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Landlords get it in the neck again

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Comments

  • Registered Users Posts: 1,061 ✭✭✭DubCount


    Not a shock that yields in Ireland are the highest in Europe. Mortgage interest rates are also at the upper end of European tables. Risk of Buy2Let investment in Ireland is so high that high yields are going to be necessary to attract investment.

    Yield is only one consideration in a Buy2Let investment. It shows that rent prices are high relative to the cost of buying a property. If you want lower rent relative to house prices, you need to address costs (mortgage interest rates on Buy2Let etc.) and address risk (an efficient and reliable eviction system for rogue tenants). If things continue as they are, Ireland will be number 1 in the yield tables for many years to come.

    As usual, you have to ask the question, "if returns are so good in Irish Buy2Let, why are more landlords leaving the market than joining it?"


  • Registered Users Posts: 5,506 ✭✭✭Wheety


    What's your opinion RayCun?


  • Registered Users Posts: 36,023 ✭✭✭✭LuckyLloyd


    Wheety wrote: »
    What's your opinion RayCun?

    From the title his opinion seems to be pretty clear: landlords may be protesting too much.


  • Registered Users Posts: 8,344 ✭✭✭Ray Palmer


    Just want to know the details of the calculations. Does it consider taxes?


  • Registered Users Posts: 15,704 ✭✭✭✭RayCun


    DubCount wrote: »
    As usual, you have to ask the question, "if returns are so good in Irish Buy2Let, why are more landlords leaving the market than joining it?"

    If the situation for landlords in Ireland is so terrible, why are UK landlords investing here?
    Ray Palmer wrote: »
    Just want to know the details of the calculations. Does it consider taxes?

    Ask them, but since this is a guide for investors I'm sure they are interested in more than the headline figure.


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  • Registered Users Posts: 900 ✭✭✭seamie78


    Ray Palmer wrote: »
    Just want to know the details of the calculations. Does it consider taxes?

    I always wonder why tax is thrown into every argument in relation to landlords, its income so you pay taxes on it. the rate depending on your overall circumstances


  • Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    People are getting exactly what they wanted, large REITs buying entire blocks, that's working out just dandy. Yeilds will continue to be high as a new apartment can be put on at 'market rate' plus a bit for the luxury nature of the rental, pushing that market rate higher for the next block purchased.

    People who think private LL's have it easy with the risks involved are simply out of touch with the actual reality.


  • Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    seamie78 wrote: »
    I always wonder why tax is thrown into every argument in relation to landlords, its income so you pay taxes on it. the rate depending on your overall circumstances


    Because REITs are adept at avoiding tax making the yeilds higher again and thus mitigating their risk.


  • Registered Users Posts: 516 ✭✭✭10pennymixup


    RayCun wrote: »
    If the situation for landlords in Ireland is so terrible, why are UK landlords investing here?



    Ask them, but since this is a guide for investors I'm sure they are interested in more than the headline figure.

    Where in the article does it say UK landlords are actually investing here?

    It just seems to say that Ireland is an attractive proposition to "investors looking to maximise rental returns" due to "an average rental return of 7.69%, continued economic growth, consistent demand for rental properties, the stability of the euro and reasonable property prices."

    I agree when you say that you're sure investors are interested in more than this headline, maybe why they are not investing in their droves.

    You only get rental returns if the tenant pays rent and doesn't wreck the place. And in the UK, its a lot easier to remove a bad tenant than here.

    It seems the article bases it's findings on selective criteria, no where does it mention how difficult or expensive it is to remove a bad tenant here, negating any possible returns.

    It also lets itself down when it says Ireland has reasonable property prices. If anyone here thinks that Ireland's property prices are reasonable, let me know.


  • Registered Users Posts: 1,061 ✭✭✭DubCount


    RayCun wrote: »
    If the situation for landlords in Ireland is so terrible, why are UK landlords investing here?

    I'm sure there are some landlords from the UK and elsewhere investing in Ireland. Maybe they are attracted by high gross yields. Maybe they have not understood the risks. Still, at a time when rents are increasing, demand is a saturation relative to supply, and gross yields are high by international standards - The number of landlords and tenancies registered with the RTB is falling. Dont be fooled by the media or the government - High risk = high price.

    A few foreign investors is not changing the overall market direction.


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  • Registered Users Posts: 67 ✭✭Andycap8


    There's your source
    WorldFirst wrote:
    Research conducted by WorldFirst UK. All property prices and rental figures retrieved from Numbeo Cost of Living Tracker, September 2018. Numbeo is the world’s largest database of user contributed date about cities and countries worldwide. Full breakdown available on request

    (where the rent figures come from) Numbeo complies "cost of living" data - like a survey. For Ireland they've 1,200 unique contributors.

    (where the property price figure come from) Numbeo complies "pricing & rent information" again from internet users. For Ireland they had 213 unique contributors.

    The "yields" they reference are gross yields, not net yields.
    For their cost to income ratios they use user submitted "net income figures" for ireland it is €2,210, for Dublin it is €2,414 (so dublin net incomes are only 9% higher than all of ireland). Those net income figures equate to approx €30k & €35k gross salaires. That salary would qualify someone in Dublin for social housing.

    WorldFirst is a payments company, not an investment advisory company.


  • Closed Accounts Posts: 3,948 ✭✭✭ Zachary Witty Vignette


    Has there ever been a better time to be a landlord? All of them milking it these days. They should be praising the current system and not an ounce of a complaint.


  • Registered Users Posts: 1,622 ✭✭✭Baby01032012


    Never been a worse time you mean. RTB, threshold and government intent on pushing small landlords out..rent caps...6 years security of tenure for tenants...up to 2 years to get tenant out if they stop paying rent etc.


  • Closed Accounts Posts: 3,948 ✭✭✭ Zachary Witty Vignette


    Never been a worse time you mean. RTB, threshold and government intent on pushing small landlords out..rent caps...6 years security of tenure for tenants...up to 2 years to get tenant out if they stop paying rent etc.

    You have the highest rents of all time!


  • Registered Users Posts: 8,344 ✭✭✭Ray Palmer


    seamie78 wrote: »
    I always wonder why tax is thrown into every argument in relation to landlords, its income so you pay taxes on it. the rate depending on your overall circumstances

    Because you pay more tax here then other places. Not much point in making a extra 1% if the entire amount you earn is taxed at a higher rate. USC charges alone make the yield value pointless.

    It is very relevant as you don't pay the same taxes in each country. Other countries allow the mortgage as an expense.

    The article relies on cash buyers only and I suspect it is an investment fund and not personal tax they are referring to


  • Moderators, Sports Moderators Posts: 9,977 Mod ✭✭✭✭aloooof


    Pheonix10 wrote: »
    Has there ever been a better time to be a landlord?
    Never been a worse time you mean.

    This might be a mad suggestion, but rather than these extremes, could it just be the case that the truth lies somewhere in the middle??


  • Registered Users Posts: 1,622 ✭✭✭Baby01032012


    Thats high gross rents, plus high level of costs too. Plus tax at up to 56% on any earnings. And its a high risk investment. When you think you are trusting a couple of tenants with at least 250k for your investment and hoping they will pay and not thrash it.

    Last year i had criminal gang who didnt pay for year wouldnt leave and RTB kept their show going by entertaining every appeal tenants made even when tenants didnt show up.


  • Registered Users Posts: 8,344 ✭✭✭Ray Palmer


    Pheonix10 wrote: »
    Has there ever been a better time to be a landlord? All of them milking it these days. They should be praising the current system and not an ounce of a complaint.

    Yes when there was less charges and taxes. Landlords very well may be charging higher rents but keeping less of it now. Right now I get less than when the rent was lower. So why would I praise this situation while people like yourself think I am better off and being greedy when I am not.You also ignore the years of heavy losses when rents dropped.


  • Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    Pheonix10 wrote: »
    You have the highest rents of all time!


    And they're still not worth the risk. I and many other LL's would be delighted to see a return to sanity on all fronts; lower rents in exchange for actually being able to do something if people don't pay and/or damage the property.


  • Registered Users Posts: 1,622 ✭✭✭Baby01032012


    aloooof wrote: »
    This might be a mad suggestion, but rather than these extremes, could it just be the case that the truth lies somewhere in the middle??

    I'd like to agree but the answer is no....look at the volume of small landlords leaving the sector...huge decrease in RTB registrations etc. Only positive for REITS/funds who have large economies of scale who pay no taxes and bought in bulk at discount from NAMA.


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  • Registered Users Posts: 9,371 ✭✭✭TheChizler


    Ray Palmer wrote: »
    Yes when there was less charges and taxes. Landlords very well may be charging higher rents but keeping less of it now. Right now I get less than when the rent was lower. So why would I praise this situation while people like yourself think I am better off and being greedy when I am not.You also ignore the years of heavy losses when rents dropped.
    When were rent and charges significantly lower? Or when were the rules that are commonly complained about substantially different? Apart from the RPZ rules which came in after market rents had jumped significantly, there haven't been major changes in recent years IMO.


  • Registered Users Posts: 36,023 ✭✭✭✭LuckyLloyd


    I'd like to agree but the answer is no....look at the volume of small landlords leaving the sector...huge decrease in RTB registrations etc. Only positive for REITS/funds who have large economies of scale who pay no taxes and bought in bulk at discount from NAMA.

    There was only a 2% year on year drop in RTB registrations over the past year and that can just as easily be attributed to the sale market and move out of negative equity for accidental landlords as anything else.


  • Closed Accounts Posts: 7,070 ✭✭✭Franz Von Peppercorn


    People are getting exactly what they wanted, large REITs buying entire blocks, that's working out just dandy. Yeilds will continue to be high as a new apartment can be put on at 'market rate' plus a bit for the luxury nature of the rental, pushing that market rate higher for the next block purchased.

    People who think private LL's have it easy with the risks involved are simply out of touch with the actual reality.

    REITs are landlords.


  • Registered Users Posts: 8,344 ✭✭✭Ray Palmer


    TheChizler wrote: »
    When were rent and charges significantly lower? Or when were the rules that are commonly complained about substantially different? Apart from the RPZ rules which came in after market rents had jumped significantly, there haven't been major changes in recent years IMO.

    It isn't a matter of opinion it fact that PRSI and USC were added to rental income. So that is 10% in the last 3 years. On top of the LPT and PRTB charges. In case you don't know insurance has also gone up.

    To recoup a €1 decrease is at least €2.20 increase in rent required due to tax. Again you ignored the losses made when rent dropped which tenants broke leases to get but their is no repercussions for the tenant but a landlord can be fined if they do.

    Landlords are worse off with the higher rents due to increases in costs, charges and tax is a fact


  • Registered Users Posts: 15,704 ✭✭✭✭RayCun


    It's like farmers and the weather. If it rains its too wet, if it doesn't rain its too dry.

    Apparently the only thing worse than rents being low is rents being high.


  • Registered Users Posts: 1,447 ✭✭✭davindub


    Ray Palmer wrote: »
    TheChizler wrote: »
    When were rent and charges significantly lower? Or when were the rules that are commonly complained about substantially different? Apart from the RPZ rules which came in after market rents had jumped significantly, there haven't been major changes in recent years IMO.

    It isn't a matter of opinion it fact that PRSI and USC were added to rental income. So that is 10% in the last 3 years. On top of the LPT and PRTB charges. In case you don't know insurance has also gone up.

    To recoup a €1 decrease is at least €2.20 increase in rent required due to tax. Again you ignored the losses made when rent dropped which tenants broke leases to get but their is no repercussions for the tenant but a landlord can be fined if they do.

    Landlords are worse off with the higher rents due to increases in costs, charges and tax is a fact

    You always paid PRSI on rental income if you were self employed so you cant complain they brought this in. But that was 2012, way before the recovery.


  • Registered Users Posts: 1,061 ✭✭✭DubCount


    LuckyLloyd wrote: »
    There was only a 2% year on year drop in RTB registrations over the past year and that can just as easily be attributed to the sale market and move out of negative equity for accidental landlords as anything else.

    That's 1 landlord in 50 leaving a market with the highest gross yields in Europe and massive shortages of rental accomodation. That also doesn't account for the increased scope of the RTB to cover housing agencies which is masking the real level of the decline.

    Why do you think that is..........?


  • Registered Users Posts: 259 ✭✭lcwill


    DubCount wrote: »
    Not a shock that yields in Ireland are the highest in Europe. Mortgage interest rates are also at the upper end of European tables. Risk of Buy2Let investment in Ireland is so high that high yields are going to be necessary to attract investment.

    Yield is only one consideration in a Buy2Let investment. It shows that rent prices are high relative to the cost of buying a property. If you want lower rent relative to house prices, you need to address costs (mortgage interest rates on Buy2Let etc.) and address risk (an efficient and reliable eviction system for rogue tenants)."

    I'm a landlord in Ireland and Italy - headline yields are dramatically different but there are so many other factors: in Italy I set the rent based on a government determined formula and pay tax at 10%, tenants pay the building management fees and most repairs, unfurnished is the norm, no capital gains tax if you hold for 5 years or more, and basically no inheritance tax.


  • Registered Users Posts: 9,371 ✭✭✭TheChizler


    Ray Palmer wrote: »
    It isn't a matter of opinion it fact that PRSI and USC were added to rental income. So that is 10% in the last 3 years. On top of the LPT and PRTB charges. In case you don't know insurance has also gone up.

    To recoup a €1 decrease is at least €2.20 increase in rent required due to tax. Again you ignored the losses made when rent dropped which tenants broke leases to get but their is no repercussions for the tenant but a landlord can be fined if they do.

    Landlords are worse off with the higher rents due to increases in costs, charges and tax is a fact
    I wasn't aware of those, hence me asking. So all those things are new?


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  • Registered Users Posts: 37,295 ✭✭✭✭the_syco


    seamie78 wrote: »
    I always wonder why tax is thrown into every argument in relation to landlords, its income so you pay taxes on it. the rate depending on your overall circumstances
    Because 50% tax of 10 is 5, but 25% tax of 8 is 2. So the former gets to keep 5, and the latter gets to keep 6.

    So although the former gets higher rent, the latter gets to keep more after taxes. Thus although foreign landlords may be charging less, they could be getting more.


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