Does putting in a new kitchen count as "substantial refurbishment"?

FishOnABike

__..__ wrote: »

You do make it sound so easy.
You must be a millionaire by now.
Whats the secret?

I wish I was!

It could be quite easy to bankrupt yourself in the process if you haven't considered the need for ongoing capital input to what should be a long term investment.

Just like I don't expect to see a positive cashflow on payments into a pension scheme until the investment matures, if I ws investing in property I would want to make sure I had enough cash at hand to manage paying for the investment until it either matures or I can cash out early at a profit.

I would not be banking on a positive cashflow, not in the early years anyhow, possibly only after a few years when inflation had overtaken any mortgage repayments.

alias no.9

_Dara_ wrote: »

Intuitively... yes? Arguing that the change doesn't have to be a improvement is one for the people who love to trot out sentences that start with "Well, technically..." before the eyes of everyone in the vicinity glaze over.

I mean, you could argue that the change doesn't have to be an improvement if a dispute arose but I wouldn't fancy the chances of anyone who tries that.

The point I'm making is that ambiguous legislation is flawed legislation.

The two positive aspects of the current legislation are that it was introduced at the stroke of a pen and serves sitting tenants reasonably well.

It has however thrown prospective tenants under the bus because sitting tenants are less likely to move and landlords simply cannot advertise properties on the open market at the capped rates due to the volume of enquiries they'll have to field. Available properties are no longer being listed on Daft or other services, they're now going on word of mouth and personal recommendations.

On the landlord side, those who've led the charge to increase rents have been rewarded with a lock in at above average rates while anyone who didn't take the piss can't even openly advertise their properties when they come vacant for reasons mentioned above.

Personally I think regulation was necessary but the panicked, ill thought out regulation we got is part of the current problem. We have rents recorded on RTB registration, we have floor areas and energy performance on BER, both mandatory for residential lettings, benchmark areas on a €/sq.m basis with a possible offset for energy rating, then restructure the tax code to penalize those leading the charge with high rents to remove the incentive for runaway rental markets. If you take away the legally mandated arbitrary disparity in allowable rents for comparable properties, it may even be possible to bring properties to the market in a civilized manner.

Graham

FishOnABike wrote: »

It could be quite easy to bankrupt yourself in the process if you haven't considered the need for ongoing capital input to what should be a long term investment..

Of if you get a non-paying tenant that takes 2 years to evict.
Or if you find yourself stuck at substantially below market rate after doing a previous tenant a good-turn.
Or if your finances haven't yet recovered from the ruinously low-rents of the GFC.
Or if your not forced to upgrade the accommodation to bring the property in-line with HAP requirements or face a discrimination action.
Or if the LA tells your over-holding tenant to stay-put after you've gone sale agreed.
Or if the local housing charity tells your non-paying tenant to stay-put.
Or if you're a reluctant landlord and your bank start repossession proceedings.
Or if the government move the goalposts again.

Or anyone of several hundred scenarios I haven't covered arise.

__..__

.

Browney7

Maya Defeated Meadow wrote: »

But this is not going to be good enough for most investors and without investors we have the issues we now have with supply issue.

If its not an attracitive long term investment and day to day business people are not going to get involved and why would they.

I really believe there needs to be a drastic reducion in the taxes paid by LLs or allow the full capital repayment of a mortgage to be an expense against tax. This along with giving more power to LLs to choose their tenants, get rid of bad tenants etc and we will attract a lot of people back into the game.

Developers and builders also need to be incentivised with tax breaks to encourage building.

Can you point to any jurisdiction in the world where this is currently allowed?

An investor who purchased a property 100% in cash with a ten year investment horizon would be totally disadvantaged versus an investor who borrows the expected rent over that time and purchases the rest with his own cash. Repaying a bank money you didn't have in the first place is not an expense and to think otherwise is bananas.

The_Conductor

rawn wrote: »

Asking for a co-worker, his LL wants to raise the rent by more than 50% in January, she said she's putting in a new kitchen and i think painting the house? The house is in a RPZ.

The short and simple answer is- a new kitchen, and a repaint- does *not* constitute a 'substantial refurbishment'.

wordofwarning

Lumen wrote: »

If you want a fixed income then buy fixed income.

Who do you think will want to be a landlord, when there is no limit on the losses you can incur during an economic downturn, but a cap on the potential upside during economic growth? Who do you think will leverage up on property, take on potentially massive losses for very little gain?

This is 2017, people are not financially illiterate anymore. If property is not attractive, people will pour money into index funds where there are not a ton of people screaming for them to be regulated. Landlords will sell up and more their capital to makes with no excessive regulation.

Browney7

Browney7 wrote: »

Can you point to any jurisdiction in the world where this is currently allowed?

An investor who purchased a property 100% in cash with a ten year investment horizon would be totally disadvantaged versus an investor who borrows the expected rent over that time and purchases the rest with his own cash. Repaying a bank money you didn't have in the first place is not an expense and to think otherwise is bananas.

No it wouldn't be fair on people without a mortgage so overall a reduce debt tax rate would be a far better option. Say a 20% cap on taxation on rental income regardless of how much money you earn from other sources. Taxing rental income at your marginal rate is madness and no wonder it drives so many people to dodge tax as much as they can.

awec

Maya Defeated Meadow wrote: »

No it wouldn't be fair on people without a mortgage so overall a reduce debt tax rate would be a far better option. Say a 20% cap on taxation on rental income regardless of how much money you earn from other sources. Taxing rental income at your marginal rate is madness and no wonder it drives so many people to dodge tax as much as they can.

Are there any other groups of people you think should get special tax breaks or is it only landlords who are deserving of paying lower income tax than everyone else?

awec

awec wrote: »

Are there any other groups of people you think should get special tax breaks or is it only landlords who are deserving of paying lower income tax than everyone else?

The are already "groups of people" who get tax breaks even in the area of renting property. For example the letting of farm land is tax free (up to a very high threshold) and the rent a room scheme.

awec

Maya Defeated Meadow wrote: »

The are already "groups of people" who get tax breaks even in the area of renting property. For example the letting of farm land is tax free (up to a very high threshold) and the rent a room scheme.

Rent a room is capped pretty low. It's also not an investment.

I'll ask again, why do you think landlords should contribute less to the state than someone who works in a shop, or someone who works in an office? Why do you feel them paying the normal amount of tax on their income, like pretty much every other citizen, is "madness"?

awec

awec wrote: »

Rent a room is capped pretty low. It's also not an investment.

I'll ask again, why do you think landlords should contribute less to the state than someone who works in a shop, or someone who works in an office? Why do you feel them paying the normal amount of tax on their income, like pretty much every other citizen, is "madness"?

Well it's not capped that low, 14k net is a lot more than most LLs are getting gross (if you can get the full benefit of the rent a room). And in ways it can be an investment many buy houses with the full intention of covering the mortgage by renting spare rooms.

I could invest in farm land tomorrow and earn up to 40k per year tax free leasing it.

There are many other examples of tax exemptions in different sectors. Renting property needs to be very attractive for people to do it, there is risk and people doing it deserve to be rewarded for this by making good money through paying less tax. The alternative is lack of housing through no supply as being a LL is just not attractive to people.

_Dara_

Maya Defeated Meadow wrote: »

The are already "groups of people" who get tax breaks even in the area of renting property. For example the letting of farm land is tax free (up to a very high threshold) and the rent a room scheme.

The rent a room scheme is to encourage people to make use of the extra space in their principal residence.

Sole traders don't get a lower tax rate, why should landlords? Sole traders take on risk too.

And capital repayments are a liability, not an expense. Accounting 101.

For all your complaining, you don't seem very put off becoming a landlord.

awec

Maya Defeated Meadow wrote: »

Well it's not capped that low, 14k net is a lot more than most LLs are getting gross (if you can get the full benefit of the rent a room). And in ways it can be an investment many buy houses with the full intention of covering the mortgage by renting spare rooms.

I could invest in farm land tomorrow and earn up to 40k per year tax free leasing it.

There are many other examples of tax exemptions in different sectors. Renting property needs to be very attractive for people to do it, there is risk and people doing it deserve to be rewarded for this by making good money through paying less tax. The alternative is lack of housing through no supply as being a LL is just not attractive to people.

That is still not an investment.

You are comparing apples and oranges. Landlords are getting someone else to pay off their asset, it is not as simple as counting the money they put in their pocket each year. It is supposed to be a long term investment, rent-a-room is not.

Dropping the tax band is going to have no real impact on supply. Where are all these properties that are suddenly going to be let out? Are you saying there are people out there hoarding property and keeping it vacant because they would rather have no income than taxed income? I think not.

pwurple

_Dara_ wrote: »

Genuine question here. Say that a magic wand was waved over Dublin and supply massively increased. Rents decreased dramatically bringing market rate below the RPZ caps. You are now able to fully charge what the market will bear but it's lower than the current cap. Would you still leave the residential rental market?

Couldn't give a toss what happens in Dublin. None of my property is there.

And no, because if the RPZ ridiculousness was still in place then I cannot differentiate my property (high end, long term tenants, unfurnished) from the student kip three buildings down. I cannot give a discount to miss perfect tenant there ten years, because if they move out, I'm then stuck at that rent for the next tenant who I have no relationship with. I do not have the freedom to manage my own affairs.

_Dara_

No need to be brusque, pwurple, I made an assumption about Dublin, no big deal.

Lumen

wordofwarning wrote: »

This is 2017, people are not financially illiterate anymore. If property is not attractive, people will pour money into index funds where there are not a ton of people screaming for them to be regulated. Landlords will sell up and more their capital to makes with no excessive regulation.

Index funds hold assets which are very heavily regulated, same as REITs. The rise of private equity is partly a reaction to what's perceived as excessive regulation of publicly listed companies. There is no nirvana of zero regulation to which landlords can flee, other asset classes have layers of professional management to deal with regulation that suck out some of the yield.

In any case, back on topic, here's a live example:

http://www.boards.ie/vbulletin/showthread.php?t=2057791176

lcwill

alias no.9 wrote: »

It has however thrown prospective tenants under the bus because sitting tenants are less likely to move and landlords simply cannot advertise properties on the open market at the capped rates due to the volume of enquiries they'll have to field. Available properties are no longer being listed on Daft or other services, they're now going on word of mouth and personal recommendations.

Personally I think regulation was necessary but the panicked, ill thought out regulation we got is part of the current problem. We have rents recorded on RTB registration, we have floor areas and energy performance on BER, both mandatory for residential lettings, benchmark areas on a €/sq.m basis with a possible offset for energy rating, then restructure the tax code to penalize those leading the charge with high rents to remove the incentive for runaway rental markets. If you take away the legally mandated arbitrary disparity in allowable rents for comparable properties, it may even be possible to bring properties to the market in a civilized manner.

My agent recently advertised a Dublin city centre one bed apartment of mine at below market rates on Daft. They got 35 applications in 30 minutes then took it down.

Agree on setting benchmark rents by square metre, adjusted based on quality of accomodation and services provided, and richly rewarding landlords who set their rents within those limits with high levels of deductibles and low tax rates. In the end of the day the landlord will end up with the same cash in his pocket, maybe even more, the tenant puts less pressure on his employer for raises, and has more cash to spend in local shops and pubs.