’t earn it’ when that person has rich parents (gifted) vs when that person doesn’t have wealthy parents (AHB/LA).

If I was in that boat, I’d see it as the same. But the emotional response is far far stronger against the ‘undeserving owners’….without wealthy parents.

Ursabear

Mic 1972 wrote: »

that's not even allowed from a legal standpoint
you have to be resident in the country you work from, at least 6 months + 1 day per year

Apologies I guess I read it wrong, I read it as though they were allowing employees to change what country they are employed in once there is an office there. I guess there's an application process and one can only be successful if it makes sense in context to their role .
https://www.google.com/url?sa=t&source=web&rct=j&url=https://blog.google/inside-google/life-at-google/hybrid-approach-work/amp/&ved=2ahUKEwjk2Z7yrr3wAhVdRBUIHfEBAWoQFjABegQICxAC&usg=AOvVaw3ehsI8azKU79X9EMNfxRnp&ampcf=1

" By mid-June your PAs and functions will come back with a process by which you can apply to move to another office. In granting approvals, they’ll take into account whether business goals can be met in the new location and whether your team has the right infrastructure in the site to support your work.

Remote work: We’ll also offer opportunities for you to apply for completely remote work (away from your team or office) based on your role and team needs. Before the pandemic, we had thousands of people working in locations separate from their core teams. I fully expect those numbers to increase in the coming months as we develop more remote roles, including fully all-remote sub teams. You’ll be able to apply for remote work within your product area or function. As with location transfers, your leads will evaluate whether remote work can support the goals of the team and business. Whether you choose to transfer to a different office or opt for completely remote work, your compensation will be adjusted according to your new location. "

[Deleted User]

Idbatterim wrote: »

A proper lpt would encourage people to downsize for a start.

Ah yeah, tax them out of their homes, that's the way forward.

I honestly believe that one of the biggest reasons people don't downsize in Ireland is because the chances of ending up beside Knackbag McScum that'll make your life a misery, and go unpunished, are far too high.

If I had a house in a quiet area, I'd only be coming out in a coffin. And the idea that LPT should rise as a punishment to get people out of their houses is ridiculous.

Besides, the vast majority of houses in Ireland are 3 bed semis, with the few 2 beds thrown in too. They wouldn't be downsizing by much.

hometruths

DataDude wrote: »

It’s definitely a mix of both. I’d say it’s more common on the smaller ‘gifts’ to lie on the mortgage application saying it’s a gift when in fact it will be repaid. I’m sure the banks are well aware of this and doubt they really care (once the ‘gifter’ has no claim to the property). Didn’t Leo previously make some reference to this himself sure?

The larger ‘gifts’, where banks can be kept out altogether, and the son/daughter is just given a €1m+ house. These are typically structured as 0% interest loans. The ‘gift’ is therefore just the interest portion which falls below the annual gift exemption at current deposit rates. There is never any intention of repaying the capital in reality, but by calling it a loan you can defer the CAT liability until death. These structures are fairly common in SCD.

I guess this is the best work around since they tightened up the dwelling house relief.

Pre 2016 you could buy a house for your kid to live in for 3 years at which point you could gift it to them, and as long as they live in it for a further 6 years it is exempt from CAT.

Hell of a deal. There was no upper limit to value of the house.

Idbatterim

cnocbui wrote: »

There's the activities of REITS and the tax breaks offered to them and the revenue greed of the government and councils and their on-costs, but you see the problem as people who currently own homes?

A proper lpt would encourage people to downsize for a start. You are right about the disgraceful lack of tax paid by reits. Thats a government decision...

DataDude

L1011 wrote: »

If money is actually being "lent" to children rather than gifted, there are potential tax implications for non-repayment and also likely people lying to their mortgage provider.

It’s definitely a mix of both. I’d say it’s more common on the smaller ‘gifts’ to lie on the mortgage application saying it’s a gift when in fact it will be repaid. I’m sure the banks are well aware of this and doubt they really care (once the ‘gifter’ has no claim to the property). Didn’t Leo previously make some reference to this himself sure?

The larger ‘gifts’, where banks can be kept out altogether, and the son/daughter is just given a €1m+ house. These are typically structured as 0% interest loans. The ‘gift’ is therefore just the interest portion which falls below the annual gift exemption at current deposit rates. There is never any intention of repaying the capital in reality, but by calling it a loan you can defer the CAT liability until death. These structures are fairly common in SCD.

tom1ie

Sierra Oscar wrote: »

Is it?

Admittedly supply has increased modestly in Dublin since the onset of Covid-19, but the rest of the country has seen a sharp fall in supply.

It would be a brave Minister who takes the decision to abolish HAP with the thinking that we have enough supply to no longer warrant State intervention in the rental market. People becoming homeless isn't a good look for a Government. Fine Gael post-2016 General Election will tell you that.

Agreed. I said that in my first post.
Vulture funds are buying up housing so rental supply must be increasing.
There is no point supply increasing but the price of rent being kept arificially high by HAP.

hometruths

tom1ie wrote: »

Rental supply is increasing due to vulture funds coming in buying housing stock.
The reason rent is so high is because of HAP.

Exactly it is a vicious circle.

As rents rise further more and more people need housing assistance.
|
V
As more people need housing assistance, govt enters into more leases, pays out more HAP, buys more units on private market etc.
|
V
As govt enters into more leases, pays out more HAP, buys more units on private market etc rents rise further
|
V
As rents rise further more and more people need housing assistance.

And so on and so on....

Sierra Oscar

tom1ie wrote: »

Rental supply is increasing due to vulture funds coming in buying housing stock.
The reason rent is so high is because of HAP.

Is it?

Admittedly supply has increased modestly in Dublin since the onset of Covid-19, but the rest of the country has seen a sharp fall in supply.

It would be a brave Minister who takes the decision to abolish HAP with the thinking that we have enough supply to no longer warrant State intervention in the rental market. People becoming homeless isn't a good look for a Government. Fine Gael post-2016 General Election will tell you that.

tom1ie

Sierra Oscar wrote: »

I think you're forgetting why HAP was introduced in 2014 in the first place - i.e. a greater number of people couldn't afford to make ends meet and were becoming homeless due to being unable to afford basic accommodation costs. This was brought about as a result of a critical shortage in the rental market.

The problem is HAP was always meant to be a short term solution to a supply crisis. It was envisaged that the rental market would reach a stable equilibrium with rents falling back once supply began to outpace demand. This was to be coupled with an increase in housing stock held by Local Authorities for further alleviate the pressure on the market. I think it's clear for all to see that not nearly enough progress has been made on this. In fact I would argue we are in a much, much worse position now than in 2014.

If you remove HAP, what do you propose to do with the people who become homeless as a result of that decision? I'd argue we still don't have near the level of rental supply needed to drive down rental costs to an affordable level in a post-HAP world. Sure, the costs would fall but probably not by nearly enough.

Rental supply is increasing due to vulture funds coming in buying housing stock.
The reason rent is so high is because of HAP.
I didn't say remove HAP just lower it so the baseline for rent overall drops.
There is now more supply in the market.

Bass Reeves

tom1ie wrote: »

So if rents weren't so high I presume people would be happier to pay rent.
Therefore what is the reason rent is so high?
Is it due to the fact there is a high baseline due to HAP?

Many countries have historical property rental capacity that has been put in place decades ago. Because of this investors are often only looking for modest returns.

Take a new three bed apartment being put up for rent. Assuming an average interest rate of 3% over the next thirty years. Interest will be approximately 157k on the purchase. Repayments will be 1410 euro/month. ( This is assuming no equity by LL, I know this nevers happens buts it's for illustration purposes). Add to this management charges(1.5k/ year.or 125/ month) Add in maintenance for next 30 years, risk of non payment by tenants and other costs and this adds 250+/ month in costs. There fore for this property to pay for itself over 30 years it costs about 1800/ month in costs.

Assuming an investment buy and puts up a 20% deposit he has 75k in equity,.his repayments will drop to 1150/ month but he has 75k in equity and costs remain the same giving total costs over 30 years of 1525/month. Because it's an apartment appreciation is not guaranteed and if it was a house you have added costs.

L1011

If money is actually being "lent" to children rather than gifted, there are potential tax implications for non-repayment and also likely people lying to their mortgage provider.

Sierra Oscar

tom1ie wrote: »

So if rents weren't so high I presume people would be happier to pay rent.
Therefore what is the reason rent is so high?
Is it due to the fact there is a high baseline due to HAP?
If HAP was lowered LL'S would have to lower rent as the money they indirectly get off the government aka taxpayer has been lowered.
This would then make rents more affordable and take the pressure off the housing market as people would not be in such a rush to take out massive mortgages at historically low interest rates.
The question is will HAP be lowered. My opinion is no way as there is way too many vested interests now working in this sector and the media would absolutely destroy whatever politician even suggested this. Also you would have the likes of manix flynn cracking up on the airwaves talking about the vulnerable in society etc.
Lowering HAP would lead to lower rents for everyone and lower amounts of tax payers money going into LL pockets (albeit LL pay a hefty amount of tax back to the government anyway).

I think you're forgetting why HAP was introduced in 2014 in the first place - i.e. a greater number of people couldn't afford to make ends meet and were becoming homeless due to being unable to afford basic accommodation costs. This was brought about as a result of a critical shortage in the rental market.

The problem is HAP was always meant to be a short term solution to a supply crisis. It was envisaged that the rental market would reach a stable equilibrium with rents falling back once supply began to outpace demand. This was to be coupled with an increase in housing stock held by Local Authorities for further alleviate the pressure on the market. I think it's clear for all to see that not nearly enough progress has been made on this. In fact I would argue we are in a much, much worse position now than in 2014.

If you remove HAP, what do you propose to do with the people who become homeless as a result of that decision? I'd argue we still don't have near the level of rental supply needed to drive down rental costs to an affordable level in a post-HAP world. Sure, the costs would fall but probably not by nearly enough.

hometruths

DataDude wrote: »

Interesting piece in the Sunday Independent titled ‘Bank of mum and dad is propping up South Dublin’. Pretty much as expected but nice to see it confirmed by an EA.

Owen O’Reilly saying in the properties he’s selling it’s routine for parents to be gifting €400k-€1m for their kids to live nearby and that prices would be considerably lower without this.

Same article has a mortgage broker saying 7 out of 10 applications they process have considerable gifts attached. Finding now that the vast majority of applicants who don’t have sizeable gifts are not renewing their applications when approval lapses and that, although they have lots of applications, very few are being drawn down and most just sit in the cabinet unused.

Wonder will it ever lead to a conversation about inheritance taxes if property ownership becomes an inherited, rather than an earned right!

https://m.independent.ie/irish-news/bank-of-mum-and-dad-is-propping-up-south-dublin-housing-market-40403979.html

Very interesting article, and like a lot of the trends in the market, it only comments on what the effect is right now, and not enough consideration of the consequences should this trend continue.

Fair play to the parents for giving the kids a leg up, but where is the money coming from? If it is profits from their businesses good luck to them, but article suggests vast majority is capital from savings and pensions.

Parents are probably thinking, well we're all right, we have a decent nest egg and sure we can always sell the SCD family home if push comes to shove. And that works out fine as long as the majority of SCD parents feel the same and have the same healthy pensions.

But the article says 7/10 have big parental gifts and the rest are starting to give up because they can't compete, saying we'll take a step back and wait and see.

Logic dictates this trend plays out that at some stage it becomes 6/10, then 5/10 etc with gifts, whilst the number waiting and seeing rises.

And then there is a tipping point when the number of buyers with family gifts is less than the number of buyers without.

Are impoverished pensioners in SCD going to be the next big thing?

eg "My pension is worth nothing because I needed to cash it in to help my kids, and now my house has fallen in value and I can't afford to sell it?, where's my NAMA etc etc"

Wouldn't surprise me in the slightest.