# Getting out of being a landlord or not



## elainem (22 Sep 2012)

Just wondered if lanlords are considering getting out of property letting due to property taxes, PRTB, second home charges etc.?

Also, what do people think the property charge will be? Will it be a percentage of the property value, e.g. 2.5%?


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## Alexmartin (22 Sep 2012)

There are ways of getting at least some of it back.

http://irishlandlord.com/forum/showthread.php?t=2545&page=3


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## shesells (23 Sep 2012)

No point in speculating on the property tax. It will be what it will be.


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## oldnick (23 Sep 2012)

LLs are not generally a happy lot nowadays. But an increase in property tax need not be a great cause if the LL starts now to advise tenants that there will be an icrease in rents next year. I've done so already  and told each of them that due to various increases imposed on me  I have to pass pon some of them.

Now, I think i can get away with increasing rent because there is ,in Dublin ,a greater demand for rental accommodation than for years -and rents are edging upwards. And I know  several landlords in my main area who are going to increse rents due to never ending charges.

So, whilst we are being stung in ever direction and are always the villains in Irish society, there is a glimmer of hope ,at least temporarily, that we can recoup some of the recent extra costs.

I regret I don't know much about the rental market outside Dublin. Does anyone know if there has been an increase in demand and rents in other areas.


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## Luternau (23 Sep 2012)

I recently advised my Mgt Agenr that my tenants would have to be told that rents would have to be increased if additional charges and costs associated with the property occur. I asked him to consider inserting this in the leases. I suppose this strategy will only be operable, if every LL does the same. I believe that is fair and reasonable, and in the same mould as airlines introducing fuel charges to hedge against unforeseen fuel price movements.

As a LL, a real concern would be if they reduce allowable interest down from 75%. As it is, I don't understand why, a LL can't write off all his interest on acquiring an asset, while say a farmer, or other small business owner, can write off all interest on loans associted with acquiring assets, including land. The curtailment of relief to 75% has resulted in many LL's having to pay tax, on what is at best break-even, or in some cases an operating loss. 

I realise the point was to increase the tax take, but changing tax codes/allowances to create a profit for tax purposes for a small segment of tax payers is somewhat unfair, if not unprecedented. Please feel free to correct me if I have got that wrong.


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## Bronte (25 Sep 2012)

oldnick said:


> . But an increase in property tax need not be a great cause if the LL starts now to advise tenants that there will be an increase in rents next year.


 
What was interesting in the link to the landlord's website was the fact that they were separating rent from charges. Therefore you only pay tax on the rent, in your case if you increase the rent to cover the charges you have to declare and pay tax on all of it. But you still have to pay the charges which are not tax deductable. Something to think about.

In my own situation I never increase rent when there is a sitting tenant.  Though I've had to reduce on occasion.  Not sure that tenant's can pay more, they are having higher taxes and the cost of heating, petrol is rising, plus food too seems to be increasing leaving people with less disposable income.


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## oldnick (25 Sep 2012)

I'm not sure that one can seperate the taxes/charges from the "main rent" for Revenue purposes. 
Revenue want to know the total collected and , as regards the seperate expences, will decide what is deductible (as we know they say NPPR is not).

But advising tenants  verbally or in writing that govnt imposed charges/taxes will be passed on to the tenants seems eminently sensible.  Obviously decent notice must be given.

Raising rent is something that I also have never done with sitting tenants -and like Bronte have reduced it for them (mainly because they saw rents declining 2007-10).  

Unfortunately,like the tenants, I have to pay higher taxes, fuel, heating etc. Indeed, my rental income has declined considerably -as well as the value of the property. 

In one way tenants are lucky -they escaped the  horror of losing half the value of one's property asset. And they pay nothing whenever something breaks down - whether it's a boiler or a microwave.

I've absorbed the 100 property charge and the 200 NPPR -but if the property charge/tax increases further then -without a penny extra going to me - I'm increasing the rents.

I'd encourage every LL to do the same - with the proviso that tenants are properly informed in good time and that  they are in every other way fairly treated.

P.S. In U.K. -inc. Northern Ireland - it is the occupant who is liable to pay. In France it is also the occupant who is liable to pay the tax habitation.


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## murphaph (25 Sep 2012)

oldnick said:


> P.S. In U.K. -inc. Northern Ireland - it is the occupant who is liable to pay. In France it is also the occupant who is liable to pay the tax habitation.


...and in Germany the landlord is legally permitted to pass the cost of his Grundstuer (property tax) straight on to the sitting tenant. He is also allowed to pass on all costs associated with providing services to the dwelling.

I, as a property owner here, get a bill from the local authority for bins, water, waste water, roads, parks etc. which (if I were a landlord) would all be passed straight on to the tenant. Only costs like insurance on the property have to be absorbed by the landlord as it's his asset that he's insuring.

Rents are controlled by law (max percentage increases per year generally with limited exceptions) but the landlord can and does pass on the above costs beyond his control straight to the tenant. This is standard practice here. Tenants don't expect the landlord to absorb these costs.

In Ireland it's really despicable. not only are you as the owner the chargeable person, you're not even allowed to deduct these costs when calculating net profit! Pretty damn cheeky, especially when coupled with the stupid 75% limit on mortgage interest relief (also 100% in Germany, UK etc.)

For a state that can't/won't provide a fraction of the social housing needed and so heavily dependent on the private rental sector, Ireland seems intent on driving landlords out of the "business". I think the state will rue the day it decided that landlords were the bad guys.


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## murphaph (25 Sep 2012)

cashier said:


> You can't compare Germany with Ireland as they have advance laws in relation to renting and tenancy in Germany in addition renting is the norm in Germany, people in general only buy retirement cottages and many could have secure tenancy in rented flats for many years, bringing up families etc. In Ireland the law in relation to renting and tenancy is as archaic as the hills, there is no security for tenents and much needs to be done to modernise the exisiting system.


What has any of this got to do with my post?

The UK is very similar to Ireland in terms of home ownership rates and landlord/tenant law. The tenant is liable for the Council Tax there as well which is essentially a property tax and services charge rolled up into one (they have no rates on domestic houses either any more).

As for your post "people in general only buy retirement cottages" well I don't know what to say except it's a load of nonsense. German home ownership stands at 43% at last count as is RISING as Germans begin to fear inflation again. More and more of my own colleagues are moving towards home ownership in fact.


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## murphaph (25 Sep 2012)

Please don't post single links and quotes from them as some sort of answer. Yes, there are huge regional variations but nationally the figure is 43% home ownership in Germany. It's app. 80% in the UK/Ireland and the tendency in Germany at present is towards home ownership (be that good or bad, it wasn't a point I was debating and has really nothing to do with this thread)


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## Bronte (26 Sep 2012)

cashier said:


> . In Ireland the law in relation to renting and tenancy is as archaic as the hills, there is no security for tenents and much needs to be done to modernise the exisiting system.


 
You do realise that us landlords would love to have security of tenancy for our tenant's.   No written lease in Ireland is worth the paper it's written on.  If we had the security of German landlords the state of many properties would improve overnight.  I would love to invest more in my properties, but as I've basically no rights I cannot improve too much for fear of damage and worse.  

Anyway as landlords seem to be the enemy and the government seem hell bent on punishing us as the easy target bad boys all I can see is rent rises as more and more landlords get out of the business, and very few new ones to replace them.


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## Luternau (26 Sep 2012)

bronte said:


> you do realise that us landlords would love to have security of tenancy for our tenant's.   No written lease in ireland is worth the paper it's written on.  If we had the security of german landlords the state of many properties would improve overnight.  I would love to invest more in my properties, but as i've basically no rights i cannot improve too much for fear of damage and worse.
> 
> Anyway as landlords seem to be the enemy and the government seem hell bent on punishing us as the easy target bad boys all i can see is rent rises as more and more landlords get out of the business, and very few new ones to replace them.



+1.


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## Mikeinie (26 Sep 2012)

All costs associated with the rental of the property should be taken into consideration in the rent being charged.  When you go buy something in a shop, you don’t care how much of what you pay goes to tax, profit, leases etc.  you just want to know how much you have to pay.  Like most things, rent is based on supply and demand.


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## oldnick (28 Sep 2012)

Looking over these posts plus others on other websites I'm sure that it's time for LLs to be more confident about asking for rent increases. Not out of greed but to cover ever rising costs, including those damn taxes and charges.

Of course, if rental demand was low then I wouldn't be so bullish - but in Dublin at least there is a great shortage of decent rental property. Looking at the Daft/myhome websites I recently realised that i'm much cheaper than most LLs with similar properties. This knowledge, combined with the advent of extra taxes, has made me raise rents a little. Not one tenant said they'd move out (mind you, I'm sure they checked around before agreeing to the rent increase !) .

Considering ...
-we've lost so much on the value of our properties,
-most of us are getting less rent than in 2006
-govnt never ending taxes,charges,disincentives against LLs....
...... NOW is the time to restore rents to a level that makes letting property worthwhile.

Anyway, that's my political party broadcast on behalf of downtrodden LLs.


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## murphaph (28 Sep 2012)

oldnick said:


> Looking over these posts plus others on other websites I'm sure that it's time for LLs to be more confident about asking for rent increases. Not out of greed but to cover ever rising costs, including those damn taxes and charges.
> 
> Of course, if rental demand was low then I wouldn't be so bullish - but in Dublin at least there is a great shortage of decent rental property. Looking at the Daft/myhome websites I recently realised that i'm much cheaper than most LLs with similar properties. This knowledge, combined with the advent of extra taxes, has made me raise rents a little. Not one tenant said they'd move out (mind you, I'm sure they checked around before agreeing to the rent increase !) .
> 
> ...


Couldn't agree more tbh.

I am also the cheapest in D15 for 3 bed semi d property (only have 1 residential property in Ireland let) or at least there are only 2 similar properties looking for as little as me, the rest are all at least 50pm more expensive (I know daft asking prices leave room to negotiate in them, but not that much).

I'm thinking a 25pm increase just to cover my increasing costs from January is the order of the day. Will monitor daft closely and proceed from there. Tenants have to bear some of the cost of these taxes as well IMO, though I'm sure they think we're all minted. If not, then it'll become more and more attractive for me to sell up and get out of residential letting in Ireland altogether. I've been lucky so far with tenants and I know it, one chancer and it could be disastrous (been there done that with some overholding commercial tenants-don't want it again!).


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## oldnick (29 Sep 2012)

Good luck Murphaph. It's more difficult for LLs like you and Bronte  (she doesn't live next door does she ?) living abroad than for me to raise the rent. Tenants see me  several times a year ,ring me direct etc.  One gets a better feel and knowledge than if one's far away.

I have two places further from home that local mngt companies deal with  - and it was those two places which proved more difficult. I was an anonymous landlord (doubtless rich and greedy!)not the friendly,helpful albeit eccentric LL that my nearer tenants know.


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## murphaph (29 Sep 2012)

Cheers Oldnick, Yeah I think I know what you mean. I know my tenants as they are in situ several years now and I was still in Ireland when they moved in and it is managed by a family member (thank God) who maintains the contact. 

Have a good relationship with the tenants in there. They are good with the rent, no messing, but I'm good to them too, any problems are sorted promptly for them and they are paying at the lower end for the area. Don't want to fleece anyone, but don't want to be covering all the new increases myself when rents seem to be nosing up there.


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## oldnick (30 Sep 2012)

Another blow to LLs - at least those living in Ireland- in todays Sunday Times (which, incidentally, has a decent article by our guru Brendan Burgess)...

"LLs to be targeted in forthcoming Budget .. PRSI to be applied to rental income ...  "etc 

Does it ever stop?


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## Bronte (1 Oct 2012)

If they're going to apply PRSI, doesn't that mean that one gets social welfare entitlements.  All these proposals are the governemt sending out feelers.  

Anyone able to scan the article as one cannot get it online and I've only got the international version of the Times.


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## oldnick (1 Oct 2012)

Bronte. i chucked ST in paper bin this a.m.  and when i saw your post  went running back to it (just for you!) but it had gone..

Anyway, it was  short article and in the meantime I realised that it didnt say anything different to what noonan had already stated in last years Budget -that from 2013 PAYE workers letting property would pay 4% PRSI on the rental income. 
Those on self -assessment ,like me, already pay it.  

Indeed, I remember feeling aggrieved when i found out last year that PAYE people letting proprty had  escaped the 4% PRSI on rental income.

So, from my point of view there is no increase and , to be selfish ,I'm glad that everyone in ireland will now pay it.

I don't think that should affect overseas residents  but it is worth asking our gurus like Mandelbrot ,McGibney or others if it does affect you -and whether you are entitled to SW benefits because of it. Out of my depth on that one.


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## Bronte (2 Oct 2012)

oldnick said:


> I don't think that should affect overseas residents but it is worth asking our gurus like Mandelbrot ,McGibney or others if it does affect you -and whether you are entitled to SW benefits because of it. Out of my depth on that one.


 
Thanks for your fishing expedition.  No worries.  I wasn't asking the question for myself about SW benefits, just wondering about it in general.  Like yourself I hope not to have to rely on a dimishing social welfare in old age.  By the time I retire they're be nothing left for anyone.


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## murphaph (2 Oct 2012)

Bronte said:


> Thanks for your fishing expedition.  No worries.  I wasn't asking the question for myself about SW benefits, just wondering about it in general.  Like yourself I hope not to have to rely on a dimishing social welfare in old age.  By the time I retire they're be nothing left for anyone.


I wouldn't mind having the opportunity to pay the minimum PRSI contribution (€253 a year I think) on the off chance that there will be a half decent state pension if my contributions led to a full state pension. Unfortunately I'm not allowed as I'm socially insured in Germany now.

UK non-residents living and working in another EU state can voluntarily maintain their NI contributions to avail of the state pension (as can Germans and anyone who has ever contributed to the German system) and it makes sense to do so in many cases. In Ireland we are prevented from doing so as it contravenes "European rules" about being socially insured in more than one member state at the same time: I think they make half these rules up as they go along!


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## Bronte (3 Oct 2012)

I don't see the problem you have Murphapy, your previous Irish contributions combined with your German contributions will give you the full state pension eventually. That's the beauty of the the European union. You don't need to make Irish Prsi contributions.

If you don't have a full working life, I think one can buy contributions, say if you were laid off when 55 or whatever. At least that used to be the case.

In any case I certainly doubt if paying €253 a year would help, that makes no sense to me that a low amount such as that would equal a pension eventually.  If it's something that you are worried about then you should contact the pensions office in Sligo for the rules, they must have a booklet on people who contribute in Ireland, another EU country and how to make voluntary contributions.  Personally I think Irish state pensions are not going to be sustainable at current levels so one must make other provision.


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## murphaph (3 Oct 2012)

Bronte said:


> I don't see the problem you have Murphapy, your previous Irish contributions combined with your German contributions will give you the full state pension eventually. That's the beauty of the the European union. You don't need to make Irish Prsi contributions.


You don't get a single pension at the end. You get a pension from each and every member state on a pro rata basis which you apply for through the responsible agency in the country you live in or the last EU country you worked in. They have to then deal with your previous country's agencies to be able to determine the payments, but it's not a single "EU pension"-no such thing exists. The Irish state pension is simply extremely generous compared to the German one for someone who can get one by making the minimum contribution. 

German pension is based on actual money put into it (capped) so the more you earn during your working life and therefore the more German PRSI you pay into the pot, the more you get in your pension when you retire but the return is considered poor compared to many private schemes.

The Irish system works on an "averaged contributions" basis, so low earners, high earners, doesn't matter: so long as you make your averag 48 contributions per working year (since starting insurable employment in Ireland!-someone starting to work at age 55 in Ireland can avail of a FULL state pension-this is impossible in Germany) we all get the same state pension (currently €230 pw).

The Irish state pension, being so generous compared to what you can put into it, is therefore extremely attractive. The German state pension is not very attractive at all and even though Germans and people who have made at least one insurance payment in Germany can voluntarily continue to pay into it, there's very little reason to do so unless you have less than 5 years (their min. qualification period) of EU wide national insurance payments made and are leaving the EU completely and are unlikely to return. 

The UK state pension is also a good RoI if you can make the minimum NI contribution to avail of it, so many Brits continue to pay voluntary NI payments in order to get it, especially if they leave the UK in their 30's or 40's. 



Bronte said:


> In any case I certainly doubt if paying €253 a year would help, that makes no sense to me that a low amount such as that would equal a pension eventually.


It does in the UK system anyway.



Bronte said:


> If it's something that you are worried about then you should contact the pensions office in Sligo for the rules, they must have a booklet on people who contribute in Ireland, another EU country and how to make voluntary contributions.


You can't do it in Ireland. They prohibit it. 


> Under EU legislation it not possible for a person to be subject to the social insurance systems of two or more member states at the same time. This means that you cannot pay Voluntary Contributions in Ireland at the same time as you are in insurable employment, self-employment, receiving credited contributions or paying Voluntary Contributions in another EU member state.
> http://www.welfare.ie/EN/Topics/PRSI/Pages/volcons.aspx





Bronte said:


> Personally I think Irish state pensions are not going to be sustainable at current levels so one must make other provision.


I agree, but even a reduced pension (say €100 pw in today's money-that's a huge cut from the current level) would be a very good RoI if you could avail of it with a minimum PRSI contribution of €253 (class S, think it's €317 for class A) a year!

I'm not concerned about my retirement at the moment. Have enough bricks and mortar to top up my German and Irish (presuming they don't change the rules again and nullify my 600 something class A contributions) pensions and have a small DC private scheme from ca. 8 years of employment with a multinational where it was compulsory to contribute.


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## Bronte (4 Oct 2012)

Yes you are correct it's bits of pensions from everywhere, but my understanding was that whereever you ended up living in you'd have an amount equal to anyone else, or more, but you wouldn't be getting any less than the minimum. Not an expert in the area, which is why you should check with Sligo. Would be interesting to know about it if you find out.

You say the Irish state pension is great compared to the German one, I find it hard to believe that German pensioners are worse off than Irish pensioners in relation to living standards, not monetary amounts.

I worked in London a long time ago, are you suggesting that I can pay €253 a year and get a full UK pension?  No way.  That's about 10K lump sun right now over say 40 years, please sign me up.


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## murphaph (4 Oct 2012)

Bronte said:


> Yes you are correct it's bits of pensions from everywhere, but my understanding was that whereever you ended up living in you'd have an amount equal to anyone else, or more, but you wouldn't be getting any less than the minimum. Not an expert in the area, which is why you should check with Sligo. Would be interesting to know about it if you find out.
> 
> You say the Irish state pension is great compared to the German one, I find it hard to believe that German pensioners are worse off than Irish pensioners in relation to living standards, not monetary amounts.


Current pensioners retired under a different system to the one I pay in to. Under the Hartz reforms, Germany changed an awful lot wrt. welfare and pensions were also reduced. Please also note that unlike in Ireland "pensioners" in Germany receive different amounts, depending on how much they earned. A German pensioner could be in receipt of over 2k a month, if he'd contributed a lot to the system. If he'd contributed nothing, he'd get something like €370 per month. You could be anywhere in between, depending on what you contributed. In Ireland, most pensioners will get the same full payment of 230pw, so long as they made their contributions, regardless of how big those contributions were. Different systems basically.



Bronte said:


> I worked in London a long time ago, are you suggesting that I can pay €253 a year and get a full UK pension?  No way.  That's about 10K lump sun right now over say 40 years, please sign me up.


The UK minimum qualification period is much higher, some decades IIRC. 

You should certainly check it out with the DWP (in Newcastle I think) to see if it's possible and what it'll cost you. Certainly some Brits I know in Germany pay voluntary contributions to avail of the pension as the contributions are low in their opinion, relative to what they (should) get out.


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