Are landlords selling up ?

MarkAnthony

CollyFlower wrote: »

I find It astonishing that 75% of Irish landlords are "accendital" landlords.

Why? It's a terrible (okay that's over stating it) ROI compared to many safer alternatives. As Gator has pointed out you'd have to go back prior to the Celtic tiger to find sensible LL's in it for the return. The rest will be Post 2011 in Dublin and then probably only until the CGT exemptions ran out.

It's an iterative process - we'll get out from under (hopefully!) then it'll crash again, then the next lot will get out from under each taking a smaller and smaller loss. We might have something approaching a properly functioning market by about 2050 if we're lucky.

CollyFlower

MarkAnthony wrote: »

Why? It's a terrible (okay that's over stating it) ROI compared to many safer alternatives. As Gator has pointed out you'd have to go back prior to the Celtic tiger to find sensible LL's in it for the return. The rest will be Post 2011 in Dublin and then probably only until the CGT exemptions ran out.

It's an iterative process - we'll get out from under (hopefully!) then it'll crash again, then the next lot will get out from under each taking a smaller and smaller loss. We might have something approaching a properly functioning market by about 2050 if we're lucky.

The reason why I find it astonishing is because in my day landlords were renting and running a business and renting their property for less than a mortgage would costs... I guess a lot of landlords are changing sky-high prices now is because they know most renters have no hope of saving for a deposit.

MarkAnthony

CollyFlower wrote: »

The reason why I find it astonishing is because in my day landlords were renting and running a business and renting their property for less than a mortgage would costs... I guess a lot of landlords are changing sky-high prices now is because they know most renters have no hope of saving for a deposit.

Most LLs now regardless of how they came to be LLs are charging Sky high rents because it's basic supply and demand. The government are the ones screwing renters as it's the only way to keep the country running. Upto 50% of rental payments go to the exchequer in tax, it's the only way to effectively tax property at the rate needed to keep essential services running. That's not going to change anytime soon, the only hope is that during the next apartment price crash people are able to buy into property themselves and avoid this ridiculous tax burden.

Of course as soon as the scales tip something akin to the Council tax will have to be introduced to make up the shortfall.

CollyFlower

That's another thing I don't get, over 50% of rental income going on tax, that's just outrageous!

MarkAnthony

CollyFlower wrote: »

That's another thing I don't get, over 50% of rental income going on tax, that's just outrageous!

With one or two off LLs it's less of course and presumably people like Gator have incorporated to take advantage of tax breaks there. It doesn't diminish the fact that a huge portion of the country's bills are being borne, disproportionately, by renters.

athtrasna

CollyFlower wrote: »

That's another thing I don't get, over 50% of rental income going on tax, that's just outrageous!

Like with any other income, the more you earn the more you pay. The over 50% figure relates to people whose total income is taxable at the highest rate. Why should rental income be treated differently. Sure there are costs associated with being a landlord but there are costs associated with working too?

Former accidental landlord here. One of the happiest days of my life was when we evicted the last set of tenants and could get in to start to undo the damage they did.

Carlos Orange

CollyFlower wrote: »

That's another thing I don't get, over 50% of rental income going on tax, that's just outrageous!

I presume rental income is just being treated the same as other income and is liable to income tax and prsi.

MarkAnthony

athtrasna wrote: »

Like with any other income, the more you earn the more you pay. The over 50% figure relates to people whose total income is taxable at the highest rate. Why should rental income be treated differently. Sure there are costs associated with being a landlord but there are costs associated with working too?

Former accidental landlord here. One of the happiest days of my life was when we evicted the last set of tenants and could get in to start to undo the damage they did.

To be fair any other service provider, and I'm very fond of saying LL's should treat their businesses as such, can avail of lower tax rates by incorporation. I must admit to my discredit I spent much more time mentally undressing my Revenue Law lecturer than actually listening to what she was saying so I'm open to correction.

Godge

CollyFlower wrote: »

That's another thing I don't get, over 50% of rental income going on tax, that's just outrageous!

Why? The top rate of income tax plus USC is over 50%. Why shouldn't landlords with rental income not pay that on top of their regular income?

CollyFlower

Godge wrote: »

Why? The top rate of income tax plus USC is over 50%. Why shouldn't landlords with rental income not pay that on top of their regular income?

I don't know if you're being sarcastic or not, Godge.. 'reluctant landlords ' should be tax free, they're not in the profession to make a profit they're just trying to survive.

athtrasna

CollyFlower wrote: »

I don't know if you're being sarcastic or not, Godge.. 'reluctant landlords ' should be tax free, they're not in the profession to make a profit they're just trying to survive.

Maybe take that one to the taxation forum if you want to argue for such an exploitable loophole.

MarkAnthony

CollyFlower wrote: »

I don't know if you're being sarcastic or not, Godge.. 'reluctant landlords ' should be tax free, they're not in the profession to make a profit they're just trying to survive.

I'm not sure they should be tax free, I'm more than happy to pay my way but 100% interest relief would be a start, other business expenses get it.

We've seen the government take a decision that rent a room should be tax free so before you're flamed to a crisp it's not the most bonkers suggestion in the world. That said it has shown that people will still be greedy which is why I personally support renters being able to seek relief from tax on rental payments.

the_syco

handlemaster wrote: »

Is this the start of profit taking ?

IMO it's a general "f**k you" to the government who is screwing over the landlords. I'd wonder if having to accept anyone was the straw that broke the camel's back?

Deleted User wrote: »

They're fools then, if they're accidental landlords then they're screwed if the tenant decides to muck them around, would take months to sort the situation out and in the meantime how are they going to make their mortgage payments?

I doubt a lot of the accidental landlords will have enough experience to tell the difference.

Deleted User wrote: »

A professional landlord with multiple properties, not over leveraged, can afford to ride out any problems like this and so should keep rents at market rates all the time.

IMO, you only become a "professional landlord" when you don't owe money on the house you are renting.

CollyFlower wrote: »

I guess a lot of landlords are changing sky-high prices now is because they know most renters have no hope of saving for a deposit.

IMO, it's because they hope to cover the mortgage with the rent.

the_syco

CollyFlower wrote: »

'reluctant landlords ' should be tax free, they're not in the profession to make a profit they're just trying to survive.

Either they want to make a profit, or they make a loss. They sell now, they make a loss. They stay in the game to make a profit. And if they stay in the game, why should they do so without getting taxed?

CollyFlower

athtrasna wrote: »

Maybe take that one to the taxation forum if you want to argue for such an exploitable loophole.

I'm not Slab Murphy, I don't know anything about tax evasion or loopholes, I'm just saying I think reluctant landlords are being unfairly treated..

Eugene Norman

[Deleted User] wrote: »

They're fools then, if they're accidental landlords then they're screwed if the tenant decides to muck them around, would take months to sort the situation out and in the meantime how are they going to make their mortgage payments?

Better to get a good tenant and keep them until they can afford to sell up.

A professional landlord with multiple properties, not over leveraged, can afford to ride out any problems like this and so should keep rents at market rates all the time.

A professional landlord with multiple properties can afford some properties to be below market as he's making money anyway and a bad tenant could cost more in repairs. An amateur landlord needs to pay the mortgage.

Hopeful2016

CollyFlower wrote: »

I don't know if you're being sarcastic or not, Godge.. 'reluctant landlords ' should be tax free, they're not in the profession to make a profit they're just trying to survive.

Troll? Or an eejit?

CollyFlower

Hopeful2016 wrote: »

Troll? Or an eejit?

Banker or ****

Hopeful2016

CollyFlower wrote: »

Banker or ****

Definitely eejit!

ongarboy

Is the general consensus here that if you have a hefty mortgage on your investment property, that the preference would be to exit being a LL asap once you get out of negative equity?..... but that if you owned the property outright, remaining as a LL would be prudent (despite the 51% tax on all rent received)?

Reason I ask is that I'm in a position where I have savings sitting stagnant in bank accounts earning almost zero interest and I'm strongly considering purchasing an investment property (which I could buy outright) to rent out but my worst fear is nightmare tenants (especially when you read about all the horror stories on this forum). As you can gather I'm pretty risk averse, so the stock market is not something I want to indulge in either. So many friends and family tell me I'm mad for not buying property (I have my own principal residence) but when I read about threads like this with landlords selling up, maybe investment property isn't the be all end all?

Would all the acccidental LLs here continue on as such if they hadn't got mortgages on said properties?

The Randy Riverbeast

ongarboy wrote: »

Is the general consensus here that if you have a hefty mortgage on your investment property, that the preference would be to exit being a LL asap once you get out of negative equity?..... but that if you owned the property outright, remaining as a LL would be prudent (despite the 51% tax on all rent received)?

Reason I ask is that I'm in a position where I have savings sitting stagnant in bank accounts earning almost zero interest and I'm strongly considering purchasing an investment property (which I could buy outright) to rent out but my worst fear is nightmare tenants (especially when you read about all the horror stories on this forum). As you can gather I'm pretty risk averse, so the stock market is not something I want to indulge in either. So many friends and family tell me I'm mad for not buying property (I have my own principal residence) but when I read about threads like this with landlords selling up, maybe investment property isn't the be all end all?

Would all the acccidental LLs here continue on as such if they hadn't got mortgages on said properties?

I dont think it would be as bad if you bought a property now. A lot of accidental landlords found themselves in a situation where they bought at the peak, prices dropped and they had to move. This left them with renting and paying a mortgage.

If you are risk adverse I would avoid property. There's a forum somewhere around here that could help you out.

Eugene Norman

Eugene Norman wrote: »

My experience is the opposite.

Eugene Norman wrote: »

A professional landlord with multiple properties can afford some properties to be below market as he's making money anyway and a bad tenant could cost more in repairs. An amateur landlord needs to pay the mortgage.

Well I applaud the bravery of your high risk strategy of going for maximum rent at all costs, but good luck if you're an accidental landlord.

Eugene Norman

[Deleted User] wrote: »

Well I applaud the bravery of your high risk strategy of going for maximum rent at all costs, but good luck if you're an accidental landlord.

I'm not a landlord at all. My experience was as a renter. I now own. The guys with multiple properties were relaxed.

Eugene Norman

Eugene Norman wrote: »

I'm not a landlord at all. My experience was as a renter. I now own. The guys with multiple properties were relaxed.

Fair enough, but I wasn't referring to personal demeanor or stress levels of the landlord.

If you can't see that you're comparing an amateur in danger of going bankrupt to a professional looking to balance risk and return. And that the amateur's best chance of success is not risking the dodgy tenant and missing months of mortgage payments, then I'm not sure you understand what an accidental landlord is.

4ensic15

Pre 63 lettings are on the market because they were repossessed by banks or because the hassle of running them has increased massively. Inspections by housing standards, fire officers, lpt, Nppr, no S23 tax write offs, refuse charges, Prtb registrations, water registration and charges, protected structure laws, trouble evicting problem tenants attending PRTb hearings et al, are all new issues that the Pre 63 landlords of 20 years ago did not have. Most pre-63s will be converted to single dwellings reducing supply to the rental market.
Many old sweat pre-63 landlords bought years ago and are now quite advanced in age.

draiochtanois

This post has been deleted.

I bought in 2005, not the best investment I ever made but my plan was to sell after 30 years when I hope to retire.

I'm sticking to that plan unless a boom presents an opportunity that is a serious pocket liner

alias no.9

ongarboy wrote: »

Is the general consensus here that if you have a hefty mortgage on your investment property, that the preference would be to exit being a LL asap once you get out of negative equity?..... but that if you owned the property outright, remaining as a LL would be prudent (despite the 51% tax on all rent received)?

Reason I ask is that I'm in a position where I have savings sitting stagnant in bank accounts earning almost zero interest and I'm strongly considering purchasing an investment property (which I could buy outright) to rent out but my worst fear is nightmare tenants (especially when you read about all the horror stories on this forum). As you can gather I'm pretty risk averse, so the stock market is not something I want to indulge in either. So many friends and family tell me I'm mad for not buying property (I have my own principal residence) but when I read about threads like this with landlords selling up, maybe investment property isn't the be all end all?

Would all the acccidental LLs here continue on as such if they hadn't got mortgages on said properties?

Talk to a financial / tax advisor*. Depending on your age/other income, the rental income could be invested in a pension scheme relatively tax efficiently but with the obvious proviso that you can't touch it until later life. You could obviously recover your capital at any time but have to be accepting of any market losses or CGT on any gains.

*Financial Advisors who don't charge you a fee are working for the institutions who pay their commission, not for you

MarkAnthony

ongarboy wrote: »

Is the general consensus here that if you have a hefty mortgage on your investment property, that the preference would be to exit being a LL asap once you get out of negative equity?..... but that if you owned the property outright, remaining as a LL would be prudent (despite the 51% tax on all rent received)?

Reason I ask is that I'm in a position where I have savings sitting stagnant in bank accounts earning almost zero interest and I'm strongly considering purchasing an investment property (which I could buy outright) to rent out but my worst fear is nightmare tenants (especially when you read about all the horror stories on this forum). As you can gather I'm pretty risk averse, so the stock market is not something I want to indulge in either. So many friends and family tell me I'm mad for not buying property (I have my own principal residence) but when I read about threads like this with landlords selling up, maybe investment property isn't the be all end all?

Would all the acccidental LLs here continue on as such if they hadn't got mortgages on said properties?

You've missed the boat in terms of the trough of property prices and capital gains tax exemptions that existed. I also think apartments have entered a bubble in some areas as people can't afford the deposits on houses and don't want to keep paying rent. There are also some people like yourself who want to get into a rental market at or near to it's peak. I think it's a bad time to get in but do your research with long terms LLs. Be aware you may need to offer a consultancy fee but it would be money well spent.

If you've a couple of hundred grand lying about why not consider all the options and speak to a FA. You may find it's actually worth having small mortgages to allow you a larger property portfolio given internist can be deducted. You'll also need to speak to an accountant. If you're not willing to invest the money in these professional fee's you're not ready to be a LL IMHO. You may find a professional Financial advisor or wealth manager can offer you a number of equally as good or better options.

You may simply wish to be a LL as a hobby, that's perfectly fine. Some people make Jam some people want to have a property they manage, if you're becoming a LL in any shape or form remember is a customer facing role and you need to keep your customer happy while taking a profit.

Lastly bad tenants, it's absolutely fatal to people who've over extended themselves on mortgages and no doubt bloody frustrating to everyone else. But if you're not over extended you can wait it out and carry the losses forward year on year against tax. Bear in mind it's a business and these things happen in business.

TL;DR Speak to a Financial advisor before making decisions about your money. A fool and his money are easily parted.

Aversion to stocks as you are risk averse but looking to property is a strange one.

Look at the S&P500 or FTSE100 and compare to Irish property prices. They recovered from the crash years ago. Irish property hasn't.

The liquidity and diversification offered by the stock market is a huge factor too.

Trying to find a good financial advisor is not easy. You can attain QFA status quite simply too, I'd be slow to rely on them. This isn't the place to discuss it of course but I'd exercise extreme vigilance.

Also, just because you have the money it doesn't rule out borrowing some to avail of tax relief on the interest portion of the mortgage, costs a bit more over all but keeps some of your money out of the investment. Some decent low rates available too.