Current public sentiment towards the housing market?

[Glenbhoy]

Bearishbull, i decided to take up the mantle of your challenge (for research purposes of course). Twas more difficult than i thought, but i've come up with this:
[broken link removed]=
2 bedroom apartment - mountjoy sq. cost 330K

100% IO mortgage, repayments at 4.35% are €1194


Rental, given comparable apartments on DAFT, one would hope for circa 1300 p.m.
http://www.daft.ie/searchrental.daft?s%5Bcc_id%5D=ct1&s%5Ba_id%5D=ga1&s%5Bmnp%5D=&s%5Bmxp%5D=&s%5Bbd_no%5D=2&refine=Refine&search=1&s%5Brefreshmap%5D=1&search_type=rental

Overall Income - 11 months - 14300 p.a
Annual Interest - 14328 p.a

Slight loss considering management fee/insurance, but rent could perhaps be increased slightly.
Bear in mind that capital appreciation is likely to be circa 10% p.a (because it always is obviously).
Net result - win, win, win.......

 

[whizzbang]

[broken link removed]=
2 bedroom apartment - mountjoy sq. cost 330K

so long as you can get it for 330,000 and there isn't a bidding war

/edit fair play on finding one that at least works on paper though!

 

[room305]

They'll be grand so long as they have a 'good' accountant with connections (I know one person who's avoided a stamp duty bill by using such accountants). It's rampant in the industry, so much so that revenue are overwhelmed trying to track down such people. Even still, revenue officials are only humans and the brown envelope culture still pays even though people might not want to believe it (I'm talking from my own experience of course).

This is misleading toss if not outright lies. There are of course legal ways of avoiding stamp duty and good accountants will be happy to point them out to you. There is nothing necessarily wrong with this.

However, to suggest that stamp duty can be avoided by bribing revenue officials is a joke. Just think about logically - what size of a bribe would you be talking about and would the official (who would have to be quite senior and even then I'd have my doubts) really want to risk their entire career for it?

If you have indeed bribed an official then you were probably taken for a ride.

 

[bogwarrior]

while posters here (perhaps reflecting their own circumstances) remark on the dangers of FTBs getting stuck in the newly developed, poorly serviced outer suburbs of our cities when a correction comes, at least they will have a place to live, even if its not the detached period house in Rathmines they hoped for. From once they can make they repayments they'll survive.

The real danger here is for the 50 something wannabe investor, who has a bit of equity or nice nest-egg built up and see's from some of his/her mates that property is the way to go. At a time in their lives when they should be moving away from risky investments (and lets face it - at the current prices 2 bed units and generic 3 bed semi-d's in the new burbs are risky as a shortish term ie5-10 year investment), they're getting into the property fad.

To me its similar to what happened in the US pensions market during dot-com, when people nearing retirement age were encouraged to invest large chunks of their assets into the dot-coms rather than diversifying some of it into bonds/cash.

In the event of a correction/slowdown/crash here - young people will feel it bad, but at least time will be on their side to recover their assets. The smart people will have made their money anyway, and there will also be a lot of folks who'll be able to ride it out. But the 58 year-old with the empty 3 bed-semi in a legoland Kildare housing estate who was banking on it as his retirement fund, now thats the guy/girl who's going to be phoning Joe Duffy.....

 

[room305]

I was refering to "security of tenure" or the lack of it so to speak.

As I plan to move from being an owner to a renter this is something that is of concern. The regulation is quite weak and probably the only thing working in your favour is the vast over-supply of rental properties means the landlord cannot afford to get you offside.

However, there are similar downsides to home ownership as anyone has had to deal with unregulated sham property management companies is probably all too well aware.

At least if you are shafted by your landlord it is relatively easy to move. It's one hell of a process to try and sort a bad management company out!

 

[Firefly]

Pardon the beermat maths here, but say you buy an interest only apt for 300k (I fundamently disapprove of IOs btw - just to prove a point). Say the rent doesn't cover the IO mortgage and that you have to subsidize it to the tune of 300 euro per month for 20 years. That results in negative cashflow of 3,600 a year or 120k over 20 years...a considerable sum, but the property would only have to increase by 1 measily percent py to make this back. Worst comes to the worst ...after 10 years you decide your fed up forking out 3,600 (which in 10 years will be zilch anyway)...do it up and have a nice bed i Dublin for dirty weekends away!
Firefly.

 

[CelloPoint]

Bearishbull, i decided to take up the mantle of your challenge (for research purposes of course). Twas more difficult than i thought, but i've come up with this:
[broken link removed]=
2 bedroom apartment - mountjoy sq. cost 330K

100% IO mortgage, repayments at 4.35% are €1194


Rental, given comparable apartments on DAFT, one would hope for circa 1300 p.m.
http://www.daft.ie/searchrental.daft?s%5Bcc_id%5D=ct1&s%5Ba_id%5D=ga1&s%5Bmnp%5D=&s%5Bmxp%5D=&s%5Bbd_no%5D=2&refine=Refine&search=1&s%5Brefreshmap%5D=1&search_type=rental

Overall Income - 11 months - 14300 p.a
Annual Interest - 14328 p.a

Slight loss considering management fee/insurance, but rent could perhaps be increased slightly.
Bear in mind that capital appreciation is likely to be circa 10% p.a (because it always is obviously).
Net result - win, win, win.......

You've neglected stamp duty, maintainence costs (remember it's the landlords responsibility to sort out that dishwasher, dodgy plumbing, leaking ceiling, broken lightbulb), and legal fees.

You'd be lucky to get E550 for a double room in a flat in Mountjoy Square given the large immigrant population and native vagrants in the vicinity of that area.

 

[Persius]

Revenue may be underresourced, but I do think they will be able to track down many "investor landlords" who aren't paying income tax on rent, correct stamp duty, capital gains tax on sales etc.

I've posted on this before. Basically just like the non-resident account inquiries, they offload the work to the banks. The easy method would be to look at any individual with more than one mortgage. Alternativly to cover the case where people are themselves renting, but also renting out what was once their PPR, they ask the banks to trawl for morgages which were payed off from a stream of income that doesn't appear to be a salary, i.e. someone else's rent. Considering today's technology and bank record retention period, this shouldn't be too hard to do. If the revenue even start talking about it, many may confess themselves if doing so could avoid fines.

 

[room305]

That results in negative cashflow of 3,600 a year or 120k over 20 years...a considerable sum, but the property would only have to increase by 1 measily percent py to make this back.

If you invested your capital over 20 years and got a return of exactly zero would you think you had got a good deal? It would be better off in the current account of an Irish bank.

 

[tententwenty]

Revenue may be underresourced, but I do think they will be able to track down many "investor landlords" who aren't paying income tax on rent, correct stamp duty, capital gains tax on sales etc.

I've posted on this before. Basically just like the non-resident account inquiries, they offload the work to the banks. The easy method would be to look at any individual with more than one mortgage. Alternativly to cover the case where people are themselves renting, but also renting out what was once their PPR, they ask the banks to trawl for morgages which were payed off from a stream of income that doesn't appear to be a salary, i.e. someone else's rent. Considering today's technology and bank record retention period, this shouldn't be too hard to do. If the revenue even start talking about it, many may confess themselves if doing so could avoid fines.

Or alternately they could just phone up anyone advertising a room and ask if they give rent receipts. If the answer is no, investigations ensue!

 

[Glenbhoy]

You've neglected stamp duty, maintainence costs (remember it's the landlords responsibility to sort out that dishwasher, dodgy plumbing, leaking ceiling, broken lightbulb), and legal fees.

You'd be lucky to get E550 for a double room in a flat in Mountjoy Square given the large immigrant population and native vagrants in the vicinity of that area.

Bearishbull did say to neglect stamp duty. Maintenance costs have been neglected (sure white good consumables are pretty cheap nowadays), but as a bit of a handy man myself, i can do most of that myself (i don't know about the lightbulb, but i don't remember any of my landlords replacing the bulbs).
As for the rent, I don't agree with you and DAFT does seem to back me up - i worked there for 3.5 years and don't remember too many 'native vagrants', as for immigrants, there are indeed more non-irish nationals there than previously, but that goes for most parts of the city (even some southside locations!!).

 

[exile]

Or alternately they could just phone up anyone advertising a room and ask if they take rent receipts. If the answer is no, investigations ensue!

I know at least one person who got a letter from the Revenue saying they suspected she had properties she was letting. Not quite sure why they flagged her - it was something to do with address changes which didn't match her property purchases. Actually she wasn't letting any properties and owned just one house which she lived in. But they're obviously putting some thought into it.

 

[Duplex]

I try not to predict the economy in general because I don't have enough information, nor am I suitably qualified.
Sorry to harp on about property as the be all and end all, but even with increased supply I can't see the Irish love affair with property coming to an end any time soon. To get a good insight into Irish psyche, go to Xtravision tonight and rent out "The Field".
Firefly

I've often come across, what only can be described as this cultural foible as an explanation as to why the Irish property market wont fold. However a sentimental Hollywood film is pretty flimsy evidence to support a multi billion € market. The most likely scenario is that we will have a repeat of what happened in 2001 a build up in inventories followed by falling prices.

 

[whathome]

The most likely scenario is that we will have a repeat of what happened in 2001 a build up in inventories followed by falling prices.

Absolutely agree, I bought in late 2001, the market right now feels very similar to mid 2001 when prices started dropping. The big difference is that there's nothing create a reversal next year as opposed to the recovery in 2002.

Buyers know all about fear so they're very good at smelling it.

 

[Glenbhoy]

Revenue may be underresourced, but I do think they will be able to track down many "investor landlords" who aren't paying income tax on rent, correct stamp duty, capital gains tax on sales etc.

Alternatively, since the general sentiment here is that investors can't cover the mortgage interest with rent, then there's no income tax to pay!! (i know that's a relatively recent phenomonem....)

 

[thewatcher]

I try not to predict the economy in general because I don't have enough information, nor am I suitably qualified.
Sorry to harp on about property as the be all and end all, but even with increased supply I can't see the Irish love affair with property coming to an end any time soon. To get a good insight into Irish psyche, go to Xtravision tonight and rent out "The Field".
Firefly

Whatever about the older generation,it's nothing as deep as that with the younger generation.Greed plain and simple "can't lose" etc.

 

[thewatcher]

I know at least one person who got a letter from the Revenue saying they suspected she had properties she was letting. Not quite sure why they flagged her - it was something to do with address changes which didn't match her property purchases. Actually she wasn't letting any properties and owned just one house which she lived in. But they're obviously putting some thought into it.

That's the funny thing,the one person i know who did sell a house to buy another one rather than holding on to their first property told me he got a letter from revenue a few weeks later.It was some kind of declaration that he had sold his initial property,not exactly sure.I can only think that maybe all these evaders are revenue's rainy day fund.

 

[Howitzer]

Pardon the beermat maths here, but say you buy an interest only apt for 300k (I fundamently disapprove of IOs btw - just to prove a point). Say the rent doesn't cover the IO mortgage and that you have to subsidize it to the tune of 300 euro per month for 20 years. That results in negative cashflow of 3,600 a year or 120k over 20 years...a considerable sum, but the property would only have to increase by 1 measily percent py to make this back. Worst comes to the worst ...after 10 years you decide your fed up forking out 3,600 (which in 10 years will be zilch anyway)...do it up and have a nice bed i Dublin for dirty weekends away!
Firefly.

Except you'll still owe 300K and even IO mortagages will look for you to pay this off at some point.

 

[CelloPoint]

Just saw this post over on Location, location, location.

Gives you an idea as to how anxious developers are to get the contracts signed and money in the bank. They're even offering a E500 voucher if you sign within 21 days! The voucher's probably with one of their mate's kitchen companies so is pittence for the sake of peace of mind, safe in the knowledge that no matter how badly the market turns, your money is safely tucked away in the bank.

If you get the contracts sorted within 21 days of your solicitor receiving them you get a 500euro voucher towards your kitchen. Even our contract didn't give individual dimensions (or even mention the overall square footage!!!). I think its fair to say that Bohan property consultants are not excelling themselves with their level of service on this one!

Someone FTB was on here giving on about people referring to FTBs as 'saps' etc. I'm sorry if you what you read doesn't please you, but anybody who gets involved in deals with developers for a poorly-located property, in a turbulent market, that isn't even built yet is most certainly a gullible fool in my opinion.

What use is a E500 discount off the latest kitchen then? 'Bremore Pastures', Balbriggan sounds like legoland

 

[Glenbhoy]

They're even offering a E500 voucher if you sign within 21 days!

TBH Cello, this is not a new development, many builders have been giving away fully fitted kitchens, flooring etc for at least 4/5 years now, if the contract is signed within 21 days of the booking deposit being put down. Many of them also offer something else at completion to speed up the process.
You are right in that the offer is normally something that they've got a deal on, or can do quite cheaply themselves, but for the impoverished FTB, any little helps and is appreciated.