Tax Treatment of Landlords has to be Revisited

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I've noticed that there are a lot of people who are not invested in property who strangely seem to be invested in not seeing it do well as an investment (even though we clearlyneed investment for the common good at this point). I guess it relates to a desire to have one's own invetment decisions vindicated or a desire not to experience regret. There is really no point in arguing with someone coming from that perspective and I am not saying that to be nasty it's just an observation over a large number of discussions.
 
Sarenco said:
I think that’s a weird attitude TBH.

It was perfectly logical for a landlord to continue renting a property to a good, long-term tenant at a discount to market rent.
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Oh I agree there is a value to retaining a good long-term tenant, but there is a limit in terms of what remains good business and what could be considered poor business practice in failing to increase rents for years as the market continued to move at pace. Rent controls wren't implemented overnight. There were growing calls for, and government reference to rent controls in the years preceding their introduction.
 
Leo said:
Oh I agree there is a value to retaining a good long-term tenant, but there is a limit in terms of what remains good business and what could be considered poor business practice in failing to increase rents for years as the market continued to move at pace. Rent controls weren't implemented overnight. There were growing calls for, and government reference to rent controls in the years preceding their introduction.
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OK, if a landlord in 2016 had a good long-term tenant paying a lower-than-market-rate rent, didn't particularly need to receive anything higher than that, and knew from their tenant's circumstances that this was the most they could afford without it causing them undue hardship or even shortening the odds of a default, are you really saying that they should have jacked up the rent regardless?

You seem to be retrospectively blaming people for acting decently towards others.
 
RonnieShinbal88 said:
I've noticed that there are a lot of people who are not invested in property who strangely seem to be invested in not seeing it do well as an investment (even though we clearlyneed investment for the common good at this point). I guess it relates to a desire to have one's own invetment decisions vindicated or a desire not to experience regret. There is really no point in arguing with someone coming from that perspective and I am not saying that to be nasty it's just an observation over a large number of discussions.
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If you're referring to me, my wife owns a rental property. What's hers is mine and all that, so I'm very much not against the prospect of landlords making a return on their investment. They absolutely need to get a return or we will have no rental market here and that would be a national disaster.

I'm simply making the point that at a time when yields on property letting far exceed other options, then there are greater factors dissuading further investment than a lack of a return.
 
Leo said:
Rent controls wren't implemented overnight.
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They were actually.

The legislation was rushed through the Dail and became effective on Christmas Eve, 2016 - there was no implementation period.

Also, bear in mind that at the time rents could only be reviewed once every two years (this remains the position outside RPZs). So most landlords had no opportunity to increase rents in advance of the introduction of the RPZ regime.
 
T McGibney said:
and knew from their tenant's circumstances that this was the most they could afford without it causing them undue hardship or even shortening the odds of a default, are you really saying that they should have jacked up the rent regardless?
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It's very much the landlord's call on whether they want to prioritise providing a social service over seeking the best return for their investment. It's a poor financial strategy but is commendable for other reasons.
 
T McGibney said:
OK, if a landlord in 2016 had a good long-term tenant paying a lower-than-market-rate rent, didn't particularly need to receive anything higher than that, and knew from their tenant's circumstances that this was the most they could afford without it causing them undue hardship or even shortening the odds of a default, are you really saying that they should have jacked up the rent regardless?

You seem to be retrospectively blaming people for acting decently towards others.
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I think the point was specifically that 'it's better that we don't have landlords like that in the Irish rental market', it's better that a REIT would buy them out and do a refurb or leave the place off the market for 2 years then rent it out at over twice the rent.

It certainly pushes up market rents, it's better for the REITS. It's not better for the tenants obviously.
 
Sarenco said:
The legislation was rushed through the Dail and became effective on Christmas Eve, 2016 - there was no implementation period.
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True the legislation was, but they had been debated for some time prior to that, you even had the Minister for Housing proposing linking limits to inflation at the start of 2014. Most commentators ridiculed controls as ineffective at best, but again we were reminded that doesn't deter our politicians.
 
RonnieShinbal88 said:
I think the point was specifically that 'it's better that we don't have landlords like that in the Irish rental market', it's better that a REIT would buy them out and do a refurb or leave the place off the market for 2 years then rent it out at over twice the rent.
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That's clearly not what I said, and clearly not good for the market or renters.
 
RonnieShinbal88 said:
I've noticed that there are a lot of people who are not invested in property who strangely seem to be invested in not seeing it do well as an investment (even though we clearlyneed investment for the common good at this point). I guess it relates to a desire to have one's own invetment decisions vindicated or a desire not to experience regret. There is really no point in arguing with someone coming from that perspective and I am not saying that to be nasty it's just an observation over a large number of discussions.
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It would be good for the entire country if the value of property dropped. That doesn't mean people want to see investors losing money.
 
Leo said:
If you're referring to me, my wife owns a rental property. What's hers is mine and all that, so I'm very much not against the prospect of landlords making a return on their investment. They absolutely need to get a return or we will have no rental market here and that would be a national disaster.

I'm simply making the point that at a time when yields on property letting far exceed other options, then there are greater factors dissuading further investment than a lack of a return.
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Income generating investments referred to in terms of 'yield' are normally quite low risk.
A property rented out with gross rent at 6 or 7% of the property value that's 21% of the property value or 42% of the investment on a 50% LTV at risk if it takes 3 years to evict non paying teants as in several recent cases.
Separate to that you have Irish house price risk, a crash risk of what 50% historically.
You now have political risk, with a referendum on the right to property, eviction bans and left wing parties in line to take over in a year or two.

The risks are huge it isn't just about yield when you compare investments.
 
Leo said:
I don't see you quoting where I said:
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OK, so maybe you'd like to explain why it's a good thing that landlords charging lower than market rent are leaving the market.
I think the REIT comment logically follows from that but you can clear it up easily by explaining what you meant.
 
Leo said:
Judging by the figures quoted by some posting on here in the investment forum, there aren't too many options available that beat the yield of rental property today,
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I know it's apples and oranges to a certain extent, but I'd want a 2x differential in expected return to make me indifferent between Irish residential property and a basket of global equities.

Your share portfolio isn't going to call you at midnight with a broken toilet or refuse to pay you rent for months on end, etc.

As I've said before I think changes to how residential property is taxed would make a big difference in retention of landlords, particularly if you had a CGT exemption for long-term lettings (at least ten years).


From Irish policy there is also a social imperative to encourage investment in residential property that there just isn't for a basket of global equities.
 
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Leo said:
All forms of investment must consider projected yield versus risk, property investment should be no different in that regard.
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And people demand higher return for higher risk, or they sell up.

People selling up is definitely not what is needed right now, if you have evidence that REITs are just replacing those then you should provide it here, there is no evidence of that historically, there is a significant net reduction of registered tenancies, it's easy to track all of this on the rental sites and it's the reason we currently have an eviction ban.

REITs are also putting properties on the market at a much higher rent, so the tenants served notice because small landlords are getting out possibly can't afford the replacement offered by a REIT.

There has been a recent backlash with issues in Germany with institutional investors owning all the rentals, it doesn't seem to be the Nirvana of a rental market many seem to wish for.
 
Leo said:
True the legislation was, but they had been debated for some time prior to that, you even had the Minister for Housing proposing linking limits to inflation at the start of 2014.
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Not really - the Irish Times first reported the RPZ proposals on 13 December 2016 - it became effective 11 days later and landlords had no ability to react.

If Fine Gael had agreed to Alan Kelly’s proposal to limit rent increases to increases in general inflation, we wouldn’t be in the current mess. The RPZ regime has been a disaster.
 
Sarenco said:
If Fine Gael had agreed to Alan Kelly’s proposal to limit rent increases to increases in general inflation, we wouldn’t be in the current mess. The RPZ regime has been a disaster.
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How so?

RPZ increases were limited to 4% at a time from 2016 to 2021 in RPZs, and at no point was inflation ever higher than that.
 
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