# Minister Murphy actively pushing landlords out of the market in the face of the latest Daft report



## landlord (14 May 2019)

The shortage in Ireland of rental properties, (or more importantly perspective landlords) has become quite obvious.
The latest daft report is showing rental availability at its lowest level, 2700 properties as of May 1st 2019 compared to 4,400 in 2007 and average rent at an all time high of €1,366.
Average rents (on Daft) being at all time highs is a red herring, because it is only a small sample of rental properties and does not reflect the vast majority of landlords stuck at below market average rents due to rent pressure zones.
This shortage is always seen exclusively as a supply issue, but surely the government must realize that even if they are built, their must be an incentive for a perspective landlord to purchase them and that their constant interference in the rental market has only served to alienate current and perspective landlords.
Myself and many other landlords out there who bought to rent between 7th December 2011 and 31st December 2014, can now sell with no capital gains penalty.
(Initially the requirement was to hold the property for 7 years, but this was reduced to 4 years).
I am trying to understand how the minister who is dealing with a severe rental crisis due to a continued reduction in supply has not put 2 and 2, together and figured out that it is government policies that is pushing landlords out of this market.


I currently have a very appealing financial incentive to sell now with no capital gains tax to pay.

I and many others are no longer in negative equity, so I will make a profit rather than a loss by selling.

I will no longer have to worry about accepting rents way below market average, or government interference on how much mortgage interest I can claim against tax.

Druconian rental inspections (for HAP tenants only) is another headache.

As it has been and always will be politically unacceptable to side with landlords over tenants, any issues regarding non payment of rent or damage to rental properties will usually be awarded in favor of the tenant. Or at least that’s the perception amongst landlords.

And after all this time and effort, to then loose 52% to tax and LPT and RTB fees on top....


The minister must realise that it is government policy pushing landlords out of this market and aggravating this crisis.


----------



## Folsom (14 May 2019)

If you sell, is it possible that another landlord could buy the property?


----------



## landlord (14 May 2019)

Folsom said:


> If you sell, is it possible that another landlord could buy the property?



Yep, but I guess they would have some of the same issues to consider before buying that are pushing me out of the market.
It potentially could also be bought by a home owner to live in.


----------



## Leo (14 May 2019)

landlord said:


> Yep, but I guess but they would have some of the same issues to consider before buying that are pushing me out of the market.



If the property is in a RPZ, they would also be restricted by the rents previously charged, so automatically less attractive if you have been charging anyway below market rent.


----------



## Folsom (14 May 2019)

Yes of course, but there are others who are in a position to buy with large deposits that are better generating an income from record breaking rents against sitting in deposit accounts with little interest being generated.

Im somewhat confused as to how the daft.e rental figures are a red herring. If the vast majority of landlords are stuck on rents below market average value, then surely the daft.ie sample, albeit a small one, would encompass a sample that reflects the vast majority of rents being charged by landlords?
The report states it identifies 54 markets (25 in Dublin, four other cities and 25 other counties. 
It seems nearly improbable that daft.ie report doesn't reflect the prices of the vast majority of landlords.


----------



## landlord (14 May 2019)

Folsom said:


> Yes of course, but there are others who are in a position to buy with large deposits that are better generating an income from record breaking rents against sitting in deposit accounts with little interest being generated.
> 
> Im somewhat confused as to how the daft.e rental figures are a red herring. If the vast majority of landlords are stuck on rents below market average value, then surely the daft.ie sample, albeit a small one, would encompass a sample that reflects the vast majority of rents being charged by landlords?
> The report states it identifies 54 markets (25 in Dublin, four other cities and 25 other counties.
> It seems nearly improbable that daft.ie report doesn't reflect the prices of the vast majority of landlords.



I am not aware of any body that is actively and effectively enforcing this RPZ policy.  A landlord is unlikely to raise rents illegally mid contract as their is a strong likely hood that the tenant will complain, however when a tenant moves out for whatever reason and a landlord re-rents on daft, there is no body that I am aware of that is checking that the new rent is within the RPZ rules. The new perspective tenant would be far too frightened to query this with the landlord when he turns up to the viewing with 50 other couples/families.
From experience of many friends and colleagues who are landlords and have tenants move out, I know of none that are missing the opportunity of raising their rent to the market average as they know they will not get caught.
Also over the last few years the rules on renovating a property to bring it up to market rent have been taken advantage of. Although I believe this legislation is being strengthened soon.

A rather crude method showing evidence the the RPZ rules are being ignored is, look at the properties to rent in Swords today.....15 properties.
14 of them have round numbers like €1800 or €1500 etc....
Only 1 has a rent of €1388
As I rent out many properties, my rent reviews due to the 4% always require a non rounded rent figure.
I find it hard to believe that all of these 14 landlords are just rounding down the rent and missing out on the compounded extra rent.


----------



## Folsom (14 May 2019)

So what I get from that is landlord sets a price upon which a tenant agrees to pay. Upon the tenant leaving, the landlord sets a new higher rent for new prospective tenant?
This would explain the increasing rents as reported by daft.ie.
Im failing to see how this equates to Minister Murphy actively pushing landlords out of the market.


----------



## landlord (14 May 2019)

Folsom said:


> So what I get from that is landlord sets a price upon which a tenant agrees to pay. Upon the tenant leaving, the landlord sets a new higher rent for new prospective tenant?


Yes from my experience this is frequently happening.  But not just a new higher rent, but a rent which far exceeds the 4% limit. 



Folsom said:


> Im failing to see how this equates to Minister Murphy actively pushing landlords out of the market.



For me to stay in this market, I would like to see the minister extend the capital gains tax incentive beyond 7 years, allow the free market to dictate rents, provide assurances that the ability to offset investment mortgage interest will not be restricted again, allow LPT to be offset against rental profits and provide equal rights for landlords as tenants receive regardless of the political consequences.


----------



## Folsom (14 May 2019)

landlord said:


> For me to stay in this market, I would like to see the minister extend the capital gains tax incentive beyond 7 years,



Im not familiar with this incentive, but it sounds generous as it is.



landlord said:


> provide assurances that the ability to offset investment mortgage interest will not be restricted again,



On what grounds is this desirable? Wasn't this one of the factors that fuelled property speculation during the boom leading to too many house's been built?



landlord said:


> allow LPT to be offset against rental profits



No disrespect, but its turning into quite a wishlist.



landlord said:


> allow the free market to dictate rents,



Extending tax relief and incentives to property investors as you propose is interference in the free market. 
Im not seeing where landlords are being pushed out. Perhaps in your own circumstance you feel it is not worthwhile being a landlord, but that is your choice. But in the main, if rents are rising, its hard to see how landlords in general would want to leave.


----------



## Sarenco (14 May 2019)

Just on LPT, the previous Minister for Finance, Michael Noonan, said on at least two occasions that LPT _should_ be a deductible expense for income tax purposes.  He just didn't do anything to make it so.  Nor has the current Minister for Finance.

I don't think anybody seriously disputes that there has been a net reduction in the number of residential landlords in recent years.  The RTB recently expressed concern at the reduction in the number of registered tenancies.  The IPAV estimated last year that there are two landlords leaving the market for every one that enters.  Daft suggests that the number of rental properties on the market is at an all time low.

So why would landlords exit a market at a time when rents are rising so strongly?  Seems bizarre, no?

It seems pretty obvious to me - unfair taxation and onerous, unbalanced regulation.  

That's why I threw my hat it some time ago.  I simply couldn't justify staying in a business where the net, after-tax profits were so slim relative to the risks involved.  And the uncertainty introduced by the ever increasing regulatory burden?  I'd simply had enough.

For those landlords that have stayed in the game, you have my respect.  For me, life is too short.

There are easier ways to make a buck.


----------



## The Horseman (15 May 2019)

Folsom said:


> Extending tax relief and incentives to property investors as you propose is interference in the free market.
> Im not seeing where landlords are being pushed out. Perhaps in your own circumstance you feel it is not worthwhile being a landlord, but that is your choice. But in the main, if rents are rising, its hard to see how landlords in general would want to leave.



Investors of any nature are happy to contend with the normal ups and downs of a market, the standard laws of economics show that supply will increase once supernormal profits are available until there is enough suppliers to reduce supernormal profits to normal profit. This is how a normal market functions.

The market is not being allowed to find its own equilibrium, landlords are leaving because of the high taxation, the tenant based support, the anti landlord stance etc. With the Govt constantly interfering in the market investors wont invest because they are trying to second guess what law the Govt will introduce next.

Investors accept the whole idea of the law of economics and adjust their business strategy accordingly, what they can't do is adjust it to changes in the law. Changes in the law of economics impacts the individual within the market, changes in law introduced by the Govt impacts on everybody which removes an individuals competitive advantage gained through their specific circumstances.


----------



## NoRegretsCoyote (15 May 2019)

Sarenco said:


> *I don't think anybody seriously disputes that there has been a net reduction in the number of residential landlords in recent years.  *The RTB recently expressed concern at the reduction in the number of registered tenancies.  The IPAV estimated last year that there are two landlords leaving the market for every one that enters.  Daft suggests that the number of rental properties on the market is at an all time low.



Not so clear. The Census showed no decline between 2011 and 2016 in private rented households. RTB has no clue really because no one has to tell them when a tenancy ends. 

Personally I am indifferent if it is small-time landlords or institutions. It's the number of units that matters.


----------



## Ceist Beag (15 May 2019)

I'm not convinced that high taxation is a strong motivation for landlords leaving the market. There is still plenty of money being made by landlords and nett return on investment is still an attractive one as far as I can see. I think the bigger factor might be the imbalance in any dispute between landlords and tenants and the difficulty of getting rid of bad tenants if you are unlucky enough to end up with some. The risk of this may well prompt landlords to consider it not worth it. However on the flip side I never buy this argument of landlords complaining that they cannot achieve the "market rate". You should enter the market knowing your numbers and operate on that basis and it really isn't an argument to complain because someone else is achieving a higher rent than you are allowed to achieve. That just equates to jealousy and greed imho. If the rate you are charging is not giving you an adequate return then why did you enter the market in the first place? Obviously there may be exceptions to this, e.g reluctant landlords who could not sell due to NE, so my point is a general one.
For the record we're landlords and rent at well below the "market rate" and are happy to do so because the rent we receive is what we were happy to rent for when we first decided to enter the market (allowing for inflation). We currently have excellent tenants and would be happy to keep the status quo. Our biggest concern is what would happen if we ever got new tenants who were not so good - hearing the many horror stories and how the law seems to be very heavily in favour of tenants is the one area we would like to see addressed. The financial side? Not so much.


----------



## Sarenco (15 May 2019)

@Ceist Beag 

Would you be happy to offer your property to a new, unknown tenant at substantially below market rent?  That's what the regulations will now force you to do if and when your current tenant leaves.

Obviously everybody's tax situation is different but in my case I only got to keep ~40% of any net rental profit (having regard for my marginal tax rate and the various non-deductible expenses).  For me, the (post-tax) reward was just too slim to justify the risk involved in continuing in the business.


----------



## Andrew365 (15 May 2019)

I have a small sample base of evidence that landlords are leaving the market in numbers.... For the first 3 months of the year I was viewing apartments for sale in a large apartment development in Dublin 4. In the end I saw about 8 properties in the development and out of the 8 only two were owner occupied. For 4 of the 6 the agent indicated that they were under RPZ and the current rent allowed was below market rate. Lastly of the 6 landlord properties 4 of them were empty.

What I can deduce is that whilst the income from properties is taxed more now it is more the increase in the market value of the properties that are driving landlords to sell up and cash in.

As an FYI I bought an apartment in part with a view to rent it at a later stage but having run the numbers I agree with the sentiment here that the risk / reward is too high. I bought in the short-term as mortgage is significantly less than my rent was and I now have security and no risk of a landlord deciding to get out of the market and leave me competing with everyone else again for property!


----------



## Ceist Beag (15 May 2019)

Sarenco said:


> @Ceist Beag
> 
> Would you be happy to offer your property to a new, unknown tenant at substantially below market rent?  That's what the regulations will now force you to do if and when your current tenant leaves.
> 
> Obviously everybody's tax situation is different but in my case I only got to keep ~40% of any net rental profit (having regard for my marginal tax rate and the various non-deductible expenses).  For me, the (post-tax) reward was just too slim to justify the risk involved in continuing in the business.


Yes I would. For one there are always many variables at play as to what any other property can be rented out at, secondly I am not motivated by what anyone else is receiving, thirdly life is too short to be looking at always maximising my return. As I said, if you're in the market you should know what numbers work for you and that is all that should be important - not what anybody else is getting.


----------



## The Horseman (15 May 2019)

Ceist Beag said:


> Yes I would. For one there are always many variables at play as to what any other property can be rented out at, secondly I am not motivated by what anyone else is receiving, thirdly life is too short to be looking at always maximising my return. As I said, if you're in the market you should know what numbers work for you and that is all that should be important - not what anybody else is getting.



Investors entered the market having "done their numbers" eg rent is expected to increase by X plus 10% per year due to the limited supply of properties. Sounds like a good investment so do it, now rents could rise by X plus 10% as that's the market rate but you can only increase it by X plus 4% (in RPZ) so your investment was based on growth of X plus 10% but you are restricted to X plus 4%.

Investing is a long term strategy and changes in the law distort the laws of economics.

Great if you are not motivated by achieving the highest return on your investment, it would appear you are in a better financial position than others. Well done to you. If you want to follow philanthropic pursuits by renting below market rate then work away.


----------



## Folsom (15 May 2019)

Ceist Beag said:


> I think the bigger factor might be the imbalance in any dispute between landlords and tenants and the difficulty of getting rid of bad tenants if you are unlucky enough to end up with some.



I would agree that this is probably the biggest factor. I dont see how affording tax relief and other financial incentives to landlords will help avoid bad tenants.
In the main, if you have set out a business plan for yourself and crunched the numbers you will have deduced whether or not it is financially viable to enter the rental market as a landlord.
Those complaining (not you) about not being able to charge average "market rates" is a false dichotomy as below average rates, as do above average rates, feed into the average market rate as a whole. If below average rates are increasing, the the overall average rate is increasing.


----------



## Folsom (15 May 2019)

The Horseman said:


> Investors entered the market having "done their numbers" eg rent is expected



I think that is part of the issue, "expectation". As you mention, investing is a long-term strategy. There will be peaks and troughs. Im all for free market trading, but the government will always set out the platform for everyone upon which that free trade is to operate.
What is missing from the general discourse of landlords is talk of competition. Landlords offering rents below average market rates are simply more competitive. Instead, the discourse appears to be that _x _is charging a particular rent, so why cant I?


----------



## Sarenco (15 May 2019)

Ceist Beag said:


> Yes I would. For one there are always many variables at play as to what any other property can be rented out at, secondly I am not motivated by what anyone else is receiving, thirdly life is too short to be looking at always maximising my return. As I said, if you're in the market you should know what numbers work for you and that is all that should be important - not what anybody else is getting.


Fair enough. 

I can certainly see why you might be happy enough to accept a discount on the market rent from an existing, reliable tenant. But to be happy offering a discount to somebody with whom you have had no prior experience seems very odd to me.  He could default on the rent, destroy the property, etc.

If I'm putting my capital at risk, I have an expectation (but no guarantee) that I will be appropriately rewarded.  

Rent controls and unfair taxation materially skew the risk/reward profile of the residential letting business.  I decided I was no longer being adequately rewarded for the risk I was carrying so I put my money elsewhere.


----------



## Ceist Beag (15 May 2019)

The Horseman said:


> Investors entered the market having "done their numbers" eg rent is expected to increase by X plus 10% per year due to the limited supply of properties. Sounds like a good investment so do it, now rents could rise by X plus 10% as that's the market rate but you can only increase it by X plus 4% (in RPZ) so your investment was based on growth of X plus 10% but you are restricted to X plus 4%.


With all due respect, is the first rule of investment not that past results are no indication of future gain! Any investor who invests on the basis of expecting 10% increases per year deserves to be reined in imho.


----------



## Ceist Beag (15 May 2019)

Sarenco said:


> Fair enough.
> 
> I can certainly see why you might be happy enough to accept a discount on the market rent from an existing, reliable tenant. But to be happy offering a discount to somebody with whom you have had no prior experience seems very odd to me.  He could default on the rent, destroy the property, etc.
> 
> ...


See again the narrative here is on the basis of the highest price going. Sarenco if you enter the market you set your price based on what you perceive to be a fair rent at that time. You don't perceive that you are offering it at a discount then do you? So why, if looking for new tenants in 2 years time, do you suddenly think that your original rent +4% is now a discount? 
Like I said, I think your bigger concern (and mine too), is the risk of getting a bad tenant and the difficulty you would have in getting rid of them (not to mention the cost). This is where I think the focus should be, not this constant talk about the rent rates.


----------



## Firefly (15 May 2019)

Ceist Beag said:


> I think the bigger factor might be the imbalance in any dispute between landlords and tenants and the difficulty of getting rid of bad tenants if you are unlucky enough to end up with some.



I think you are right. A small landlord ( 1 or 2 properties) could be wiped out with a bad tenant and I think these are the landlords leaving the market / not entering the market. The large, institutional landlords can more easily cover a few bad tenents. In addition they seem to be focusing on new, high-end properties which are probably not going to attract as many bad tenents and also not address the lower-end of the market where people are having difficulties.




Andrew365 said:


> Lastly of the 6 landlord properties 4 of them were empty.



Hi Andrew365,
I would suspect a lot of landlords (especially those who have bought some time ago with small mortgages) are just leaving their properties idle. Just not worth the risk/hassle/refurb costs. The other option lots are taking is AirBnB for the same reasons
Firefly



Folsom said:


> Im all for free market trading, but the government will always set out the platform for everyone upon which that free trade is to operate.


The problem is that the government keeps changing the trading platform. Property by its nature is an illiquid asset so it's not difficult to see why new landlords are not rushing into the market (even with rents this high!)



Folsom said:


> Landlords offering rents below average market rates are simply more competitive. Instead, the discourse appears to be that x is charging a particular rent, so why cant I?


Landlords don't need to be very competitive as demand is outstriping supply. As with any other asset, Landlords are seeking to maximise their return.


----------



## The Horseman (15 May 2019)

Ceist Beag said:


> With all due respect, is the first rule of investment not that past results are no indication of future gain! Any investor who invests on the basis of expecting 10% increases per year deserves to be reined in imho.



You have taken me literally when I used the 10% example. It takes years to increase supply in the property sector so an investor could with some degree of confidence expect in a normal functioning market an increase in rent over the short term due to the lack of supply.

In a normal functioning market the law of economics if allowed to work without interference will find its balance. What people forget is that when the rents fell through the floor tenants were complaining, now that rents have risen people don't want to see the landlord actually achieving a peak to offset the trough we experienced when the rents fell.

People have very short memories when it suits them.


----------



## Alistair (15 May 2019)

The extreme headline rent levels, primarily in Dublin, are largely due to decades of Dublin centric government policy.  There is greatest population demand coupled with high wage levels that drives demand in Dublin; this is what is giving rise to the skewed headline reports.  Like it or loathe it, Dublin is a victim of the current success its enjoying (everything is cyclical).  I don't think anyone in their right mind would like to see a return to a run-down Dublin of the 1980s.  Ultimately, for a professional who has the capacity to relocate, to continue living in Dublin is a personal choice down to the individual and they must find a way to reconcile the high rents versus their earning capacity.  Its all about personal choice.

Further feeding into this, but a separate issue, is the lack of tax payer funded social housing units.  Government policy facilitated tenancy roll-overs form the original qualified occupant of the 1950s to dependents who in turn did not have to meet the same original qualification criteria and subsequently were allowed purchase the government supplied unit, thus reducing the number of social units available, ultimately at a cost to the tax payer.

As a long term landlord, last year I made the difficult decision to exit the Irish BTL market.  This is a slow process and one that is still underway.  Like the vast majority of small landlords in Ireland, I have been fair with tenants, acted immediately on their feedback, on occasion provided small rent holiday periods when times become really tough for some individual tenants.  The government made it clear that they wanted a different kind of BTL investor "a professional landlord" to enter the Irish market, to the demise of the small landlord.  That is now happening as a result, in part, of more favorable tax treatment terms of institutional investors.   These investment platforms are typically pension funds who have a fiduciary responsibility to their members (pensioners) to maximize their investment return.  Failure to do so will give rise to issues for Pension Trustees who govern these investment platforms.  Rents will continue to find their level which directly correlates to the demand, but its unrealistic to expect these rents to fall in the short to medium term.

The small landlord carries ALL the downside risk financially and liability-wise from a legal standpoint.  The risk versus reward ratio must support the business model in Ireland.  Smart money will follow the returns, what ever country that is in.  In my own personal experience as a landlord, the net return does come anywhere near supporting the risks.  Anecdotally, through my dealings with selling agents the market activity driven by the small BTL investor has fallen off a cliff.  That may facilitate more FTBs into the market which is a good thing, but there will be challenges with developers ability to deliver suitable housing stock for a price that falls within the central bank borrowing guidelines.


----------



## Sarenco (15 May 2019)

Ceist Beag said:


> See again the narrative here is on the basis of the highest price going. Sarenco if you enter the market you set your price based on what you perceive to be a fair rent at that time. You don't perceive that you are offering it at a discount then do you? So why, if looking for new tenants in 2 years time, do you suddenly think that your original rent +4% is now a discount?
> Like I said, I think your bigger concern (and mine too), is the risk of getting a bad tenant and the difficulty you would have in getting rid of them (not to mention the cost). This is where I think the focus should be, not this constant talk about the rent rates.


I'm not sure you are really grasping the impact of the RPZ regime.

Back in 2015, the then Government introduced a new rule to the effect that rents could only be increased every 2 years (still applicable outside RPZs).  As we now know, market rents continued to increase dramatically due to the imbalance of supply and demand.

Then in December 2016, the Government introduced the RPZ regime, the effect of which was that rents could only be increased by 4% at the end of the then 2-year review cycle.  In other words, many landlords were locked into renting at material discounts to market rates - not by choice but by Government diktat. 

You keep arguing that risk and return are somehow independent of each other.  They're actually inextricably linked - rental yields are always higher in low-income neighbourhoods because the risk of tenant default is higher.  Because the risk is higher, rational landlords demand a higher yield.

More generally, I don't understand why you seem to have a problem with people seeking to maximise the risk-adjusted return on their capital.


----------



## Ceist Beag (15 May 2019)

Sarenco said:


> More generally, I don't understand why you seem to have a problem with people seeking to maximise the risk-adjusted return on their capital.


The point I'm trying to make is that I think the government should focus on reducing the risk rather than allowing landlords to maximise return. Currently they are attempting to limit the return without any focus on the risk side of the equation and most of the discussion is on the return. In my view the bigger concern is on the risk and this is where the conversation should be focused.


----------



## Sarenco (15 May 2019)

@Ceist Beag 

When you say "reducing the risk" are you talking about putting in place a fit-for-purpose dispute resolution process?  

I certainly agree that is an area that is crying out for reform but I happen to think that market participants should be free to price risk without Government interference.


----------



## The Horseman (15 May 2019)

Ceist Beag said:


> The point I'm trying to make is that I think the government should focus on reducing the risk rather than allowing landlords to maximise return. Currently they are attempting to limit the return without any focus on the risk side of the equation and most of the discussion is on the return. In my view the bigger concern is on the risk and this is where the conversation should be focused.



Why can't the Govt do both and by doing so you will encourage more into the market and rents will then stabilize for all concerned.


----------



## Folsom (15 May 2019)

Firefly said:


> Landlords don't need to be very competitive as demand is outstriping supply.



This suggests a market failure. Which with most commodities is a bad thing, but with a social necessity such as housing it becomes a crisis, and crisis can be dangerous. 
And perhaps there is the rub of it. Housing policy has failed and the housing market has failed - is it fair to say it has been broken since 2005 when house building and prices went beserk culminating in the crash in 2008? 
So in the middle of a crisis, dealing with a social necessity such as housing, what do we do? 
I suggest build more housing in areas of high demand, if possible. 
It seems however, that in a market of excess demand over supply that a landlord can soak up the capital appreciation, maximise the return on increasing rents and expect favourable tax reliefs without needing to be competitive?


----------



## Ceist Beag (15 May 2019)

Sarenco said:


> When you say "reducing the risk" are you talking about putting in place a fit-for-purpose dispute resolution process?


Yes.


----------



## Alistair (15 May 2019)

I think that Ceist Beag doesn't fully grasp the business model in play.  There are 3 key stakeholders to each tenancy agreement, the asset owner (yes it is an earning asset), the tenant who is the debtor and the government who although is a significant beneficiary (~50% tax on rent) but yet does not have any skin in the game... (i.e. landlord's risk is similar to having eggs and bacon for breakfast, the chicken is involved, but the pig is committed...). 

Very simple and approximate numbers below: 
For example, a landlord will borrow €200,000 @ ~5% from a lending institution (semi commercial rate).  Landlord will contribute an additional €50,000 (80% max lending limit, stamp duty, legal costs).
Furnishing costs ~ €10,000 (capitalized @ 12.5% annually, not expensed).  Property tax/levy not a deductible expense.

Example 1
Tenant pays €1,000 per month, ~€500 of this is paid by way of income tax by the landlord (assuming top rate PAYE).  Landlord has ~€500 net of tax monthly.  Until recently only 75% of this interest cost was a deductible expense, but is being graduated back to 100%. (Interest portion only).
Monthly mortgage cost paid by landlord (Principal and Interest) ~ €1,200 per month assuming 20 year repayment term.
Landlord has additional costs including PRTB registration, Buildings Insurance, Life Assurance (usually a condition precedent by the lender).
This example is not financially sustainable for the landlord.

Example 2
Same property, Tenant pays €2,000 per month, ~€1,000 of this is paid by way of income tax by the landlord (assuming top rate PAYE). Landlord has ~€1,000 net of tax monthly.
Mortgage cost paid by landlord (Principal and Interest) ~ €1,200 per month assuming 20 year repayment term.
Landlord has additional costs including PRTB registration, Buildings Insurance, Life Assurance (usually a condition precedent by the lender). 
Hours worked and travel costs incurred by landlord in letting a property or dealing with repairs etc is not rechargeable.  Allowing for a sinking fund, this is just about break even net of tax and running costs.  

I trust you can see that government tax take and the reduced ability to offset landlord costs under this business model is penal and is the main driver of increased rents.

Effectively, landlords are collecting a significant amount of tax for the state without the state having to expend any real effort or carry any risk.

As tenancies naturally expire landlords are and will continue to exit the Irish rental market to seek better return for all the risks and costs involved in this highly volatile market.


----------



## Firefly (15 May 2019)

Folsom said:


> This suggests a market failure.



On the contrary. Most (if not all) markets experience periods where demand is greater than supply (and vice versa). Just look at post 2008 when there was a glut of rental properties that drove down rents.

What _is_ a failure is the constant moving of the goalposts by the government and the increasing security tenants enjoy compared to the complete downside risk the landlord is exposed to.


----------



## Firefly (15 May 2019)

Alistair said:


> Anecdotally, through my dealings with selling agents the market activity driven by the small BTL investor has fallen off a cliff.  That may facilitate more FTBs into the market which is a good thing, but there will be challenges with developers ability to deliver suitable housing stock for a price that falls within the central bank borrowing guidelines.



This is an important point IMO. For whatever reason, there will always be people who will not own their own home. People with the funds need to be encouraged into buying buy-to-lets.


----------



## Folsom (15 May 2019)

Firefly said:


> Most (if not all) markets experience periods where demand is greater than supply (and vice versa). Just look at post 2008 when there was a glut of rental properties that drove down rents.



Yes, but when prices are falling or increasing those that are most competitive (providing best value for the product or service) should prevail, driving out inefficiency and poor quality at one end and keeping the prospect of exploitation and exorbitant prices in check at the other end.
What we have now is a situation where there is little need to be competitive.
Competition is a central tenant of the free market. If there no need, or very little need to be competitive, it is a failed market.


----------



## Folsom (15 May 2019)

Firefly said:


> What _is_ a failure is the constant moving of the goalposts by the government



Moving goalposts is fine if it provides the platform for a functioning market. In our case, this is also a failure.


----------



## Folsom (15 May 2019)

Alistair said:


> Monthly mortgage cost paid by landlord (Principal and Interest) ~ €1,200 per month



How much of €1,200 repayments is interest on the mortgage in year one? And how much of that interest is an allowable deduction against tax?


----------



## Ceist Beag (15 May 2019)

Alistair said:


> I think that Ceist Beag doesn't fully grasp the business model in play.  There are 3 key stakeholders to each tenancy agreement, the asset owner (yes it is an earning asset), the tenant who is the debtor and the government who although is a significant beneficiary (~50% tax on rent) but yet does not have any skin in the game... (i.e. landlord's risk is similar to having eggs and bacon for breakfast, the chicken is involved, but the pig is committed...).
> 
> Very simple and approximate numbers below:
> For example, a landlord will borrow €200,000 @ ~5% from a lending institution (semi commercial rate).  Landlord will contribute an additional €50,000 (80% max lending limit, stamp duty, legal costs).
> ...


Alistair I think it is you who doesn't fully grasp any of what I said!
In both examples provided you are talking about a landlord buying a property and letting it out. There is absolutely nothing in any of what I said that suggests the landlord should choose example 1 over example 2. In fact I clearly stated quite the opposite. Do the numbers up front, decide what is a good rate to rent out at and if it looks like a good decision then go for it. My argument has been around the complaints about not being able to raise the rent substantially after the initial let. If you do the numbers correctly up front then there is no reason why you should need to substantially up the rent later (above the allowed 4%).
Show me where what I said bears any relevance to your examples.


----------



## Firefly (15 May 2019)

Folsom said:


> Yes, but when prices are falling or increasing those that are most competitive (providing best value for the product or service) should prevail, driving out inefficiency and poor quality at one end and keeping the prospect of exploitation and exorbitant prices in check at the other end.
> What we have now is a situation where there is little need to be competitive.


I agree - that's what I am saying. Rents are rising so much that a landlord who wants to stay in the business can get a queue around the corner for viewings. Demand is greater than supply. Why isn't there a massive influx of landlords into the market as the returns look so good? It is because (1) government moving goalposts and (2) downside risk associated with bad tenants are making entering/remaining in the market unnattractive for small landlords, at exactly the time when we need more of them to provide accomodation.



Folsom said:


> Competition is a central tenant of the free market. If there no need, or very little need to be competitive, it is a failed market.


It's not a failed market as it's not a free market (My points (1) & (2) above).


----------



## The Horseman (15 May 2019)

Folsom said:


> Yes, but when prices are falling or increasing those that are most competitive (providing best value for the product or service) should prevail, driving out inefficiency and poor quality at one end and keeping the prospect of exploitation and exorbitant prices in check at the other end.
> What we have now is a situation where there is little need to be competitive.
> Competition is a central tenant of the free market. If there no need, or very little need to be competitive, it is a failed market.




Competition is indeed central to a free market. The clue is in the "free" part where a market is free to rise and fall due to the constituent parts of the market. This is basic law of economics supply rises to meet demand.

Herein is where we have the issue, the market is not "free" as Govt interference is distorting the market. In a normal functioning "free" market suppliers would come and go based on the attractiveness of the trading environment within that market. As the trading environment is becoming so anti landlord this is one of the reasons more landlords are leaving rather than entering it.


----------



## Firefly (15 May 2019)

The Horseman said:


> Competition is indeed central to a free market. The clue is in the "free" part where a market is free to rise and fall due to the constituent parts of the market. This is basic law of economics supply rises to meet demand.
> 
> Herein is where we have the issue, the market is not "free" as Govt interference is distorting the market. In a normal functioning "free" market suppliers would come and go based on the attractiveness of the trading environment within that market. As the trading environment is becoming so anti landlord this is one of the reasons more landlords are leaving rather than entering it.



Exactly what I was trying to say!


----------



## Folsom (15 May 2019)

I agree its not a free market. I disagree that the housing market hasnt failed however.
Housing policy, near on twenty years has set the platform for the boom and bust. Current housing policy with RPZ are patchwork jobs. 
The conditions set on housing policy are a reaction to an uncompetitive failed rental market. Im not suggesting that the policy of RPZ's will remedy the market, I dont think it will.


----------



## Firefly (15 May 2019)

Folsom said:


> Housing policy, near on twenty years has set the platform for the boom and bust.



I agree. 

_Government failure, in the context of public economics, is an economic inefficiency caused by a government intervention, if the inefficiency would not exist in a true free market_

https://en.wikipedia.org/wiki/Government_failure

The housing market, or more specifically, the market participants are responding negatively to government interference. Despite the high rents, we do not see an influx of landlords. Why do you think that is?




Folsom said:


> Current housing policy with RPZ are patchwork jobs.
> The conditions set on housing policy are a reaction to an uncompetitive failed rental market. Im not suggesting that the policy of RPZ's will remedy the market, I dont think it will.



I agree. If anything it will push up rents across the board by 4% per year, even for those properties where the landlord hadn't increased the rent for years to protect the value of their investment. And thanks to compound interest,  that 4% is going to get very high very soon in cash terms.


----------



## Folsom (15 May 2019)

The Horseman said:


> Herein is where we have the issue, the market is not "free" as Govt interference is distorting the market.



There is government interference in all markets through rules and regulations and taxes.
The notion of "free market" is broadly unattainable ideological mantra. 
Instead, if the government can provide a level playing field for competitors (buyers and sellers) then upon that level playing field a competitive free market can emerge. But it is never truly free.




The Horseman said:


> In a normal functioning "free" market suppliers would come and go based on the attractiveness of the trading environment within that market.



And that is what is happening in rental market? The suppliers are coming and going with some evidence that the trend overall is to leave. Is this a bad thing? In my view, no. 
The Celtic Tiger generated an unsustainable housing boom in no small part spurred on by wanna-be landlords. 
That is just my opinion. I dont think the housing crisis, as what this government is trying to resolve, will be resolved by creating the conditions to induce more people to become landlords. Its not a shortage of landlords that is the problem, its a shortage of suitable housing.
That said, those landlords that are in business deserve not to be pushed out, if that is what is happening? 
I dont think it is. I think what we are seeing is the exiting of the wanna-be landlord that jumped on the bandwagon but is unable to sustain themselves in a market that is at record rents. A market correction if you will.



The Horseman said:


> As the trading environment is becoming so anti landlord this is one of the reasons more landlords are leaving rather than entering it.



Perhaps, but a long-term strategy will have factored in these 'troughs', if you can call record rents on top of capital appreciation a trough.


----------



## Folsom (15 May 2019)

Firefly said:


> If anything it will push up rents across the board by 4% per year,



If you are a landlord, whats not to like about 4% increase on record high rents?


----------



## Firefly (15 May 2019)

Folsom said:


> If you are a landlord, whats not to like about 4% increase on record high rents?


You first



Firefly said:


> Despite the high rents, we do not see an influx of landlords. Why do you think that is?


----------



## Folsom (15 May 2019)

Firefly said:


> You first



There are probably a number of factors, not least the perceived notion of  tenancy rights which I noted earlier;



Folsom said:


> I would agree that this is probably the biggest factor.



But the purported exiting of landlords has been largely unsubstantiated. There is certainly anecdotal evidence of larger corporate landlords entering the market. I touched on it here;



Folsom said:


> there are others who are in a position to buy with large deposits that are better generating an income from record breaking rents against sitting in deposit accounts with little interest being generated.



So if 50 bandwagon-wannabe-landlords exit the market because conditions are too tough for them and one larger, cash rich long-term strategy landlord, enters the market and buys the 50 properties then sure, there are less landlords - but is that necessarily a bad thing?


----------



## Firefly (16 May 2019)

Folsom said:


> There are probably a number of factors, not least the perceived notion of  tenancy rights which I noted earlier;



There's nothing perceived about it. Have a look at the threads here and you will find countless examples of bad tenants causing great expense for landlords.



Folsom said:


> So if 50 bandwagon-wannabe-landlords


Not sure why you attach such a description - care to explain why?




Folsom said:


> There is certainly anecdotal evidence of larger corporate landlords entering the market.
> 
> Not sure why you attach such a description - care to explain why? exit the market because conditions are too tough for them and one larger, cash rich long-term strategy landlord, enters the market and buys the 50 properties then sure, there are less landlords - but is that necessarily a bad thing?



I think it's clear that the corporates are buying blocks of properties at the higher end. The single landlord operates at the lower end with a few properties.


----------



## Folsom (16 May 2019)

Firefly said:


> Not sure why you attach such a description - care to explain why?



There are good tenants as there are bad tenants. There are good landlords as there are bad landlords. 
It would be my impression that in times of record breaking rents, on top of associated capital gains, that if a landlord is finding these conditions tough and need to leave then they probably never had a long-term strategy in place. I don't think it is any harm that such landlords are leaving the market.


----------



## The Horseman (16 May 2019)

Folsom said:


> There is government interference in all markets through rules and regulations and taxes.
> The notion of "free market" is broadly unattainable ideological mantra.
> Instead, if the government can provide a level playing field for competitors (buyers and sellers) then upon that level playing field a competitive free market can emerge. But it is never truly free.
> 
> ...



Govt intervention in any market should only cover health and safety and min standards. It should not interfere with normal market functions. Investors won't invest because they don't know what changes the Govt will bring in next.

Yes there is a shortage of accommodation but with the central bank rules people can't afford the prices being asked. We don't have enough trades to build in the quantity we want so those who are available can name their prices for any work they do. The developers need to recoup these costs so they include them in the purchase price. Institutional investors have the funds to invest in property but the Govt is giving them preferential tax treatment over individual landlords. The number of properties leaving the rental sector is higher than the numbers coming in. The Govt should be encouraging existing landlords to stay in the market while supply increases which would eventually lead to supply coming closer to demand and then having a functioning market.

With landlords leaving the market they either sell up or leave the property vacant. So either way there is a reduction of bed spaces available for rent. EG a three bed semi currently has four adults renting it. If it is sold chances are it will be sold to a couple so there is a loss of two bed spaces on the rental market. if the property is left vacant there is a loss of four bed spaces on the rental market.

Landlords are being pushed out trust me on this. I have contacts in various estate agents and they have told me the number of landlords selling is increasing all the time. You will also see a lot of landlords leaving the market as some are exempt from CGT if they bought between 2011 and 2014 and held the properties for a min of 4 yrs.

Again the above is going to impact on the number of bed spaces available in the rental market.


----------



## NoRegretsCoyote (16 May 2019)

I think people are missing the point that *being a landlord generates high gross yields*.

You can get approx 10% yields on apartments in certain places. Risk free rates are basically zero. This is a healthy gross margin - bigger I suspect than at any time since the 1980s.

*Is it enough to compensate for the risk?* That's a matter of opinion.


----------



## Leo (16 May 2019)

Folsom said:


> that in times of record breaking rents,



Perhaps for the record few new properties coming on the market, but the vast majority of properties are not achieving those record rents so why are you so convinced that those leaving the market are the ones receiving record breaking rents?


----------



## Bronte (16 May 2019)

Folsom said:


> On what grounds is this desirable? Wasn't this one of the factors that fuelled property speculation during the boom leading to too many house's been built?
> 
> No disrespect, but its turning into quite a wishlist.
> 
> ...



In every business all costs of running the business are legitmate deductable costs for tax purposes. Except for landlords. Where there is constant interference. 

As for the Celtic Tiger, the reason for property speculation was because banks loaned too much silly money to people that couldn't afford it, they loaned money for property investor landlords who were only in it to do a quick turn around and had no notion of how to be a property landlord and the worst thing they did was loan on interest only to such people.

And it's not just the rent is the issue. People look at the high rents and assume landlords are making a mint.  It's not actually true when you factor in all the costs, the loss of the mortgage interest, the prsi and the usc loaded on.  Plus the fact it's a constant worry that you'll get a problem tenant who plays the system.


----------



## Bronte (16 May 2019)

Bacon

Some of you do not remember, but you ought to, when the government interferred and dropped mortgage interest relief for landlords it destroyed the market. That's what market interference does.

The government needs to

a) help landlords get rid of problem tenants in a timely manner
b) incentivise renovations, now they are actually doing the opposite, why renovate if you can't increase the rents, or you'll only renovate if absolutely necessary
c) stop increasing taxation (lpt, usc, prsi)
d) allow all legitimate costs as a deduction
e) stop more and more rules, new RTB annual registration nightmare coming
f) realise that rent caps mean you devalue properties
g) realise that the Reit's are driving up rents
h) realise there is more tax from ordinary landlords than tax free reits/pension funds
i) the only people making money out of Reit's is the people managing them

They also need to either build social housing or buy it. 

It would also help if there was a see change in planning

j) need to go up not out
k) need to stop NIMBY
l) Dublin especially and then Cork need to go up up up ( I see Cork are doing a city change around the train station area that may revolutinsse the city, which already started there near city center - was impressed too coming in from Dublin airport - near Point depot I think)
m) Stop planners blocking developments
n) stop crazy rules about light in apartments
o) more parking should be compulsory in all developments, need to go with the continental model of every apartment having an underground parking space
p) all appartments need to have storage space, a cellar type in the basement for example, also normal on the continent


----------



## Firefly (16 May 2019)

Pretty much all covered there Bronte


----------



## Folsom (16 May 2019)

The Horseman said:


> Govt intervention in any market should only cover health and safety and min standards.



For sure, and a bit more besides. Social justice, security and general welfare of the people might be factors also. 




The Horseman said:


> I have contacts in various estate agents and they have told me the number of landlords selling is increasing all the time.



Who are they selling too? Most likely other landlords or FTB's or people trading up? Either way or or, the property remains in circulation and is available for occupancy.


----------



## Folsom (16 May 2019)

Leo said:


> Perhaps for the record few new properties coming on the market, but the vast majority of properties are not achieving those record rents so why are you so convinced that those leaving the market are the ones receiving record breaking rents?



Apologies, I was referring to record breaking _average _rents as being reported by daft.ie.


----------



## Leo (16 May 2019)

Folsom said:


> Apologies, I was referring to record breaking _average _rents as being reported by daft.ie.



The issues with the Daft report is that it relies solely on properties advertised on the Daft platform. It is not reflective of the overall market, and is skewed towards new rentals and misses out on long term leases that are well below the current market rate.


----------



## Sarenco (16 May 2019)

NoRegretsCoyote said:


> You can get approx 10% yields on apartments in certain places.


The problem, of course, is that most landlords cannot (legally) charge market rents.

Because of the way the RPZ regime was introduced, many landlords find that they can now achieve a gross yield of less than 6% on their property.  That's often the equivalent of a net, after-tax, yield of around 2%.

For me, the (post-tax) reward was far too slim to justify the risks and hassle involved in continuing in the business.  I have no doubt that many other landlords have reached a similar conclusion.


----------



## Folsom (16 May 2019)

Granted, I did think that myself. In fact the properties listed on Daft.ie at any given time are only those properties that have _not _obtained asking price. The actual agreed price when occupancy is taken up is not shared on daft.ie.
That said, given the volume of trade on daft.ie I dont think it unreasonable to assume that it is not too far off the mark.


----------



## Folsom (16 May 2019)

Sarenco said:


> Because of the way the RPZ regime was introduced, many landlords find that they can now achieve a gross yield of less than 6% on their property. That's often the equivalent of a net, after-tax, yield of around 2%.



I do find some of this stuff confusing. May I ask how the yield is calculated?


----------



## NoRegretsCoyote (16 May 2019)

Folsom said:


> I do find some of this stuff confusing. May I ask how the yield is calculated?



Gross yield=(annual rent)/(value of property)

Net yield=(annual rent less expenses and tax)/(value of property)


----------



## Folsom (16 May 2019)

So the biggest culprit for turning away would be investors would be rising house prices? 
And the biggest driver of landlords selling up is the capital gains to be realised with house prices the way they are.


----------



## The Horseman (16 May 2019)

Folsom said:


> For sure, and a bit more besides. Social justice, security and general welfare of the people might be factors also.
> 
> 
> 
> ...




You have only picked part of my post and used it to your context. If a rented property is purchased by an owner occupier then the no of bed spaces available in the rental market has reduced.


----------



## Folsom (16 May 2019)

The Horseman said:


> You have only picked part of my post and used it to your context. If a rented property is purchased by an owner occupier then the no of bed spaces available in the rental market has reduced.



Yes of course. But the demand in owner occupier market has reduced also with one less buyer, which is a good thing.


----------



## Sarenco (16 May 2019)

Folsom said:


> So the biggest culprit for turning away would be investors would be rising house prices?
> And the biggest driver of landlords selling up is the capital gains to be realised with house prices the way they are.


Eh, no.

The biggest "culprits" are unfair taxation and overbearing regulation.


----------



## Leo (16 May 2019)

Folsom said:


> That said, given the volume of trade on daft.ie I dont think it unreasonable to assume that it is not too far off the mark.



Curious then that in Q4, Daft reported rents across the Dublin regions ranging from €1,646 (north County Dublin) to €2,110 (south City Centre) while the RTB stated at the time that average Dublin rents were €1,620.


----------



## Folsom (16 May 2019)

Sarenco said:


> Eh, no.
> 
> The biggest "culprits" are unfair taxation and overbearing regulation.



I dont see how "unfair taxation" and overbearing regulation leads to reducing yields. If I set my rent at €1,000pm my tax due on that, whether fair or unfair, is set. If government sets a RPZ limit of 4% then I can increase rent in two years time to €1040pm. 
How is my yield reduced?


----------



## Folsom (16 May 2019)

Leo said:


> Curious then that in Q4, Daft reported rents across the Dublin regions ranging from €1,646 (north County Dublin) to €2,110 (south City Centre) while the RTB stated at the time that average Dublin rents were €1,620.



So which is more accurate than the other? 

If Daft.ie is out of kilter with what is reality then so be it. Im only making an assumption that it is a reliable source primarily on the level of media attention afforded to it.
Im happy to accept that it is not an accurate measurement if that can be shown to be the case.


----------



## dereko1969 (16 May 2019)

What do the landlords here think would be "fair" taxation. It seems to me from a perusal of comments here that it's a lot more than simply returning to the halcyon days of being able to deduct 100% of mortgage interest.

We do need a functioning rental market, whether it's by "amateur/accidental" landlords or professionals, I don't really care.

The OP seemed to want the state to back off but was also happy to take the CGT exemption which I found amusing, also anyone who bought in 2011 cannot be in negative equity unless they went bananas buying something hugely overpriced.


----------



## Leo (16 May 2019)

Folsom said:


> So which is more accurate than the other?
> 
> If Daft.ie is out of kilter with what is reality then so be it. Im only making an assumption that it is a reliable source primarily on the level of media attention afforded to it.
> Im happy to accept that it is not an accurate measurement if that can be shown to be the case.



The RTB stats cover all tenancies reported, including periodic re-registrations, but they don't publish enough data to see what volumes they're basing their data on but given that they do include data from long-term tenancies, it should be the better data. 

The Daft data only covers properties advertised on their platform over the period, so misses out a large section of the market, and hey, if you're renting a property at a significant discount to the market rate, you're not likely to want to move, right? The media make a big fuss about the Daft data because they make it easy for them to do so, publishing in great detail with attention grabbing stats and pretty graphs. That same media earn a nice income from the property market, so the narrative works for them. Remember when lots of people were saying the crash had started, but the papers were still full of articles pimping the latest developments to hit the market.


----------



## Thirsty (16 May 2019)

To answer the question re taxation of rental income.

Current thorns are

Local property tax
PRSI and USC charges
Tax breaks given to pension funds and not to those investing in property for future pension.
Mortgage interest (granted this is due to change).

If I pay 10k into my pension fund, I get a significant tax break.

If I invest 10k into a rental property I don't.

Wrap some regulations similar to pension funds aound property investment, e.g. has to be rented for 10 years, can't sell till I'm 65 etc and allow individuals invest directly in rental property as a personal pension fund.


----------



## NoRegretsCoyote (16 May 2019)

Folsom said:


> I dont see how "unfair taxation" and overbearing regulation leads to reducing yields. If I set my rent at €1,000pm my tax due on that, whether fair or unfair, is set. If government sets a RPZ limit of 4% then I can increase rent in two years time to €1040pm.
> How is my yield reduced?



If (controlled rent)<(market rent) then mechanically the yield is lower than it would be absent rent controls. It's just arithmetic.



There are landlords who found tenants in 2012/3 when market rents were low, and kept them below-market when the real increases in market rents happened in 2014-16. 

Some of these landlords are at 30%-40% odd below market rent at this point. It's a long time before they get anywhere near market rent at 4% a year.

It doesn't seem right to punish these landlords for being fair with sitting tenants.


----------



## NoRegretsCoyote (16 May 2019)

Leo said:


> The RTB stats cover all tenancies reported, including periodic re-registrations, but they don't publish enough data to see what volumes they're basing their data on but given that they do include data from long-term tenancies, it should be the better data.
> 
> The Daft data only covers properties advertised on their platform over the period, so misses out a large section of the market, and hey, if you're renting a property at a significant discount to the market rate, you're not likely to want to move, right?



Exactly: *the only reliable data on the number of tenancies is the Census.*

The next one is April 2021, with results published later that year.


----------



## landlord (16 May 2019)

I want to stress my earlier point to any poster who has used the phrase “record rents” to justify their argument that landlords are making a fortune.

Once again if a person initially rented an apartment in Swords in 2016 for €1200, then the max rent in 2017 at 4% would be €1248, in 2018 €1297 and in 2019 €1348.
Please note none of these re-rent figures ARE ROUND NUMBERS!!!!!

There are only 12 properties on Daft available in the whole of swords today (which is shocking in its self)

€2,200/month
36 South Bank, Swords, Co. Dublin

€2,750/month
Elmwood, Swords, Co. Dublin

€1,800/month
Cedar Square, Ridgewood, Swords, Co. Dublin

€1,650/month
Turnbury House,Ridgewood, Swords, Co. Dublin

€2,000/month
St. Werburghs, Swords Road, Swords, Co. Dublin

€1,850/month
Boroimhe Beech, Swords, Co. Dublin

€1,850/month
Holywell Drive, Swords, Co. Dublin

€1,700/month
Ridgewood Grove, Ridgewood, Swords, Co. Dublin

€1,388/month
Coachyard House, Main Street, Swords, Co. Dublin

€2,200/month
Ridgewood Close, Swords, Co. Dublin

€1,700/month
Sycamore House, Applewood Village, Swords, Co. Dublin

€1,800/month
Castleview, Swords, Co. Dublin


Of these 12, I would guess that only 1 advert (priced at €1388/month) is reflecting a rent which is abiding by the 4% RPZ rules.

Most if not all of the others with nice round numbers are more than likely ignoring it knowing that they will not get caught!!!!

So once again the rents advertised on daft definitely DO NOT represent the market average which I would imagine is way lower.


----------



## Folsom (16 May 2019)

NoRegretsCoyote said:


> If (controlled rent)<(market rent) then mechanically the yield is lower than it would be absent rent controls. It's just arithmetic.



Yes, I understand stand that landlords are claiming that their yields could be higher than they are. But then this goes into the heart of tenancy rights. If im a tenant and I agree a rent of €1000 a month, then I have a reasonable expectation that rent increases will be in line with increases in my income or increases due to interest rate hikes. 
Neither of which have increased dramatically over last decade. 
So if a landlord is prepared to ask rent at €_x _at point _a _then as part of long-term strategy (with a long-term tenant) they should be prepared to ask rents with increases in-line with income and/or increases in line with expenses rising, such as interest rates. 
Just because joe bloggs is looking for €300 extra a month, doesn't mean everyone else should be charging the same. This is how competition can exist in the rental market. 



NoRegretsCoyote said:


> There are landlords who found tenants in 2012/3 when market rents were low, and kept them below-market when the real increases in market rents happened in 2014-16.



That was their choice. 



NoRegretsCoyote said:


> Some of these landlords are at 30%-40% odd below market rent at this point. It's a long time before they get anywhere near market rent at 4% a year.



But what is the "market rent"? 
It wouldn't seem to me that the "market rent" is the average rent across a sector, which _includes rents kept at below average rates, in other words, competitive prices._



NoRegretsCoyote said:


> It doesn't seem right to punish these landlords for being fair with sitting tenants.



But they weren't "being fair". They made a commercial decision to lower rents to attract and keep tenants. They dropped rents to a level they were, as part of their long-term strategy, happy to charge in order to attract a tenant. 
Others kept rents higher and sat on vacant premises until the market recovered to levels they were willing to let out at. They took losses, but as part of their long-term strategy, that is the risk they took.


----------



## Folsom (16 May 2019)

landlord said:


> Of these 12, I would guess that only 1 advert (priced at €1388/month) is reflecting a rent which is abiding by the 4% RPZ rules.



Is it possible that some of those properties, perhaps recently vacated, are simply asking for the same price that the previous tenant paid? In other words, there is no or little increase and are the properties with highest rents, most likely to be occupied by temporary tenants rather than long-term tenants?
4% of €1800 is €72. Could a landlord choose to just increase by €50 to €1850?
That the landlord has taken a commercial decision to charge top end rates in order to attract higher income tenants (and by possible perceived reasoning, good tenants) in the knowledge that the property will over long-term sit vacant for longer periods than properties with much lower rents?


----------



## Gordon Gekko (16 May 2019)

I use the exact number I must admit. If 4% gives an uneven amount, so be it.

If you don’t keep rents at their maximum, you remain exposed to further rule changes and the value of your property is diminished.


----------



## RentingD (16 May 2019)

I'm a landlord, reluctantly for the past 10 years and would love to leave. I've had lovely tenants for years, never had an ounce of bother until my most recent (HAP) one. They've been there a while without problem but lately their rent is late, complaints from neighbours about noise etc. I'm hoping to sell next year when the house is out of negative equity and i'm saving in case the house is unoccupied for a while. But evicting the tenant wont be easy if theyve nowhere else to go. There are hardly any rentals in the area and a HAP tenant with children cannot be flexible. It is my problem now with new controls. I can only get tenant out by selling the house so it's either put up with more rubbish or sell. Also tired of the massive revenue bill every November.


----------



## Firefly (16 May 2019)

Folsom said:


> If im a tenant and I agree a rent of €1000 a month, then I have a reasonable expectation that rent increases will be in line with increases in my income or increases due to interest rate hikes.



Why should a tenant's circumstance come into it for a landlord? Conversely, if the landlord has a drop in other income should the tenant do the decent thing and pay the landlord more rent?



Folsom said:


> So if a landlord is prepared to ask rent at €x at point a then as part of long-term strategy (with a long-term tenant) they should be prepared to ask rents with increases in-line with income and/or increases in line with expenses rising, such as interest rates.


Again, why? The landlord will try to get the highest rent they can. Conversely the tenant will try to get the lowest rent they can. 



Folsom said:


> But they weren't "being fair". They made a commercial decision to lower rents to attract and keep tenants. They dropped rents to a level they were, as part of their long-term strategy, happy to charge in order to attract a tenant.



Yes, but now, because of government policy, the value of their asset is under threat through no fault of their own. This is what's not fair. You can be sure that any new property coming onto the market will be rented out for the max rent.


----------



## Folsom (16 May 2019)

Firefly said:


> Why should a tenant's circumstance come into it for a landlord?



Because they are the tenant, they have agreed a rent price. What sort of social instability do you want to create if landlords can offer below market rents only to jack them up on a whim because other landlords are charging more?




Firefly said:


> Conversely, if the landlord has a drop in other income should the tenant do the decent thing and pay the landlord more rent?



 If a tenant and landlord _agree _a rent then in the absence of real reason for a rent increase, such as increasing incomes, increasing interest rates, then any increases at all should be modest and sustainable on the existing tenant.
It helps to promote social stability, keeps exploitation at bay.



Firefly said:


> Again, why? The landlord will try to get the highest rent they can. Conversely the tenant will try to get the lowest rent they



Yes, and once a rent has been _agreed  then _any increases need to be sustainable.



Firefly said:


> Yes, but now, because of government policy, the value of their asset is under threat through no fault of their own.



How is the value of their asset under threat? It was the landlord who pitched and agreed the rent price in the first place.
You are not suggesting that if a landlord charges €1,000pm and decides to sell the property that they should be allowed to double the rent in order to try extract a better price for the property?
What sort of chaos would ensue if that were allowed?
This is all cowboy amateur landlord stuff. This type of thinking has no place in a modern civilized society when dealing with critical necessities such as housing.
The sooner these short-term chancer landlords are driven out the better. They have no plan, no strategy, get them out of the private rental market.



Firefly said:


> This is what's not fair. You can be sure that any new property coming onto the market will be rented out for the max rent.



Is that a good thing or a bad thing? Which is it?
It will only be rented out if a tenant _agrees _to pay the max rent. Good luck to the landlord if it works out. But if the landlord drops the rent 30-40% to get a tenant, only to jack up the rent once they are in, what sort of chaotic housing market will that be?


----------



## AlbacoreA (16 May 2019)

At this point I have zero faith in the govt not bringing in more rules.

If I was a landlord stuck on a very low rent it might be good time to sell up, wait a couple years see what's happening then re enter the market with a higher rent and possibly house process will have fallen due to the increased supply.

..or if the govt have made it entirely untenable due to rule changes just forget about it.


----------



## NoRegretsCoyote (16 May 2019)

@Folsom 

Landlords who in 2016 were keeping rents 30% below market rate were doing so in the anticipation that they could (at very least) bring the rent back to market levels when a tenant left and they had to bring it to market again.

The rent controls introduced in 2017 made this impossible, as new tenancies are tethered to the old rent, no matter how low it was.

This seems to punish landlords for many years for doing the decent thing for their tenants in the first place.


----------



## Folsom (16 May 2019)

NoRegretsCoyote said:


> Landlords who in 2016 were keeping rents 30% below market rate were doing so in the anticipation that they could (at very least) bring the rent back to market levels when a tenant left and they had to bring it to market again.



Im sorry this doesn't make sense to me. Why would a landlord keep rents 30% below "market rate"?
How is the "market rate" determined in first instance?
Perhaps a simple example will help me understand?
There are two similar properties, same location on the market. Both are let out to tenants. One tenant is paying €1,300pm, the other tenant is paying €1,000pm.

What is the market rate?
What is the average market rate?


----------



## NoRegretsCoyote (16 May 2019)

@Folsom 

The market rate is the rent that a property would fetch if it was advertised openly.

For example imagine I could get €10k for my car via private sale on carzone. I could sell it there, or sell it to my brother for €8k. *The market value of the car would still be €10k, not €8k.*


----------



## Sarenco (16 May 2019)

@Folsom 

I'm going to assume that your question is genuine.  


Sarenco said:


> Because of the way the RPZ regime was introduced, many landlords find that they can now achieve a gross yield of less than 6% on their property.  That's often the equivalent of a net, after-tax, yield of around 2%.


Does that answer your question? If not, could you be specific about what you still find so confusing?


----------



## Folsom (16 May 2019)

NoRegretsCoyote said:


> @Folsom
> 
> The market rate is the rent that a property would fetch if it was advertised openly.
> 
> For example imagine I could get €10k for my car via private sale on carzone. I could sell it there, or sell it to my brother for €8k. *The market value of the car would still be €10k, not €8k.*



So if you sold it for 8k you would be selling it for 2k below market value? 
But by selling it for 10k there is no chance that you are selling it for 2K above market value?

Take a 2 bed apt in Galway that fetched €300k in 2007, but a two years later could only get €150k. 
Was the €300k above market value, or the €150k below market value? Or are both prices just a point in time that serve as the market value of the property at that time? In other words, there is no above or below market value, there is only the market value at that point in time?


----------



## Folsom (16 May 2019)

Sarenco said:


> @Folsom
> 
> I'm going to assume that your question is genuine.
> 
> Does that answer your question? If not, could you be specific about what you still find so confusing?



Ok, if its no trouble? 
A property valued at, say €200k is yielding €12k in rent - gross yield 6%. The market value of rents on similar properties increases during the year to €15kpa. 
So the 12k landlord wants to raise the rent to exploit the €15k. But before he does, the government introduce RPZ at 4% max increase, leaving the landlord only able to raise the rent to €12,480pa. 
The property value is still €200k. So the yield is now 6.24%. 
So despite the RPZ, the gross yield has risen. 
If that much is accurate perhaps I can ask about the net yield, admittedly more complex.


----------



## NoRegretsCoyote (16 May 2019)

@Folsom 

Market value is a standard term in economics, accounting, finance, etc.

If you are in doubt look it up in a textbook.


----------



## NoRegretsCoyote (16 May 2019)

Folsom said:


> Ok, if its no trouble?
> 
> So the 12k landlord wants to raise the rent to exploit the €15k. But before he does, the government introduce RPZ at 4% max increase, leaving the landlord only able to raise the rent to €12,480pa.
> The property value is still €200k. So the yield is now 6.24%.
> *So despite the RPZ, the gross yield has risen. *



Not if the value of the house has risen too.


----------



## Folsom (16 May 2019)

NoRegretsCoyote said:


> @Folsom
> 
> Market value is a standard term in economics, accounting, finance, etc.
> 
> If you are in doubt look it up in a textbook.



I know what it is. Im not sure some landlords do.
I put a very simple question about two properties. It should be easy to answer?


----------



## Folsom (16 May 2019)

NoRegretsCoyote said:


> Not if the value of the house has risen too.



True, so rising house prices are reducing  yields on rent?


----------



## Leper (17 May 2019)

I believe there is something dreadfully wrong with a country that has rent prices higher than a mortgage repayments. Newspaper headlines over the past few days reflect this. Certainly, in the current climate I wouldn't buy a house to rent it out in Ireland. Nearly everything is stacked against the landlord and to a certain extent the tenant. The main beneficiaries are (i) The Revenue Commissioners (ii) The Solicitors (iii) Builder/Maintenance people (iv) Real Estate Agents.

Seventeen years ago we bought an apartment in Spain. We hoped to rent it out, use it for our own breaks and hoped we could not lose on our investment and effectively it was to be the major part of our retirement fund. Things didn't work out and a recession kicked in hitting Spain harder than Ireland. Our property decreased in value by €70,000.00 and we never really hit it off with renting it out. In two words:- Bad Investment.

Property prices are at nearly an all-time low in coastal Spain with just a 5% rise (on under-valued prices) over the past two years and because of Brexit no further increase will happen in the near future. Despite my previous advice on this forum suggesting not to buy in Spain, things are changing there and perhaps opportunity knocks for some investors here. Obviously, there are regulations regarding renting in Spain, but nothing remotely like what is happening here. But, before you dip your toes remember there are no problems renting during June, July, August. It's the period October to May is the problem. You will need somebody to look after the property and employ maintenance when necessary. Utilities are payable all year including refuse charges.


----------



## Firefly (17 May 2019)

Folsom said:


> Because they are the tenant, they have agreed a rent price. What sort of social instability do you want to create if landlords can offer below market rents only to jack them up on a whim because other landlords are charging more?
> 
> If a tenant and landlord _agree _a rent then in the absence of real reason for a rent increase, such as increasing incomes, increasing interest rates, then any increases at all should be modest and sustainable on the existing tenant.
> It helps to promote social stability, keeps exploitation at bay.
> ...



Over & out for me Folsom. With respect your socialist views are too far gone. You don't seem to understand basic private property rights and fail to see that incentives drive economies and societies forward. Also, your descriptions of small landlords is also unwarranted.


----------



## Folsom (17 May 2019)

Firefly said:


> You don't seem to understand basic private property rights and fail to see that incentives drive economies and societies forward.



I totally understand property rights. This topic is about the Minister apparently pushing out landlords out of the market. There is scant evidence of this. A minor drop in the amount of landlords at best implies larger landlords replacing smaller landlords, at worst, that conditions are tough for some landlords typically those who have no long-term strategy.
I never attributed any description to small landlords. I only attributed description to landlords who are clearly out of their depth and most probably should never have become landlords in the first place. It is a good thing that these landlords are leaving the market, hopefully to be replaced with landlords capable of understanding the sector they are entering.
Nothing to do with socialist views, all about keeping up standards.

Ive seen worse descriptions of tenants on this site without anyone exiting the discussion.


----------



## Firefly (17 May 2019)

Interesting article here explaining why landlords are leaving the market in large numbers:

https://www.irishtimes.com/business...leaving-the-market-in-large-numbers-1.3360363

Essentially, on the financial side, unless you are a cash buyer it's gonna cost you.

Given the rise in house prices in the past 5-6 years I would assume many wouldbe new landlords are not entering as the capital appreciation is limited and the costs and hassles are just not worth it.

It would be interesting to get numbers on idle investment properties too. I would imagine quite a few landlords (with small mortgages) would be tempted to just leave the property idle.


----------



## Folsom (17 May 2019)

Folsom said:


> There are two similar properties, same location on the market. Both are let out to tenants. One tenant is paying €1,300pm, the other tenant is paying €1,000pm.
> 
> What is the market rate?
> What is the average market rate?



No takers. I will do my best to figure it out.

The market rent value is €1300 and €1000 respectively, being the amount that landlord and tenant have _agreed _the rent to be.
The average market rent is €1150. So at once, one property is rented out under the avr market value and one is rented out above avr market value.
The problem seems to be that the landlord renting out below avr market value would like to increase to €1150 but is restricted via RPZ of 4% to €1040. The tenant in the €1300 property would presumably like to see their rent reduced to €1150 too - but tough, €1300  is the price _agreed _so pay up.
Even if the €1000 property was allowed to go to €1150, then a new average market rent would emerge of €1,225...and again, the 'problem' of below avr market rents continues.
The answer to all of this is to build a third and fourth and fifth house until such time demand for housing is at sustainable levels.
The answer is not to allow spiraling rents and in turn spiraling house prices - can anyone remember what happened last time?

I do empathise with anyone who is genuinely caught in tight situations and I appreciate that with increased taxes that is the case for many.
But I dont subscribe to notions of landlords reducing rents because they like to 'reward good tenants' but now wish to take those rewards away but jacking up rents as high as possible. Landlords pitched their rents below average market levels because they deemed it sustainable to themselves and attractive enough to have continued occupancy and as little vacancy as possible.
This is the commercial, competitive decision they made.


----------



## RedOnion (17 May 2019)

Folsom said:


> The market rent value is €1300 and €1000 respectively, being the amount that landlord and tenant have _agreed _the rent to be.


You keep referring to 'agreed', with an emphasis on the word.
Before I decide whether to respond or not, can you please set out the duration of the agreement in your scenario? I'm assuming it's a standard 12 month agreement?


----------



## Palerider (17 May 2019)

@Folsom

You are active on this thread, I will declare my hand, I would not buy to let in a fit in Ireland, the taxes are incredible....assuming you get the rent of course, there is no incentive and it is can be a challenge to get a really good tenant, don't start me on the rights, the paperwork, the RTB etc

Smaller landlords owning less than maybe 4 or 5 places have been exiting. Govt policy discourages private investment into the sector,  commercial landlords are entering which distorts the real availability numbers, we are socially better off having a spread of rental unit ownership rather than large corporate block owners

If you had €150k spare and understanding Minister Murphys position tell me would you invest in Irish rental real estate stock and why.


----------



## Folsom (17 May 2019)

RedOnion said:


> You keep referring to 'agreed', with an emphasis on the word.
> Before I decide whether to respond or not, can you please set out the duration of the agreement in your scenario? I'm assuming it's a standard 12 month agreement?



That could differ from agreement to agreement. But taking a standard 12 month agreement (for the price of the rent, and not the occupancy) then any agreement should demonstrate that any increases thereafter are proportionate, sustainable and justified.


----------



## RedOnion (17 May 2019)

Folsom said:


> That could differ from agreement to agreement


I asked about your hypothetical scenario. 



Folsom said:


> But taking a standard 12 month agreement (for the price of the rent, and not the occupancy) then any agreement should demonstrate that any increases thereafter are proportionate, sustainable and justified.


In the real world it doesn't. You're confusing socially desirable situation, with the real world.

You've used the word 'should'. 

Either base your arguments on fact & reality, or I'll leave you in peace to get back to your pet unicorn.

In your scenario:


Folsom said:


> The tenant in the €1300 property would presumably like to see their rent reduced to €1150 too - but tough, €1300 is the price _agreed _so pay up.


At the end of the agreement, the tenant just says they'll move out, unless rent is reduced. There is no guarantee of rent for the landlord.


----------



## Folsom (17 May 2019)

Palerider said:


> If you had €150k spare and understanding Minister Murphys position tell me would you invest in Irish rental real estate stock and why.



Not a chance.  I think the market is dysfunctional and prices for property are distorted. 
There are still swathes of empty units throughout the country, circa 200,000. 
The biggest under occupancy rate is in the private owner-occupied sector with some 40% of properties there under occupied. 

I heard the Minister talking this morning on PK. Communal living quarters are the way forward apparently for young professionals, who like to socialize but not ready to settle down. We are abandoning the 'starter home' to be replaced by the 'starter communal quarter' - a concept that has taken hold in London and New York (also in the midst of homeless crisis) but that originated in the Soviet bloc of Russia, Romania and Bulgaria. 

Why cant people see, the profit motive is a good thing, but if driven too far it no longer innovates, it just turns to greed. Greed is what blew our economy apart in 2008 and we are still trying to patch things up.


----------



## Alistair (17 May 2019)

Agreed Palerider.

I am a small landlord who has been active in the market for 20+ years.  About 1.5 years ago, my accountant who performs my rental tax returns, advised me to think about the viability of my small portfolio of 6 BTLs and question if the net returns were there.   It was immediately obvious that the net returns are no longer there.  Additionally, there are significant overholding risks with no viable recourse for the small landlord.  There is constant negative and unwarranted demonization of the small landlord in Ireland.  No issue with regulation, however the more recent and ever increasing amendments to the Residential Tenancies Act have made this small industry unviable for small landlords in Ireland.

The social justice argument that is being espoused on this thread is aiming at the wrong target.  BTL, regardless of one's individual circumstances whether they chose to invest in BTLs or found themselves in the position of accidental landlord is a business.  Its not personal, its about providing a quality service for the best possible return.  If the returns are no longer there, or the risk does not support the reward, then its time to exit the business.

I have since purchased 2 BTLs on the continent, and will continue to divest completely of BTLs in Ireland.  Nothing personal, its business.


----------



## Sarenco (17 May 2019)

The Department of Finance published quite an interesting paper earlier this year on institutional investment in the housing market. 

The paper included the following warning:

_"Although as yet unproven, there is a risk that at sufficient scale an institutional investor or group of investors could, over time, develop monopolistic or oligopolistic pricing power. The highly dispersed nature of the Irish rental ownership structure to-date may have obviated such a development in the past. Theoretically, such price-setting power could be attained at a local level given certain market conditions and sufficient scale."_

https://assets.gov.ie/6348/140219142846-5a166a1ec85f4237935fb5c21dd666cb.pdf


----------



## Ceist Beag (17 May 2019)

Alistair said:


> Agreed Palerider.
> 
> I am a small landlord who has been active in the market for 20+ years.  About 1.5 years ago, my accountant who performs my rental tax returns, advised me to think about the viability of my small portfolio of 6 BTLs and question if the net returns were there.   It was immediately obvious that the net returns are no longer there.  Additionally, there are significant overholding risks with no viable recourse for the small landlord.  There is constant negative and unwarranted demonization of the small landlord in Ireland.  No issue with regulation, however the more recent and ever increasing amendments to the Residential Tenancies Act have made this small industry unviable for small landlords in Ireland.
> 
> ...


Alistair, what are the main factors that have changed regarding your own portfolio that have now made the net returns so unattractive? Has taxation been the only reason or have there been other factors? Presumably the net returns were attractive up until recently so I'm just interested in what has caused this to change as clearly something in recent years has reduced your returns.


----------



## Palerider (17 May 2019)

Alistair said:


> Agreed Palerider.
> 
> I am a small landlord who has been active in the market for 20+ years.  About 1.5 years ago, my accountant who performs my rental tax returns, advised me to think about the viability of my small portfolio of 6 BTLs and question if the net returns were there.   It was immediately obvious that the net returns are no longer there
> 
> I have since purchased 2 BTLs on the continent, and will continue to divest completely of BTLs in Ireland.  Nothing personal, its business.



Interesting, I agree and have the same strategy, I also purchased overseas, the first one in 2010 and have added since with the most recent one in April and I will do more, excellent experience.


----------



## Folsom (17 May 2019)

RedOnion said:


> You're confusing socially desirable situation, with the real world.
> 
> Either base your arguments on fact & reality,



This is an attempt to create socially desirable situation. All from the real world too. Some facts and reality from the rtb.ie
https://onestopshop.rtb.ie/rent-pressure-zones/

"_Rent Pressure Zones are located in parts of the country where rents are highest and rising, and where households have the greatest difficulty finding accommodation they can afford. They are intended to moderate the rise in rents in these areas and create a stable and sustainable rental market."_




RedOnion said:


> At the end of the agreement, the tenant just says they'll move out, unless rent is reduced. There is no guarantee of rent for the landlord.



Yes, tenants breaking agreements are as bad as landlords breaking agreements.


----------



## RedOnion (17 May 2019)

Folsom said:


> Yes, tenants breaking agreements are as bad as landlords breaking agreements


Breaking what agreement?

I said 'at the end of the agreement'. So there is no agreement being broken.

You're picking bits that suit your agenda.


----------



## Mcivor (17 May 2019)

Hi Palerider / Alistair,

Could you share where you made your new investments

My story - I have 3 BTL's in Dublin with 1st purchased over 20 years ago, 2nd in 2013 that is just back up to same price I paid apart from excessive stamp duty at the time c. 30K which I'll probably never recoup , and 3rd during recession. Two are now mortgage free and 3rd with c. 60% ltv so not too bad so far. However I still can't make it pay and am always afraid of big repair or service charge levy. The level of return doesn't justify the risk. I think what really killed it was when FF govt of the day introduced USC and PRSI on rental income even though as this is 'unearned' income whatever that means there are no benefits to paying this PRSI i.e. afaik doesn't count towards contributory pension, etc. I have children so may hold onto 2 of the properties that could be of use to them but otherwise I'd just sell up. Govt keep very quiet re level of taxation, prsi, and usc they collect from private landlords. I wonder why..


----------



## Folsom (17 May 2019)

RedOnion said:


> Breaking what agreement?
> 
> I said 'at the end of the agreement'. So there is no agreement being broken.



My apologies, I incorrectly mistook your comment to mean the tenant not paying their rent. 
Of course, at the end of an there is no guarantee of rent for the landlord. But in the real world, the landlord will be aware of this before they become a landlord. That is the risk that they choose to take. If they are not prepared to take that risk, dont become a landlord. That is why any prospective landlord should set out a long-term strategy and be prepared for the troughs. 

How are the real world facts and of the rtb trying to moderate rents increases and create a stable and sustainable rental market sitting with you and your own view that no such thing occurs in your world?


----------



## RedOnion (17 May 2019)

Folsom said:


> your own view that no such thing occurs in your world?


Where exactly did I say that?


----------



## Sarenco (17 May 2019)

@RedOnion 

Please stop feeding the troll.

Many thanks.


----------



## Folsom (17 May 2019)

RedOnion said:


> You're confusing socially desirable situation, with the real world.
> 
> You've used the word 'should'.
> 
> Either base your arguments on fact & reality,



You implied that my suggestion of what 'should' be was not based on fact or reality. In reality, my suggestion of what 'should' be is close to what, in fact, the rtb.ie is trying to achieve - a socially desirable situation of moderate rents increases to create a stable and sustainable rental market.

Personally, I think they are inadequate measures by themselves. The realistic solution is to build more houses. I dont think it can be clearer than that. 
So unless anyone else actually has a realistic proposal for the OP other than inane ideas like "free market" when they cannot even understand basic concepts of market value, I will leave here.

- Build more houses
- Impose RPZ's limits
- Drive out the cowboy spoofer landlords.


----------



## Sarenco (17 May 2019)

Mcivor said:


> ...govt of the day introduced USC and PRSI on rental income even though as this is 'unearned' income whatever that means there are no benefits to paying this PRSI i.e. afaik doesn't count towards contributory pension, etc.


Yeah, the imposition of PRSI to rental income a few years ago was probably the last straw for me.

When I ran the numbers, I realised the Government was taking nearly two-thirds of my modest rental profits.  What was left didn't come close to adequately compensating me for the risks I was bearing.

So I reluctantly exited the business.


----------



## NoRegretsCoyote (17 May 2019)

Sarenco said:


> The Department of Finance published quite an interesting paper earlier this year on institutional investment in the housing market.
> 
> The paper included the following warning:
> 
> ...




That's highly speculative.

What scale would a REIT need to be to have monopoly power?

I'd say 20% of rental supply in a country town would do it.

I'm not sure any institutional landlord is even at a tenth of this in any market.


----------



## Sarenco (17 May 2019)

NoRegretsCoyote said:


> I'm not sure any institutional landlord is even at a tenth of this in any market.


Well, it's just highlighting a risk.

But I can certainly think of certain areas of Dublin where a single institutional investor holds sufficient stock that monopolistic pricing power has got to be a real concern at a local level. The area around Heuston Station springs to mind.


----------



## NoRegretsCoyote (17 May 2019)

Sarenco said:


> But I can certainly think of certain areas of Dublin where a single institutional investor holds sufficient stock that monopolistic pricing power has got to be a real concern at a local level. The area around Heuston Station springs to mind.



Yeah but there are perfect substitutes five minutes walk away.

You cannot really exert market power in a dense city location without controlling a vast amount of the market.


----------



## Sarenco (17 May 2019)

NoRegretsCoyote said:


> Yeah but there are perfect substitutes five minutes walk away.


Are you sure about that?

Checking Daft, I can only find five apartments for rent within a 5 minute walk of Heuston Station that are not owned by a single, institutional landlord.


----------



## Bronte (17 May 2019)

Sarenco said:


> The Department of Finance published quite an interesting paper earlier this year on institutional investment in the housing market.
> 
> The paper included the following warning:
> 
> ...


I believe this is already the case. As I mention at point g yesterday.  And they treat human beings very much as a commodity. Yet we ordinary small time landlords are castigated constantly in the media. And by legislators.


----------



## Bronte (18 May 2019)

This news has shocked me, I’m literally thinking that maybe I need to evict all my tenants and sell up.



Get out while the going is good.

And I see that article mentions bedsits, and how that policy was a bad idea, something I railed against many times on here.

https://www.askaboutmoney.com/threa...uilding-in-ireland.187743/page-3#post-1390780


----------



## Saavy99 (18 May 2019)

Bronte said:


> This news has shocked me, I’m literally thinking that maybe I need to evict all my tenants and sell up.
> 
> 
> 
> ...



Good grief


----------



## The Horseman (18 May 2019)

Bronte said:


> This news has shocked me, I’m literally thinking that maybe I need to evict all my tenants and sell up.
> 
> 
> 
> ...



I am getting out of the rental market on foot of this.


----------



## Sconeandjam (18 May 2019)

I was reading the discussion in the committee stage for the residential tenancies act amendment and mr Murphy is really pushing small time landlords out. Anyone with a btl mortgage have a risk of having to all with sitting tenants. 
Mr Murphy wants any substantial change to move up a good number of percentage points on the ber scale which is subjective. Is it worth it I ask? Spending 10-20k for a devalued house with a sitting tenant after 2months...oh they were talking about moving from 6months to 2 months that a tenant can stay as long as they like.

 Have 3 btl two empty and up for sale and waiting for the last tenant to leave. 

Mr Murphy said in the discussion as well that the reit investors and charity's do not have to adhere to the 4% rent increase as in the case of the small time landlords. No wonder the rents in Dublin are above the 4%.
Many that are homeless are on Hap and with the risks involved landlords will not take on someone that has been emergency accommodation. Why are they there? I had a lady contact me asking to rent a3bed  with her 5children (one child only born)and they have been living in emergency accommodation the last 2 years. Ask the child's daddy to help.

 The houses we bought were the going rate at the time and will not be devalued by a sitting tenant. The amount of tax we have paid as well as USC is madness. We were caught with rents below the market rent by 400euros due to providing accommodation. The tenants were or ended on rent allowance. We were one of the landlords that helped the government but no more.


----------



## galway_blow_in (18 May 2019)

Palerider said:


> Interesting, I agree and have the same strategy, I also purchased overseas, the first one in 2010 and have added since with the most recent one in April and I will do more, excellent experience.



Is it difficult managing from so far away?


----------



## Folsom (18 May 2019)

I did think I was out of this discussion but this type of stuff draws me back in.



Bronte said:


> This news has shocked me, I’m literally thinking that maybe I need to evict all my tenants and sell up.



Why on earth would you even consider evicting all your tenants on account of the proposal to make it easier for tenants to rent for life?


----------



## Folsom (18 May 2019)

The Horseman said:


> I am getting out of the rental market on foot of this.



You are a landlord, you are in the business of providing accommodation to tenants. 
Why would the prospect of a long-term for life tenancy make you get out of rental market?


----------



## Saavy99 (18 May 2019)

Folsom said:


> You are a landlord, you are in the business of providing accommodation to tenants.
> Why would the prospect of a long-term for life tenancy make you get out of rental market?




What if his circumstances change, what if he wants to give the property to his child, or  sell it to fund his retirement.  What if he loses his job and can't fully meet the mortgage repayments on the house. It' looks like  the government's intention is to push all small time landlords out and instead allow these large companies take over the rental market in this country.


----------



## Luternau (18 May 2019)

Folsom said:


> Why on earth would you even consider evicting all your tenants on account of the proposal to make it easier for tenants to rent for life?


Something along the lines of this:

The proposal that you cannot evict a tenant if you wish to sell.
Tenants getting more rights and protections than private landlords have. Landlords have been thrown under the bus by a succession of  governments that have totally failed to tackle the severe undersupply of property and believe they can regulate the problem away by rent and tenancy controls.

Meanwhile, institutional landlords with significant holdings are free to do what they want, and can avail of significant tax breaks while doing so. 

Why not go after them and cap the rents and post tax pofits they are making? No,  say the regulators, it would send the wrong message about Ireland Inc. being a great place to come and invest.

Its a bad policy created by people that don't understand or care about unintended consequences. Where and when has this happened before?


----------



## Folsom (18 May 2019)

Luternau said:


> The proposal that you cannot evict a tenant if you wish to sell.



Thats not the proposal.


----------



## Folsom (18 May 2019)

Saavy99 said:


> What if his circumstances change, what if he wants to give the property to his child,



Well he cant. As long as there are people, families living in the property paying rent they have a right to privacy and a right to be free from the fear of eviction which could turn their lives upside down.
This is not the 18th century, we have progressed as a society.



Saavy99 said:


> sell it to fund his retirement.



There is nothing in that article that suggests he cannot sell it. All that is being offered is security of tenure to rent paying tenants.



Saavy99 said:


> What if he loses his job and can't fully meet the mortgage repayments on the house.



What if anybody loses their job and cannot fully meet the mortgage repayments?



Saavy99 said:


> It' looks like the government's intention is to push all small time landlords out and instead allow these large companies take over the rental market in this country.



I dont think so. Although perhaps they are trying to push out landlords who, perversely, are more concerned about how to evict their tenants rather than actually providing accommodation to tenants.


----------



## The Horseman (18 May 2019)

Folsom said:


> You are a landlord, you are in the business of providing accommodation to tenants.
> Why would the prospect of a long-term for life tenancy make you get out of rental market?


I entered the market to make money pure and simple. I am not allowed raise rent to market figs. I am not allowed evict non paying residents without going through a long drawn out process and I may not even get paid even if I get a rtb judgment against a tenant.

Can I suggest you go and buy a property and let somebody live in it at a rent you deem appropriate and you make up the shortfall on the mortgage.


----------



## Folsom (18 May 2019)

The Horseman said:


> I entered the market to make money pure and simple.



Well I would suggest that everyone enters business to make money pure and simple. But they do it by providing a good or service that people want and/or need. The quality and pricing of the good or service is what drives competition.
If this is not a consideration of your business model as a landlord, best you leave so.




The Horseman said:


> Can I suggest you go and buy a property and let somebody live in it at a rent you deem appropriate and you make up the shortfall on the mortgage.



No way. The Irish property market is dysfunctional, has been since about 2005 when prices really started going beserk.
There are 200,000 empty dwellings in this country, about 8% of stock. Private ownership sector has 40% under-occupancy. The trend will be for downsizing, leaving big monster houses in the country at risk of neglect.
House prices are supported by ECB money printing that gave assets a price pump and  keep our government bond yields artificially low.
The government knows we are walking on egg-shells. Homelessness is still rising so policies will always be to re-act against that and any of it causes, including more protection for tenants - rightly so.
 You got into property rental to make money pure and simple, but reality is you haven't figured on the wider implications and factors of becoming a landlord - tenancy rights and security of tenure, homelessness, unemployment, taxes, housing policy, history, and lots more beside.


----------



## The Horseman (18 May 2019)

Folsom said:


> Well I would suggest that everyone enters business to make money pure and simple. But they do it by providing a good or service that people want and/or need. The quality and pricing of the good or service is what drives competition.
> If this is not a consideration of your business model as a landlord, best you leave so.
> 
> 
> ...


Can I suggest you become familiar with contract law. A lease is a contract which like any contract is for a definitive period of time which allows both parties to agree an extension. The proposals do not allow this nor do they allow a landlord limit their liability to loss like every other commercial trans between two parties neither of which is the state.


----------



## Sarenco (18 May 2019)

Folsom said:


> Well he cant.


He can actually.

Requiring a property for personal or familly use is one of the six grounds upon which a Part 4 tenancy can be lawfully terminated.

There is no proposal for that to change.


----------



## Folsom (18 May 2019)

Sarenco said:


> He can actually.
> 
> Requiring a property for personal or familly use is one of the six grounds upon which a Part 4 tenancy can be lawfully terminated.
> 
> There is no proposal for that to change.



I stand corrected. Nothing for @Saavy99 to be concerned about then in that regard.


----------



## Sconeandjam (18 May 2019)

And your complaining about landlords trying to protect their investment!  Many landlords are leaving their properties empty until the time is right to sell due to the system where it takes up to 2years to evict a non paying tenant and trying to claw this back on someone on state assistance is pointless. I know a good few landlords that had tenants in with good references and new rents paid...2years later the house is destroyed and tenants leave with everything bar the kitchen sink.

You are assuming all landlords went straight to btl purchases. Many home owners became landlords by keeping their old home and renting it out while living in another home. They may have bought at the height of the market and would have to sell below or near to the purchase price. Or they bought from the family.

No wonder landlords are not renting the properties out. The risk is getting too great and with further restrictions Mr Murphy and the opposition are trying to write into law is crazy to be a landlord. There was even a mention of giving a tenant the 6months rent if you want to sell. What if they have not paid the rent in the last 6months and the bank is after the landlord for the mortgage?

If someone wants security then they should try to buy and pay all the costs that go with it.


----------



## Folsom (18 May 2019)

The Horseman said:


> Can I suggest you become familiar with contract law. A lease is a contract which like any contract is for a definitive period of time which allows both parties to agree an extension. The proposals do not allow this nor do they allow a landlord limit their liability to loss like every other commercial trans between two parties neither of which is the state.



https://www.threshold.ie/advice/seeking-private-rented-accommodation/do-i-have-to-sign-a-lease/

You have to get past the concept of the business that you are in is just the same as any other business. It is not. Tenants are not your customers, they are your tenants. Housing is not a commodity, it is a social necessity.


----------



## Saavy99 (18 May 2019)

Folsom said:


> I stand corrected. Nothing for @Saavy99 to be concerned about then in that regard.




Well thank goodness for that.


----------



## Palerider (18 May 2019)

galway_blow_in said:


> Is it difficult managing from so far away?



I have a relationship with a local agent so not at all, quite the opposite, I have little input, my biggest job is to check the rental income statements monthly, the agents there take a lot responsibility getting the right tenant, my trust is developed over time.


----------



## Palerider (18 May 2019)

In more progressive markets such as the US there are apartment buildings and condo buildings, in apartment buildings all units are rented, the building as a consequence is investable, can be sold to larger investors, pension funds and so on, renting for life is possible so long as you pay the rent, you don't and you are out, out much easier than here,

The building owner decides who gets in.

We need to build skywards in Cities, Dublin is a good example, any group that puts in planning for an apartment building in Dublin - all tenanted, for life will sail through planning, I am not talking about social housing.

It's the lack of mature joined up thinking that recognises all stakeholders needs that is the issue in our small country, a look at more mature countries that have addressed their housing needs is a window on resolving all of this, not difficult, not rocket science.


----------



## AlbacoreA (18 May 2019)

Folsom said:


> ...you have to get past the concept of the business that you are in is just the same as any other business. It is not. Tenants are not your customers, they are your tenants. Housing is not a commodity, it is a social necessity.



Govt should provide social necessities not the private market. 

At this point the govt could do anything. They've turned a low risk into a high risk. 

I think people should be allowed to leave the market under the rules at which they entered it.

 If people are happy with the direction the govt are taking and it's a viable business, then most will stay in it and indeed more will enter it. So heres no reason to stop people leaving unless of course you don't believe it's viable.


----------



## Folsom (18 May 2019)

AlbacoreA said:


> Govt should provide social necessities not the private market.



Housing is a social necessity. Do you mean ending the private rental market?


----------



## AlbacoreA (18 May 2019)

This all started partially when the govt sold off it's social and affordable housing stock.

Then it it outsourced its obligation to the private market. It then forced that market to take high risk business that the govt didn't want. 

So the govt has effectively renaged on it's obligation to provide housing and forced it on someone else. So now it's that private business obligation to provide housing. 

At the same the govt keeps changing the rules and goal posts. 

So it's the govt ending the private rental market. The market that it's outsourced housing too.

The new landlords coming in are targeting the high end. That won't fix supply where it's needed.


----------



## AlbacoreA (18 May 2019)

Who will supply this social housing that is needed.


----------



## Gordon Gekko (19 May 2019)

Just to offer an alternative view, I’m considering buying an investment property at the moment. I’ve a number of reasons for doing so, but the current noise encourages me if I’m honest as I find it analogous to “blood on the streets” in investment parlance.


----------



## galway_blow_in (19 May 2019)

I'm half considering buying a second commercial investment property, bought the first one in May 2016 for 120000 all in including stamp duty and legal fees, collected 36 k so far and not a single expense, only error I've made was paying off the ten year 50k loan early as it was a waste of cash.

New property would be a cash buy ( little Asian food place in Limerick city) but I would probably be over exposed to bricks and mortar and paying more tax, temptation will probably pass in a week 

Having hefty debt seems to be the only logical way to make property pay with the draconian tax take?


----------



## Gordon Gekko (19 May 2019)

I’m looking at something for €450k. Loan would be €315k interest only for 15 years at 5.5%. Rent would be €29k a year. Tax deductible interest of circa €17k a year. Tax deductible agent fees of circa €3k a year. Tax bill circa €5k a year. Keep the surplus €4k a year rolling up in the rent account to cover contingencies. Clear the loan using part of the future pension lump sums.


----------



## AlbacoreA (19 May 2019)

Gordon Gekko said:


> Just to offer an alternative view, I’m considering buying an investment property at the moment. I’ve a number of reasons for doing so, but the current noise encourages me if I’m honest as I find it analogous to “blood on the streets” in investment parlance.



 Imo it's just a bit early for blood in the streets analogy. People are getting out of a very specific rental type. They are how ever buying up other types of rental. Property is still being snapped up. It's just slowing  at certain price points due to affordability.

If someone ends up with 10-20k damage to a property and no rental income for a couple of years, that's the risk. If you can carry that cost easily then it's not really a high risk. Like wise having capital tied up for a longer term.


----------



## galway_blow_in (19 May 2019)

Gordon Gekko said:


> I’m looking at something for €450k. Loan would be €315k interest only for 15 years at 5.5%. Rent would be €29k a year. Tax deductible interest of circa €17k a year. Tax deductible agent fees of circa €3k a year. Tax bill circa €5k a year. Keep the surplus €4k a year rolling up in the rent account to cover contingencies. Clear the loan using part of the future pension lump sums.



Don't let Sarenco hear of this, any rate above tracker level is usury in his mind


----------



## galway_blow_in (19 May 2019)

AlbacoreA said:


> Imo it's just a bit early for blood in the streets analogy. People are getting out of a very specific rental type. They are how ever buying up other types of rental. Property is still being snapped up. It's just slowing  at certain price points due to affordability.
> 
> If someone ends up with 10-20k damage to a property and no rental income for a couple of years, that's the risk. If you can carry that cost easily then it's not really a high risk. Like wise having capital tied up for a longer term.



Do you think commercial property might now appeal to more traditional residential investors?


----------



## Gordon Gekko (19 May 2019)

My blood on the streets comment stands, but it’s more around sentiment versus reality. We’re being bombarded with tales of landlords fleeing the market. This is a market where demand massively exceeds supply, where borrowing costs are fully deductible, where Brexit is leading to economic immigration, and where interest only is available. It is also a market where institutional money sees potential.


----------



## galway_blow_in (19 May 2019)

Gordon Gekko said:


> My blood on the streets comment stands, but it’s more around sentiment versus reality. We’re being bombarded with tales of landlords fleeing the market. This is a market where demand massively exceeds supply, where borrowing costs are fully deductible, where Brexit is leading to economic immigration, and where interest only is available. It is also a market where institutional money sees potential.



I think your instincts are correct but are the rules of the game not very different for institutional money?


----------



## AlbacoreA (19 May 2019)

Gordon Gekko said:


> My blood on the streets comment stands, but it’s more around sentiment versus reality. We’re being bombarded with tales of landlords fleeing the market. This is a market where demand massively exceeds supply, where borrowing costs are fully deductible, where Brexit is leading to economic immigration, and where interest only is available. It is also a market where institutional money sees potential.



The narrative that landlords are fleeing  the market is a bit misleading. Few look at that properly. There is always a landlords leaving and new landlords entering the market. There is a slow move to landlords with more properties and a slow decline in landlords with one property. But it's far from fleeing. After the crash about 50k left but a lot  have come back since. Still not what it was. 

There other metric  they point to it is lack of rental supply. But demand had increased. Population has increased and immigration is very high. Supply can't meet this demand. It's likely we can never meet this demand. 

Finally the new supply is at the most profitable end of the market. If you have money you can find somewhere over priced to rent. Almost no one is building affordable or socal housing. The only people who will build this is the govt. They don't want to. 

So I think that's what you'll find. Landlords who are getting out, are actually getting back in but perhaps into a Reit, or into a different more profitable part of the market. Because they are case rich and want that money to work for them.


----------



## AlbacoreA (19 May 2019)

So the idea that you can force landlords to maintain social or affordable housing is flawed. They'll just move to something more profitable.

Unless of course the provision is tied to this none profitable housing and profits are controlled. Which is a bit like what they were doing in Austria. But all of Europe is struggling with immigration and govt not building housing.


----------



## Folsom (19 May 2019)

AlbacoreA said:


> This all started partially when the govt sold off it's social and affordable housing stock.





AlbacoreA said:


> This all started partially when the govt sold off it's social and affordable housing stock.
> 
> Then it it outsourced its obligation to the private market.





AlbacoreA said:


> So the govt has effectively renaged on it's obligation to provide housing and forced it on someone else. So now it's that private business obligation to provide housing.





AlbacoreA said:


> So the idea that you can force landlords to maintain social or affordable housing is flawed. They'll just move to something more profitable.



You talk alot of sense there Albacore. 
Housing policy in this country has failed. Not just on foot of increased taxes and RPZ's. It has failed over a couple of decades as you rightly point out that the government outsourced its responsibility to provide social and affordable housing to the private sector. 
The consequences of which we are living with today and witnessing the patchwork job of RPZ's etc being implemented. 
The State needs to invest heavily in social and affordable housing to create a stable and sustainable market.


----------



## Sarenco (19 May 2019)

I'm not sure about "blood on the streets" but I wonder if the recent price falls, particularly in Dublin, are prompting some landlords to think about getting out while the going is good.  

If the net, after-tax, income is poor you are really left with the expectation of capital appreciation to justify an investment.  Perhaps some landlords are sceptical of achieving meaningful capital appreciation in the medium-term in circumstances where median property prices are over nine times median income.

Having said all that, I think BTL can still make sense for a cash buyer with a low marginal tax rate.  A retiree, for example, buying with a pension lump sum.


----------



## AlbacoreA (19 May 2019)

https://m.independent.ie/irish-news...even-though-building-is-cheaper-38125430.html

The only conclusion is that it's unofficial policy for the govt to increase demand. They aren't trying to solve the housing crisis. They have a patsy in small landlords that soaks up most of the criticism and heat.


----------

