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

[Folsom]

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]

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]

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]

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




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.

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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.

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.

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.

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]

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]

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]

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]

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?

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.

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.