The amount of money leaving the country is small as a proportion of the size of the sector and isn't really a factor in the pro's and con's of the argument. A 'Fair return' is a very subjective term. Very little wealth is created in the rental sector, it is just transferred from one group to another. Wealth in created through work, primarily though the creation of internationally traded goods and services. There's no way income from wealth generating activities such as that should be taxed at a higher rate than income from non wealth generating activities. That's just bad economics. Therefore landlords should be paying at least as much tax on their income as PAYE employees.
Sinn Féin wants to stop exodus of semi-professional and accidental landlords
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Nicklesilver
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Most of the large PRS is foreign owned and pay Max 25% tax. Irish private self employed pay 55%. (income over 100k)
PebbleBeach2020
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Do you accept the correlation between rental income being liable to PRSI and USC and the sudden rapid increase of rents i the region of 15-20% the following year? I would disagree with your statement above.
I believe it beneficial to all that more "mom and pop" landlords are involved in the sector. There are high entry and exit costs to the buy-to-let market. If entry, then you have 1% stamp duty, engineer fee and solictors fees. On a house purchase of €350,000, you are looking at entry costs of approximately €6-7,000. If exiting, then you have estate agent fees at approximately 1.5% and solicitor fees. On a house sale of €350,000, you are looking at exit costs of approximately €6.5-7,000.
So entry and exiting the market is substantial. How are non-institutional investors going to be enticed back into the market, if and when the institutional investors can make better returns elsewhere. They will see up and what will become of the rental market (supply) in Ireland then?
The solution is that landlords and tenants must both be faciliated and listen to. For tenants, I think a reduction in rents makes sense, this can be done via a tax credit as proposed by Sinn Fein and that was available pre 2014 (I think). Alternatively, it landlords agree to reduction the rent by sad 20%, then make that landlords rental income not liable to PRSI and USC. The landlord is effectively unchanged in terms of income and the tenant gets a 20% reduction in rent.
For landlords, I don't think they are against a rent freeze for 2 or 3 years, provided it is a temporary arrangement. The government need to keep their word on this. I think landlords would give up a lot for an easier and quicker eviction process for tenants that don't pay the rent. At the moment, it takes 1-2 years before you can get your property back from a non-paying landlord. And any damages to the property and you do not have any redress. That's ridiculous.
Give and take on both sides is the solution. But the above won't win any votes, so won't happen.
This seems like a great idea to me.
PebbleBeach2020
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I actually read that posting a few weeks back and thought it was a fantastic proposal.
NoRegretsCoyote
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What if you don't pay enough income tax? Lots of tenants don't!
What if you are over 66 and not liable to PRSI? Or over 70 and not liable to USC? Lots of landlords are old!
All of these ideas are just re-arranging the furniture. What you need is policy to support the construction of new dwellings.
PebbleBeach2020
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You aren't going to have a solution that fits every single rental/landlord sitution. I'm not SF biggest fan, but this is their proposal and would offer some respite to renters. Something else can be done for the above if desired.
As for lots of landlords are old, do you have any data to back that up? From speaking to landlords and estate agents here in cork, landlords are exiting the market as they near retirement and who would blame them!!! I would imagine, having not seen data on the topic, that the number of elderly residential landlords is fairly small.
I agree, but contruction of new dwellings takes years and years. The proposals above are for immediate relief and help. To build an estate of 100 house would take 3-4 years at a minimum.
NoRegretsCoyote
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But the vast majority of renters are not squeezed by current rent levels, so it becomes a free gift.
Yes. Over-65 households have the second-highest median level of "real assets" which are not PPR.
| Median values of real assets (Thousand) | 2018 | Under 35 years | Other Real Estate Property | % | 142.0 |
| Median values of real assets (Thousand) | 2018 | 35 - 44 years | Other Real Estate Property | % | 183.4 |
| Median values of real assets (Thousand) | 2018 | 45 - 54 years | Other Real Estate Property | % | 237.0 |
| Median values of real assets (Thousand) | 2018 | 55 - 64 years | Other Real Estate Property | % | 393.0 |
| Median values of real assets (Thousand) | 2018 | 65 years and over | Other Real Estate Property | % | 254.4 |
What people need to be thinking about is long-term, structural solutions to support housebuilding.
Yes, of course there is.
The main problem with the housing market is the price of property. That's also the main reason rents are so high.
I'm a tenant, a home owner and a landlord, all at the same time.
If you make more money available or you make money cheaper then headline rents and property prices will increase in a supply constrained market. What's difficult to understand about basic supply and demand?
In the above scenario we'll just end up with more black economy payments.
Nicklesilver
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I wonder is there any credible data on the income and rent in the rental sector. There’s a lot of heresay that becomes fact. The bottom line is rents are high because of the costs, the risks and the tax rates. The balance has gone against small private landlords and that is why they are leaving. It’s just not worth it and that along with being demonised for providing accommodation is just the last straw.
PebbleBeach2020
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Purple, I'm struggling to make any sense of what it is you are actually advocating or anything resembles a solution. Yes, the dogs on the street know that increasing supply is the long term solution. But have you anything that offers immediate or short time solutions???
Aren't they? According to SF, the left and the media, I was under the impression that that's exactly what they are?!!!
Aren't they? According to SF, the left and the media, I was under the impression that that's exactly what they are?!!!
And nothing will really change until then. What's happening now is politicians pretending they can change things without addressing the fundamental disfunction of the entire planning and construction sector.
There are no immediate or short time solutions.
No, rents are high because that is what the market will stand.
If we increased income tax for everyone rents would drop.
If we reduced HAPS rents would drop.
Rents are high because demand exceeds supply and those chasing what the State hasn't snapped up in the private rental sector are able to pay what they are paying.
That's it. There's nothing else to it.
Increasing the available funds by introducing tax relief for renters will drive up rents. Decreasing the amount of tax landlords pay will increase net margins but won't decrease rents.
The only thing that will reduce rents is less money chasing the available stock (reduce HAPS or a recession) or a larger available stock being chased by the same amount of money.
NoRegretsCoyote
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No. The share of Irish private renters paying >40% of disposable income on housing costs is about 20% and has been more or less the same for a long time. This is medium-low by EU-15 standards.
There is more by Seamus Coffey on this very comprehensive post.
Journalism doesn't pay very well, nor does being a SF TD when you have to give half your salary back to the party
PebbleBeach2020
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So are you proposing the government does nothing for a number of years in terms of current renters plight?
Nicklesilver
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I don't think its that simple, rent also reflect location, transport links, services, climate, cost of building, etc.
There is no simple solution, you can't increase the supply in a fully developed area, rooms with a sea view cost more to stay in. There are many cases of homeless people refusing housing in an area they don't like. Populist simple solutions don't work. Ireland is not unique, look at China
There is no simple solution, you can't increase the supply in a fully developed area, rooms with a sea view cost more to stay in. There are many cases of homeless people refusing housing in an area they don't like. Populist simple solutions don't work. Ireland is not unique, look at China
There's nothing they can do, other than rent freezes and stopping landlords from ending tenancies. That will help existing tenants but will make things far worse for those entering the market.
If we want houses to be cheaper then we need to make the cost of ownership higher. That means property taxes, and very high rates for expensive houses. If you can't afford to pay then it comes off your estate after you die.
How about doubling the rates for all homes up to €250K, X3 up to €500k, X4 up to €750k and X8 over that. All of a sudden there's a ceiling on property values and if you can afford to live in a house worth €3 million you can afford to pay a couple of grand a month in property tax.
Look at most of the developed world. There's been a massive increase in money supply since the last recession, and an even bigger one since Covid, and there's no return on bonds so a good chunk of that capital has flooded into property.
The increase in money supply has far exceeded the increase in the supply of property. Institutional investors are just looking for returns that are higher than the bond market (so literally anything better than nothing). Net result; massive appreciation of capital assets. Art, classic cars, gold, Bitcoin, all sorts of assets where there is a finite supply have inflated in line with the increased amount of money central banks have printed. We are a twig floating in the vast river that is international capital. There's bugger all our government can do to fight the current.