Current public sentiment towards the housing market?

[Bootdog]

What analysis is available on these 300k empty houses? e.g.

• how many are on the shannon (and similar) built for tax breaks?
• how many are full of immigrants who are shy of forms?
• how many are genuine holiday homes for people who enjoy and can afford a second home?

In my experience anyone with property for rent in cities and towns has no problem renting i.e. no suggestion of excess supply.

I think this is a very good and important point. It would be useful to know how many homes were vacant at the previous census / survey to the one that came up with this figure.

These properties didn't appear overnight. This supposed excess in supply would have taken 10+ years to build up. I don't buy the line that investors are leaving houses sitting vacant while the capital value increases year on year. Any investor with the financial acumen to take that approach would naturally rent the place out in order to get an even better return than that from capital appreciation alone. Property managers these days can handle the whole process of letting out with minimal or zero input from the owner...

 

[gurramok]

I think this is a very good and important point. It would be useful to know how many homes were vacant at the previous census / survey to the one that came up with this figure.

These properties didn't appear overnight. This supposed excess in supply would have taken 10+ years to build up. I don't buy the line that investors are leaving houses sitting vacant while the capital value increases year on year. Any investor with the financial acumen to take that approach would naturally rent the place out in order to get an even better return than that from capital appreciation alone. Property managers these days can handle the whole process of letting out with minimal or zero input from the owner...

for both Bootdog and Bo Se benefit

From a previous post http://www.askaboutmoney.com/showpost.php?p=303300&postcount=6993

At least 60,000 vacant units built since 2002

And from CSO report in Indo:
http://www.unison.ie/irish_independent/stories.php3?ca=9&si=1636317&issue_id=14226

*snip*
[FONT=Verdana, Arial] MORE than 300,000 homes across the country will not be included in the latest census - because there was no-one at home.
Enumerators delivering and collecting the census forms were unable to contact the inhabitants.
Following inquiries among neighbours, postmen and women and apartment block management companies, the vast majority of those dwellings - some 275,000 - were identified as being vacant.
In a further 30,000 cases, there was nobody at home when census officials called on various occasions.
*snip*

Its either they are vacant if they haven't been sold *cough* or they have been sold and are sat on by speculators who couldnt be bothered renting them out.
[/FONT]

 

[StoppedClock]

Can you think of any yourself?

The most obvious VIs do not want a reversal in the market. Builders want to keep on building, mortgage lenders want to keep lending, the government wants to keep on receiving tax receipts.

Estate Agents have been the biggest VI cheerleaders and will hold with their bullish spin till it is completely obvious that market has peaked, however I think they will then turn bearish to get the crash over ASAP and start ramping again.

 

[StoppedClock]

Any investor with the financial acumen to take that approach would naturally rent the place out in order to get an even better return than that from capital appreciation alone.

Are you being serious?
Any investor with the financial acumen has long ago left the Irish Market.
Empty properties not being let is a fact of the Dublin market and has been for quite some time as Capital Apreciation is (was) adequate, EAs have even used it as a selling point to convince "investors with financial acumen" new to the game that they wouldn't even have to dirty their hands dealing with teneants.
Also I have a number of friends who have invested in Irish Property but who are sufficienty ralistic to know that the market will eventually turn and when it does it will be fast and brutal, the longer it goes up the faster and more brutal it will be, they want to be able to offload their properties quickly. They see the potential rent from a property let for 1 or 2 years as insufficent extra return to justify haveing to give notice to tenents and redecorate etc. etc.

 

[liteweight]

Are you being serious?
Any investor with the financial acumen has long ago left the Irish Market.
Empty properties not being let is a fact of the Dublin market and has been for quite some time as Capital Apreciation is (was) adequate, EAs have even used it as a selling point to convince "investors with financial acumen" new to the game that they wouldn't even have to dirty their hands dealing with teneants.
Also I have a number of friends who have invested in Irish Property but who are sufficienty ralistic to know that the market will eventually turn and when it does it will be fast and brutal, the longer it goes up the faster and more brutal it will be, they want to be able to offload their properties quickly. They see the potential rent from a property let for 1 or 2 years as insufficent extra return to justify haveing to give notice to tenents and redecorate etc. etc.

Can't say I've noticed any empty properties in the Dublin rental market. Anything to back this up? Having a tenant doesn't preclude one from selling relatively quickly. Personally, I can't see the logic in someone keeping a property empty when they could be making extra in rent.

 

[whathome]

Can't say I've noticed any empty properties in the Dublin rental market. Anything to back this up? Having a tenant doesn't preclude one from selling relatively quickly. Personally, I can't see the logic in someone keeping a property empty when they could be making extra in rent.

I know several people who moved into their partners' home but don't rent their own property out. Maybe they're hoping to make the most of capital appreciation to date and avoid stamp duty claw-back and CGT when they eventually sell. I wouldn't advise it but I know many people doing it.

 

[room305]

What analysis is available on these 300k empty houses? e.g.

• how many are on the shannon (and similar) built for tax breaks?
• how many are full of immigrants who are shy of forms?
• how many are genuine holiday homes for people who enjoy and can afford a second home?

Does it matter? I'm not being facetious or anything, I am genuinely curious. The price of every single house in the country has appreciated enormously over the past few years, irrespective of location and local supply factors. Perhaps half of these houses are in Shannon and Leitrim, built solely for tax breaks but I'll bet they still appreciated as other houses in the country did. In my hometown of Carlow, house prices should be falling as job prospects in the town continue to worsen with the closure of factories by Braun, Lapple and Greencore. Instead they have worked furiously to close the gap with prices in Dublin.

A house in which nobody wishes to live is worth nothing. Once the tax breaks run out on these houses and the owners cannot sell them for buttons, will it not drag down the price of houses everywhere?

Also remember, it is 300k vacant houses, not 300k houses that were empty when the census enumerator called round.

In my experience anyone with property for rent in cities and towns has no problem renting i.e. no suggestion of excess supply.

Of course. They are offering these houses for rent at rates vastly cheaper than the cost of servicing a mortgage. People would be silly not to live there as the landlords are in effect, subsidising the tenants. At some stage equilibrium will have to be restored between rental costs and mortgage costs.

 

[liteweight]

I know several people who moved into their partners' home but don't rent their own property out. Maybe they're hoping to make the most of capital appreciation to date and avoid stamp duty claw-back and CGT when they eventually sell. I wouldn't advise it but I know many people doing it.

Indeed. I know one or two doing the same thing but they're not investors. I'm not too sure how well they'll be protected against the clawback either. Some are operatinng under the illusion that if one rents under the RaRs there is no liability. They're banking on the fact that Rev. will find it too difficult to trace whether they were living there or not. I don't see why they just don't sell immediately if they're not going to live there and don't rent it out, especially given the current climate.

Have you seen any evidence of investors leaving property idle in Dublin? The only one's I've ever seen were in Sandymount as the builder held on to them. They're rented now.

 

[Bootdog]

Are you being serious?
Any investor with the financial acumen has long ago left the Irish Market.
Empty properties not being let is a fact of the Dublin market and has been for quite some time as Capital Apreciation is (was) adequate, EAs have even used it as a selling point to convince "investors with financial acumen" new to the game that they wouldn't even have to dirty their hands dealing with teneants.
Also I have a number of friends who have invested in Irish Property but who are sufficienty ralistic to know that the market will eventually turn and when it does it will be fast and brutal, the longer it goes up the faster and more brutal it will be, they want to be able to offload their properties quickly. They see the potential rent from a property let for 1 or 2 years as insufficent extra return to justify haveing to give notice to tenents and redecorate etc. etc.

Unfortunately I am

If you know a couple of examples of the situation above, well fair enough, but I can't say I've seen anything to suggest it ... any people I know who have invested in property look to let them out as much as they can. That would include a couple who started a portfolio in the early 90's, and the current annual rental income would cover a significant portion of the original capital they used to purchase the house. (BTW these folks have stopped buying in Ireland some years back).

Like you say, maybe it makes no sense because any "investor with the financial acumen has long ago left the Irish Market."

 

[whathome]

Have you seen any evidence of investors leaving property idle in Dublin?

Well I would say that as soon as somebody stops living in their PPR but holds on to it for capital appreciation they become an investor....whether they like to be called that or not. I also know of people who purchased property in Dublin for the purpose of investment that don't currently rent it out. Why bother with the hassle dealing with tenants when you've been making five times the annual rent in capital appreciation? Those days of massive capital appreciation are over now so these empty properties will either be rented or sold.

 

[bearishbull]

There are many properties in Dublin not rented out and empty. There are tax reasons and other reasons for that. Rents are'nt that much relative to the capital appreciation per year for last 10 years. Most investors will rent but a sizeable amount don't.

 

[beattie]

There are many properties in Dublin not rented out and empty. There are tax reasons and other reasons for that. Rents are'nt that much relative to the capital appreciation per year for last 10 years. Most investors will rent but a sizeable amount don't.

The question is now that the days of cap appreciation are over will these empty properties be rented out or will they be put up for sale? The daft report could precipitate a further flush of properties coming on stream.

 

[Guest111]

There are quite a few couples who have bought separately but live together and leave the other property vacant to avoid stamp duty, stamp duty clawback, and even to get the old first time buyers grant.

 

[beattie]

There are quite a few couples who have bought separately but live together and leave the other property vacant to avoid stamp duty, stamp duty clawback, and even to get the old first time buyers grant.

Are people in this situation liable for SD clawback? Do you have to live in a property to avoid it?

 

[bo se]

Does it matter? I'm not being facetious or anything, I am genuinely curious. The price of every single house in the country has appreciated enormously over the past few years, irrespective of location and local supply factors. Perhaps half of these houses are in Shannon and Leitrim, built solely for tax breaks but I'll bet they still appreciated as other houses in the country did. In my hometown of Carlow, house prices should be falling as job prospects in the town continue to worsen with the closure of factories by Braun, Lapple and Greencore. Instead they have worked furiously to close the gap with prices in Dublin.

A house in which nobody wishes to live is worth nothing. Once the tax breaks run out on these houses and the owners cannot sell them for buttons, will it not drag down the price of houses everywhere?

Also remember, it is 300k vacant houses, not 300k houses that were empty when the census enumerator called round.

Of course it matters. If for example they were all holiday homes (clearly not the case) then presumably they would be vacant as the owner would return a form only for his PPR. In this situation the 300k empty houses would not represent excess supply.

Also re the Section type properties on the Shannon/Letrim - values have not appreciated in line with values in the rest of the country - I believe that is discussed elsewhere on this site. And as you point out their existing values are most vulnerable as not enough people want to live in the areas they are located.

 

[Guest111]

Are people in this situation liable for SD clawback? Do you have to live in a property to avoid it?

I'd imagine people in this situation are fine.

Provided you don't rent out your property surely where you sleep and what you do are nobody's business. The stamp duty clawback only kicks in if you rent out the property.

 

[whathome]

There are quite a few couples who have bought separately but live together and leave the other property vacant to avoid stamp duty, stamp duty clawback, and even to get the old first time buyers grant.

Also, when they finally sell the second property, they won't pay 20% CGT as they're claiming it was one of their PPR's. I think they should be declared to the revenue as non PPR's.

Other couples are leaving the second property empty while waiting out the claw-back period. I know of one couple who were planning on waiting another year for the 5 year limit to have passed before renting out his apartment in Blackrock so as to avoid the claw-back. We haven't seen them in a while so they may have decided to sell it given the current outlook for property.

In Ireland now it's quite common for both individuals in a relationship to own a property before moving in together. When you look at how the stamp duty and CGT system works in this country, you can see why this would result in many vacant homes. Eventually these properties will be rented or sold, further adding to rental or sales supply. Since there's a population boom between the ages of 25 and 35, this would be quite a common occurrence with couples.

So in effect, the stamp duty claw-back rule is artificially reducing rental supply because property is left vacant to avoid paying tax. As soon people realise that these properties have stopped appreciating and have actually started to depreciate, they may be dumped on the market.

When you think about it, not renting an appreciating property while living with a partner can appear very desirable:
- No tenants
- No wear and tear on the property
- No furniture
- No PRTB
- No tax returns relating to rent
- No 20% CGT when sold
- No neighbour trouble

It may not explain all vacant properties but could be the reason that many are not rented.

 

[liteweight]

Are people in this situation liable for SD clawback? Do you have to live in a property to avoid it?

The property must be occupied by the owner in order to avoid stamp duty clawback. I don't know how realistic it is for them to check but they have recently made a start on this.

In all honesty, it doesn't seem worthwhile to take the risk with regard to clawback. It's charged at investors' rates and can be quite hefty depending on price of property at time of purchase. A FTB presumably has a mortgage, which is not an investment mortgage, and is given extra tax relief on the interest for the first 7 years. So it's not only the clawback they have to worry about but they will be viewed as tax evaders by Revenue on this front alone!

Furthermore, if caught, they will have to pay cgt on profit if they sell in the future and that's 20%. If they simply sold the property they wouldn't be liable for any of this. Personally, when weighing up whether a property would appreciate enough, even last year, to cover the above costs, it doesn't make sense to me.

 

[whathome]

Personally, when weighing up whether a property would appreciate enough, even last year, to cover the above costs, it doesn't make sense to me.

If I was in that situation, I wouldn't do it either but you can be sure many people are. The benefits are huge and the percieved risk of being found out is very small. Who's going to know if I spend the night at my place or my partner's place?

None of the couples we know with a second PPR are using the rent-a-room scheme, they are leaving the property vacant. It also gives them an escape option if the relationship doesn't work out!

 

[liteweight]

If I was in that situation, I wouldn't do it either but you can be sure many people are. The benefits are huge and the percieved risk of being found out is very small. Who's going to know if I spend the night at my place or my partner's place?

None of the couples we know with a second PPR are using the rent-a-room scheme, they are leaving the property vacant. It also gives them an escape option if the relationship doesn't work out!

I don't know how big the benefits are in reality. I suppose the key word here is 'percieved'. Most FTBs don't seem to realise that there's a clawback at all and were horrified at the program on TV last week. A FTB who bought an apartment at 300K ends up paying approximately 15K in clawback plus interest, plus penalties which are quite hefty. If they sell the apartment for 350K, they pay approx. 10K capital gains (not taking expenses into account). This is before Revenue start looking for their increased tax relief back, and again, I'm sure there are penalties attached. If caught, they'd be lucky to make 20K profit, whereas they could have walked away with 50K if they'd sold immediately.

I remember on another thread you said that a friend of yours got a letter from Rev. re clawback...did they ever find out why they were targeted or were they just part of the 1000 or so that Revenue decided to check on lately?