Landlords get it in the neck again

RayCun · 09-11-2018 10:29am #1

Ireland has retained its position as Europe’s most attractive destination for buy-to-let investors for the third year in a row, according to research by WorldFirst.

https://www.propertyinvestortoday.co.uk/breaking-news/2018/10/ireland-still-europes-number-one-buy-to-let-hotspot

DubCount · 09-11-2018 11:46am

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?"

Wheety · 09-11-2018 11:48am

What's your opinion RayCun?

LuckyLloyd · 09-11-2018 11:49am

Wheety wrote: »

What's your opinion RayCun?

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

Ray Palmer · 09-11-2018 1:20pm

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

RayCun · 09-11-2018 1:22pm

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.

seamie78 · 09-11-2018 1:22pm

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

Samuel T. Cogley · 09-11-2018 1:27pm

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.

Samuel T. Cogley · 09-11-2018 1:29pm

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.

10pennymixup · 09-11-2018 3:06pm

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.

DubCount · 09-11-2018 3:16pm

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.

Andycap8 · 09-11-2018 5:29pm

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.

0gac3yjefb5sv7 · 09-11-2018 5:44pm

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.

Baby01032012 · 09-11-2018 5:58pm

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.

0gac3yjefb5sv7 · 09-11-2018 6:16pm

Baby01032012 wrote: »

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!

Ray Palmer · 09-11-2018 6:20pm

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

aloooof · 09-11-2018 6:20pm

Pheonix10 wrote: »

Has there ever been a better time to be a landlord?

Baby01032012 wrote: »

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??

Baby01032012 · 09-11-2018 6:20pm

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.

Ray Palmer · 09-11-2018 6:25pm

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.

Samuel T. Cogley · 09-11-2018 6:26pm

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.

Baby01032012 · 09-11-2018 6:28pm

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.

TheChizler · 09-11-2018 7:02pm

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.

LuckyLloyd · 09-11-2018 7:05pm

Baby01032012 wrote: »

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.

Franz Von Peppercorn · 09-11-2018 7:07pm

Samuel T. Cogley wrote: »

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.

Ray Palmer · 09-11-2018 7:41pm

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

RayCun · 09-11-2018 7:48pm

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.

davindub · 09-11-2018 8:22pm

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.

DubCount · 09-11-2018 8:38pm

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..........?

lcwill · 09-11-2018 9:09pm

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.

TheChizler · 09-11-2018 9:18pm

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?

the_syco · 09-11-2018 11:58pm

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.

Gumbo · 10-11-2018 9:55am

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.

Mod Note
Be careful here as you are straddling the line between opinions and trolling.

4ensic15 · 10-11-2018 10:24am

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.

Only 2%! This is at a time when there is increasing demand due to a rise in household formation and immigration, tiny deposit rates on savings and increasing rents. What would be expected is a substantial increase in the number of registrations. There is a natural churn of laqndlords leaving the market due to death or other reasons but the fact is that they are not being replaced in circumstances where it should be a no-brainer for people with the cash to invest.

The_Conductor · 10-11-2018 10:31am

RayCun wrote: »

https://www.propertyinvestortoday.co.uk/breaking-news/2018/10/ireland-still-europes-number-one-buy-to-let-hotspot

I'm not sure how you make the assertion that 'landlords get it in the neck again'.
I'd view the article incredibly positively- insofar as its a positive for Irish tenants- as its selling Irish rental property as a massively high yield generator (if you consider 7.69% to be massively high)- to UK investors- at a time when the only other investors in Irish residential rental property are the REITs. Aka- if anyone actually reads and heeds this article- be it on their heads- but the main beneficiary of anyone who heeds the article- is prospective Irish tenants.

The article is flogging Irish rental units to Brits- without giving them any background on how the Irish market differs from the UK market- or the risks involved. In addition- the statistics used are questionable- and more than a little unbelievable (given the breadth of information in the public domain- which contradicts their findings).

Irish landlords, particularly small scale landlords (those with 5 or fewer units) are leaving the Irish property rental sector in their droves (at a rate of just under 7% of landlords in this segment, per annum, at present- according to out-of-date figures released by the RTB (last July- relating to 2017)).

REITs are not interested in the small scale/semi-d sector- they're particularly interested in apartment blocks etc- however, there are a large cohort of prospective tenants out there who quite simply do not want to live in apartments- and actively seek out alternate property types (houses etc)- articles such as the one quoted in the opening post- may, entirely accidentally, help provide some units in that sector.

To be brutally honest- labelling your thread- as you did- is a fairly clearcut attempt at trolling- and is clearly in breach of the forum's charter. If you intended to generate comment- the very least you should have done- is read and understand the article that your quoting- because it most certainly does not stand up to any sort of scrutiny- in fact, its a poor attempt to sell Irish property to unsuspecting Brits- apparently without any great depth of research on the part of the authors.

If you want to discuss media articles- as they pertain to property- thats fine- but please- no trolling- its not appreciated.

The_Conductor · 10-11-2018 10:37am

4ensic15 wrote: »

Only 2%! This is at a time when there is increasing demand due to a rise in household formation and immigration, tiny deposit rates on savings and increasing rents. What would be expected is a substantial increase in the number of registrations. There is a natural churn of laqndlords leaving the market due to death or other reasons but the fact is that they are not being replaced in circumstances where it should be a no-brainer for people with the cash to invest.

Its only at 2% overall- after they added all the housing associations, local authority unit managers etc- into the mix- as individual landlords- if you strip those out- a net 6.7% of landlords with 3 or fewer (and 6.86% with 5 or fewer) units- left the Irish residential property letting sector from 1st Jan 2016 to 31st December 2017. The pace at which small scale landlords have left the sector- sped up in 2018- however, statistics are not available (as yet).

Its not quite freefall- and its been gently massaged by the RTB through their creative addition of various other categories of bodies/groups/associations etc- to the mix- but its trending downwards at a worrying pace.

Graces7 · 10-11-2018 1:08pm

The_Conductor wrote: »

Its only at 2% overall- after they added all the housing associations, local authority unit managers etc- into the mix- as individual landlords- if you strip those out- a net 6.7% of landlords with 3 or fewer (and 6.86% with 5 or fewer) units- left the Irish residential property letting sector from 1st Jan 2016 to 31st December 2017. The pace at which small scale landlords have left the sector- sped up in 2018- however, statistics are not available (as yet).

Its not quite freefall- and its been gently massaged by the RTB through their creative addition of various other categories of bodies/groups/associations etc- to the mix- but its trending downwards at a worrying pace.

This was what was starting to escalate when I made my dramatic bid for freedom from the private rental market. Now I read the daft site with deep thankfulness that I did so and am safe in a council property.

I was able and willing to move counties and provinces but even so, finding a property within my range etc. was all but impossible

The change since I started renting some 14 years ago is devastating. Even this forum has changed

Landlords get it in the neck again

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