Once a rental property, always a rental property?

2007fool

I'm alarmed enough to post on boards. I've recently been talking to an estate agent friend about my accidental landlord status and my hope to sell in a couple of years' time when out of negative equity.
My friend said that it is anticipated in the budget that landlords will no longer be able to use a plan to sell as a reason to terminate a tenancy. 
Cue me looking at the housing and homelessness report and it does seem to be proposed that the residential tenancies act be amended. 
I can't find any discussion about the implications of this. It seems to me to mean that 1) I will only be able to sell my apartment as an investment property, 2) my tenanted apartment will be worth less than next door (owner-occupied) , 3) in having below-market rent (to keep good tenants) I have unwittingly put a ceiling on the price I can get. 

Is my outrage misplaced? I'd value thoughts.

Tigger

You will probably still be able to say you need it to live in and end the tennency that way
You can always wait till the end of a part 4 lease and end it that way
I'd assume the problem is too many false claims of wanting to sell followed by accidentally not selling

HeidiHeidi

2007fool wrote: »

I'm alarmed enough to post on boards. I've recently been talking to an estate agent friend about my accidental landlord status and my hope to sell in a couple of years' time when out of negative equity.
My friend said that it is anticipated in the budget that landlords will no longer be able to use a plan to sell as a reason to terminate a tenancy.
Cue me looking at the housing and homelessness report and it does seem to be proposed that the residential tenancies act be amended.
I can't find any discussion about the implications of this. It seems to me to mean that 1) I will only be able to sell my apartment as an investment property, 2) my tenanted apartment will be worth less than next door (owner-occupied) , 3) in having below-market rent (to keep good tenants) I have unwittingly put a ceiling on the price I can get.

Is my outrage misplaced? I'd value thoughts.

How have you arrived at these conclusions

If a tenancy ends (which 99.9% of them do, eventually) then you can market/sell the apartment as what you like - as a home or as an investment, or either/or.

The only implication I can see (unless I'm missing something obvious) is that you can't force an end to a tenancy on the basis that you want to sell. I don't see how that would lead to your conclusions above.

(I hadn't heard anything about this, so thanks for posting all the same!)

The_Conductor

lawred2 wrote: »

That excuse for eviction is a disgrace

Its a valid reason to sell to a property.
There are over 30,000 people who bought in the last boom- who had no intention of becoming landlords- many of whom through necessity (such as work) had to move elsewhere- but were unable to sell properties because of the negative equity overhang on the property.

Simply saying its a disgrace allowing a landlord to end a tenancy in order to sell a property- without looking at the larger picture- is a disgrace in itself.

We have strong property rights in this country- and the simple fact of the matter is a landlord cannot sell a property with a sitting tenant in the majority of cases- as a prospective purchaser would be unable to get a mortgage for the property without vacant possession.

Tenancy rights in this country- despite what you may imagine- are significantly stronger than in most EU countries- however, there is an irony in that both tenants and landlords view residential tenancies as short term solutions.

If a landlord is not allowed to end a tenancy on the grounds that he/she wishes to sell the property- there has to be some reciprochal safeguard introduced to secure their property rights- which includes the right to sell a property......... This could be any of a number of different options- including but not limited to- limiting a person's exposure to the negative equity element of outstanding debt associated with a property (aka- a form of the US 'Jingle Mail').

There has to be balance in the rights and obligations of tenants and landlords- at the moment- particularly from a taxation perspective- the balance is most certainly in a landlord's favour- however, the main beneficiary of the ridiculous runaway rents- is the government- who manage to levy tax at a rate of up to 55% for self employed landlords.

Tenants and Landlords- both deserve to have reasonable rights (and obligations and safeguards). Simply dismissing the rights or expectations of either- is not on.

moc moc a moc

lawred2 wrote: »

That excuse for eviction is a disgrace

God forbid someone might be allowed to actually sell their own property.

The_Conductor

2007fool wrote: »

1) I will only be able to sell my apartment as an investment property, 2) my tenanted apartment will be worth less than next door (owner-occupied) , 3) in having below-market rent (to keep good tenants) I have unwittingly put a ceiling on the price I can get. 

Seems to be a fair and reasonable set of assumptions to make.

If you can only end a part IV tenancy after 10 years (the proposal is to put it on a 10 year cycle)- unless you're prepared to wait out the 10 years (or however long they change it to).

An owner occupied property is almost always worth more than a tenanted property- as people assume, rightly or wrongly, that an owner occupier is more likely to have maintained the property better than a landlord of a let property.

If you do accept a reduced rent (for whatever reason)- certainly you are setting an artificial ceiling on buyers expectations for the price of the property (be they people who intend to purchase the property as an investment- or to live in it). I don't see how or why this is inaccurate?

The rental yield a property generates- is a function of its market value. If you set the rental yield at a lower than market level- the property is worth less than a neighbouring property that is achieving a better return..........

All-in-all- it is a lot of work being a good landlord- if you have no intention of being a landlord long term- bit the bullet, accept that you'll have negative equity to clear- and cut loose the property? If it takes declaring a bankruptcy to do this- so be it (most lenders are wising up and figure they're worse off going down this road- and are willing to play ball with accidental landlords these days)............

4ensic15

If such a provision is enacted it would be unconstitutional. The residential Tenancies Act is already sailing close to the wind. Any more attacks on landlords will force a challenge in the courts.

ted1

lawred2 wrote: »

That excuse for eviction is a disgrace

Why is that ? Sounds like a legit reason , if you want security then but a place.

2007fool

I have written a reply already, but had linked to the housing and homelessness report, so it seems to be stuck in the ether.
Thanks to all the replies, even the "property is theft" themed one.
It did seem to me grossly unfair to be stuck waiting to sell at the timescale of the tenant or the 4 (or 10) year cycle or otherwise to be trying to shift a tenanted apartment at a crappy rental yield.
Thanks to the conductor for his thoughtful posts. The difficulty is that the sage advice is to get out as soon as possible, which is just not possible for us just yet.
4ensic, your post prompted me to go back to my googling. It seems that the language of the oireachtas committee report which had me so alarmed has been watered down in the final report and the suggestion now is that it is only when someone is selling 20 units in a single development that they will not be permitted to terminate leases.
In any event, thanks to all, I feel considerably better now.

athtrasna

I was at the Simon community report launch yesterday and the proposal is that a landlord with three or more properties new treated as a business with 100% of expenses tax deductible if they agree to void sale of the property or needed for a family member or themselves to move in as a way of terminating the lease.

Landlords with fewer properties could opt to be included but they want it to be compulsory for landlords with three + properties

richy

athtrasna wrote: »

I was at the Simon community report launch yesterday and the proposal is that a landlord with three or more properties new treated as a business with 100% of expenses tax deductible if they agree to void sale of the property or needed for a family member or themselves to move in as a way of terminating the lease.

Landlords with fewer properties could opt to be included but they want it to be compulsory for landlords with three + properties

Not really sure what you mean by this. Are you saying if a person has 3 or more properties in Ireland (even if one is principle private residence) then they can act like a business and deduct expenses like diesel, furniture etc?

The_Conductor

Property tax is a particular bugbear- its a deductible for commercial lettings- or indeed for any business- but not for residential property. USC on gross rental income is another one.......... In either case- electing to sign up to this knocks at least 10% off your tax bill (probably significantly more).

The issue out there though- is the number of unintentional landlords who are not being allowed to sell property- because of negative equity overhangs- who are clinging on by their finger nails- because they're not allowed to do otherwise. The proposal to allow tax arrangements as they pertain to a business- apply to the residential letting market- is all fine and dandy- however, it doesn't do anything whatsoever for 2007fool (the OP) or any of the other tens of thousands who have found themselves in his/her position.

I get where Simon are coming from- however- they're looking at this myopically- there is a bigger picture that is not being taken into account.

athtrasna

richy wrote: »

Not really sure what you mean by this. Are you saying if a person has 3 or more properties in Ireland (even if one is principle private residence) then they can act like a business and deduct expenses like diesel, furniture etc?

That's the figure they used and they said three properties not three rental properties. In fact they used the example of two people already owning their own place and buying a property together so yes. It was Lorcan Sirr from DCU doing that part of the presentation.

4ensic15

This is only a proposal though? Merrion Street have yet to get their hands on it?

The_Conductor

4ensic15 wrote: »

This is only a proposal though? Merrion Street have yet to get their hands on it?

Hopefully....... It sounds a bit nutty otherwise.

RandomAccess

I'd say that this is just a misunderstanding of the change that is proposed.

They may be about to add some teeth to the existing rule which is being abused by a select number of landlords where they claim they wish to sell a property as a means of replacing a tenant with a higher paying tenant.

This is almost certainly just closing a loop hole that is being abused. (Many examples have been posted on this forum of late)

4ensic15

RandomAccess wrote: »

I'd say that this is just a misunderstanding of the change that is proposed.

They may be about to add some teeth to the existing rule which is being abused by a select number of landlords where they claim they wish to sell a property as a means of replacing a tenant with a higher paying tenant.

This is almost certainly just closing a loop hole that is being abused. (Many examples have been posted on this forum of late)

That is trying to cure the symptom, not the cause. Why should a landlord not get the full market rent for his property? The rules have been driving landlords out of the business and forcing rents up.

RandomAccess

4ensic15 wrote: »

That is trying to cure the symptom, not the cause. Why should a landlord not get the full market rent for his property? The rules have been driving landlords out of the business and forcing rents up.

Slowing down the pace of rent inflation is to everyones benefit in the medium to long term. A landlord seeking short term gains is practically an oxymoron.

Besides, why should a landlord expect a tenant to follow the rules laid down for them if the landlord can choose to ignore the rules they should abide?

4ensic15

RandomAccess wrote: »

Slowing down the pace of rent inflation is to everyones benefit in the medium to long term. A landlord seeking short term gains is practically an oxymoron.

Besides, why should a landlord expect a tenant to follow the rules laid down for them if the landlord can choose to ignore the rules they should abide?

Slowing down the rate of inflation is by increasing supply. Trying to slow it down by preventing landlords getting market rent causes them to give up and supply reduces further aggravating price inflation. Landlords don't have to let but tenants have to have somewhere to live. If you make rules landlords don't like they just give up.

athtrasna

RandomAccess wrote: »

I'd say that this is just a misunderstanding of the change that is proposed.

They may be about to add some teeth to the existing rule which is being abused by a select number of landlords where they claim they wish to sell a property as a means of replacing a tenant with a higher paying tenant.

This is almost certainly just closing a loop hole that is being abused. (Many examples have been posted on this forum of late)

It's about securing tenure apparently

GGTrek

The_Conductor wrote: »

4ensic15 wrote: »

This is only a proposal though? Merrion Street have yet to get their hands on it?

Hopefully....... It sounds a bit nutty otherwise.

The Oirechtas Committee on Housing and Homelessness proposal for a Private Landlord is an unmitigated disaster, they want to force full rent control and allow termination of tenancy with no reason only after 10 years, at the same time over 10 years landlord costs and taxes will fluctuate wildly. Imagine a business where its revenues are fixed by law for periods of 10 years, but its costs are left to market and to successive governments whims (these are all socialists ideas at its worst btw) a sure recipe for bankruptcy. Much better to sell and realize the capital gain if you have any.
The link to the proposal that the OP could not post is here:
http://www.oireachtas.ie/parliament/oireachtasbusiness/committees_list/housing-homelessness/
Hopefully the proposal will be stopped before it is too late.

newacc2015

RandomAccess wrote: »

Slowing down the pace of rent inflation is to everyones benefit in the medium to long term. A landlord seeking short term gains is practically an oxymoron.

Besides, why should a landlord expect a tenant to follow the rules laid down for them if the landlord can choose to ignore the rules they should abide?

Explain how slowing down rent inflation benefits everyone. Because the only person it is really benefiting is the tenant and not the Government (losing out on extra taxes from higher rents) and landlords from loss of higher rents.

I dont think you seem to understand basic demand and supply. Higher prices ie higher rents, result in more supply. Artificially lower prices will only reduce supply and force up prices in the future/reduce quality of housing. Rent controls are literally the only thing that most economists agree are counter productive. They have been a serious **** up in any country/city that has introduced them

A tenant doesnt really have any rules to follow. They can be tardy with their rent and there is no recourse. They can not pay rent for months and evicting them take an age. The only rules that exist re for tenancy agreements serve to benefit tenants and tenants only. A tenant can break a lease whenever they feel like it and a landlord cant do anything(there is the BS they can deduct the time waiting to find someone to fill the property rule). There is nothing really in any Irish statue to protect/benefit a Landlord.

I think most Landlords would be happy with more regulations. But they will want more protection from non-paying/anti-social tenants. IMO a non-paying tenant should be on the kerbside within 60 days of not paying rent. Evictions need to be sped up immediately. A landlord who doesnt pay his mortgage on his BTL can lose it within 60 days. Yet a non-paying tenant can take 12 months to evict. Who does the law really favor?