2021 Irish Property Market chat - *mod warnings post 1*

awec wrote: »

This is still just populism.

Ireland needs landlords. The more the small landlords leave the market, the larger the share of the rental market the big funds will obtain. You've been pretty vocal about how terrible this is already.

You can't have your cake and eat it.

The roblem now is that the state depends on the REITs and they know it.
As part of negotiations for the state renting so many properties there was probably something in the conversation like "Let us have all those properties and We will pay you over the odds for these properties and you wont even be taxed on them, and we will make sure you arent taxed while we are in power."

Hubertj wrote: »

I’m not too knowledgeable on tax allowances for landlords but your suggestion makes sense. I was responding to the posters suggestion policy should drive rents down 40%. That wouldn’t solve anything, in my opinion.

Could you expand on that? I would have thought driving rents down 40% would solve a lot for an awful lot of people. I'd have said it was one of the primary problems that needs to be solved?

DataDude wrote: »

Could you expand on that? I would have thought driving rents down 40% would solve a lot for an awful lot of people. I'd have said it was one of the primary problems that needs to be solved?

I’d be very surprised if many private landlords are enjoying a 40% premium on rent over mortgage. Intentional policy of make their mortgage unaffordable? Sounds like populist boll*x to punish the evil landlord class. I don’t see how that solves the issue of their being insufficient supply in the market. If there is sufficient supply consumers have more more choice to find a better deal in the market. That will result in rents falling. A better solution is a vacancy tax which kicks in after 2 months (or whatever the average duration of vacancy is). Then we would see if there are the magical hundreds of thousands of vacant units hiding in plane sight around the country (excluding the luxury developments in d2 and d4 everyone knows about).

Hubertj wrote: »

I’d be very surprised if many private landlords are enjoying a 40% premium on rent over mortgage. Intentional policy of make their mortgage unaffordable? Sounds like populist boll*x to punish the evil landlord class. I don’t see how that solves the issue of their being insufficient supply in the market. If there is sufficient supply consumers have more more choice to find a better deal in the market. That will result in rents falling. A better solution is a vacancy tax which kicks in after 2 months (or whatever the average duration of vacancy is). Then we would see if there are the magical hundreds of thousands of vacant units hiding in plane sight around the country (excluding the luxury developments in d2 and d4 everyone knows about).

Problem is that by putting a ceiling on rent increases the government have put a floor on rents.
You can advertise a property as long as you want for €2500 pm but if nobody takes it not much you can do about that unless you want to put the price down. If you dont put it down it will take longer to rent. PErsonally I think some this October there will be lots of takers for these rentals/
But I dont see how the government can slap a vacancy tax on it if they dont want to put the price down for fear of getting caught by the same governments rent controls for the foreseeable.

timmyntc wrote: »

The idea that we need to keep rents high to "protect" the small landlord - absurd.

All landlords, big or small take a risk when they take on debts to pay for their property. If the rent doesnt cover the mortgage, tough ****. You either pay for it out of your own pocket (you are getting an asset after all) or you sell up.

So long as its not bought by an investment fund and kept empty, then there will be no loss of housing/rental stock.


People being forced to sell because their investment is no longer profitable is a sign of a functioning market. Not all speculators will make profit, some have to lose out.

And they are selling. But worse, there are no ordinary investors entering the market now. Its only REITs and councils on the government tit. And they arent interesting in sucking on smaller tits than the government funded ones.

timmyntc wrote: »

The idea that we need to keep rents high to "protect" the small landlord - absurd.

All landlords, big or small take a risk when they take on debts to pay for their property. If the rent doesnt cover the mortgage, tough ****. You either pay for it out of your own pocket (you are getting an asset after all) or you sell up.

So long as its not bought by an investment fund and kept empty, then there will be no loss of housing/rental stock.


People being forced to sell because their investment is no longer profitable is a sign of a functioning market. Not all speculators will make profit, some have to lose out.

Agreed. The argument that rents needs to be kept high to protect people is bizarre to me. If rents are low, it is because the demand simply isn't there to support higher rents. If the rent becomes so low as to make the renting of the property unprofitable, then the landlord can liquidate the asset and move on. The less of the rental property isn't a problem because if he can only rent it for a song, then the demand for rental property isn't high.

If the landlord makes a loss, what is the problem? Going into business entails a level of risk.

DataDude wrote: »

A.) Unless you bought at particularly bad times (e.g. 2004 -2007) and at a very high LTV, I would say it's almost certain that you would have at least that, if not more given that mortgage interest rates are c.2.5% and investment yields are >5%.
B.) Taking out debt to invest in an asset is risky. There is no inherent right for that investor to achieve a return that exceeds both the cost of their debt and repays their capital. Rental yields remain remarkably attractive at >5% when compared to other assets, hence the pouring in of international capital. So there are two options, we look to force down rents or apartment prices continue to rocket? I don't think we should be pandering to the poor landlord who is very sad his yield is going to fall from 5% to 3% (still an excellent return in todays terms, even if it doesn't cover his mortgage) in this scenario.

You make some good points and I’m not in a position to disagree on the numbers as I don’t have any myself. However, look at it from an investment perspective. Landlords are needed, only an idiot would think otherwise. If policies are intentionally introduced to make an investment unattractive why would another investor take that risk? What happens further down the line when another wave of populism leads policy makers to make more bad decisions?

Hubertj wrote: »

I’d be very surprised if many private landlords are enjoying a 40% premium on rent over mortgage. Intentional policy of make their mortgage unaffordable? Sounds like populist boll*x to punish the evil landlord class. I don’t see how that solves the issue of their being insufficient supply in the market. If there is sufficient supply consumers have more more choice to find a better deal in the market. That will result in rents falling. A better solution is a vacancy tax which kicks in after 2 months (or whatever the average duration of vacancy is). Then we would see if there are the magical hundreds of thousands of vacant units hiding in plane sight around the country (excluding the luxury developments in d2 and d4 everyone knows about).

I presume you have not been reading the news for the last five years as there is a housing crisis, predominantly due to the hyper growth of rents. It is not just a supply issue, but also a cost issue. If you think it is just the one then you do not accept it is a "crisis" or an "emergency" but something a lot less severe. Sure what good would a doubling or tripling of supply be if it was of 2 bedroom apartments starting at €2k per month?! Just about affordable for two well paid finance or tech workers sharing but how would that help people trying to raise their families?

And I use 40% for rents to decrease as, from looking at the average salaries and average rents, that would be a much more equitable level to pay for your rent and it would ensure people are not as financially stretched, unable to save, plan etc. For house prices, I think they aren't actually that unaffordable , maybe something like 15-20% reductions on new builds and an increase in supply would go a long way to alleviating the crisis.

You also have to think of the bigger picture post-covid; it is not sustainable for the cash in the economy to get sucked into rents instead of being circulated constantly into more productive sectors. Ensuring that workers have more cash in their pockets after they pay their rent and bills is far better for the economy.

timmyntc wrote: »

See below in response to a proposal to decrease rents up to 40%.





As if landlords unable to afford mortgage on their (extra) rental property is a justification for maintaining the status quo - yeah no. You have to accept that some people will lose out. Any landlords who cant afford the mortgage after a drop in rents should sell. They took a risk, it didnt pay off. Life goes on.

The state should not be trying to keep these people in business.

I agree, it's such a weak argument to not look to implement a policy which makes rents more affordable. Especially when you note that even with rents skyrocketing the past few years, landlords have been exiting the market en masse so it is clear that prices do not keep landlords in the market, it is something else.

Amadan Dubh wrote: »

I presume you have not been reading the news for the last five years as there is a housing crisis, predominantly due to the hyper growth of rents. It is not just a supply issue, but also a cost issue. If you think it is just the one then you do not accept it is a "crisis" or an "emergency" but something a lot less severe. Sure what good would a doubling or tripling of supply be if it was of 2 bedroom apartments starting at €2k per month?! Just about affordable for two well paid finance or tech workers sharing but how would that help people trying to raise their families?

And I use 40% for rents to decrease as, from looking at the average salaries and average rents, that would be a much more equitable level to pay for your rent and it would ensure people are not as financially stretched, unable to save, plan etc. For house prices, I think they aren't actually that unaffordable , maybe something like 15-20% reductions on new builds and an increase in supply would go a long way to alleviating the crisis.

You also have to think of the bigger picture post-covid; it is not sustainable for the cash in the economy to get sucked into rents instead of being circulated constantly into more productive sectors. Ensuring that workers have more cash in their pockets after they pay their rent and bills is far better for the economy.

I’m not denying there isn’t an issue. There clearly is. But tell me how policies designed to make investment unattractive will encourage investment? Who will take on that risk? I don’t think private investors will. That leave “funds” or REITs but everyone seems to want them out of the industry too. Is it then Just the state? What is the capital cost of this? What are the operational costs going forward? Many many extra public servants are required to manage this? Additional public sector salaries and pension obligations?

Hubertj wrote: »

You make some good points and I’m not in a position to disagree on the numbers as I don’t have any myself. However, look at it from an investment perspective. Landlords are needed, only an idiot would think otherwise. If policies are intentionally introduced to make an investment unattractive why would another investor take that risk? What happens further down the line when another wave of populism leads policy makers to make more bad decisions?

Just to echo comments made by a few others. If rents were somehow forced down (not saying this is easy to do, although I do think when you look at the level of government subsidy in the private rental sector - it's somewhat artificial at current levels).

In order for investors to continue to achieve the same yield, apartment prices would fall. Given building costs are relatively inflexible (and high), this theoretically would mean land values would have to fall also for more development to occur.

So we'd end up in a new era with lower rents, lower land values, lower apartment prices and investors still getting their yields. Sure the ones who bought in 2018-2021 would get stung, but that's investing for you and life would go on. Given that most of the BTL going on in 2018-2021 was done by large institutional investors, there's arguably no better time to pursue something like this as there's fewer than ever Joe Public Landlords to get stung by it.

DataDude wrote: »

Just to echo comments made by a few others. If rents were somehow forced down (not saying this is easy to do, although I do think when you look at the level of government subsidy in the private rental sector - it's somewhat artificial at current levels).

In order for investors to continue to achieve the same yield, apartment prices would fall. Given building costs are relatively inflexible (and high), this theoretically would mean land values would have to fall also for more development to occur.

So we'd end up in a new era with lower rents, lower land values, lower apartment prices and investors still getting their yields. Sure the ones who bought in 2018-2021 would get stung, but that's investing for you and life would go on. Given that most of the BTL going on in 2018-2021 was done by large institutional investors, there's arguably no better time to pursue something like this as there's fewer than ever Joe Public Landlords to get stung by it.

They would not achieve same yields, and if property price fall significantly, supplies would go down as well. Shortage of properties problem would grow.

schmittel wrote: »

With the greatest of respect, this is nonsense.

So what if private landlords cannot afford their mortgages? They'll simply be replaced with landlords/owners that can afford the property.

If the problem we're trying to solve is the unaffordable cost of housing then obviously rents falling by 40% will solve this problem.

Rubbishing such ideas as populism is just populism for landlord/property owning classes!

The point I am making is that if you introduce policies to make investment unattractive and drive investors out of the market you cause uncertainty in that market (whatever that market is property or otherwise). If there is uncertainty in a market it will deter investors as they may not want to take the additional risk. Are you really suggesting that introducing uncertainty in a market will not deter investment? That’s just nonsense, total nonsense. Rents obviously need to fall but to suggest regulating the sh*t out of the market will have the desired effect without unintended consequences is nonsense