With SF threat gone, will landlords stay in?

I

imalwayshappy

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Now that the election is over, one of the main reasons that people were selling their investment properties is the fear of Sine Fein getting into government and associated policies. As this proposal is now unlikely, I am wondering if many landlords will now reconsider staying in the market or will be see the mass exodus continue as a result of RPZ etc.
 
Is there any sign of them shaking up the RPZ thing? It's very lopsided, a good landlord who applied that for years is being punished whereas new entrants can get nearly double rental income because they are not shackled the same way.
 
With rpz zone, it's becoming more and more difficult to justify the investment for a small renter. My yield is now about 4 per cent before tax without considering any major refurbishment. If it's difficult to justify when already owning a property, it is even more difficult to justify as a new investment. I don't think anyone will try to get rid of the rpz in the near future. They have not worked but getting rid of them after so long would be extremely difficult and unpopular.
 
Premos said:
They have not worked but getting rid of them after so long would be extremely difficult and unpopular.
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I think the most likely way they will be abolished is via legal action. I’m surprised no landlord hasn’t challenged them yet.

A bit like what happened in the early 2000s to liberalise the taxi market.
 
No the real issues are still there being artfully ignored by Min for Housing.
RTB is beyond useless and is now dangerous, wrong advice routinely given by their agents.
Rules favour Tenant, get a bad one and you will lose years and years and damage your health.
 
Premos said:
If it's difficult to justify when already owning a property, it is even more difficult to justify as a new investment.
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Why do you argue that?

If I own a €500k property already and am getting €12k a year rent when the market rent is €30,000, I should probably sell.

But if I am thinking of investing €500k in a property which has not been let before, I could get a €30k rent.

It seems the opposite to what you are saying.

I think that people are getting out but lots more are getting in and charging market rents.
 
The amount of buy to let mortgages are very low so I don't know if there are a lot of individual investors on the market. A lot of second-hand properties for sell are also properties that have been rented before. In the long term, 10 years ago, when the first rent freeze was put into place, it didn't worry me too much. 10 years on, the impact is really substantial. Perhaps the effect would be less important in the next 10 years as the current rents are really high. This wasn't the case in 2015 when the first measures were put into place.
If I buy a 500k property and the market rent is 30k, with 3k general costs, it's a yield of 5.4 per cent before tax. That's with the work involved, the time involved, the empty weeks (because avoiding them is very difficult, there are always things to change and repair). If you add, the risks of a tenant issue or a change of policy, no it's not that great.
When I said it was difficult to justify when you own a property, I meant that at the time when I invested in the rental sector, the rules were not the same. I bought it, I repaired it at the time, I own it. The return is not great. It's difficult to justify us keeping it and we are reviewing our position between each rentals. We currently have decided to keep it for personal reasons as our children are nearly adults and rentals for them will probably be an issue.
However, despite having funds that would allow me to buy again, I will not invest in the market currently.
 
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Premos said:
If I buy a 500k property and the market rent is 30k, with 3k general costs, it's a yield of 5.4 per cent before tax.
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You can get a 10% rent for something like an apartment in Waterford.

These are actually some of the highest yields in Europe! I learned last year that some huge European institutional investors have bought up a lot of bedsit territory in Dublin and are sweating the assets.

But for a solo landlord who is Irish resident I just don’t think the after-tax yield is worth the risk of a single bad tenant, never mind regulatory risk.
 
Dr Strangelove said:
You can get a 10% rent for something like an apartment in Waterford.

These are actually some of the highest yields in Europe! I learned last year that some huge European institutional investors have bought up a lot of bedsit territory in Dublin and are sweating the assets.

But for a solo landlord who is Irish resident I just don’t think the after-tax yield is worth the risk of a single bad tenant, never mind regulatory risk.
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Agree 100% re solo landlord...
 
Premos said:
I am sure some do get these yields, but not when you apply 10 years of rpz.
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I know someone pretty senior in the industry.

He says that funds leave first-time lets dangling on the market for months at very high prices. They’d prefer to leave it empty and wait for a whale to come along than to let it quickly for €100 less.
 
Dr Strangelove said:
He says that funds leave first-time lets dangling on the market for months at very high prices. They’d prefer to leave it empty and wait for a whale to come along than to let it quickly for €100 less.
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That's just how commercial real estate works. Reduce the rates to get a quick let and you help move the whole market downwards. David McWilliams and others have foretold of the imminent collapse of commercial real estate market here multiple times in recent year highlighting that practice.
 
Leo said:
That's just how commercial real estate works.
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It’s slightly different. CRE is quite oligopolistic and firms can tacitly collude to keep rents high as you set out above.

But a big commercial residential landlord doesn’t have market power to set residential rents given how many small landlords still exist. The practice I outlined above is a pure response to RPZ rules.

It’s rational for small-time landlords to do the same but most of them probably don’t have the resources or wherewithal to do so.
 
Dr Strangelove said:
But a big commercial residential landlord doesn’t have market power to set residential rents given how many small landlords still exist. The practice I outlined above is a pure response to RPZ rules.
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Yeah, I meant commercial as in commercial real estate and not just large scale operators in the residential market. After all, even one-off landlords should be considered commercial right? :D Point was it's not surprising for operators with long histories in commercial real estate management to apply a similar operating model to the residential market.
 
I don’t understand why there isn’t some allowance for properties renting at way below market rate to increase rents.

I’m aware of a house rented at 7k a year to long term renters. Market rate is triple that.

Less than 3% return pre tax. Under 1% when accounting for tax and repairs.

I think it was rented at the very bottom of the market and the landlord was happy to have a nice family in the house.

The couple renting get €1k each in renters relief which is madness really. So there rent is under €450/month for a 3bed house.

Not a great use of tax payer money imo.
 
Because the whole point of it is to eventually reduce market rents.

Unfortunately however the opposite appears to be the case, which must mean

a) landlords who should be subject to controls are applying more than the rent control increases and getting away with it
b) vastly more rentals are coming on the market not subject to the controls (>2 years since last let or first time let, appropriately refurbished properties) than existing rentals which are subject to controls
 
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