Amateur v Professional Landlords.

Dav010

https://amp.independent.ie/business/personal-finance/property-mortgages/rents-to-soar-again-as-cuckoo-fund-housebuying-hits-record-37992104.html


As I read this article I was reminded of all the times over the years I read posts giving out about “amateur” landlords who own a single/small number of properties, how they should get out of the market if they couldn’t soak up the cost of a tenant who doesn’t pay, or tries to raise the rent above what the tenant can afford.

Looks like those posters now have had their wish granted, huge “professional” landlords buying up large swathes of new/existing property, rents are forecast to rise 17% above existing levels and you can be 100% certain increases will be imposed on tenants like clockwork thereafter.

neris

The govt forced a lot of small landlords out of the market with excessive regulation and the inefficiency of the prtb for them. The big guys can afford the legal costs of chasing rents etc.

4ensic15

Be careful what you wish for.

Graham

Meanwhile in Germany, citizens are protesting against the large scale/institutional landlords.

handlemaster

This government policy will cost the Irish tax payers in the long run. The voters have only themselves to blame , next time round be careful of what is been promised. Just because the man / woman knocking at your door looking for a votes demonizes Landlords doesn't make it true.

Fol20

Graham wrote: »

Meanwhile in Germany, citizens are protesting against the large scale/institutional landlords.

Interesting. The German market is much better run. What are the tenants protesting about. It will be interesting as this is the way the market is going without the ll protections


Edit: just found a article this weekend:
https://www.google.ie/amp/s/www.euronews.com/amp/2019/04/06/germans-take-to-streets-in-rent-rise-protests-demanding-government-takeover-large-private

Eric Cartman

professional landlords arent suited to many irish renters, our 'ahh be grand, ill sort that out next week' attitude is actually helpful when you think about it.

professional landlords will have your carpark fob and communal access knocked off on midnight of the first day your fees are overdue, notice of arrears will be waiting for you straight away and they'll follow the eviction process to the hilt.

fines or strongly worded legal letters for minor violations like parties or damage to communal areas. high cost fines for parking in the wrong space temporarily etc...

maintenance often done to the cheapest passable standard using materials that are durable but not necissarily look good / are suited to an apartment block (checker plate flooring in lifts etc...)

rigid rules, ultra strict payment schedules, faceless customer service when you have an issue, no consideration for a situation outside the norm. Its the major downsides to professional landlords. They also tend to, by virtue of their box ticking tenant criteria, be closed off to tenants without a rental history, bad credit , no references etc... kicking the lower rungs from the ladder.

PhoenixParker

Graham wrote: »

Meanwhile in Germany, citizens are protesting against the large scale/institutional landlords.

They're not demanding one off accidental landlords take over though.

Fol20

PhoenixParker wrote: »

They're not demanding one off accidental landlords take over though.

Yea its much worse, their demanding the government take over these REITs. All that would happen is the large investment funds would move money elsewhere and how in the name of god would the government afford to buy a fund like that unless they are like the saudis or apple where they have billions in reserve.

Topgear on Dave

Fol20 wrote: »

Yea its much worse, their demanding the government take over these REITs. All that would happen is the large investment funds would move money elsewhere and how in the name of god would the government afford to buy a fund like that unless they are like the saudis or apple where they have billions in reserve.

Tax the rich.

(Not me, or anyone who votes for me... & Not property taxes, they're immoral apparently)

Old diesel

Just because REITs have their issues doesn't mean the small landlord model is fit for purpose either.

There is merit in having a significant proportion of rentals been delivered by people who......

1) are committed to housing for the long term.

2) for whome housing supply is THEIR business and career.

3) people who are actually interested in sustainability of housing solutions.

4) who are prepared to see housing as a need and are willing to work to meet that need.

Vienna seem much cited as a workable housing model. You could argue that Viennas housing people are "professionals" yet are delivering a very different outcome to a REIT over here.

I'm not endorsing Viennas approach which seems to see a lot of state support or involvement with cost rental, social housing based solutions and the like.

But im merely saying I think Vienna is a professional landlord type model but is NOT the REIT type model we have here.

Dav010

Old diesel wrote: »

Just because REITs have their issues doesn't mean the small landlord model is fit for purpose either.

There is merit in having a significant proportion of rentals been delivered by people who......

1) are committed to housing for the long term.

2) for whome housing supply is THEIR business and career.

3) people who are actually interested in sustainability of housing solutions.

4) who are prepared to see housing as a need and are willing to work to meet that need.

Vienna seem much cited as a workable housing model. You could argue that Viennas housing people are "professionals" yet are delivering a very different outcome to a REIT over here.

I'm not endorsing Viennas approach which seems to see a lot of state support or involvement with cost rental, social housing based solutions and the like.

But im merely saying I think Vienna is a professional landlord type model but is NOT the REIT type model we have here.

Sorry, this is pie in the sky stuff.

“Professional” Landlords will only stay in the market as long as they are making profits. If yields drop due to increase in supply/economic downturn, they will cut their loses far faster than a small time landlord who may be trapped in negative equity.

Supply is not their business, lack of supply helps their business model as it keeps rents high.

Professional/corporate investors are interested in sustainable profits, they don’t care about society nor housing those in need, unless it benefits them of course.

Sorry, point 4 has nothing whatsoever to do with landlords.

Cuddlesworth

All landlords should be interested in profit, its the point of being a landlord.

Old diesel

Dav010 wrote: »

Old diesel wrote: »

Just because REITs have their issues doesn't mean the small landlord model is fit for purpose either.

There is merit in having a significant proportion of rentals been delivered by people who......

1) are committed to housing for the long term.

2) for whome housing supply is THEIR business and career.

3) people who are actually interested in sustainability of housing solutions.

4) who are prepared to see housing as a need and are willing to work to meet that need.

Vienna seem much cited as a workable housing model. You could argue that Viennas housing people are "professionals" yet are delivering a very different outcome to a REIT over here.

I'm not endorsing Viennas approach which seems to see a lot of state support or involvement with cost rental, social housing based solutions and the like.

But im merely saying I think Vienna is a professional landlord type model but is NOT the REIT type model we have here.

Sorry, this is pie in the sky stuff.

“Professional” Landlords will only stay in the market as long as they are making profits. If yields drop due to increase in supply/economic downturn, they will cut their loses far faster than a small time landlord who may be trapped in negative equity.

Supply is not their business, lack of supply helps their business model as it keeps rents high.

Professional/corporate investors are interested in sustainable profits, they don’t care about society nor housing those in need, unless it benefits them of course.

Sorry, point 4 has nothing whatsoever to do with landlords.

By point 4 - I mean that someone would look at a projected shortfall of 20 k houses and look at how they might fill the gap.

Doesn't sound unreasonable to me

Fol20

Topgear on Dave wrote: »

Tax the rich.

(Not me, or anyone who votes for me... & Not property taxes, they're immoral apparently)

The rich are rich for a reason. If there is too much of a disincentive to work here, they will move their wealth elsewhere. They are the most mobile for a reason afterall.

We already have high levels of taxation for the wealthier classes and the wealthy pay for the majority of taxes in ireland as is. Couldnt find the article but the top 10pc pay for 50pc of paye income. Why do you think they should pay more than they already do. How about if we make the taxable base larger as id say a quarter of workers dont pay any tax.

Fol20

Old diesel wrote: »

Just because REITs have their issues doesn't mean the small landlord model is fit for purpose either.

There is merit in having a significant proportion of rentals been delivered by people who......

1) are committed to housing for the long term.

2) for whome housing supply is THEIR business and career.

3) people who are actually interested in sustainability of housing solutions.

4) who are prepared to see housing as a need and are willing to work to meet that need.

I Think there should be 3 different groups within the residential market that are evenly distributed - Social to replace HAP, Private LL and REITs. A healthy market should have competition and with less players in the market, they control more power in it. Right now we appear to be heading into the abyss with only REITs in the future.

1) Agree.
2)Agree.
3)Disagree, everyone is interested in either votes or money.
4)Disagree, same as above.

riemann

Cuddlesworth wrote: »

All landlords should be interested in profit, its the point of being a landlord.

Nonsense. The majority of posters on here are only landlords for reasons of providing the vulnerable of society with a place to call home. They are not interested in money, it is irrelevant.

The big bad professional rental companies are only interested in making a quick buck.

I mean who wants to deal with professionals when you can get essentially the same thing from a retired garda?

Marcusm

Dav010 wrote: »

Sorry, this is pie in the sky stuff.

“Professional” Landlords will only stay in the market as long as they are making profits. If yields drop due to increase in supply/economic downturn, they will cut their loses far faster than a small time landlord who may be trapped in negative equity.

Supply is not their business, lack of supply helps their business model as it keeps rents high.

Professional/corporate investors are interested in sustainable profits, they don’t care about society nor housing those in need, unless it benefits them of course.

Sorry, point 4 has nothing whatsoever to do with landlords.

Actually, a properly established REIT is a secular rather than cyclical investor meaning that what it needs is a strong consistent income stream and stability of prices and tenant base. They have entered Ireland at a time when there is a property squeeze and a concomitant level of price increases (significantly exceeding rental growth). This is unhelpful for the long term investor. Not all chase price growth but rather stable yields. The current airish market will incentivise near term divestment by some REITs rather than what Ireland needs, a permanent stable REIT base.

Dav010

Marcusm wrote: »

Actually, a properly established REIT is a secular rather than cyclical investor meaning that what it needs is a strong consistent income stream and stability of prices and tenant base. They have entered Ireland at a time when there is a property squeeze and a concomitant level of price increases (significantly exceeding rental growth). This is unhelpful for the long term investor. Not all chase price growth but rather stable yields. The current airish market will incentivise near term divestment by some REITs rather than what Ireland needs, a permanent stable REIT base.

So you are looking for a REIT with a social conscience? Stable yields depend on there being demand, which right now there is shortage of. But going back to my op, the impact of these “professional” landlords is further wallet busting increases in rental costs, and a situation where developers now prefer to sell whole developments to corporate buyers rather than owner occupiers and small landlords. A handful of corporates now dictate supply and price. Some may consider that better than a retired guard or a private sector worker owning an apartment or two, but if that what people want, cool.

L1011

Dav010 wrote: »

So you are looking for a REIT with a social conscience?.

We had them, Public Utility Societies, many went under or were voluntarily liquidated in the 70s after refocusing on discount purchase.

Yurt2

Dav010 wrote: »

So you are looking for a REIT with a social conscience? Stable yields depend on there being demand, which right now there is shortage of. But going back to my op, the impact of these “professional” landlords is further wallet busting increases in rental costs, and a situation where developers now prefer to sell whole developments to corporate buyers rather than owner occupiers and small landlords. A handful of corporates now dictate supply and price. Some may consider that better than a retired guard or a private sector worker owning an apartment or two, but if that what people want, cool.

People probably want neither. We went from a home ownership rate of north of 80% in the early 90's, then the big bang and explosion of buy-to-let mortgages where BTL were out-muscling younger buyers, and now to the logical conclusion of the process: out of country corporates wanting a piece of the action out-muscling everybody else.

Home-ownership is in precipitous decline, and our urban areas and outlying towns are now feeding grounds for people chasing a buck.

The fate of the Irish worker is increasingly looking like Boxer the carthorse from Animal Farm; docile and loyal, naively believing that all problems can be solved by rolling up his sleeves and working harder - when really he is to be turned into glue no matter what he does.

PhoenixParker

L1011 wrote: »

We had them, Public Utility Societies, many went under or were voluntarily liquidated in the 70s after refocusing on discount purchase.

Housing associations could play a big part in giving the Irish property market long term stability I believe.

runawaybishop

Old diesel wrote: »

Just because REITs have their issues doesn't mean the small landlord model is fit for purpose either.

There is merit in having a significant proportion of rentals been delivered by people who......

Snip...

Iris REITs' chairperson, in a letter to shareholders, confirmed that they will increase the rent to the max at every opportunity. If people want the professionalism that comes with these type of landlords they shouldn't be surprised when that professionalism also includes driving profits up at every single oppertunity.

Marcusm

Dav010 wrote: »

So you are looking for a REIT with a social conscience? Stable yields depend on there being demand, which right now there is shortage of. But going back to my op, the impact of these “professional” landlords is further wallet busting increases in rental costs, and a situation where developers now prefer to sell whole developments to corporate buyers rather than owner occupiers and small landlords. A handful of corporates now dictate supply and price. Some may consider that better than a retired guard or a private sector worker owning an apartment or two, but if that what people want, cool.

You have completely misconstrued my post; it’s not about social conscience, it’s about investment dynamics.

4ensic15

If it wasn't for the REITs there would be far fewer building erected. Builders cannot finance new builds in the manner in which they did pre-2008. If there were fewer new builds there would be even greater pressure on the rental market.

Topgear on Dave

I skimmed through an article in the indo today, it was giving out yards about entire blocks of apartments being sold for rental to reits etc.

(Snapping them up apparently, but to journos it's always "snapped up", not just bought :rolleyes: )

I couldn't help thinking that these guys have cut out the indo property section entirely buy buying blocks.

The indo engaged in serious property puffery back in the boom when 2 bed apartments were sold one at a time for 400k to unfortunate buyers and BTL-ers.

Eric Cartman

runawaybishop wrote: »

Iris REITs' chairperson, in a letter to shareholders, confirmed that they will increase the rent to the max at every opportunity. If people want the professionalism that comes with these type of landlords they shouldn't be surprised when that professionalism also includes driving profits up at every single oppertunity.

and they all will, the rpz's will end and overnight rent will go up 30% before a new rule can be enforced and theyll slowly climb down month by month till they fill the units with people pushed to the brink and those rent levels will be locked in for another 2 years.

these people increase to the legal limit on the exact day they can and are under no pressure to take lower offers or choose lower earning tenants. Anything in a nice part of town will be jacked up and the leaving tenants may be offered an inflated price on a lesser development to keep them in the eco system.

the_syco

Old diesel wrote: »

1) are committed to housing for the long term.

Whilst it's profitable, yes.

Old diesel wrote: »

2) for whome housing supply is THEIR business and career.

Whilst it's profitable, yes.

Old diesel wrote: »

3) people who are actually interested in sustainability of housing solutions.

They'll keep a percentage homeless; demand is good for business. No demand due to many houses would be bad for business.

Lumen

The experience of my renter friends (who pay their rent on time and don't cause property damage) seems to be that corporate-ly managed blocks of apartments are much better run than the apartments and houses they've rented from small landlords, which suffer from neglect and lazy remediation.

For instance, any issues with the property are often dealt with under 24 hours, as opposed to weeks or never with small landlords, and when they move out there has been more flexibility over timing because the institutional landlord is able to fill the vacancy within a shorter period of time.

Now this may be a question of efficiency of scale, and also that new, large blocks suffer from fewer maintenance issues, but I really struggle to see anecdotal evidence to support the vitriol against insitutional landlords (which I see on social media more than here TBH).

I expect the way the market will evolve over time is that the institutional landlords and good tenants tend to choose each other, leaving the tenants with more chaotic lives to the badly managed properties run by small landlords who offer more flexibility but also worse property management.

Which is exactly how things normally work in other sectors, like finance. The poor and those who can't keep their life together sufficiently to appeal to the institutions end up with the smaller operators who provide worse product (high interest rates in the case of finance, shabby, damp old badly-maintained properties in the case of landlords.

And this is also my experience of renting in the UK when I was youjnger.

amcalester

Lumen wrote: »

The experience of my renter friends (who pay their rent on time and don't cause property damage) seems to be that corporate-ly managed blocks of apartments are much better run than the apartments and houses they've rented from small landlords, which suffer from neglect and lazy remediation.

For instance, any issues with the property are often dealt with under 24 hours, as opposed to weeks or never with small landlords, and when they move out there has been more flexibility over timing because the institutional landlord is able to fill the vacancy within a shorter period of time.

Now this may be a question of efficiency of scale, and also that new, large blocks suffer from fewer maintenance issues, but I really struggle to see anecdotal evidence to support the vitriol against insitutional landlords (which I see on social media more than here TBH).

I expect the way the market will evolve over time is that the institutional landlords and good tenants tend to choose each other, leaving the tenants with more chaotic lives to the badly managed properties run by small landlords who offer more flexibility but also worse property management.

Which is exactly how things normally work in other sectors, like finance. The poor and those who can't keep their life together sufficiently to appeal to the institutions end up with the smaller operators who provide worse product (high interest rates in the case of finance, shabby, damp old badly-maintained properties in the case of landlords.

And this is also my experience of renting in the UK when I was youjnger.

The problem is that some people, and they tend to be the most focal, want the champagne service at lemonade prices and think that REITs is the way to get this.

Lumen

amcalester wrote: »

The problem is that some people, and they tend to be the most focal, want the champagne service at lemonade prices and think that REITs is the way to get this.

Which people? Where are they expressing these opinions? I haven't seen them.

From my perspective, the main macro advantage (to the State, and therefore the country, sort of) of institutional investors is that they are, in principle, easier to regulate and tax. I do appreciate that in practice the REITs pay no tax right now, but this is a policy choice rather than any kind of inevitability.

A lot of the banking problems we saw in the the crash were with lending to small BTLs. It was difficult to move against them because they were people in the economy who were, to varying degrees, as screwed or more than everyone else. Their debts were often a complicated mess of cross-collaterilisation and personal guarantees (enabled by the banks, in fairness). That is one reason for the State to want to encourage the funds in - zero risk to the banks.

So if I was in government or at the central bank, looking forward to the next crash, I'd be super keen on having a large amount of the one and two bed apartments owned by foreign investors, because if and when the crash comes, all that young, single. foreign labour that has driven up demand in the city centre will be out of here in a shot, and you don't want that overhang of supply financed by small landlords creating another banking crisis.

The flip side of the macroprudential benefit is that when the economy is not in crisis, the institutions represent an outflow of wealth from the country. Is this bad? I don't know, maybe it represents some kind of counter-cyclical benefit.

Another benefit is that they have access to cheap capital, and so are capable of substantial investments to bring new housing at scale.