Do landlords in Ireland have it as tough as they think?

We have one rental property. Never really intended being a Landlord, it’s a former PPR that was way under water when we moved out, selling at the time would have crystallised a big loss meaning we simply couldn’t have moved to a place big enough for our family had we sold. While we never intended being landlords, we still made an informed choice based on the circumstances we were in so I don’t think accidental landlord is the correct term, I’d reserve that for someone who had to move for work or had to let one property and rent another themselves.

The rent we charge is below market value and being in an RPZ will continue to be, however it’s still pretty close to breakeven on a cashflow basis even after tax, so I won’t play the poor mouth but every landlords circumstances will be different. When the capital element of the mortgage payment is taken into account, selling it right now would not make sense on a purely numbers basis, obviously if you would have some money left over from the sale and had a specific need for that, it would be a different story. Having never intended being a Landlord, selling up was however a very real consideration when our long term tenants gave notice earlier in the year, again we took stock of our situation and decided to let again.

Going through the process of finding tenants in the midst of this crisis was eye opening. Taking prospective tenants at their word and accepting their current landlords reason for serving notice to terminate the tenancy, there is an exodus happening in the sector. There are a lot of desperate people looking for places right now, right across the spectrum of professions and demographics. Lots of enquiries from people on HAP, interestingly almost every single one was in employment which in itself should blow apart some stereotypes. Based on the figures they are disclosing as their approved HAP amounts, this number should not be the problem either, we’re dealing with a total lack of supply and the only thing that will fix it is an increase in construction of both social housing and private rented housing. I would 100% agree that when location comes into it, priority should be given to those working in an area over people who’ve never worked looking for a place beside their ma, but as I’ve stated above most enquiries from people on HAP were from people in employment, often many years in the same job.

Back to the exodus from the private rental sector, if these landlords are all intending selling up, the crisis will get much worse before it gets better. From my own purely selfish motives, I see that if I accept what I am being told by prospective tenants, that selling now would be stupid as moving with the herd and selling when everybody else is selling will rarely prove to be the best option. Obviously as the property is in an RPZ, the upside on rent is limited but there still remains the opportunity to cherry pick the best tenants. This is a landlords strongest card in mitigating the biggest risk in their business, a non-paying tenant. It’s little things like this that keep you viable. Last time round I was prepared to negotiate on rent for the right tenants, it left me in the situation of being tied to below market rate rent now but for the time they were there, I never once had to wonder if the rent would be paid, it was always paid and on time, I don't have any regrets.

I think that the current trend of open viewings don’t lend themselves to getting a good feeling for prospective tenants, I didn’t show many people the property but I spent a bit of time talking to each of them. In reality I think that all of them would make good tenants, most tenants are good tenants and most landlords are good landlords, but there’ll always be some little things that mark one set of tenants above the others if you take the time to talk to them.

There are things I think would improve the sector for everybody. RTB cases need to be resolved within 6 weeks, this should help both tenants and landlords, nobody needs uncertainty hanging over them. Where an RTB decision declares a valid termination has been issued, there should be a fully enforceable order to vacate within 4 subsequent weeks. To balance this, terminating a lease to sell should be a one time only thing, sure there are instances where properties are genuinely put on the market but the sale falls through, the same landlord should never have the opportunity to use this declaration on the same property again, too much spoofing going on. Family member moving in should be subject to random checks.

The market rent thing has become a joke, you simply cannot openly advertise a property that is significantly below market rent which in turn taints the perception of what market rent should be because what you're really seeing is a segment at the upper end of the market, with below market rent properties being let through word of mouth or where they advertised, the real rent is not being advertised. If all new tenancies were allowed set the rent independent of the previous tenancy, it might bring more properties onto the open market and possibly but there is still an overall shortage. It's time to ditch the link to previous rent and the market rent bits when setting rents for new tenancies, the data exists through RTB registrations and the mandatory BER along with Eircodes to benchmark current rents on a €/SqM basis by areas and regions. Use a median value for an area either as your control point for future tenancies or else if you're going to use the tax code to try and get a hold on rents, use the actual rent v's the median rent for the area as a means to offer tax relief or increased taxed to reign in the higher end, the RPZ system actually locked in the chancers and pisstakers at the top end of the market and penalised the folks who saw fit to not increase the rent on a sitting tenant.

Anyway, I'm waffling a bit now, these are just some recent insights, feel free to agree, disagree, counter the points made.

Church on Tuesday wrote: »

They're not presumptions, my opinion is based on years of renting.

If you are/were a decent landlord then fine, I respect that. Not every Landlord I've had has been dodge, but the vast majority were. There's no point in me saying otherwise just because the few decent landlords on here will get upset like you have.

There are decent landlords and decent, like myself, tenants. There are those tenants then who couldn't give a toss about the place their staying in and will wreck the place and be a nuisance for their housemates. I've any amount of college/work and even previous landlord references.

No landlord is really on the breadline. None of the ones I've met in my time anyways. One landlord on here mentioned he has two properties, that's two more than most people and that's fair enough.

But please spare me this craic about landlords somehow letting for the good of it; it's a business, pure and simple.

Well actually you are being presumptuous in assuming all landlords are typified by your experience.

And yes, no landlord (or certainly none I know) are letting and setting properties out of altruism. Some (myself included) do it because it offers a reasonable rate of return.....a good chunk, however, are not landlords out of choice but out of necessity and would likely dispose of the property their letting if they could do so in a way that leaves them debt/liability free.

Anyway, if you think it is easy of handy money head off into the bank tomorrow with 3/4 properties you want to buy and see how far you get when you put you business plan to them - you should have no problem getting funded 😉

I do want to add one more thing... There are some absolute scumbags out there looking to profit on the back of the current crisis while contributing almost nothing except a brass neck. I had third parties, who should be fully aware of the relevant legislation, contact me and suggest they can get me much more than the advertised rent despite the obvious location in an RPZ, one on the basis of renting the entire property and subletting it room by room, I had images of battery chickens in my head, and another claiming to have screened and vetted professionals on their books having rented another property in the same development at a much higher price.

Yer Da sells Avon wrote: »

I'll tell you what's ridiculous: Being legally allowed to kick someone out of their home when they've been paying their rent on time and haven't done anything wrong.

Renting is in accordance with the lease and the tenancy can only be terminated in accordance with the law.
Dems the rules

Irishcrx wrote: »

I don't think generally people really understand that landlords don't profit a huge amount from a single house tenancy and then have to balance the risk vs reward , one bad tenant + rent arrears , damages and legal costs could well put you off ever doing it again and you have pretty much no legal backing in any sort of speedy manner, one bad tenant and there profits for that year could be in minus.

People spout high rents etc etc , yes and higher rental income = higher tax outgoings.

Example

Rental Income - €2,000 per month
Tax on income (Higher Rate) - €1040
Mortgage Payment - €700

Profit = €260

Trust me , €260 a month isn't a lot for the hassle that comes with being a landlord. Yes certain repairs can be written off as well as other deductions end of year but it isn't the goldmine people assume it to be unless you are already rich and rent a large number of properties and thus can afford the odd loss.

Please note that the calculations here are wrong.

Capital repayments on a mortgage are not a cost/expense.

They are a form of saving.

The interest payment is a cost.

You do not pay income tax on the gross rental income.

Many people confuse cashflow with profits/losses.

Many landlords are making large rental profits, but are cashflow negative after making capital repayments.

Some landlords seem to assume that the gross rent should cover the interest and capital repayments.

Rent should cover the cost of occupation, not the cost of ownership.

Irishcrx wrote: »

Example

Rental Income - €2,000 per month
Tax on income (Higher Rate) - €1040
Mortgage Payment - €700

Profit = €260

Trust me , €260 a month isn't a lot for the hassle that comes with being a landlord. Yes certain repairs can be written off as well as other deductions end of year but it isn't the goldmine people assume it to be unless you are already rich and rent a large number of properties and thus can afford the odd loss.

Let's assume that of the 700 mortgage payment, 500 is allowable interest. That's fairly high, but we will be generous.

This landlord is then making 1500 rental profits per month before other expenses.

Let's allow 100-200 pm for other expenses.

So they earn 1350 net rental profits.

On this figure they will pay tax at their marginal rate.

Pkiernan wrote: »

Roddy Doyle eat your heart out...

My last tenants point of view cost me 17000.

I often wonder how this happens. I know it does, so not questioning that, but people need to be a little better at assessing who they are letting property too...

Yer Da sells Avon wrote: »

Why would offering security of tenure to well-behaving tenants not be feasible in Ireland, when it is in Germany?

I didn't say it wasn't feasible or possible just that I don't foresee it. Not that even Germany does what was being asked for.
40 years of having a fairly flat population probably does make some things easier but if people really wanted to clone the German housing market I'm sure they could.

wowy wrote: »

I thought victim-blaming wasn't allowed on boards?

Why on earth would you believe that?

Yer Da sells Avon wrote: »

Why would offering security of tenure to well-behaving tenants not be feasible in Ireland, when it is in Germany?

Because German institutional landlords are more than happy with a long run return of about 5% and consequently they are not interested in, nor do they drive, market volatility.

In contrast, if, like in Ireland, you're a landlord with one or very few properties there is a significant incentive/temptation to either sell (taking the property out of the rental pool) or turf a tenant to get someone else in on a higher rent.

Furthermore, you're right - a good well behaved tenant should have pretty much an unfettered tenancy, but on the flip side it needs to be easier and quicker to get rid of bad tenants and recover unpaid rent and the cost of repairs from them.

When it went bad for us it cost us about €20k in fees and repair bills......plus the rent foregone.......then we had a series of solicitors' letters from the former tenant because of our refusal to give them a reference (in which they claimed the damage was not their fault......it was their sub-tenants!!).

andekwarhola wrote: »

The alternative is wasting taxpayers money on exorbitant rents on the private sector or hotels.

The need for subsidised housing is never going to go away so it might as well be as cost-effective as possible.

The irony with the typical Irish government /local authority love for outsourcing infrastructure and other state needs to the private sector is that it always actually often ends up costing the taxpayer more in the long run.

No, the alternative is properly manage the construction of a diverse stock of social housing and then manage it as a public asset.

By this I mean provide state or publicly owned land and procure housing/accommodation on a fixed price contract on that land......let the accommodation on the basis of need (not politics).....and charge socially equitable rents.

On top of that.......no forever homes. People have their needs and capacity to pay routinely reviewed and adjusted accordingly. If you don't pay the rent then out you go......likewise if your circumstances change and you need larger or smaller accommodation it should be provided.

Then don't sell the stock off. And don't allow it to be inherited.....it's there to be used to meet a social need, not to reward anyone.

If it was me, I'd take politics out of the whole sorry mess and properly fund and empower housing associations, and also include resident-management requirements in any development or community.