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Landlords selling up - Rents rising

Diemos

Rents rising as landlords sell to cash in on property price boom - Independent.ie

I'm not a landlord but I think the attitude towards landlords in the past 20 years has been particularly unfair. Just mention landlord on social media and the lynch mob will descend in droves.

Politicians pushing populist laws against landlords and making it a less and less attractive investment vehicle.

Tenants rights have been boosted dramatically in the past decade, a lot of the commentary was the bring more professionalism to the industry but there has been no reciprocal strengthening of landlord rights.

Now, surprise, surprise, there are very few rental properties available and rents are soaring, homelessness is on the rise again.

The response seems to be surprise pikachu face.

Have we seen an irreversible change in the Irish market, where the small landlord is gone and replaced by large faceless organisations for good?

I've rented in the past, I believe it's an important part of the housing eco system, I think we've really shot ourselves in the foot here.

I'm curious to hear what other think.

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Ray Palmer

https://www.boards.ie/discussion/comment/117736227#Comment_117736227

It really isn't good if you want to buy because more people are going to need to be housed so prices go up. It also puts more pressure on people to buy because there is nowhere to rent. House prices go up and less places to rent while we still don't have enough houses being built to house people. Decreasing occupancy in the existing stock is terrible for everyone looking but benefits the seller. At the moment I have figured it is better to leave a property empty for 2 years rather than rent due to RPZ and current construction costs.

Ranjo

I sold our rental property, which was originally our PPR back in 2013, at a loss after buying it in 2002. We had some equity in it, so came out OK.

I still rejoice at exiting the rental market to this day. I don't even have one of those really bad renter stories, but it's still a painful experience for no gain other than a marginal property value increase which you only may eventually get and pay CGT on anyway.

JimmyVik

https://www.boards.ie/discussion/comment/117736583#Comment_117736583

I saw planning permission going in for a huge extension and stables.

I think I know who they bought the house for.

mrslancaster

""The President won't sign legislation if it's unconstitutional. Doesn't need to go anywhere near the courts. It's not as if SF can/would try to do this quietly""

Always wondered how that works... probably stupid question but does the president have to sign off on every amendment to an act, eg if theres a new SI, or are later changes just authorised by the relevant minister?

Edit, sorry a bit off topic but helps to understand how changes can happen

spaceHopper

My father had a house in flats and after he passed away I managed it for my mother. At some point I’ll inherit it but I’m not sure if I’ll keep it or sell it. There is a family attachment to it and I know my father would have wanted me to keep it. But is it worth the hassle.

I view this type of renting as a temporary thing, it’s something you do when you are in college or first start working. You do it, have the craic and eventually settle down get your own apartment or house, a step on the ladder. It’s not renting for life, which I think is bonkers in Ireland, we aren’t setup for it.

Our housing model should be

Small private or big institutional landlords renting to a young generation who then either

Move into their own place or even first step.

Move into social housing provide by local council.

Rent allowance or HAP should be a short term thing to get you over a problem, aka no job or poor paid job but after a time you either stand on your own two feet or you move from it to social housing.

Housing people and families in private rental housing isn’t working it’s too expensive and it’s not fair on the person or family as they have very little security. What happens when they retire?

There was a guy on news talk last night he rented a house to the council, they rented it to a tenant who is nightmare he’s now selling up and the council have given him the two fingers and left him with the tenant and calls from guards and neighbours about her behaviour. Even with her antisocial behaviour he can’t evict her because of the pandemic. That protection is lapsing but it will still take 18 months to get her out. She should be gone in 7 days.

agoodpunt

Its a race for LLs to get out before SF get in dont know how the reits will respond they have share holders and pension funds and they will want a return

One thing for sure supply of rent capped rentals will disappear to be replaced with new expensive rentals

The ridiculous long notices to vacate are already a hinderance to a sell a property

markw7

https://www.boards.ie/discussion/comment/117737417#Comment_117737417

Oh lovely, the neighbours must delighted!

redarmyblues

I was considering selling my rental due to the hassle and the current hostile environment towards LLs but after reading Eoin Ó Broin's comments I am definitely selling. Why are Gov and its opposition incentivizing investors to get out of the private rental market when they should be doing the opposite.

“Crucially, one of the big concerns we have is, in the last quarter, data from the Residential Tenancies Board (RTB) shows that the number of vacant possession notices to quit, of landlords selling properties, has dramatically increased"

Has the man no sense of self awareness, he is one of the biggest reasons for the flight of small time Landlords from the market.

agoodpunt

Friend of mine just issued 6 notices with solicitor affiadavitt selling up, all professionals some nurses they where crying he was fkcuing crying too

but next 2 years it will be dyer out there LLs who sold out drinking champange "now you got what you deserve.. lol

many sitting tenants just wait for same it was a bad policy to overtax and demonise a mostly good business to cover failings in our planning and mismanagement of social then screwing private accomodation

DCC buying all around dublin paying over odds in panic more champange lol

jmlad2020

As someone who may move back to Dublin to work, is the rental scene really that bad?

There is definitely a reduced quantity of professional rentals on the market, but they are still being advertised, at before Covid level prices. Nothing out of the ordinary. You'd think more people working remotely means less demand.. What can I expect as a prospective renter? Will it be difficult?

The J Stands for Jay

https://www.boards.ie/discussion/comment/117736467#Comment_117736467

If you make a loss, you wouldn't be paying tax.

vandriver

https://www.boards.ie/discussion/comment/117732872#Comment_117732872

I'd love to see some figures to back up your 'barely breaking even' claim.

Is it a... rent 18 grand, mortgage 12 grand ,tax 5 grand ,I'm only making a grand,it's not worth it type scenario?

Barely breaking even on cashflow is not the same as barely breaking even on profit.

Del2005

https://www.boards.ie/discussion/comment/117758789#Comment_117758789

The government wanted professional landlords and did everything in its power to bring them to the market. Now we have professional landlords leaving property empty to avoid RPZ legislation and private landlords selling as fast as possible.

You are screwed because of government intervention.

JimmyVik

https://www.boards.ie/discussion/comment/117758863#Comment_117758863

You can pay tax on a loss with property rental in Ireland.

I couldnt believe it myself when i found that out.

A Shaved Duck?

https://www.boards.ie/discussion/comment/117759340#Comment_117759340

I dont really know what point you are trying to prove but if you want to imply something other than what i've posted fill your boots. Reality is you dont have a clue.

JimmyVik

https://www.boards.ie/discussion/comment/117759340#Comment_117759340

I wonder why they all are leaving then?

Maybe they are making a profit but the amount of hassle is just not worth the profit they make.

Or maybe the potential for financial ruin is just too great and its time to leave the business to the REITs and councils.

The J Stands for Jay

https://www.boards.ie/discussion/comment/117760473#Comment_117760473

What sort of expenses would you be incurring that can't be offset against the rent?

marieholmfan

https://www.boards.ie/discussion/comment/117732872#Comment_117732872

Breaking even as in getting an asset for nothing?

DubCount

https://www.boards.ie/discussion/comment/117760682#Comment_117760682

Being a LL does not mean getting an asset for nothing. If you buy a rental property, you pay with cash you already have or the capital repayments on a mortgage. You pay full price for the property out of cash from your own pocket. Its not free.

While you own the investment property, you get income from rent (hopefully) and expenses (interest on mortgage, insurance, accountant fees, PRTB registration fees, repairs and maintenance etc.). Hopefully your income is more than your expenses, and you make a profit. You pay tax on the profit, and keep the balance.

The truth is that the profit to be made is not as great as it needs to be, to make the investment worthwhile, and to make sense with all the hassle and risk involved. There are easier ways of making money, and accumulating wealth over time.

purpleshoe

https://www.boards.ie/discussion/comment/117760682#Comment_117760682

I can never understand this logic. The LL has their money (& borrowed) on the table, most likely hundreds of thousands. It is far from risk free, and it has never been a case of getting an asset for nothing.

I strongly view, for the short term anyway, that the tenant is in touching distance of getting an asset for nothing because "It is my constitutional right, and I know my rights".

I can't blame the small/traditional LL's for selling up. They have been scapegoated for societies housing problems, rode sideways with taxes, and with legislation that erodes their control of their property and exposes them to the risk of delinquent tenants with zero come back. In a few more years all rentals will be REIT, or similar owned. These are operations with deep pockets and their own legal departments. They won't mess around, they won't be flexible, they won't compromise their bottom line.

If you think todays LL's are demons, wait until you see what is coming behind them.

JimmyVik

https://www.boards.ie/discussion/comment/117760597#Comment_117760597

Im not a landlord bur i believe if you look it up on revenue they will list out expenses that can and cannot be claimed for.

marieholmfan

https://www.boards.ie/discussion/comment/117760957#Comment_117760957

The profit is the asset that you get after 20 years.

purpleshoe

https://www.boards.ie/discussion/comment/117762214#Comment_117762214

Sure as you put it that way. Now I see it 🙄.

JimmyVik

https://www.boards.ie/discussion/comment/117762214#Comment_117762214

Break it down for us?

agoodpunt

https://www.boards.ie/discussion/comment/117762214#Comment_117762214

How can something you have borrowed and repaid be profit, is saving money every wk/mth also considered profit

If i dont have then why should you even though you worked it, LLs cant claim for there time as an exp, fact

Claw Hammer

Small landlords have always left the market. Many decide the hassle is not worth it. The real issue is why so few landlords are coming into the market to replace those who leave.

In any normal circumstances, low interest rates and rising rents should have been causing landlords to barrel in to the market. There are a number of reasons why this is so:- inability to raise finance on reasonable terms, high taxes with restricted deductions for expenses, RTB, BER and HAP regulations ll make for a massive burden on the one property landlord. Houses and apartments are being left empty by their owners because of the hassle in renting them out. I know a man who had a 4 bed house in Carrick on Shannon. He was getting €500 a month. When it went empty at the end of the tax break period he stopped letting it. I looked at Carrick on Shannon on DAFT recently. There were 2 properties to rent in the town itself. I then checked AirBnB and found there were about 10 entire properties available. It is obvious something is wrong.

The solution from some quarters is more rent restriction, more restriction on sales, more taxes, more regulations. It is nuts.

handlemaster

https://www.boards.ie/discussion/comment/117733040#Comment_117733040

Its so good everyone wants to do it. All up side not risk and tenants will look after you. Let us know when you buy

1874

https://www.boards.ie/discussion/comment/117760651#Comment_117760651

What sort of expenses do you think could possibly equate to 50% of an annual rent?

The total sum of the rent is eligible for tax as it is for social insurance and USC, so if a 1 bed apartment which is likely to go for 1250-1450 and the landlord is already on the higher rate (or moves into it), then all their rental income will be subject to tax at 42%, plus however that affects their social insurance payment plus additional percentage for USC, it depends on their overall income really.

Lets just say a round 1400/mth, 16800/annum, you think someone can legitimately offset 7056 of that to expenses? on what? technically you can only write off white goods at 12.5%/annum or 1 item of each type over 8 years (and from previous experience with tenants, white goods do NOT last that long).

I dont think you can write off anything for social ins (prsi/rsi/whatever its is called now) OR USC.

You have an effective 50%+ taxation, which the State/Revenue commissioners get their take one way or the other, which ine ssence means they get first dibs/main priority on that income, and that is why many landlords are either not even breaking even or subsidising the cost.

You cant claim for any of your own time. I can see legitimate reasons why a persons own time isn't claimable because it cant be proved and it could be scammed/there is no way to prove how many hours work was undertaken or if zero hours were undertaken, and as such it somewhat incentivises landlords to pay for work legitimately so it CAN be claimed back (which imo is understandable) What I dont understand is why people think landlords are making any profit on any given month, unless they got the property before prices took off and have long since paid significantly or completely, but anyone with a mortgage is unlikely to be making much if any profit, hence there is no reason to be involved in such a high risk, work intensive situation, that requires constant attention.

It could be made possible to make private landlording legitimate/legal, of better quality and finccially viable for tenants and rewarding for someone investing their time/money in it, but it would require sensible legislation.

Your post makes it sound like you think like a lot of people do, that you get to pay all expenses out of the rental income and then are taxed on whats left over, and thereby a landlord would have all their costs paid and then pay a paltry tax, thats not how it works, a person may pay their mortgage first (ie monthly) but the Revenue commissioners have a more significant claim on that income.

There would be a quick easy fix (given that it seems legislation can be written and enforced in a short time) but that would require the State to forgoe whatever paltry income they take from small landlords and offset that against the rental cost or a set value so the a tenants rent could be reduced by that amount.

The state has already done this for REITs who pay little to no tax, and they dont reduce market rates? yet the state wont do this for small landlords? That is why landlords are getting out/selling up, these sold properties usually have less people living in them, new housing stock isn't replacing housing sufficiently/ie demand outpaces the actual need. An increase in sold properties creates a further increased need for rental properties too, where the demand already isn't being met across all the market, hence rents increase even more.

The State is complicit in worsening the situation by introducing restrictive legislation that discourages existing landlords and discourages new landlords from entering the market, so they are either doing this unintentionally (meaning they are incompetent) OR they are doing it intentionally meaning imo they are compromised as politicians because they are either corrupt or biased towards large businesses owning/running rentals or even having such a significant influence on owner occupiers (see businesses outbidding for new properties geared towards first time buyers).

The entire housing system is dysfunctional, from inaction, corruption, poor planning.

A start out of this would be to tax REITs at levels small landlords have been taxed at, encourage them out.

The J Stands for Jay

https://www.boards.ie/discussion/comment/117763052#Comment_117763052

That's a lot of words to say that you don't realise that capital repayment does not affect profit.

1874

https://www.boards.ie/discussion/comment/117763273#Comment_117763273

Your reply suggested to me you didnt understand what profit means, or how it is generally interpreted by tenants.

Who seem to think all rent is profit, and arent aware of costs incurred

Revenue deems all rent as taxable income, profit (whats practical) to me is whats left over after all costs are paid.

If you are suggesting that someone is in profit, because they have made a payment off the prinicipal, thats a long wait to get your return, there is usually a significant outlay to get that potential return over a long period of time, which doesnt factor in non paying tenants or the difficulty getting rid of them. I think most landlords would be happy to get the capital paid off, because that is the only avenue for profit (if there is no profit in it, why would anyone get involved). Do you even think that should be allowed? or do you expect people to put up the capital to acquire a property to allow someone to live in for free.

When someone puts up the initial capital to put a property up for rent, they are saving the state from doing so from taxation, why do you think there should there not be a regular income from that ie some form of profit? without landlords where would anyone who needs a roof over their heads live? The state doesnt want to do it? Are you ok with REITs not being taxed at all? do you think they will be a better option for renters?

I worked out the capital appreciation over the years I had a rental property, taking into account taxation (significant 50+%) all the time, hassle dealing with unreasonable tenants, by the time CGT was paid, I would have been better off doing OT in work.