Property Tax To Increase Rents

senordingdong

So with the new property tax around the corner, does anybody else reckon this will make landlords increase the rent on their properties?

housetypeb

They can try-but its a renters market at the moment.
Seems the pressure is downwards at the moment with rent and house prices.

am i bovvered

As far as I know the proposed tax is for owner-occupiers.
There is already a property tax for landlords.

stigofthesump

senordingdong wrote: »

So with the new property tax around the corner, does anybody else reckon this will make landlords increase the rent on their properties?

All depends on what the market will stand and the tenant/landlord relationship. Not in the short term but it might have an effect in a couple of years.

senordingdong

housetypeb wrote: »

They can try-but its a renters market at the moment.
Seems the pressure is downwards at the moment with rent and house prices.

I've heard this being said alot lately but to be honest, I don't think it's true at all.

In all the places I've looked, the rents fell about 10-20% over a year ago and just held steady.

Specualtion aside, it just doesn't make sense to me that after the drop in prices, landlords lowered their rates.
And now ontop of this hit to their coffers, they may have to start paying out for the BTL properties.

Could be a disaster waiting to happen.

J-blk

senordingdong wrote: »

In all the places I've looked, the rents fell about 10-20% over a year ago and just held steady.

I'm seeing rent prices all over the map TBH. For example, in my estate, there are about 5-6 2 bed apartments for rent currently and every one of these is identical in layout, size, etc. The most expensive one is advertised for €1095 and the cheapest one for €900 - which is a pretty crazy price difference for identical apartments. What I think is happening is that initially we were seeing more obvious price drops on Daft.ie, etc but at this stage, most landlords are aware of how the market has adjusted and tend to build in "buffers" of €100-150 into their monthly rents that the tenant will negotiate down so that they still get close to what they hope they'd get and the tenant feels that they got a reduction... Or maybe I'm just paranoid :P.

However, because there are such big fluctuations and there is still a glut of properties out there (at least of a certain type) there will be landlords out there who lower their prices to rent as quickly as possible, even if others around them raise their prices in trying to pass on the property tax.

I know it's another burden on property owners, but this is one of the good things about being a tenant: it's not my problem. I got a €125 rent reduction this year but could still find a comparable property for a bit cheaper easily enough, it's just not worth the hassle of moving for the saving in question. But if the landlord tries to raise the rent next year to pass on the property tax, then I'll just move on and probably end up paying less than what I pay now even.

pooch90

Frankly, unless rent allowance is increased to allow for property tax then rents will remain stagnant or continue to fall.

Mary Hairy

Rents are determined by supply and demand. Nothing else. The reality is that there is little new building and there are very few properties coming onto the renatl market for the first time. As agianst that there are formerly rented properties being sold off. A property tax will accelerate this in two ways. Some landlords will not be able or willing to continue letting. Renters will be less anxious to buy given the new tax situation. As these developments work through, over time, rents will increase.

Ste.phen

Mary Hairy wrote: »

Rents are determined by supply and demand. Nothing else. The reality is that there is little new building and there are very few properties coming onto the renatl market for the first time. As agianst that there are formerly rented properties being sold off.

Sold off to who? Most people buying a house will be a) vacating another rental property, or b) buying it specifically to rent it out. The number of people who'll remove a rental property from the market without vacating another is low (IMHO)

A property tax will accelerate this in two ways. Some landlords will not be able or willing to continue letting. Renters will be less anxious to buy given the new tax situation. As these developments work through, over time, rents will increase.

And thus they'll sell it to someone who either will, or to someone who'll move out of their existing property.

it's not quite a zero sum game, but it's not far off either.

jmayo

Mary Hairy wrote: »

Rents are determined by supply and demand. Nothing else. The reality is that there is little new building and there are very few properties coming onto the renatl market for the first time. As agianst that there are formerly rented properties being sold off. A property tax will accelerate this in two ways. Some landlords will not be able or willing to continue letting. Renters will be less anxious to buy given the new tax situation. As these developments work through, over time, rents will increase.

One thing you are forgetting is the little matter of the government providing massive rent allowance that is keeping an artifical floor on rents.
Now I know there probably would not be a any €2,000 a month properties with rent allowance tenants, but the rent allowance system still skews the entire market.

Cut rent allowance and rents will have to fall as lots of renters could not afford the rents.
I am a big proponent of cutting rent allowance as it is unfair on renters who are not in receipt of it, renters whose taxes are probably being used to be pay some renters too high a rent.
Also why should the taxpayers of the country pay big chunk of investors mortgages ?

senordingdong

jmayo wrote: »

Cut rent allowance and rents will have to fall as lots of renters could not afford the rents.

This is another concept that has gotten thrown around alot over the past two years, and one that I disagree with.

If it is a 'renters paradise out there' then many landlords wouldn't have trouble replacing a tenant whos RA just got cut.

J-blk

senordingdong wrote: »

If it is a 'renters paradise out there' then many landlords wouldn't have trouble replacing a tenant whos RA just got cut.

Why? It's exactly because it is hard to replace tenants these days that it makes things a "renter's paradise". If tenants were abundant and easy to replace, it would be good for the landlords and back to the way things were during the boom, with people queuing up to rent places in some areas...

senordingdong

Yeah you're right.

I just don't see landlords agressivly competing.

mrgaa1

if landlords are using the rental income to pay for that particular dwelling then I can see the property tax being added on. I can't see the property tax being restricted to owner occupiers only as this would mean I'd buy a house, you could buy the one next door and we'd rent each others house therefore by-passing the tax.
When they introduce it'll be a blanket tax for all houses except unoccupied places. Someone has to pay the property tax and if you are renting then one of the parties has to pay for it. The most sensible way would be to have the landlord pay it and the rent increased to cover it.
For example if a tax was put onto the tyres for your vehicle - lets say an additional 5euro from now to cover further recycyling or something like that. It'd be simple - the seller of the tyres will add it on. Its simple economics.

Higgsy

Not sure about the members of this forum, but I feel I dont have a voice any longer. The government do not have a mandate for the policies they are currently trying to implement.

I for one, want to have a voice. If you agree, sign the petition:

http://www.ipetitions.com/petition/notoirishpropertytax/

Mary Hairy

Ste.phen wrote: »

Sold off to who? Most people buying a house will be a) vacating another rental property, or b) buying it specifically to rent it out. The number of people who'll remove a rental property from the market without vacating another is low (IMHO)


And thus they'll sell it to someone who either will, or to someone who'll move out of their existing property.

it's not quite a zero sum game, but it's not far off either.

Most purchasers are now first time buyers. Many are moving out of parental homes. New household formation will cut the supply of rental properties. This will be offset to some extent by emigration. As rents fall tenants take more space. There are couples renting two beds where previously they would have rented a one bed. Single people renting one beds where previously they would have rented studios. Houses in studios are being converted back to family homes. The net number of rented properties will fall as a result of the current economic situation. So will the number of tenants. Rental levels will be determined by the relative declines in each category.

Blackjack

Council Tax in the UK is payable by the resident - i.e. if Owner Occupier, the owner pays. If Rented, the tenant pays.

Means you take great care when renting as to what the Council Tax band is of the place you are looking at.

People on Welfare, students and single occupancies get reductions, not sure what these are.

If the property is unoccupied, there is a reduction of the tax payable, but there is still a tax payable by the owner.

am i bovvered

Blackjack wrote: »

Council Tax in the UK is payable by the resident - i.e. if Owner Occupier, the owner pays. If Rented, the tenant pays.

Means you take great care when renting as to what the Council Tax band is of the place you are looking at.

People on Welfare, students and single occupancies get reductions, not sure what these are.

If the property is unoccupied, there is a reduction of the tax payable, but there is still a tax payable by the owner.

If it has to come in this would be the best way, with a reduction for people who paid capital gains in the last 5 or so years.

irishguy

Ya this is the best way. The resident should be charged.

ilovesleep

I dont get why a property tax would fall onto tenents. Those that are renting will never own the property. Its not theirs. Its just their home and a place to live while they are paying a LL. I know its not going to be easy on LLs either if the responsiblty falls onto the LL. There is obviously a reason why people rent - they need a home and may not be able to afford a mortgage and property and renting is more affordable and ideal. Suddenly people are expected to find 80 euro a month on top of rent.

I can manage bills very well and keep things to a minimum. I have no car so no car bills. With esb I can switch off what I'm not using and wear extra layers in winter. I can walk around in the dark and cold. Have no loans. Food bills can easily be reduced. With this property tax it will be a big fat bill for 80 euro a month and no ways of reducing it except for becoming homeless, moving back home, or sharing with others.

Im working full time at about min wage and will not be able to afford this property tax.

irishguy

Your getting the benefit of living in the house/area. The proposed 80 per month was on a house value of 260k (I think) so if you were renting, you could move to a cheaper house to reduce the amount you pay in property tax or if your sharing the house then its shared among all the residents.

Blackjack

ilovesleep wrote: »

I dont get why a property tax would fall onto tenents. Those that are renting will never own the property. Its not theirs. Its just their home and a place to live while they are paying a LL. I know its not going to be easy on LLs either if the responsiblty falls onto the LL. There is obviously a reason why people rent - they need a home and may not be able to afford a mortgage and property and renting is more affordable and ideal. Suddenly people are expected to find 80 euro a month on top of rent.

I can manage bills very well and keep things to a minimum. I have no car so no car bills. With esb I can switch off what I'm not using and wear extra layers in winter. I can walk around in the dark and cold. Have no loans. Food bills can easily be reduced. With this property tax it will be a big fat bill for 80 euro a month and no ways of reducing it except for becoming homeless, moving back home, or sharing with others.

Im working full time at about min wage and will not be able to afford this property tax.

Likelihood is that any tax would need to be factored into the Rent too, so there should be reductions to rent as a result.

ilovesleep

irishguy wrote: »

Your getting the benefit of living in the house/area. The proposed 80 per month was on a house value of 260k (I think) so if you were renting, you could move to a cheaper house to reduce the amount you pay in property tax or if your sharing the house then its shared among all the residents.

Im renting in the locality that im working in. I wouldnt be able to just get up and move.

irishguy

ilovesleep wrote: »

Im renting in the locality that im working in. I wouldnt be able to just get up and move.

Why not?

ilovesleep

irishguy wrote: »

Why not?

Extremely poor bus service.

jmayo

senordingdong wrote: »

This is another concept that has gotten thrown around alot over the past two years, and one that I disagree with.

If it is a 'renters paradise out there' then many landlords wouldn't have trouble replacing a tenant whos RA just got cut.

So you think it is a good idea that your taxes (if you are paying any which I don't know or care) are going to pay someones inflated rent and thus some landlords mortgage or income.
Rent allowance is subsidising the landlords and ensuring there is an artifical floor on rents.
It is a market distortion but of course we know how ff like to distort the market in favour of the sellers.

I have no idea what you mean by your second sentence ?

irishguy wrote: »

Your getting the benefit of living in the house/area. The proposed 80 per month was on a house value of 260k (I think) so if you were renting, you could move to a cheaper house to reduce the amount you pay in property tax or if your sharing the house then its shared among all the residents.

Why should the tenants pay a property tax ?
They do not own or will ever own the asset.
Look at it as an tax on an asset.
And please do not come quoting how the bank owns the asset and not the owner.

senordingdong

jmayo wrote: »

So you think it is a good idea that your taxes (if you are paying any which I don't know or care) are going to pay someones inflated rent and thus some landlords mortgage or income.
Rent allowance is subsidising the landlords and ensuring there is an artifical floor on rents.
It is a market distortion but of course we know how ff like to distort the market in favour of the sellers.

I have no idea what you mean by your second sentence ?

Fair point.
But up untill now I looked at it differently. The way I looked at it was that we are in this mess becasue of reliance on property.
If rent allowances were discontinued, alot of BTL properties would lie idle indefinitely, and I think this in turn, would screw us all as landlords/builders wouldn't get their money back, the banks in turn, and then the govt./taxpayer in turn.

By the second sentence I meant that it seems that with the words 'renters paradise' getting thrown around the past two years, I see alot of renters coming out of the woodwork, that wouldn't have rented before the burst, or wouldn't have thought themselves able to afford the luxury.
I think there are so many people renting/looking to rent now that landlords don't feel they have to succumb to the govt. requests to lower their rates.

gurramok

senordingdong wrote: »

Fair point.
But up untill now I looked at it differently. The way I looked at it was that we are in this mess becasue of reliance on property.
If rent allowances were discontinued, alot of BTL properties would lie idle indefinitely, and I think this in turn, would screw us all as landlords/builders wouldn't get their money back, the banks in turn, and then the govt./taxpayer in turn.

The govt control 50% of the market, about 90,000+ humans. If RA was reduced tomorrow, the landlords will not find that many people to lease their properties to if ahem they refused to renew the rents at the lower rates. And if as you say that alot of them are in trouble, they will take every cent they can get.

If they get screwed, tough sh1t. They are business people and giving them borrowed money via welfare is less of a priority than feeding people on the dole for example.

senordingdong wrote: »

By the second sentence I meant that it seems that with the words 'renters paradise' getting thrown around the past two years, I see alot of renters coming out of the woodwork, that wouldn't have rented before the burst, or wouldn't have thought themselves able to afford the luxury.
I think there are so many people renting/looking to rent now that landlords don't feel they have to succumb to the govt. requests to lower their rates.

Based on what? I certainly do not see an avalanche of renters.

Tigger

mrgaa1 wrote: »

if landlords are using the rental income to pay for that particular dwelling then I can see the property tax being added on. I can't see the property tax being restricted to owner occupiers only as this would mean I'd buy a house, you could buy the one next door and we'd rent each others house therefore by-passing the tax.
When they introduce it'll be a blanket tax for all houses except unoccupied places. Someone has to pay the property tax and if you are renting then one of the parties has to pay for it. The most sensible way would be to have the landlord pay it and the rent increased to cover it.
For example if a tax was put onto the tyres for your vehicle - lets say an additional 5euro from now to cover further recycyling or something like that. It'd be simple - the seller of the tyres will add it on. Its simple economics.

i'm a renter and i'll tell you now i'll be paying no property tax rental increase

if he wants the rent to go up he can find another tenant

jimmycrackcorm

Tigger wrote: »

i'm a renter and i'll tell you now i'll be paying no property tax rental increase

if he wants the rent to go up he can find another tenant

So where is this property-tax less place you'll be going to?

Tigger

there are many large houses to rent around here if i move the landlord is looking at having this place empty for a long time or he could reduce the rent by the property tax and life goes on

his call but i'll keep ye updated