Do you think that tenants are ready for Property Tax-inspired rent increases?

dissed doc

Akiv89 wrote: »

Perhaps this question was raised earlier, but I didn't find the answer to it.
I have a clause in my lease agreement that states that tenant is liable for paying "local authority charges ... including any which are imposed after the date of the lease agreement (even if of a novel nature)". Hence the question: Is property tax a local authority charge? and Will I as a tenant be liable for paying it to the Revenue?

No, the landlord is liable to pay it as he/she is the owner.

However, the rent is based on numerous costs and completely up to the landlord (and obviously the market), so it's likely to be passed onto the tenant by way of the total rent.

Gatling

I remember reading an article where landlord association's recommend if the property tax came into effect what ever the cost to the landlord they should pass it to tenants with an extra 400-500e increase on top of the actual tax so they can make money off it

markpb

Gatling wrote: »

I remember reading an article where landlord association's recommend if the property tax came into effect what ever the cost to the landlord they should pass it to tenants with an extra 400-500e increase on top of the actual tax so they can make money off it

That's not actually true. If a landlord wants to increase the rent to cover their property tax, they have to charge the tenant by more tha the actual LPT bill because revenue will view it as extra income and charge income tax on the full amount. For example, if my property tax is €200 and I add that onto my tenants rent, I will only see €120 of it. To cover the tax bill entirely, I'd need to increase my tenants rent by €340.

Edit: I forgot that USC and PRSI are also applicable which means €340 wouldn't be enough. It's probably closer to €380.

Akiv89

dissed doc wrote: »

No, the landlord is liable to pay it as he/she is the owner.

However, the rent is based on numerous costs and completely up to the landlord (and obviously the market), so it's likely to be passed onto the tenant by way of the total rent.

The rent is fixed until the end of the lease term and can only be reviewed at the end of the term and I don't really care if the landlord plans to increase it as we plan to buy the house before it actually ends. I guess my question would be - is landlord legally allowed to withdraw the property tax from our deposit at the end of the lease term based on the above mentioned clause in our lease agreement?

Casillas

Im struggling as is. This, the water TAX and the media TAX, I know I can't afford. I think I'll emigrate to a fairer society for a better life.

PhilMcGee

It doesnt matter at all to the tenant if there are property taxes or not. They will have to pay what the landlord increases the rent to whether there are extra taxes or not.
Even if there were no extra taxes the landlord will most likely increase the rent to the max they can get anyway.
The exception being if they like you and are happy to give you a discount on what the new market rate is.

for example imagine there are 3 apartments the same renting for 750 this year.
If two of them are renting for 850 next year then the landlord renting at 750 is at a loss of 100 from what they should be getting. It doesnt matter what extra taxes are or are not brought in.

If all landlords move together to increase because of the effect of property tax then there is nothing tenants can do about it. but if the market wont hold the increase they cant rent the apartments. It will find its level itself.

Bigcheeze

markpb wrote: »

That's not actually true. If a landlord wants to increase the rent to cover their property tax, they have to charge the tenant by more tha the actual LPT bill because revenue will view it as extra income and charge income tax on the full amount. For example, if my property tax is €200 and I add that onto my tenants rent, I will only see €120 of it. To cover the tax bill entirely, I'd need to increase my tenants rent by €340.

Edit: I forgot that USC and PRSI are also applicable which means €340 wouldn't be enough. It's probably closer to €380.

Property tax is tax deductible so if the landlord increases rent by 200 and pays property tax of 200 he is in the same position as he was before the property tax.

markpb

Bigcheeze wrote: »

Property tax is tax deductible so if the landlord increases rent by 200 and pays property tax of 200 he is in the same position as he was before the property tax.

It's not. Michael Noonan said it might become so in the future but it's not right now.

The_Conductor

markpb wrote: »

It's not. Michael Noonan said it might become so in the future but it's not right now.

It hasn't been legislated for as it stands. Realistically it'll be a pure and simple hike in rents, unless its allowed as a deduction- akin to the manner management charges are also an allowable expense.

murphaph

markpb wrote: »

It's not. Michael Noonan said it might become so in the future but it's not right now.

This.

It should be deductible but sure so should 100% of mortgage interest, which isn't!

The NPPR and HH charge should have been deductible but neither was.

I doubt they'll amend the law to clarify. The law currently allows for "a county rate" to be deducted and the LPT is variable by the local authority so fulfills the notion of being a "county rate" but it's not explicit and Revenue will probably see it as a continuation of the HH charge (which they claimed was not allowed as a deduction).

It's ironic that those screaming for landlords to pay this tax will end up paying more as rents will have to be increased by at least 50% more than the cost of the tax. This will happen over time as leases end and new ones begin. People won't notice but they'll be paying more in 10 years for their apartment than they would have if the tax had been levied on the occupier as it is up north and in GB.

In Germany the LL can simply pass on the cost directly to tenant, so again, no "padding" in rent is required to get the money to government. Tenants will be the ones losing out here as ALL LLs are getting hit so it'll affect the entire market eventually.

gaius c

Pkiernan wrote: »

As per the title?

Given that rents can be reviewed once per year, and that most landlords will be upping the rent in line with the new Public Service Pension ChargeP Property Tax, are renters ready?

Absolutely. This is wonderful news for renters because some property bull fella was telling me that rising prices are actually a good thing in the property world.

Anynama141

If landlords think they can pass on the property tax, then why are they not already charging what the current rent + tax would be?

In other words, why are they currently charging less than the market can bear?

by the seaside

Anynama141 wrote: »

If landlords think they can pass on the property tax, then why are they not already charging what the current rent + tax would be?

In other words, why are they currently charging less than the market can bear?

Because they would be undercut by someone who could afford to operate at lower margins. The problem is that the operating costs as a whole will increase. To say that property tax won't increase rents is pretty much the same as saying that if the property tax was landed on tenants it would see rents go down by E50 per month. Who pays the property tax is largely irrelevant (leaving aside for the moment whether or not it is tax deductible) - current rent + property tax = cost of living in house.

However, I am finding this whole conversation a bit odd - it's very binary.

I am no expert in economics but surely the truth is that the property tax is an additional cost of doing business, therefore, in a competitive market we should see upward pressure on rents - to take an extreme case, look what happens to petrol prices when crude oil goes up (I know - it is an extreme case and the two markets are not the same and crude oil prices have a very direct influence on petrol prices, but it demonstrates the principle). However, upward pressure does not equal increases, because there may be downward pressures: decreases in public sector wages? net emigration? repossessions (maybe)? increases in unemployment? changes in living patterns such as young adults staying in the parental ome longer? And of course, maybe other upward pressures such as increasing interest rates.

Ray Palmer

Anynama141 wrote: »

If landlords think they can pass on the property tax, then why are they not already charging what the current rent + tax would be?

In other words, why are they currently charging less than the market can bear?

There is a market lag due to leases and rent review dates. It will happen it just won't be instant.

MMAGirl

Anynama141 wrote: »

If landlords think they can pass on the property tax, then why are they not already charging what the current rent + tax would be?

In other words, why are they currently charging less than the market can bear?

It's already happening in Dublin. Look at rent trend for the last couple of years.

Anynama141

MMAGirl wrote: »

It's already happening in Dublin. Look at rent trend for the last couple of years.

I've been following the trends, as someone who might look to add to my (small) portfolio. The trend is for increases in line with general inflation in Dublin prime locations. But in something like 90% of all areas, rents have been dropping for the last couple of years.

Look at the CSO figures - Daft's numbers are for asking prices, not achieved prices.

MMAGirl

Anynama141 wrote: »

I've been following the trends, as someone who might look to add to my (small) portfolio. The trend is for increases in line with general inflation in Dublin prime locations. But in something like 90% of all areas, rents have been dropping for the last couple of years.

Look at the CSO figures - Daft's numbers are for asking prices, not achieved prices.

Rents definitely have not been dropping in Dublin the last couple of years. They have been increasing. I have no idea what is happening in the rest of the country though.

Zamboni

MMAGirl wrote: »

Rents definitely have not been dropping in Dublin the last couple of years. They have been increasing. I have no idea what is happening in the rest of the country though.

My rent is the lowest it's been since 2003.
I have changed properties twice in that period.
Each change was for an upgrading of accommodation all in SCD.
Anecdotal sure, but I have not seen any credible source of rental increases.

MMAGirl

Zamboni wrote: »

My rent is the lowest it's been since 2003.
I have changed properties twice in that period.
Each change was for an upgrading of accommodation all in SCD.
Anecdotal sure, but I have not seen any credible source of rental increases.

Have you moved in the last couple of years?

Zamboni

MMAGirl wrote: »

Have you moved in the last couple of years?

Yes.