Irish Property Market 2020 Part 2

Pelezico

Mic 1972 wrote: »

sorry but this is just a bitter guy who couldn't get the rental properties he wanted. In one case he complained about an old restaurant that was turned into an art gallery. It's none of his business to decide what a LL should do with their property and how they are going to profit from it

Another video is called 'The NYC real estate bubble REFUSES to pop'
I think i know the type guy, we have a few in here :-)

Yeah...a compete loser.

tom_murphy112

Mic 1972 wrote: »

sorry but this is just a bitter guy who couldn't get the rental properties he wanted. In one case he complained about an old restaurant that was turned into an art gallery. It's none of his business to decide what a LL should do with their property and how they are going to profit from it

Another video is called 'The NYC real estate bubble REFUSES to pop'
I think i know the type guy, we have a few in here :-)

I know he can come off very harsh. But he has a successful business and did move into a nice place.

The problem is still that there are more retail space to be let out, But due to the crazy prices they are still vacant. Seems like prices are kept up artificially.

CertifiedSimp

OwlsZat wrote: »

My apartment block is fully of vacant apartments. The same ads hanging on Daft at mental prices the last 2,3,4 months.

I'd assume its because they have all availed of mortgage holidays allowing them to suspend the old free market economics so many bang on about. Hardly seems fair given the exorbitant rent they've creamed over the last few years.

Are they owned by REITs?

That's one thing they can do, leave it vacant until they get the price they want. They have the cash to weather a few months. They essentially set market price.

PropQueries

CertifiedSimp wrote: »

Are they owned by REITs?

That's one thing they can do, leave it vacant until they get the price they want. They have the cash to weather a few months. They essentially set market price.

Good point. But as some of the REITS are public companies and investors also look at vacancy rates, they may have to start filling them sooner rather than later.

Many of the same type of investors were recently caught out (even pre-covid) by buying into the narrative that rising shopping centre vacancy rates in the UK and USA didn't matter much over the past 10 years. Once bitten, twice shy as they say.

edjkdkjdhjkd

Mic 1972 wrote: »

The market is very strong, there is no reason for a seller to pull their property off the market now. Chances are they are going to go over asking prices. This is a perfect time to sell.
Whatever it is that is keeping the market going, it remains a mystery.
I don't believe that the Covid payments are responsible for keeping the property value so high

The segments of the market we are looking at (North Dublin City, South Dublin City (Drimnagh, Ballyfermot etc) are not strong imo, the media are doing everything they can to keep this propped up.


Plenty of properties we have looked at have dropped by 10% or more, perhaps in the well to do areas there hasn't been much change but we have witnessed drops and keep in mind the crash hasn't even began yet. Give it time.



I agree with you though that if anyone is planning to sell, do it now as this is likely the most they will get for their property for the next 2-5 years perhaps.

fliball123

The_Conductor wrote: »

We need a way to fairly tax rental income- while at the same time disincentivising landlords from keeping units empty (irregardless of whether or not they have debt associated with the properties- and keep in mind over a third of Irish rental properties are not mortgaged).

It wont happen as long as the cards are stacked for tenants its so hard to get a bad tenant out so you cant blame a landlord for protecting his/her property

PropQueries

fliball123 wrote: »

It wont happen as long as the cards are stacked for tenants its so hard to get a bad tenant out so you cant blame a landlord for protecting his/her property

I think many people are forgetting about the tax breaks introduced in 2012 where if an investor purchased a property and held it for 7 years, they didn't have to pay capital gains tax on the capital gain.

I think it was two budgets ago that the government reduced this period down to 5 or 6 years, so many of these investors can now sell. I would imagine there are many of these investors that are now looking to sell and crystallise their tax free capital gain from next month onwards.

It could also be a significant factor in the relatively minor reported reduction of landlords in the market over the past few years. Also, the Reits own thousands of rental properties and they may only be counted as one landlord so the "reduction" in the number of landlords and rental properties in the market may have been somewhat overstated.

The_Conductor

fliball123 wrote: »

It wont happen as long as the cards are stacked for tenants its so hard to get a bad tenant out so you cant blame a landlord for protecting his/her property

No politician is going to take away any rights from a tenant- it would be political suicide. Cognisant of this- the sanest and safest thing for any landlord to do- is to maximise their rent- to offset against against any periods in which they end up out of pocket from a miscreant tenant. The alternate- is to exit the sector, and it would a hell of a lot less stress than trying to continue to operate in it.

The current system- patently doesn't work- however, how do reform it when from a political and societal perspective- its unacceptable to do so?

Obviously- it shouldn't take the protracted periods of time to persuade a tenant to leave when a tenancy is ended- nor should it involve the payment of inducements or bribery to do so- as obviously if this is the case- the cost of doing business will simply be piled onto other tenants- the ones who are paying their rent and have a perfectly business like attitude with their landlord.

Its a damned situation- where 'reform' isn't really going to cut it anymore- the whole system is dysfunctional (for both tenants and landlords)- the multiple layers of appeals mechanisms- and the manner that even after all avenues have been exhausted at the RTB you still need to go to court- and incur yet more expenses- just doesn't make sense. And yet- its this way for both parties- anyone who takes a case- either a tenant or a landlord- pretty much has an automatic presumption of 'guilt' (its applies to both tenants and landlords)- and the burden of proof placed on defending a position is onerous and expensive. Even clearcut cases- incur needless time and expense- one tenant here in this forum has told us that she still hasn't received her deposit back after almost 2 years- despite taking a claim against the landlord- and as for the number of landlords who have taken claims for non-payment of rent- I can't actually quantify them.

The RTB, the legislation and the whole process of bringing cases and enforcing judgements- doesn't work- at all- other than in exceptional circumstances- which is an appalling inditement.

What do you do though- when its political suicide to do anything other than give additional rights to tenants- and politicians are egging one another on to promise more and additional rights- come what may.

If I were a landlord- I'd be crazy not to make the most of the current (irrational in my opinion) buoyancy in the housing market, and I'd be doing my utmost to get out of the sector as cleanly as possible.

awec

So imagining that you were a landlord and took that approach The_Conductor, where would you put your money instead?

Connavar

The_Conductor wrote: »

No politician is going to take away any rights from a tenant- it would be political suicide. Cognisant of this- the sanest and safest thing for any landlord to do- is to maximise their rent- to offset against against any periods in which they end up out of pocket from a miscreant tenant. The alternate- is to exit the sector, and it would a hell of a lot less stress than trying to continue to operate in it.

The current system- patently doesn't work- however, how do reform it when from a political and societal perspective- its unacceptable to do so?

Obviously- it shouldn't take the protracted periods of time to persuade a tenant to leave when a tenancy is ended- nor should it involve the payment of inducements or bribery to do so- as obviously if this is the case- the cost of doing business will simply be piled onto other tenants- the ones who are paying their rent and have a perfectly business like attitude with their landlord.

Its a damned situation- where 'reform' isn't really going to cut it anymore- the whole system is dysfunctional (for both tenants and landlords)- the multiple layers of appeals mechanisms- and the manner that even after all avenues have been exhausted at the RTB you still need to go to court- and incur yet more expenses- just doesn't make sense. And yet- its this way for both parties- anyone who takes a case- either a tenant or a landlord- pretty much has an automatic presumption of 'guilt' (its applies to both tenants and landlords)- and the burden of proof placed on defending a position is onerous and expensive. Even clearcut cases- incur needless time and expense- one tenant here in this forum has told us that she still hasn't received her deposit back after almost 2 years- despite taking a claim against the landlord- and as for the number of landlords who have taken claims for non-payment of rent- I can't actually quantify them.

The RTB, the legislation and the whole process of bringing cases and enforcing judgements- doesn't work- at all- other than in exceptional circumstances- which is an appalling inditement.

What do you do though- when its political suicide to do anything other than give additional rights to tenants- and politicians are egging one another on to promise more and additional rights- come what may.

If I were a landlord- I'd be crazy not to make the most of the current (irrational in my opinion) buoyancy in the housing market, and I'd be doing my utmost to get out of the sector as cleanly as possible.

I think you might be highlighting the area that can be improved with good optics here.

Coming up with a way of speeding up the whole appeals process. It could be spun as a good thing for tenants who feel wronged with the added benefit of helping out landlords in the reverse situation

The_Conductor

awec wrote: »

So imagining that you were a landlord and took that approach The_Conductor, where would you put your money instead?

Its a very good question- and if I had a very good answer to it- I'd be rich!

Investors at the moment are all asking themselves this very question and in general their perspective boils down to a few options such as:

• The Stock Market
• Investment Bonds
• Mutual Funds
• Savings Accounts
• Physical Commodities

If an erstewhile Irish investor still wanted exposure to the Irish residential letting sector- the logical thing would be to buy shares in one (or more) of the REITs (many of which are currently trading at a discount to their book values).

The more risk an investor is willing to take- the more upsides there is to potential gains (and losses). The more risk averse investor- will consequently earn much lower returns- but have lower risks.

In the current climate of Covid (and Brexit barreling down towards us)- I would argue that a risk averse approach would be preferable- and the better return once upon a time in these situations would be to invest in gilts- but now the return from gilts is incredibly poor.

If you were willing to take a punt- investing in commodities futures might be interesting- I'd suggest oil and metals would be volatile- but coffee futures or something similar might be an option?

The risks involved in the Irish residential housing sector- at the moment- and despite the ridiculous levels of rent- outweigh the possible returns particularly for small scale investors. If the risks were a lot less- it would stand to reason that there would be a much lower risk premium built into the rent that landlords would charge.

The_Conductor

Connavar wrote: »

I think you might be highlighting the area that can be improved with good optics here.

Coming up with a way of speeding up the whole appeals process. It could be spun as a good thing for tenants who feel wronged with the added benefit of helping out landlords in the reverse situation

Big time.
The system doesn't work for either tenants or landlords.
It suits no-one.
The RTB has turned into yet another state run quango that is answerable to no-one and seems to make up the rules as it goes along- to suit the RTB- rather than tenants or landlords.

Swift adjudications, and swift enforcement of determinations- on both parties- is what is needed- the whole appeals mechanisms process- is just nutty.

awec

awec wrote: »

So imagining that you were a landlord and took that approach The_Conductor, where would you put your money instead?

Stocks V Blocks is the ole debate ......... many investors in property borrow to invest though so the appeal of having something significant in a few decades is a huge appeal. Personally, going forward, the only way I'd consider investing in property is by living in it with a view to trading down eventually.

awec

Stocks are surely riskier than property, even with all the uncertainty of the sector today.

The_Conductor

awec wrote: »

Stocks are surely riskier than property, even with all the uncertainty of the sector today.

Agree- particularly as stock markets seem to be completely irrational levels- they may not be at previous peaks, but they're damn close to them.

You could do a little bit of investigating and carefully tailor the stocks/shares you're willing to invest in (even Warren Buffet managed to invest 6 billion in the last week in this manner- but he felt he had to look to Japan to find any sort of value to invest in).

At the moment- I'd be cashing in investments- and creating as much liquidity as possible- and sitting out investing it- until the implications of Brexit (and Covid) become clearer and a new 'normal' becomes established.

fliball123

The_Conductor wrote: »

No politician is going to take away any rights from a tenant- it would be political suicide. Cognisant of this- the sanest and safest thing for any landlord to do- is to maximise their rent- to offset against against any periods in which they end up out of pocket from a miscreant tenant. The alternate- is to exit the sector, and it would a hell of a lot less stress than trying to continue to operate in it.

The current system- patently doesn't work- however, how do reform it when from a political and societal perspective- its unacceptable to do so?

Obviously- it shouldn't take the protracted periods of time to persuade a tenant to leave when a tenancy is ended- nor should it involve the payment of inducements or bribery to do so- as obviously if this is the case- the cost of doing business will simply be piled onto other tenants- the ones who are paying their rent and have a perfectly business like attitude with their landlord.

Its a damned situation- where 'reform' isn't really going to cut it anymore- the whole system is dysfunctional (for both tenants and landlords)- the multiple layers of appeals mechanisms- and the manner that even after all avenues have been exhausted at the RTB you still need to go to court- and incur yet more expenses- just doesn't make sense. And yet- its this way for both parties- anyone who takes a case- either a tenant or a landlord- pretty much has an automatic presumption of 'guilt' (its applies to both tenants and landlords)- and the burden of proof placed on defending a position is onerous and expensive. Even clearcut cases- incur needless time and expense- one tenant here in this forum has told us that she still hasn't received her deposit back after almost 2 years- despite taking a claim against the landlord- and as for the number of landlords who have taken claims for non-payment of rent- I can't actually quantify them.

The RTB, the legislation and the whole process of bringing cases and enforcing judgements- doesn't work- at all- other than in exceptional circumstances- which is an appalling inditement.

What do you do though- when its political suicide to do anything other than give additional rights to tenants- and politicians are egging one another on to promise more and additional rights- come what may.

If I were a landlord- I'd be crazy not to make the most of the current (irrational in my opinion) buoyancy in the housing market, and I'd be doing my utmost to get out of the sector as cleanly as possible.

I agree with your statement about politicians they basically have no back bone when it comes to dealing with these kind of cases but at the end of the day why has a tenant the right o shaft the landlord over and of course we now have to deal with the unintended consequences of landlords pulling property off the market and not renting it. The government need to put in law that a tenant must pay the rent that they owe and if it has to be done it should come out of their wage or dole over time. Its the same with mortgages people can just stop paying and live rent free for years. Not only does this impact interest rates that everyone else is paying it also means a couple/family have one less house available for them to buy.

PropQueries

The_Conductor wrote: »

Agree- particularly as stock markets seem to be completely irrational levels- they may not be at previous peaks, but they're damn close to them.

You could do a little bit of investigating and carefully tailor the stocks/shares you're willing to invest in (even Warren Buffet managed to invest 6 billion in the last week in this manner- but he felt he had to look to Japan to find any sort of value to invest in).

At the moment- I'd be cashing in investments- and creating as much liquidity as possible- and sitting out investing it- until the implications of Brexit (and Covid) become clearer and a new 'normal' becomes established.

There was an interesting article in Bloomberg earlier this month:

"Consider just four industry group internet content, software infrastructure, consumer electronics and internet retailers account for more than $8 trillion in market value, or almost a quarter of total U.S. stock market value of about $35 trillion.

Take the 10 biggest technology companies in the S&P 500 and weight them equally, and they would be up more than 37% for the year.

Do the same for the next 490 names in the index, and they are down about 7.7%. That shows just how much a few giants matter to the index."

I'm not a bull on the S&P 500, but given the way the world has changed with everything moving online e.g. most service based companies and Government departments are moving to the cloud.

Google, Amazon, Microsoft etc. basically control this market, so there may be a strong argument in relation to the future value of these few companies being justified by today's market capitalisations. Markets are generally forward looking and these few companies appear to have their claws into everything in the world economy where future growth may come from.

The article link is here: https://www.bloombergquint.com/gadfly/why-markets-don-t-seem-to-care-if-the-economy-stinks

The_Conductor

fliball123 wrote: »

The government need to put in law that a tenant must pay the rent that they owe and if it has to be done it should come out of their wage or dole over time. Its the same with mortgages people can just stop paying and live rent free for years. Not only does this impact interest rates that everyone else is paying it also means a couple/family have one less house available for them to buy.

We've allowed a situation to develop in Ireland- which is almost unique globally- where paying your mortgage or your rent- has become optional- and indeed, you're penalised with higher rent or higher interest rates- if you actually do what you're supposed to do. This entirely perverse situation is toxic- and politicians continually boot it into the long grass, and hope it becomes someone else's problem in time.

awec

awec wrote: »

Stocks are surely riskier than property, even with all the uncertainty of the sector today.

Highly debatable I'm sure folk said that back in 2007, stock market had recovered back to 2007 peaks in 2013 ish iirc. Property was only on the way back then.

If you'd a decent wad of cash you'd dripfeed it in to the market over a period of 18/24 months.

The_Conductor wrote: »

Agree- particularly as stock markets seem to be completely irrational levels- they may not be at previous peaks, but they're damn close to them............

Much like Irish property

The_Conductor wrote: »

.......At the moment- I'd be cashing in investments- and creating as much liquidity as possible- and sitting out investing it- until the implications of Brexit (and Covid) become clearer and a new 'normal' becomes established.

Well it's much easier to sell stocks then property so that's another plus for stocks IMO
And timing the market is very, very difficult.

PropQueries

Augeo wrote: »

Highly debatable I'm sure folk said that back in 2007, stock market had recovered back to 2007 peaks in 2013 ish iirc. Property was only on the way back then.

If you'd a decent wad of cash you'd dripfeed it in to the market over a period of 18/24 months.





Much like Irish property



Well it's much easier to sell stocks then property so that's another plus for stocks IMO
And timing the market is very, very difficult.

I would assume Irish and international property is fully priced at this stage as interest rates are zero. If someone puts all their holdings into cash and inflation does take off, that's a big risk, but if interest rates rise to control inflation, then property values fall also. If stocks are fully priced, then that's a risk as well.

Maybe we are heading into a generation of no growth? If so, cash would seem the best bet.

hometruths

The_Conductor wrote: »

We've allowed a situation to develop in Ireland- which is almost unique globally- where paying your mortgage or your rent- has become optional- and indeed, you're penalised with higher rent or higher interest rates- if you actually do what you're supposed to do. This entirely perverse situation is toxic- and politicians continually boot it into the long grass, and hope it becomes someone else's problem in time.

Completely agree it is toxic, but the reason the politicians boot it into the long grass is the electorates fault.

What amazes me is me is that the majority seem to be OK this with this sort of delinquent rent/mortgage payment situation, because sure aren't all landlords and banks evil.

Until the majority realise, hang on the rest of us are actually paying for these chancers, politicians are likely to carry on as is.

Hawthorn Tree

PropQueries wrote: »

Take the 10 biggest technology companies in the S&P 500 and weight them equally, and they would be up more than 37% for the year.

Do the same for the next 490 names in the index, and they are down about 7.7%. That shows just how much a few giants matter to the index."

That is insightful. Not a huge surprise either.

I see most pension plans are trying to reduce their exposure to equity at the moment.
I think they know there will be carnage next year as the consumer/customer demand fallout of Covid really hits home.

PropQueries

schmittel wrote: »

Completely agree it is toxic, but the reason the politicians boot it into the long grass is the electorates fault.

What amazes me is me is that the majority seem to be OK this with this sort of delinquent rent/mortgage payment situation, because sure aren't all landlords and banks evil.

Until the majority realise, hang on the rest of us are actually paying for these chancers, politicians are likely to carry on as is.

I don't think it's that everyone thinks that landlords and banks are evil. It's just that both these groups got significant help over the past ten years and I think people are now saying it's time to stop the help.

We all know the help the banks got. In relation to landlords and property investors, they have been helped by three factors over the past 10 years:

1. Low interest rates.

2. The capital gains tax reliefs introduced in 2012 where they now don't have to pay capital gains tax if they bought during this time and sell today.

3. HAP, long-term leases etc. has had a significant impact on both driving rents up and placing a floor on probable rent falls.

MacronvFrugals

I know a lot goes on about the lack of 'strictness' with renting and things like this but the same can be said for dodgy landlords.

I know this guy in the article, he converted a factory into rooms, performs 24 hour illegal evictions etc and the relevant bodies have been letting him do this for years.

Thats proper wild wild west material using a commercial property to essentially warehouse people.

https://dublininquirer.com/2020/08/26/in-glasnevin-a-landlord-attempts-to-illegally-evict-two-residents

Adding i have never seen anything like this in Norway or Finland and i lived in multiple areas, it reeks of an uncivilized market.

handlemaster

PropQueries wrote: »

I don't think it's that everyone thinks that landlords and banks are evil. It's just that both these groups got significant help over the past ten years and I think people are now saying it's time to stop the help.

We all know the help the banks got. In relation to landlords and property investors, they have been helped by three factors over the past 10 years:

1. Low interest rates.

2. The capital gains tax reliefs introduced in 2012 where they now don't have to pay capital gains tax if they bought during this time and sell today.

3. HAP, long-term leases etc. has had a significant impact on both driving rents up and placing a floor on probable rent falls.

Interest rates are what they are , its not a favour to anyone.

Capitals gains relief is if you bought during a short period of time when no-one wanted to.it will only actually be a gain once sold.

HAP and long term leases ... have you dealt with social tenants ? .landlords do not want these tenants as there is usually issues with them. Not always but usually.

No mention of the continuous law changing for rental properties. A landlord can have no rent for 2 years and no recourse when a property is trashed .

PropQueries

handlemaster wrote: »

Interest rates are what they are , its not a favour to anyone.

Capitals gains relief is if you bought during a short period of time when no-one wanted to.it will onky actually be a gain once sold.

HAP and long term leases ... have you dealt with social tenants ? .landlords do not want these tenants as there is usually issues with them. Not always but usually.

Interest rate cuts were a complete favour to property investors. The central banks basically put the interests of property investors ahead of pensioners. The looming pension crisis was well flagged 20 years ago. But then again, the central banks decisions were formed on the basis that their pensions are defined benefit and wouldn't be impacted by such decisions.

I believe the central bankers decisions would have been very different if they were on the same defined contribution pensions as most private sector workers.

In relation to HAP tenants, I would assume landlords renting to non-HAP tenants also have similar problems. With HAP at least you know you're going to get paid.

handlemaster

PropQueries wrote: »

Interest rate cuts were a complete favour to property investors. The central banks basically put the interests of property investors ahead of pensioners. The looming pension crisis was well flagged 20 years ago. But then again, the central banks decisions were formed on the basis that their pensions are defined benefit and wouldn't be impacted by such decisions.

I believe the central bankers decisions would have been very different if they were on the same defined contribution pensions as most private sector workers.

In relation to HAP tenants, I would assume landlords renting to non-HAP tenants also have similar problems. With HAP at least you know you're going to get paid.

Interest rates were lowered to help kick start businesses to expand or growth. It wsnt for property investors.

HAP is not a guarantee. It can stop when the tenant stops paying their portion to the council.

PropQueries

handlemaster wrote: »

Interest rates were lowered to help kick start businesses to expand or growth. It wsnt for property investors.

HAP is not a guarantee. It can stop when the tenant stops paying their portion to the council.

The interest rate cuts had very little to do with kick starting the economy. It was a back-door bailout of the banks to increase the value of the properties they had on their books. They just hoped (wrongly), that if the property loans issue was resolved that the banks would then lend more into the real economy.

It didn't work. European banks generally only lend into property or provide loans backed by property or other assets they believe won't fall. They're not very experienced or interested in real cash-flow lending unless it's backed up by property or other guarantees.

Nothing wrong with that, but I think it's a failing the ECB failed to take into account.

handlemaster

PropQueries wrote: »

The interest rate cuts had very little to do with kick starting the economy. It was a back-door bailout of the banks to increase the value of the properties they had on their books. They just hoped (wrongly), that if the property loans issue was resolved that the banks would then lend more into the real economy.

It didn't work. European banks generally only lend into property or provide loans backed by property or other assets they believe won't fall. They're not very experienced or interested in real cash-flow lending unless it's backed up by property or other guarantees.

Nothing wrong with that, but I think it's a failing the ECB failed to take into account.

Property was only and issue with a few countries it wasn't a real concern for the European Union mandate . The Germans and French the two big drivers from the eu and ultimately its policy couldn't give a monkeys about property prices. Its the irish who messed up there. You won't find the same property centric mentality on the continent.

brisan

The_Conductor wrote: »

You could structure property tax in a fairer manner- so that it is paid by the resident of the property, rather than the owner, and in the event that the property is a residential property and not let, then it incurs a higher rate of property tax- so there is an impetus to let property rather than leaving it vacant- and in the case of REITs etc- they should not be allowed to offset property tax against rental income (as they currently are doing)?

So people who do not own property pay the property tax.
I know that the landlord just adds the property tax to the rent ,but a tenant paying his landlords property tax would not go down well with a lot of people.
If the landlord reduced the rent accordingly then fair enough but it would be a cold day in hell for that to happen