Dublin - Significant reduction in rents coming?

Muahahaha

Assetbacked wrote: »

The wait for the vaccine is like the wait for Brexit fallout; it may never come. I've noticed there doesn't seem to be a phase beyond our phase five in the easing plans which indicates potentially that the phase five plan is how we will be living for the foreseeable future!

Just on the Brexit fall out it now appears the UK govt. are hurtling along to a no deal Brexit which if it comes to pass will be a double whammy for the property market here at large. Coveney was on radio yesterday and by all accounts London is at sixes and sevens dealing with Covid while Brexit is only 7 months away with time is fast running out. Boris refusing an extension too, at this stage it looks like he actually wants a hard Brexit. If that comes to pass property prices will get hit by two separate major events in the space of a year.

The HAP/rent allowance system is going to spiral out of control too. 800,000 unemployed, I'd imagine a few hundred thousand HAP applications are just starting to flood into the Department of Social Protection right now.. Its an absolute sh1t show now coming down the road, LLs who would never have accepted HAP before are going to have little choice if their tenants are now newly unemployed. No doubt there'll be problems with delayed payments too, its going to be a real mess.

beauf

LuckyLloyd wrote: »

Landlords can try and sell up and exit the market alright, but that won't be an appealing prospect in a declining market. They can also potentially go through an eviction process with a tenant paying what they can (which is short of the previously agreed rent). During which some percentage of such tenants may stop paying entirely. Anther unappealing prospect I'd have thought.

Or they renegotiate with their tenants and keep rent coming in and their tenant on an even keel. You may be surprised by the amount of LLs who see the wood from the trees and take a pragmatic approach imo.

Sell in a declining market buy in a rising market. Why is that not appealing.

We've had years of people on these forums, telling LL that rent is not profit, that they shouldn't need positive cash flow. The profit is in the acquisition of the asset and the capital appreciation of that asset. That its purely property speculation not a business.

Many will have to cover the costs of the rental themselves during this crisis and
many will already have had their own income cut.

beauf

Muahahaha wrote: »

....LLs who would never have accepted HAP before are going to have little choice if their tenants are now newly unemployed. ....

LL already had no choice, they made it law you couldn't discriminate (refuse it).

Muahahaha

So it begins

Rents fell by 2.1% on average last month compared to March, reflecting the economic fallout from the Covid-19 pandemic. This represents the biggest monthly fall in rents since March 2009.

The average monthly rent nationwide stood at €1,418 in the first quarter of 2020, the figures show. The latest Rental Report by Daft.ie also shows the number of homes available to rent nationwide on 1 May was almost 40% higher than on the same date a year ago.

The author of the report, Assistant Professor of Economics at Trinity College Ronan Lyons, said a fall in demand for accommodation has impacted rent prices nationally, which the latest Daft.ie report shows. Speaking on RTÉ's Morning Ireland, he said the figures show the biggest one month fall in rents in over 11 years, since early 2009.

He said that with the broader economy in crisis and many people becoming unemployed this "has fed through to the property market".

https://www.rte.ie/news/ireland/2020/0512/1137857-rents-housing/

Rents 'only' down 2% but 40% more properties on the market. We're currently in the denial stage, the next stage is capitulation when they tumble faster as landlords scramble to fill vacant properties at a still decent rent.

Assetbacked

Muahahaha wrote: »

So it begins


https://www.rte.ie/news/ireland/2020/0512/1137857-rents-housing/

Rents 'only' down 2% but 40% more properties on the market. We're currently in the denial stage, the next stage is capitulation when they tumble faster as landlords scramble to fill vacant properties at a still decent rent.

It's 2% between two months, which is fairly significant. I agree, rents have been in a bubble in recent years in contrast to buying/selling prices and the fallout from covid19 will be substantial in the rental market.

Hubertj

Muahahaha wrote: »

So it begins


https://www.rte.ie/news/ireland/2020/0512/1137857-rents-housing/

Rents 'only' down 2% but 40% more properties on the market. We're currently in the denial stage, the next stage is capitulation when they tumble faster as landlords scramble to fill vacant properties at a still decent rent.

i presume the reductions won't bottom out until supply and demand reaches a new status once restrictions are lifted, college places sorted etc? Added to that, how many new builds are close to completion that could come online in next 3-6 months further adding to supply? IF working from home becomes an option for people and rents fall will more people prefer to live alone? Or opposite effect? Will people move closer to city as well?

Muahahaha

Hubertj wrote: »

Added to that, how many new builds are close to completion that could come online in next 3-6 months further adding to supply?

Would think that what is being built right now will come online for sure. But sites that are not yet started may not commence at all. So we could see a glut in 6 months time followed by a famine thereafter. Bumpy times ahead for rents for sure.

IF working from home becomes an option for people and rents fall will more people prefer to live alone? Or opposite effect? Will people move closer to city as well?

I reckon the WFH situation will be a mixed bag. Some employers wont allow it full stop, others will allow it and for a full five days a week or maybe 4 at home and one in the office.

I can see a scenario where those who can WFH might make a move out of the city to save on rent and help them save for a deposit quicker. How many will be in that cohort is yet to be answered but even if it is only 20% of the workforce that they has knock on effects for Dublin rents and lower commuter times for people who are still travelling into the city every day.

Blut2

Muahahaha wrote: »

I reckon the WFH situation will be a mixed bag. Some employers wont allow it full stop, others will allow it and for a full five days a week or maybe 4 at home and one in the office.

I can see a scenario where those who can WFH might make a move out of the city to save on rent and help them save for a deposit quicker. How many will be in that cohort is yet to be answered but even if it is only 20% of the workforce that they has knock on effects for Dublin rents and lower commuter times for people who are still travelling into the city every day.

https://www.siliconrepublic.com/companies/google-facebook-remote-work-until-2021

Google and Facebook have now announced most staff will be WFHing until January 2021 at the least. And I'd personally struggle to see them ending that in the dark depths of January, in the middle of flu season... Its a lot more likely that'll be extended until May 2021.

They've got almost 15,000 staff between them in Dublin, approx 70% of whom are not Irish, and most of whom are in their 20s and 30s - ie very much mostly in the rental market. I would imagine a lot of them are currently thinking about moving back home to cheap living costs in Spain, Italy, Portugal etc and abandoning Dublin, since they're WFHing anyway and theres now no social life here - anecdotally I know quite a few people in that exact situation who're now doing exactly that.

That exact scenario will play out across the Dublin tech sector too, it won't just be Google and FB - the vast, vast majority of jobs in it are perfectly doable from home. So those workers will be some of the last to come back to the office, if they ever do.

Thats going to have a pretty massive hit on the rental market.

Blut2

Blut2 wrote: »

https://www.siliconrepublic.com/companies/google-facebook-remote-work-until-2021

Google and Facebook have now announced most staff will be WFHing until January 2021 at the least. And I'd personally struggle to see them ending that in the dark depths of January, in the middle of flu season... Its a lot more likely that'll be extended until May 2021.

They've got almost 15,000 staff between them in Dublin, approx 70% of whom are not Irish, and most of whom are in their 20s and 30s - ie very much mostly in the rental market. I would imagine a lot of them are currently thinking about moving back home to cheap living costs in Spain, Italy, Portugal etc and abandoning Dublin, since they're WFHing anyway and theres now no social life here - anecdotally I know quite a few people in that exact situation who're now doing exactly that.

That exact scenario will play out across the Dublin tech sector too, it won't just be Google and FB - the vast, vast majority of jobs in it are perfectly doable from home. So those workers will be some of the last to come back to the office, if they ever do.

That's going to have a pretty massive hit on the rental market.

The couple across the hall in my apartments are heading back to Finland for exactly that reason. Both work in tech, moved here a year ago, and were getting stuck in to Dublin life - even playing hurling / camogie. Were paying €2k for their apartment. But they feel that there is no reason to be here any more given that the lifestyle for which they had moved to Dublin is no more, and as soon as the release of restrictions make the logistics of moving home a little more straightforward, they are leaving. I know the LL (who was my neighbour for a few years) and she thinks that she's going to have to drop the rent a good bit

While the €1.5 to €2k a month price bracket might be okay, I would imagine that there will be a big hit to the crazily priced (€3k+) apartments around the docklands

Blut2

Deleted User wrote: »

While the €1.5 to €2k a month price bracket might be okay, I would imagine that there will be a big hit to the crazily priced (€3k+) apartments around the docklands

The thing about that though is once the currently €2-3k apartments move down to €1.5-€2k, the apartments that are currently at €1.5-€2k will also then have to reduce prices significantly as a result - because other, nicer, apartments are now in that price range and competing with them. Its a bit of a cascading downwards effect.

thequarefellow

https://www.rte.ie/news/ireland/2020/0512/1137857-rents-housing/

The report mentions that the number of homes available to rent nationwide on 1 May was almost 40% higher than on the same date a year ago. Where did all this extra accommodation come from? Would students have terminated their leases? Empty Airbnb units?

PommieBast

Blut2 wrote: »

I would imagine a lot of them are currently thinking about moving back home to cheap living costs in Spain, Italy, Portugal etc and abandoning Dublin, since they're WFHing anyway and theres now no social life here - anecdotally I know quite a few people in that exact situation who're now doing exactly that.

As an aside I am wondering how many people would do that just for the lower income tax rates.

Hubertj

Blut2 wrote: »

https://www.siliconrepublic.com/companies/google-facebook-remote-work-until-2021

Google and Facebook have now announced most staff will be WFHing until January 2021 at the least. And I'd personally struggle to see them ending that in the dark depths of January, in the middle of flu season... Its a lot more likely that'll be extended until May 2021.

They've got almost 15,000 staff between them in Dublin, approx 70% of whom are not Irish, and most of whom are in their 20s and 30s - ie very much mostly in the rental market. I would imagine a lot of them are currently thinking about moving back home to cheap living costs in Spain, Italy, Portugal etc and abandoning Dublin, since they're WFHing anyway and theres now no social life here - anecdotally I know quite a few people in that exact situation who're now doing exactly that.

That exact scenario will play out across the Dublin tech sector too, it won't just be Google and FB - the vast, vast majority of jobs in it are perfectly doable from home. So those workers will be some of the last to come back to the office, if they ever do.

Thats going to have a pretty massive hit on the rental market.

WFH in your home country isn't an option long term. There are tax implications, definitely corporation and possibly personal, to it.

Next door neighbours are 4 guys in google.... 2 headed home to spain and 2 french lads stayed. The 2 lads from Spain are coming back in July. Working from home country was made clear ot them it is only interim measure.

The Americans where i work are starting to come back over the coming weeks (who can self as they all live alone or some together). We've been told we have option to wfh rest of year. Changes to office layout will be made allowing critical workers return in coming weeks. From September, office will be open to limited numbers

PommieBast

PommieBast wrote: »

As an aside I am wondering how many people would do that just for the lower income tax rates.

when you take away the reason that people come to Dublin to work, which is basically 1) the 'craic' (ugh, sorry!), and 2) the tech salary (which can now be earned from home) then the cost of being here I would imagine is a big driver

Only question is whether their salary would be reduced when they leave. If I were to leave and do my job from Spain, my salary would drop a good amount as it partially includes a cost of living allowance

awec

Working from another country as an employee is actually a lot more complicated than remote work within the state. Not uncommon for it to be disallowed by companies, or for there to be a limit on the number of days a year you can work outside of Ireland.

PommieBast

Deleted User wrote: »

Only question is whether their salary would be reduced when they leave. If I were to leave and do my job from Spain, my salary would drop a good amount as it partially includes a cost of living allowance

I was thinking of those who remain working for a Dublin company but WFH from overseas. Anglesey is 2 hours on the ferry (ok for 1 day a week) but marginal tax rates in the €35-60k band are something like 52% vs. 31%..

awec

Also just to point out that if the MNCs essentially became employment hubs of employees based outside of Ireland then the biggest benefit to the state of offering such a low corp tax rate is gone.

It’s not going to happen in any significant way.

awec

awec wrote: »

Also just to point out that if the MNCs essentially became employment hubs of employees based outside of Ireland then the biggest benefit to the state of offering such a low corp tax rate is gone.

It’s not going to happen in any significant way.

You're right I guess. But I think enough people will not want to come to Dublin, or indeed will leave (such as my neighbours) to go back home. The only things keeping an MNC employee here for the next 18 months would be career and money, and that wont be enough for the many who came because they wanted to sample Irish life

Hubertj

[Deleted User] wrote: »

You're right I guess. But I think enough people will not want to come to Dublin, or indeed will leave (such as my neighbours) to go back home. The only things keeping an MNC employee here for the next 18 months would be career and money, and that wont be enough for the many who came because they wanted to sample Irish life

Many come here for the money and career development opportunities.

awec

Deleted User wrote: »

You're right I guess. But I think enough people will not want to come to Dublin, or indeed will leave (such as my neighbours) to go back home. The only things keeping an MNC employee here for the next 18 months would be career and money, and that wont be enough for the many who came because they wanted to sample Irish life

Employees leaving Dublin is certainly feasible*, but leaving Ireland not so much.

* - a lot of the foreign employees that work in these MNCs want to live in big cities because of the lifestyle and networking opportunities, so I don't see swathes of 20/30 year olds hiking down the country somewhere. What you might see is older employees originally from more rural areas moving back closer to home.

awec

awec wrote: »

Employees leaving Dublin is certainly feasible*, but leaving Ireland not so much.

* - a lot of the foreign employees that work in these MNCs want to live in big cities because of the lifestyle and networking opportunities, so I don't see swathes of 20/30 year olds hiking down the country somewhere. What you might see is older employees originally from more rural areas moving back closer to home.

I meant leaving Ireland rather than leaving Dublin. There'll be nothing here for them other than work - certainly not the Irish experience that attracted them. Maybe not the Spanish and Italians etc will stay, as there'll be no jobs and few options back home, but certainly the Scandinavians and Americans are more likely to head home (some of the Americans in my US FS company don't intend to extend their yearly option to remain in the Dublin office which, for most of them, is coming up in September, and the locals that might fill those gaps get paid a lot less).

GocRh

awec wrote: »

Working from another country as an employee is actually a lot more complicated than remote work within the state. Not uncommon for it to be disallowed by companies, or for there to be a limit on the number of days a year you can work outside of Ireland.

Very much true. My employer (Irish company in IT) is very flexible but only allows permanent WFH in a different country if the employee moves to a local contract - which often means becoming a contractor.

There are exceptions to posted workers (i.e. someone on an Irish employment contract temporarily posted abroad by their employer), which are often very costly as the employer may have to pay social contributions in 2 jurisdictions. My employer has an international assignment programme, and for Irish employees posted abroad PRSI and pension is still collected on top of any local taxes due on the host country.

GocRh

PommieBast wrote: »

As an aside I am wondering how many people would do that just for the lower income tax rates.

Their employer would have to offer the option to move the employment contract to a local contract elsewhere - and surely that would come with a cut in pay as salaries reflect local cost of living in most big companies.

Even if the employee is kept on the Irish payroll, Revenue would still collect income taxes in Ireland anyway as 1) those living in Ireland for over 3 years would still be ordinarily resident in Ireland for tax purposes for a further 3 years and 2) Even if not a tax resident or domiciled in Ireland, tax is still charged on Irish-sourced income.

Of course the lower cost of living in places like Portugal and Spain would still represent significant gains.

PommieBast

GocRh wrote: »

Even if the employee is kept on the Irish payroll, Revenue would still collect income taxes in Ireland anyway as 1) those living in Ireland for over 3 years would still be ordinarily resident in Ireland for tax purposes for a further 3 years and 2) Even if not a tax resident or domiciled in Ireland, tax is still charged on Irish-sourced income.

Suppose there may be ways of bending the rules via subcontracting, but my remark was not intended as a deep discussion of international tax law

awec

PommieBast wrote: »

Suppose there may be ways of bending the rules via subcontracting, but my remark was not intended as a deep discussion of international tax law

It would certainly be a questionable decision for any employee to shift into contract work during economic uncertainty.

When it comes to cuts remote contractors will be near the top of the queue for the chopping block.

Ray Palmer

People really are making stuff up on this. I know 20 different people currently working from other countries to where the company is. Very easy to sort out tax wise especially within the EU. US citizen have to pay tax on any income from any other country even if already taxed.
The people I know were working like this before the lockdown and there has been an increase since.
Open plan offices are likely to be radically changed. Companies that had room now don't so don't be so sure they can get rid of their offices. Nobody knows for sure but there are already movements being made.
Lots of service jobs will likely go as there won't be enough people to use them. Don't need 5 coffee shops in a small area when customers drop so much. There will still be advantages to living close and in the city

awec

Ray Palmer wrote: »

People really are making stuff up on this. I know 20 different people currently working from other countries to where the company is. Very easy to sort out tax wise especially within the EU. US citizen have to pay tax on any income from any other country even if already taxed.
The people I know were working like this before the lockdown and there has been an increase since.
Open plan offices are likely to be radically changed. Companies that had room now don't so don't be so sure they can get rid of their offices. Nobody knows for sure but there are already movements being made.
Lots of service jobs will likely go as there won't be enough people to use them. Don't need 5 coffee shops in a small area when customers drop so much. There will still be advantages to living close and in the city

Good for you. I’m not making anything up. I doubt the poster is either.

Donald Trump

Ray Palmer wrote: »

People really are making stuff up on this. I know 20 different people currently working from other countries to where the company is. Very easy to sort out tax wise especially within the EU. US citizen have to pay tax on any income from any other country even if already taxed.
The people I know were working like this before the lockdown and there has been an increase since.
Open plan offices are likely to be radically changed. Companies that had room now don't so don't be so sure they can get rid of their offices. Nobody knows for sure but there are already movements being made.
Lots of service jobs will likely go as there won't be enough people to use them. Don't need 5 coffee shops in a small area when customers drop so much. There will still be advantages to living close and in the city

Double taxation treaties mean that the tax is often zero (well without getting into state v federal taxes). The same treaty will work in the opposite direction too. I'm not sure though whether you mean income earned abroad while a US resident or income earned by citizen who is living and working abroad

GocRh

Ray Palmer wrote: »

People really are making stuff up on this. I know 20 different people currently working from other countries to where the company is. Very easy to sort out tax wise especially within the EU. US citizen have to pay tax on any income from any other country even if already taxed.
The people I know were working like this before the lockdown and there has been an increase since.
Open plan offices are likely to be radically changed. Companies that had room now don't so don't be so sure they can get rid of their offices. Nobody knows for sure but there are already movements being made.
Lots of service jobs will likely go as there won't be enough people to use them. Don't need 5 coffee shops in a small area when customers drop so much. There will still be advantages to living close and in the city

Not making stuff up. Some employers could be more flexible, however from my experience large MNCs are very vigilant when it comes to staff working overseas. Many will limit the number of days an employee can spend on a different jurisdiction - unless they're on the local payroll.

Perhaps the people you know are on the local payroll (e.g. Irish headquarted company with employees on a Spanish subsidiary) or are contractors, which is perfectly acceptable and very common on the IT industry. Or maybe they're just bending the rules, it is not easy to track movements of EU citizens within Europe on FOM rules so enforcement isn't straight forward.

US subjects (citizens and green card holders) need to declare all worldwide income to the US IRS. Generally speaking if there's no dual taxation agreement between the US and the foreign country, taxes paid abroad cannot be deducted from the US tax.

Agreed that the services industry will change drastically.

Ray Palmer

Donald Trump wrote: »

Double taxation treaties mean that the tax is often zero (well without getting into state v federal taxes). The same treaty will work in the opposite direction too. I'm not sure though whether you mean income earned abroad while a US resident or income earned by citizen who is living and working abroad

Given your user name you think you would understand USA insist on tax payments from all citizens resident or not. Look up Boris Johnson's tax issue with the USA.