Renting in RPZ - landlord has decided to refurb so he can increase rent

pilly

Grumpypants wrote: »

I've said it time and time again, all they need to do to fix the rental market is make the tax rate on rental income under 10K 0% (similar to the 14K limit for Rent a room). If you earn 10,001 you pay the 60ish% on it all.

Overnight rents would drop to €833 a month across the board.
Most renters would get a discount from what they currently pay, so they would be happy and have more to spend/save.
Most landlords would take home more money, so they would be happy.
It would increase the amount of houses on the market as the accidental landlords who have left the market because they can't break even would flood back.

But no we get dumb 4% caps that screw everyone.

It's actually a brilliant idea.

bmwguy

Grumpypants wrote: »

I've said it time and time again, all they need to do to fix the rental market is make the tax rate on rental income under 10K 0% (similar to the 14K limit for Rent a room). If you earn 10,001 you pay the 60ish% on it all.

Overnight rents would drop to €833 a month across the board.
Most renters would get a discount from what they currently pay, so they would be happy and have more to spend/save.
Most landlords would take home more money, so they would be happy.
It would increase the amount of houses on the market as the accidental landlords who have left the market because they can't break even would flood back.

But no we get dumb 4% caps that screw everyone.

Yes but there would be no taxation income. That's why it won't happen. But a good idea if they prioritised housing over taxation (which they don't)
Although that said, they allow it for rent a room scheme but that's for people to help them pay mortgage on primary residence, not investments.
It would push up house prices too if investors could get tax free returns.
So it's not going to happen or even should happen.

pilly

bmwguy wrote: »

Yes but there would be no taxation income. That's why it won't happen. But a good idea if they prioritised housing over taxation (which they don't)

Agree, but it's an extremely unfair situation where an accidental LL is taxed over 50% and a corporation 12%.

And remember 70% of LL's in Ireland have only 1 or 2 properties.

TheDoc

Zulu wrote: »

"Accidental" landlord.

Yes I am. I'm going to have to boot out my tenants. They are also going to be -vely impacted. And good luck to them renting a 2 bed city centre apartment.
This is because the Government meddled. Hed they not, I wouldn't be leaving my property, and I wouldn't be evicting my tenants.

Can you seriously not see the impact and problems this all causes?

These are the sort of issues that on the surface I'd react with "what are you complaining about" but at the same time appreciate there is probably complexities we all wont be privy too.

At the same time, claiming you will be made homeless is a bit of a stretch considering you have an asset worth six figures, in your possession. And yes it's unfortunate there is a knock on effect to your current tenants, but they are hardly up **** creek if they are two people looking for accomodation.

If your plan was getting a mortgage this year, NOT INCLUDING your current asset, sorry but you really arn't anywhere near the pits like some of us.

I'm supporting a family of three on a single income, had a proper full on breakdown in JAnuary due to the stress of the situation with having my home ownership prospects wiped out overnight by the Central bank. I was getting mortgage approval beforehand on my own, with no issues. Repayments lower then any rent I would pay. I decided to hold off and be financially prudent. Then overnight, gonzo.

I've been absolutely blessed, that my grandfather has asked me to take his house so he can move into a home with my grandmother, and would love for me to have my family there. He's a shrewd man for being in his 90's, and knows this is an incredible change for me, all of a sudden I can save money, I can have the prospect of home onwership again, have a life and lose the crushing stress of financial burden.

So while I'm not disregarding your situation, and I have serious beef with how the government have attempted to address the rent issues and address house pricing, I think you are just venting a frustrating situation you are having, but trying to paint it to be more dramatic as it is.

Grumpypants

bmwguy wrote: »

Yes but there would be no taxation income. That's why it won't happen. But a good idea if they prioritised housing over taxation (which they don't)
Although that said, they allow it for rent a room scheme but that's for people to help them pay mortgage on primary residence, not investments.
It would push up house prices too if investors could get tax free returns.
So it's not going to happen or even should happen.

I forgot the bit that this would only be for one rental property. So mainly for accidental/small time landlords. If you had two or more properties the second house + would be taxed at the normal rate. Even those with two houses would see a benefit from the saving on the first house.

Samuel T. Cogley

I wouldn't mind if the government had tried to fix anything, they haven't - it's a cynical populist vote grabbing exercise. If they were serious about getting the situation under control they'd do something about LLs tax or reintoruce some for of tax reflief for tenants.

Zulu

TheDoc wrote: »

These are the sort of issues that on the surface I'd react with "what are you complaining about" but at the same time appreciate there is probably complexities we all wont be privy too.

At the same time, claiming you will be made homeless is a bit of a stretch considering you have an asset worth six figures, in your possession. And yes it's unfortunate there is a knock on effect to your current tenants, but they are hardly up **** creek if they are two people looking for accomodation.

If your plan was getting a mortgage this year, NOT INCLUDING your current asset, sorry but you really arn't anywhere near the pits like some of us.

There will always be people worse off, that's not the point. I'm not trying to win the sympathy olympics.
The point is that because of this ill conceived meddling by the government, two families are facing upheaval. That's the issue.

I'm supporting a family of three on a single income, had a proper full on breakdown in JAnuary due to the stress...

I too am supporting a family on a single salary. Look as I said, I'm not baying for sympathy. In the grand scheme, I'm alright Jack! But I work hard to be where I am. I was playing by the rules. Then the simpletons changed the rules, and have shafted us.

True, we're not going to be in a hotel or a car or a doorway, but presently, unless I evict a family, we don't have a place to live in September caused directly by an interference that is suppose to protect tenants.

I think you are just venting a frustrating situation you are having, but trying to paint it to be more dramatic as it is.

Well yes, I am venting; as I set out at the start

Zulu wrote:

"...just to share my experience and anger..."

LirW

Very stupid but genuine question: Would it make that much of a difference if you apply for a mortgage at the end of the year or could you do it now?
I'm just pointing out even if you apply for a mortgage at the end of the year, realistically it's going to take a good few months until you're holding the key to your new home.

Fian

Grumpypants wrote: »

I've said it time and time again, all they need to do to fix the rental market is make the tax rate on rental income under 10K 0% (similar to the 14K limit for Rent a room). If you earn 10,001 you pay the 60ish% on it all.

Overnight rents would drop to €833 a month across the board.
Most renters would get a discount from what they currently pay, so they would be happy and have more to spend/save.
Most landlords would take home more money, so they would be happy.
It would increase the amount of houses on the market as the accidental landlords who have left the market because they can't break even would flood back.

But no we get dumb 4% caps that screw everyone.

Would distort the market though, crappy apartments in a bad location would be renting for exactly the same price as nice ones in prime locations.

Grumpypants

Fian wrote: »

Would distort the market though, crappy apartments in a bad location would be renting for exactly the same price as nice ones in prime locations.

Would that not be a good thing? That you could rent a nice apartment for the price of a crappy one? Rather than renting a crappy one for the price of a nice one, which is what we currently have.

Zulu

LirW wrote: »

Very stupid but genuine question: Would it make that much of a difference if you apply for a mortgage at the end of the year or could you do it now?

Not stupid at all. I'm self employed, so I need a minimum of 2 years accounts. Which I won't have until the end of the year. Some banks have suggested making an exception, but only towards the end of the year (hence around October).

Graham

Grumpypants wrote: »

I've said it time and time again, all they need to do to fix the rental market is make the tax rate on rental income under 10K 0% (similar to the 14K limit for Rent a room). If you earn 10,001 you pay the 60ish% on it all.

Side-effect of this would be a large gap in standards between apartments that rent for 10k p.a. and 25k (ish) p.a.

No incentive for landlords under 10k to spend a penny on the property, pushing standards down. Disincentives for rentals in the 10k - 22k region.

Major incentives to split family houses into smaller and smaller 1 bed flats.

It's the sort of fiddling in the market that has all sorts of other knock-on effects that people don't consider.

CIARAN_BOYLE

Grumpypants wrote: »

Would that not be a good thing? That you could rent a nice apartment for the price of a crappy one? Rather than renting a crappy one for the price of a nice one, which is what we currently have.

The thing is the quality of the nice apartments would decline since there is no reason to maintain them.

Also it would be a crap shoot. 10,000 places available for 833 and luck decides if you get a good one or a bad one.

Claw Hammer

Grumpypants wrote: »

I forgot the bit that this would only be for one rental property. So mainly for accidental/small time landlords. If you had two or more properties the second house + would be taxed at the normal rate. Even those with two houses would see a benefit from the saving on the first house.

Sure, and the clever dicks would soon transfer the second property to their college going children and so the tax is avoided. What is needed is to increase supply in the short and long term. Short term means getting better use of existing buildings, temporary buildings and encouragement to more efficient use of existing buildings. Allowing rent received to be netted against rent paid for tax purposesn would encourage downsizers, without forcing empty nesters to dispose of an asset and endure the hassle of househunting.

Pelvis

Being forced to move out of your rented property, into your own property, while you save to buy another property.

I will pray for you.

GhostyMcGhost

CIARAN_BOYLE wrote: »

The thing is the quality of the nice apartments would decline since there is no reason to maintain them.

Also it would be a crap shoot. 10,000 places available for 833 and luck decides if you get a good one or a bad one.

Plus I think accidental landlords leaving the market long term is only a positive thing

There are too many that don't know the rules and also either need to charge high rents to make a profit or are pure chancers. It's upward pressure on rents

Zulu

Pelvis wrote: »

I will pray for you.

Thanks I appreciate it.

Manion

Wont this significantly save you money in the short term? The rental income you had from your own apartment is taxable. Ignoring deductibles you'd have wanted to be paying less than 900 euro for your current property. It's a tough situations no doubt. Those apartments aren't great for families, but people make all sorts of sacrifices to be able to afford to buy property. It could be this is a good move? You've also got a fairly long period to find alternative accommodation.

Anyway, this is exactly the type of thing the government wants for this policy. Before the policy the landlord would have simply increased the rent without an investment in the property. Now he has to refurbish to property. Society as a whole is better off even if the outcome for individuals is worse.

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This post has been deleted.

trobbin

The polices introduced by government over the last few years regarding property is baffling to a logical mind. All these polices have been designed to drive up the price of property and increase household debt.

As properties have increased in value the balance sheets of the banks are looking a lot better. You'd think the government owed the banks or something! Oh wait:)

So could it be when these balance sheets are looking great again the government will sell them to private investors once again? No way. I wonder if when these private investors acquire the Irish banks they'll start to increase rates? Surely not.

Not to worry people. Keep outbidding, I'll have the violin ready.

Bredabe

Ive been out of the rental market in Ireland since '11, so I have a question for current landlords,
rents are now as high as they have been according to media, no, to my knowledge raises in interest rates and yet landlords here and my last one say they not making any money, How is that?
Putting my a/c hat on, how with high rents like the ones family are paying are these costs a tenant wouldn't know about not be covered?

estee11

Manion wrote: »

Wont this significantly save you money in the short term?

i think if i am not mistaken, this issue may change things how the bank will look at granting the mortgage for a new build (if this is the case). As 1800 would be seen as nice income by the bank and now this will be gone. surely there are taxes and cost of current renting involved, but again it will have implications, whether positive or negative its hard to tell with so little info and it is not to answer it here.

Graham

Manion wrote: »

Society as a whole is better off even if the outcome for individuals is worse.

Forcing somebody to refurbish a property to achieve market rent is quite likely to drive standards up. The downside it this is also likely to drive prices higher, particularly in a supply-constrained market. Not a good scenario for those at the lower-end of the rental market.

Samuel T. Cogley

Graham wrote: »

Forcing somebody to refurbish a property to achieve market rent is quite likely to drive standards up. The downside it this is also likely to drive prices higher, particularly in a supply-constrained market. Not a good scenario for those at the lower-end of the rental market.

Exactly! People who can afford these rents can afford mortgages, so precisely no one is better off, except maybe the trades people doing the work.

It was the same with bed sits. Everyone is better off they're gone. Are they my arse! We need solutions not pissing in the wind winning votes from the terminally unimaginative.

Manion

estee11 wrote: »

i think if i am not mistaken, this issue may change things how the bank will look at granting the mortgage for a new build (if this is the case). As 1800 would be seen as nice income by the bank and now this will be gone. surely there are taxes and cost of current renting involved, but again it will have implications, whether positive or negative its hard to tell with so little info and it is not to answer it here.

It's not gone though. The bank when doing an assessment will view that as an both an asset and an income source.

Graham wrote: »

Forcing somebody to refurbish a property to achieve market rent is quite likely to drive standards up. The downside it this is also likely to drive prices higher, particularly in a supply-constrained market. Not a good scenario for those at the lower-end of the rental market.

....... wrote: »

This post has been deleted.

Graham pretty much covered it. It's a legitimate public policy decision that there is a need to drive up standards of the housing stock in Ireland. The introduction of BER for instance in an example of this type of policy which has been hugely beneficial as a whole for society. Another example is the banning of bedsits. The negative impact is that at the bottom end of the market people may be left with no option. Getting rid of bedsits without a viable alternative simply lead to increased homelessness and is an example of purely implemented policy. You would agree that this situation is not that though. Especially as it's been established the investment simple would not have happened under the old system while the rent increase would have happened regardless.

Grumpypants

Graham wrote: »

Side-effect of this would be a large gap in standards between apartments that rent for 10k p.a. and 25k (ish) p.a.

No incentive for landlords under 10k to spend a penny on the property, pushing standards down. Disincentives for rentals in the 10k - 22k region.

Major incentives to split family houses into smaller and smaller 1 bed flats.

It's the sort of fiddling in the market that has all sorts of other knock-on effects that people don't consider.

I don't see why there would be a disincentive for landlords to not invest in their properties.

To give an example I rent out a nice family home to a nice family for 600 euro a month, (about 7K a year). That 7K wiped out by tax, maintenance and the mortgage. I actually make a loss of a couple of grand a year.

It isn't that I don't want to invest heavily, I simply can't afford to. If I had 7K tax free rental income then I could pay the mortgage and still have money to invest into the property, I could even give them a reduction in rent and still not make a loss.

If this was the norm and there was a large supply of nice family homes for under 10K then landlords would have to keep standards high to secure good tenants and the crap would fall out of the market.

The only reason we have high cost crap properties is because people are desperate for housing, and the landlords need to charge high rents to not make a huge loss.

Graham

Manion wrote: »

Graham pretty much covered it. It's a legitimate public policy decision that there is a need to drive up standards of the housing stock in Ireland.

While superficially, driving up standards would appear to be a good thing. I would argue it can only be considered a good policy if there are affordable properties introduced at the bottom end of the market for those not in a position to afford the newly improved middle-to-upper end properties.

Grumpypants

Bredabe wrote: »

Ive been out of the rental market in Ireland since '11, so I have a question for current landlords,
rents are now as high as they have been according to media, no, to my knowledge raises in interest rates and yet landlords here and my last one say they not making any money, How is that?
Putting my a/c hat on, how with high rents like the ones family are paying are these costs a tenant wouldn't know about not be covered?

Very simple really. (Very rough figures)

Lets say you charge 2 grand a month rent (Really high) = 24K
You pay tax on that of about 10K. That leaves income at 14K.
Average cost in maintenance & Fees for a property like that = 4K. Income down to 10K.

Then most likely they have a mortgage on that of 1-1500. So around 12-18K.

So therefor a loss of 2-8K a year on the property.

Graham

Grumpypants wrote: »

I don't see why there would be a disincentive for landlords to not invest in their properties.

because under this proposal a house at 833 tax free would only make a sound upgrade investment if the new rent were significantly in excess of 1666 (taxed). No point spending 20k on an upgrade if the new rent is obliterated by 50% tax/deducations.

There is already pretty much no financial incentive for landlords at rents of less than 833 to upgrade.

E.g. a rural house currently renting at 600/month is never going to be a candidate for a few upgrades because that same house with 20k worth of improvements is only likely to see 100ish increase in rent. The payback period of the improvements is going to be longer than the economic lifetime of those improvements.

TimeToShine

In what world does a family of 4 "squeeze into" a 2 bed apartment? Even with the dog that is plenty of space.