Is the end of the road for landlords coming ?

handlemaster

https://www.theguardian.com/money/2016/dec/09/buy-to-let-landlord-days-numbered-fergus-wilson-tax-changes-mortgage-rules

Ireland follows closely what happens in the UK . In the UK at the moment landlords are leaving the sector. I can see this happening here also landlords have very little recourse when tenants go rouge. The prtb is set up for tenants , the public in general are anti landlords , taxes on rental income is very high. Why would anyone want to be a landlord ? I dont think there are many anti landlord contributers on here who would like to become one.

Spanish Eyes

It's all to make sure that REITS and the like take over the asylum. Professional companies hoovering up stock and making a Corporation Tax profit at 12.5% after all legitimate expenses allowable for a company.

This is the future, and accidental, or one house LLs are going, going, gone soon!

It is far too much hassle letting out a property now. Apart from the tax element, you have the dice loaded in favour of the tenant at all times. Overholding is a killer, and not much you can do about it either it seems.

The ladies in the Dalkey property who haven't paid a penny in rent for months, are a case in point.

newacc2015

Spanish Eyes wrote: »

It's all to make sure that REITS and the like take over the asylum. Professional companies hoovering up stock and making a Corporation Tax profit at 12.5% after all legitimate expenses allowable for a company.

REITs dont pay corporation tax! They are exempt from it. The reasoning is that shareholders shouldnt be double taxed ie their rental profits taxed by corporation tax and then again with tax on dividends. Although the Government has zero issue with double taxation on any other industry.

All the taxation of rental properties in this country is stacked against the small guys. There are dozens of apartment blocks owned by 'charities' which is nothing more than creative accounting/company structure planning by a certain big 5 firm which means these businesses dont pay any tax.

Despite all this we have senators thinking they are doing Gods work by only forcing on restricting the rights of small landlords rather than getting massive landlords to pay their fair share of tax.

Spanish Eyes

newacc2015 wrote: »

REITs dont pay corporation tax! They are exempt from it. The reasoning is that shareholders shouldnt be double taxed ie their rental profits taxed by corporation tax and then again with tax on dividends. Although the Government has zero issue with double taxation on any other industry.

All the taxation of rental properties in this country is stacked against the small guys. There are dozens of apartment blocks owned by 'charities' which is nothing more than creative accounting/company structure planning by a certain big 5 firm which means these businesses dont pay any tax.

Despite all this we have senators thinking they are doing Gods work by only forcing on restricting the rights of small landlords rather than getting massive landlords to pay their fair share of tax.

Oh well, anyway, they have tax advantages more than a non REIT/charity landlord, which is what I meant.

You are correct, there is little advantage to being a single property landlord anymore.

It's a silent Government policy I reckon.

Slydice

So, the idea you're thinking is that Landlords are still gonna be there. Just the big business REIT landlords?

That the small to medium business landlords are gonna be pushed out to make way for them?

Could there be an outcome they are looking for there?

Like is it to encourage big business landlords who have a common standard of accomodation they can measure?

Or maybe just to get all the landlord income money going to certain groups of businesses?

Or like a mix of that or something more complicated?

newacc2015

Slydice wrote: »

So, the idea you're thinking is that Landlords are still gonna be there. Just the big business REIT landlords?

That the small to medium business landlords are gonna be pushed out to make way for them?

Could there be an outcome they are looking for there?

Like is it to encourage big business landlords who have a common standard of accomodation they can measure?

Or maybe just to get all the landlord income money going to certain groups of businesses?

Or like a mix of that or something more complicated?

Small landlords will exist. They exist in Germany despite pension funds and REITs owning a sizeable amount of properties. It will be harder to compete with firms paying no tax and can borrow at 1% from banks as REITs can do.

Small mom and pop landlords have a bad rep in Ireland. Look at the massive on going thread about the landlord who wanted his rent in cash. Most of the comments are calling the landlord dodgy, a tax dodger etc. Yet it is perfectly acceptable for a dodgy vulture fund to pay distressed property for cents on the euro, completely rip off tenants and pay no taxes legally? I guarantee that LL looking for his rent in cash is paying more tax to revenue to stay under their radar than most vulture funds with hundreds of apartments.

It will be interesting to see if the dodgy funds will continue to stay here. I imagine the Irish REITs are here for the long haul. But I wouldnt be too sure about a lot of dodgy American private equity firms.

REITs etc dont care about standards or their tenants. Their only duty of care is to their share holders. Everyone is excited about renting from the new 'professionals' in Ireland, who will change the industry. I imagine their rep will take a hit in the next months when they start doling out the rent increases

April 73

I think the end is coming for small time landlords. Taxed out of business & with laws potentially coming in to make it almost impossible to get tenants out of a property regardless of whether they pay the rent or the landlord wants to sell their property.
Is it a good thing? I don't think so. The REITs care only for profit.
I would not want to be a renter in Ireland in the REIT-dominated-future.

What I don't understand is whether this is a silent but proactive decision being made by government or whether it's pure ineptitude & an inability to plan into the future.

The_Conductor

I imagine that the small landlord who is trying to let residential property on a financial or commercial basis- is on the way out. There will always be a cohort of smaller landlords out there, who, for whatever reason, it makes sense to hold onto a couple of properties- such as those who have inherited property and have an emotional attachment to it, or those who are letting their own PPR while they go abroad for a few years and wish to hold onto it.

Patently- the Irish tax system is setup in a manner to crucify smaller landlords. Tenants only ever see the headline rent they are paying (which is logical enough)- if they sat down and worked out the portion of it which netted to a landlord, they'd be scratching their heads though- despite the runaway soaring rents- it quite simply does not make financial sense to rent in the country.

We can use all manner of reasoning to try to figure how or why we have arrived at a situation where smaller landlords are persecuted- both historical, but also modern day reasons (with-holding of deposits unfairly etc etc)- however, the simple fact of the matter is- landlords are a handy whipping boy for politicians, and of course the public laps it up- sure why wouldn't they- when the headline rent for a 2 bed apartment in a not so salubrious area of Dublin- is now almost 2k per month.

The politicians in Ireland have been very adept at using the old Roman idiom- of dividing and conquering- setting one part of the community against another- allowing them the opportunity to step in and look like the good guys, wholly ignoring the fact that they, either through their actions or inactions, have percipitated the situation in the first instance.......... You can see it all over the place- food inflation- blame the supermarket multiples. Hospital waiting queues- blame bed hoggers. Soaring motor costs- blame the insurance industry. Lack of lending/bank credit- blame the troika. Lack of funds for social welfare increases- blame greedy public sector workers. You notice a trend here- its always setting one part of our communities against another- its all soundbites- and regardless of what happens, its always a politician standing on the sidelines singing about how great they are..........

Small scale landlords will never fully leave the sector- however, as a group- they certainly will be gutted.

Kapips88

Well I was looking to get into property investment.
But after researching the state of affairs for the small property investor in Ireland and also the constant moving of the goal posts and stacking of the deck against the LL ...
Well, Im out. Wouldnt become a LL in Ireland with the way things are now. And its only worse that it is getting.

The_Conductor

Kapips88 wrote: »

Well I was looking to get into property investment.
But after researching the state of affairs for the small property investor in Ireland and also the constant moving of the goal posts and stacking of the deck against the LL ...
Well, Im out. Wouldnt become a LL in Ireland with the way things are now. And its only worse that it is getting.

The issue for a lot of people who do have a small lumpsum to invest- is a lack of viable alternates- there quite simply aren't the range of investment opportunities that normally one would expect. When you have a net cost associated with leaving money on deposit- it makes sense to try to make it work for you- however, the Irish residential property sector- unless you want to buy units from one of the REITs, is not a viable investment option any longer.

Roger_007

It was only when I became an 'accidental landlord ' that I realised what a raw deal landlords get. 3 years ago, I inherited a small two-bedroomed house in a commuter town. I spent about €10k upgrading and reequiping it and I let it out to a young family for €600 per month.
When I paid all the overheads such as property tax, maintenance costs, insurance etc and then paid the income tax, PRSI, USC, I am left with a net income of about €50 per week.
The tenants are now moving on and there is absolutely no way I am going to let the house again. I will keep it unoccupied until I can can sell it for a reasonable price.
I'm sure I'm not the only landlord to choose this course of action and may explain why the number of properties available for rent is declining.

Kapips88

Mate of mine in a similar situation.
When I was asking his advice about getting into property investment he told me that he was only making a small amount after all the overheads and now keeps it empty.
But now during the summer months he lets it out on AirBnB instead and makes from that in the summer what it used to take him over a year to make as a regular rental.
And he said that AirBnB guests are much easier to manage and leave the place as good as they got it. He only lets for 1 week as the minimum period, but he got a few two weeks and one 3 week on AirBnb last summer.
He also does this swap thing with other Airbnb hosts where you give your place to them for two weeks whenever they want. and in return they give theirs to you for a two weeks whenever you want (I suppose it could be any amount of time you agree really). He got a couple of holidays to Spain and Italy this year out of it. Only had to pay for flights. He has it rented for two weeks over Christmas too this year.
All in all he said it was very much easier than he expected.

I dont know all of the ins and outs of it, but the gist of the conversation was, less work (only 4 months instead of a year of renting), less risk, more money after taxes.
Basically its AirBnB short term lets Vs Regular handcuffs type let.

Anyway just mentioning it because it might be worth looking at if you already have a property lying idle because of the handcuffs put on you as a LL. At least you will get something back from it but it remains totally under your control.

handlemaster

http://m.independent.ie/irish-news/reforms-to-tackle-rental-insecurity-35284254.html


The rental reform is all focused on the tenant as usual. When will they cop on that if they keep going like this landlords will be drive out of the business and all social housing will go back on the state. If they just made it easier to get rid of bad tenants and lowered the tax take on landlordsI think rental prices increases would ease.

road_high

Does the revenue in all fairness take 50% of all rental income? What if you have a mortgage equal or close to the rental money? Which I'd say is pretty normal.

handlemaster

road_high wrote: »

Does the revenue in all fairness take 50% of all rental income? What if you have a mortgage equal or close to the rental money? Which I'd say is pretty normal.

your on a loss. if u get 100 per month in rent abd your mortgage is 1000 you pay tax on the 100 still.

sunnysoutheast

road_high wrote: »

Does the revenue in all fairness take 50% of all rental income? What if you have a mortgage equal or close to the rental money? Which I'd say is pretty normal.

The landlord pays income tax, PRSI and USC at their marginal rate on the profits from letting (F&F depreciation is not allowable for USC purposes).

You can only claim 75% of the mortgage interest and none of the capital repayments. You can't just net off the mortgage against the gross rent as many still seem to think. Property tax is still not an allowable expense.

kupus

Of course it's the end for landlords. there is specialist companies worldwide that trade in being landlords.
Why do you think everything favors the tenants in the house?
Easy,

It's to get rid of the landlords to replace them with these companies.

Why do I say that. Because its exactly what I would do if I had very very deep pockets and could take a hit for 10-15 years.
I would start with the government and get them to push for more rights for tenants.
Then as the landlords with 1-5 houses start getting pissed off with tenants rights and start pulling out of the market. Id be there to buy them.
Then over the course of a few years, Id have enough estates to go the the govenrment and say HEY about those rights, yeah they need a bit of loosening, you know how it is. Yeah I own 200,000 apartments that you get tax on every year. Oh yeah you want to go to Monaco for a holiday mr government offal. It just so happens I own a villa there. heres the keys for the house and the yacht.
Oh your wife is a lawyer, why didnt you tell me that sooner I need a lawyer for my dealings in Ireland.

And there you go. Quite easily done. Bye Bye old Landlords, hello new ones.

Wanderer78

I like this idea of co-operative building, there's just too many middle men in the housing industry. The housing situation isn't working for many tenants and landlords, what a mess

Lumen

sunnysoutheast wrote: »

The landlord pays income tax, PRSI and USC at their marginal rate on the profits from letting (F&F depreciation is not allowable for USC purposes).

You can only claim 75% of the mortgage interest and none of the capital repayments. You can't just net off the mortgage against the gross rent as many still seem to think. Property tax is still not an allowable expense.

It would be absurd for capital repayments to be an allowable expense. Why should they be? They're essentially private savings.

newacc2015

The_Conductor wrote: »

The issue for a lot of people who do have a small lumpsum to invest- is a lack of viable alternates- there quite simply aren't the range of investment opportunities that normally one would expect. When you have a net cost associated with leaving money on deposit- it makes sense to try to make it work for you- however, the Irish residential property sector- unless you want to buy units from one of the REITs, is not a viable investment option any longer.

A lack of alternatives is so true. IMO I think investment property is so popular here, as peopel dont like to have a private pension. I know a lot of people who would have several hundred thousand sitting in a bank account. They dont want to invest in a private pension. They are afraid to do so as the Government has already decided when it feels like it, it will take a share of your pension. They also dont like the fees associated with pensions in Ireland.

Ideally the state needs to set up a private pension company that offers low cost, easy to understand pensions. Guarantee that they will be protected from future Governments greed. These pensions could directly buy and operate residential properties like German pensions do.

But there is no desire in Government to sort out the impending pension disaster.

The_Conductor

Lumen wrote: »

It would be absurd for capital repayments to be an allowable expense. Why should they be? They're essentially private savings.

To be brutally honest- I don't think that debt of any nature- never mind capital repayments, should be an allowable expense. However- I think this should be across the board. I think it is a bizarre concept that the cost of borrowings should be an allowable expense- for literally anyone. The Economist have had two seminars this year on this very concept- and how market manipulating it is (globally- not necessarily in an Irish context- but equally applicable to the Irish residential letting market).

Killergreene

Mate has a gaf worth 100k in college area. Makes circa 10k in rent per year. If he makes 3k net after everything then he's still making 3% on investment which u don't make leaving money sitting in the bank

newacc2015

Killergreene wrote: »

Mate has a gaf worth 100k in college area. Makes circa 10k in rent per year. If he makes 3k net after everything then he's still making 3% on investment which u don't make leaving money sitting in the bank

There is the risk of the tenants not paying their rent and him getting nothing for over a year. If he only has €3k profit at the end of the year. If he needs to replace a washing machine he has only made €2.5k after tax profit or if he needs to replace a kitchen he will be saving for it for years.

3% is hardly anything for the work involved. He would make more investing in an REIT

handlemaster

newacc2015 wrote: »

Killergreene wrote: »

Mate has a gaf worth 100k in college area. Makes circa 10k in rent per year. If he makes 3k net after everything then he's still making 3% on investment which u don't make leaving money sitting in the bank

There is the risk of the tenants not paying their rent and him getting nothing for over a year. If he only has €3k profit at the end of the year. If he needs to replace a washing machine he has only made €2.5k after tax profit or if he needs to replace a kitchen he will be saving for it for years.

3% is hardly anything for the work involved. He would make more investing in an REIT

agreed with you a boiler would cost 2500 euro. Washing machine 400 etc . wouldnt be long eating into the 3k not to mention time spend on the property

handlemaster

What have the landlord associations etc been putting into the new goverment housing policy .. what have they been asking for ?

Thargor

Must say Im coming around to the conspiracy side of things aswell, seems to be happening everywhere, REITs are on the rise all over wih rent creeping up no matter what the broader economy does, plus wage stagnation.

sunnysoutheast

Lumen wrote: »

It would be absurd for capital repayments to be an allowable expense. Why should they be? They're essentially private savings.

I wasn't advocating that they should be. I was merely answering the previous poster.

Roger_007

Roger_007 wrote: »

It was only when I became an 'accidental landlord ' that I realised what a raw deal landlords get. 3 years ago, I inherited a small two-bedroomed house in a commuter town. I spent about €10k upgrading and reequiping it and I let it out to a young family for €600 per month.
When I paid all the overheads such as property tax, maintenance costs, insurance etc and then paid the income tax, PRSI, USC, I am left with a net income of about €50 per week.
The tenants are now moving on and there is absolutely no way I am going to let the house again. I will keep it unoccupied until I can can sell it for a reasonable price.
I'm sure I'm not the only landlord to choose this course of action and may explain why the number of properties available for rent is declining.

I agree that it's very little to be making and the tax burden is way too much for a LL but I can't see the point in leaving it idle when you are making profit. Even 200'euro a month still will cover your petrol for the month maybe or a good chunk of your food shopping that will have to come from your wages now instead.

Not only that but it will cost you things like property tax anyway and you will have costs like heating and maintainence still.

Lumen wrote: »

It would be absurd for capital repayments to be an allowable expense. Why should they be? They're essentially private savings.

Tax should be on profit only imo after all expenses including mortgage repayment.

sunnysoutheast

Ethan Rough Saber wrote: »

I agree that it's very little to be making and the tax burden is way too much for a LL but I can't see the point in leaving it idle when you are making profit. Even 200'euro a month still will cover your petrol for the month maybe or a good chunk of your food shopping that will have to come from your wages now instead.

Not only that but it will cost you things like property tax anyway and you will have costs like heating and maintainence still.

Why take on all the risks and hassle for such a meagre return, plus the difficulties of marketing and selling with a tenant in place rather than vacant possession.

FishOnABike

Ethan Rough Saber wrote: »

Tax should be on profit only imo after all expenses including mortgage repayment.

Sure why not give everybody an asset worth several hundred thousand for free. The government could solve the housing crisis in one fell swoop.:rolleyes:

FishOnABike

FishOnABike wrote: »

Sure why not give everybody an asset worth several hundred thousand for free. The government could solve the housing crisis in one fell swoop.:rolleyes:

The current levels of taxation on rental income are not sustainable. Either there needs to be an increase in allowable expenses or a reduction in the rate of tax (a flat rate of tax on rental income rather than it being taxed at your marginal rate for instance).