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Just 119 buy-to-let mortgages approved in April

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  • 28-05-2019 12:49pm
    #1
    sk8board
    Registered Users Posts: 3,337 ✭✭✭


    Its a pretty pitiful number, and assumes annual total B2L mortgages of about 1,300 mortgages in a market with about 1.8 million residential households countrywide. the value of B2L in April was €17m, so the average was just €142k, suggesting a lot of re-mortgages, or new mortgages on existing properties.

    Sure, there are still cash buyers, but a healthy residential investment market requires steady access to B2L funding. The lowest rates on offer are about 4.8%, and its now 100% interest deductible once again.

    it really speaks to the lack of attractiveness of the irish residential investment market.


    https://www.irishtimes.com/business/financial-services/approvals-tumble-for-buy-to-let-mortgages-1.3906261


    "Landlords have reportedly been leaving the rental market despite rents reaching record highs. And it appears new investors aren’t scrambling to fill their places."


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    #2
    Cuddlesworth
    Registered Users Posts: 13,994 ✭✭✭✭Cuddlesworth


    With near 5% interest rates, the taxation of rental income, in my area of Dublin I can't see any ROI for purchasing BTL property's. Especially considering the risks involved.


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    #3
    sk8board
    Registered Users Posts: 3,337 ✭✭✭sk8board


    Cuddlesworth wrote: »
    With near 5% interest rates, the taxation of rental income, in my area of Dublin I can't see any ROI for purchasing BTL property's. Especially considering the risks involved.

    I would argue, from personal experience, that yields aren't the issue - even just achieving 5% gross yield is easily possible in almost all areas of the 'normal' rental market (2-3 bed apartments and homes). I have a blended avg of 7% currently, and I'm below market rates in almost all cases.

    However, the latter part of your point is the crux - as an investment market, the real risks are the net returns post tax and unexpected costs (usually from unplanned repairs and/or tenant delinquency).


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    #4
    Wesser
    Registered Users Posts: 1,813 ✭✭✭Wesser


    sounds good to me... more properties available for those who want to live in them and not make money from them?


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    #5
    handlemaster
    Registered Users Posts: 6,003 ✭✭✭handlemaster


    Wesser wrote: »
    sounds good to me... more properties available for those who want to live in them and not make money from them?


    Markets dont work with simple analysis like that. Alot of people dont have the means or interest in buying. Landlords are a necessary part of a healthy market and are a necessity to have a free flowing market.


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    #6
    brendane
    Registered Users Posts: 41 ✭brendane


    Wesser wrote:
    sounds good to me... more properties available for those who want to live in them and not make money from them?


    It's this attitude that is the problem. Not everyone wants too or can buy at the moment. A rental market is critical and for that we need investors who should be expected to make a profit on their investment.

    Small landlords are fleeing the market. Government legislation has made the market unattractive and was predicted and it still hasn't even begun to solve the problem


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    #7
    sk8board
    Registered Users Posts: 3,337 ✭✭✭sk8board


    brendane wrote: »
    Small landlords are fleeing the market. Government legislation has made the market unattractive and was predicted and it still hasn't even begun to solve the problem

    Small/one-property landlords are most of the market (66%, or 120k LLs out of 170k total) and they have a very simple risk - if they have a delinquent tenant, or a big repair bill, they are out 100% of their income.
    Considering no-one can realistically live from the post tax income of one property, the reasonable assumption is that they have other jobs and PAYE income - so they also have very high tax exposure to boot.

    With prices now hitting the central bank bumpers, there is simply no reason for those 120k owners to stay in the current market, except for 2 reasons I can think of:
    1. Emotional attachment to the property/future need
    2. Existing arrears

    One thing for sure, v few of them actually want to be a landlord and fill the role required of landlords.

    The market needs to professionalise - removing those one-property people is a good thing in the long term - IF they were being replaced by an ‘active/professional’ landlord, with proper tax reform and access to B2L funding at market rates, in return for abiding by any current or future bi-directional lease controls.


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