Irish Property Market 2020 Part 2

nerrad01

has there ever been any talk of taxing the reit`s? its such a crazy situation made even more crazy by them holding onto so much vacant rental properties to hold prices up.

JimmyVik

thefridge2006 wrote: »

An agent might only be paid after they find you a tenant(once off payment) and the 50% will still need to be paid on the money received from the Council.....

Just because the money is coming from the Council, doesn't mean its tax exempt.

If an agent is looking after the property they are taking about 10% plus vat every month from the rent. Plus as you say their finders fee.


So just to do some very rough numbers here.



So lets say you normally rent a propery out for €10k per year via an agent.
Lets just take 10% as what goes to the agent.


On profit of 9k (we will ignore all other tax deductable expenses for now just for this comparison, as the majority are applicable to both LTL scheme and regular rental)



Taxed at 50%, that leaves you with €4.5K


LTL scheme
They will give your 85% on a 20 year lease.
€8500
Taxed at 50%, that leaves you with €4250


Now you can take away all the expenses and hassles that you wont have with LTL, its looking good to me.


Not exact figures tbf, but you can see how after tax and expenses there really isnt much in the difference.

Mic 1972

fliball123 wrote: »

Well the only thing I will say about your comment is that yes we will see anything can happen. But someone with a rental and having difficulty renting it out currently has the final option of giving their property to the government and getting 80/85% of the rental value for 20 years +

How does that work? is there any link to how this can be arranged?

JimmyVik

nerrad01 wrote: »

has there ever been any talk of taxing the reit`s? its such a crazy situation made even more crazy by them holding onto so much vacant rental properties to hold prices up.

Loads of talk. Nothing ever done though. Tax and regulate the regular investors out of the market though. Loads done on that.

fliball123

Mic 1972 wrote: »

How does that work? is there any link to how this can be arranged?

Here is a link to the different schemes and how you can see which one suits the particular landlord best

https://www.housingagency.ie/housing-information/information-property-owners-and-landlords

cnocbui

nerrad01 wrote: »

has there ever been any talk of taxing the reit`s? its such a crazy situation made even more crazy by them holding onto so much vacant rental properties to hold prices up.

I'd imagine you'd have to vote for Sin Fein to get something like that to happen.

Mic 1972

fliball123 wrote: »

Here is a link to the different schemes and how you can see which one suits the particular landlord best

https://www.housingagency.ie/housing-information/information-property-owners-and-landlords

Thanks!

thefridge2006

JimmyVik wrote: »

If an agent is looking after the property they are taking about 10% plus vat every month from the rent. Plus as you say their finders fee.


So just to do some very rough numbers here.



So lets say you normally rent a propery out for €10k per year via an agent.
Lets just take 10% as what goes to the agent.


On profit of 9k (we will ignore all other tax deductable expenses for now just for this comparison, as the majority are applicable to both LTL scheme and regular rental)



Taxed at 50%, that leaves you with €4.5K


LTL scheme
They will give your 85% on a 20 year lease.
€8500
Taxed at 50%, that leaves you with €4250


Now you can take away all the expenses and hassles that you wont have with LTL, its looking good to me.


Not exact figures tbf, but you can see how after tax and expenses there really isnt much in the difference.

But does this not strengthen my argument?
Small time investors, who have a mortgage on it and aren't making money in the game anymore and if they reduced their income by 12/20% more, its just not worth while anymore and might even be losing money on it especially if they have lost their job....

Donald Trump

thefridge2006 wrote: »

But does this not strengthen my argument?
Small time investors, who have a mortgage on it and aren't making money in the game anymore and if they reduced their income by 12/20% more, its just not worth while anymore and might even be losing money on it especially if they have lost their job....

Investment always has some form of risk. Sometimes you win and sometimes you lose. Sometimes you "win" but you really lose relative to other investments you could have chosen. There can't really be a special consideration given to "small time investors" who buy houses to rent out. If they don't understand the risks, or don't have the capacity to manage or hedge those risks, then that's their own problem. I honestly don't mean that to sound harsh

thefridge2006

Donald Trump wrote: »

Investment always has some form of risk. Sometimes you win and sometimes you lose. Sometimes you "win" but you really lose relative to other investments you could have chosen. There can't really be a special consideration given to "small time investors" who buy houses to rent out. If they don't understand the risks, or don't have the capacity to manage or hedge those risks, then that's their own problem. I honestly don't mean that to sound harsh

I totally agree but I'm about why this would be a reason for more people selling and why renting it to the council wouldn't be a option for most

PropQueries

thefridge2006 wrote: »

I totally agree but I'm about why this would be a reason for more people selling and why renting it to the council wouldn't be a option for most

I would say that many of the bigger build-to-rent investors are most likely in active negotiations with the councils at this stage regarding leasing their apartments in bulk. If not, they're nuts IMO.

But, there can only be so much in the budget so it will be interesting to see if the bigger investors soak up all the available allocated cash before the smaller investors get their foot in the door.

Claw Hammer

PropQueries wrote: »

I would say that many of the bigger build-to-rent investors are most likely in active negotiations with the councils at this stage regarding leasing their apartments in bulk. If not, they're nuts IMO.

But, there can only be so much in the budget so it will be interesting to see if the bigger investors soak up all the available allocated cash before the smaller investors get their foot in the door.

The bigger buy to let investors would be nuts to renting their property to the councils. The whole idea of the bigger buy to let investors is dealing high calibre professional tenants at top dollar rents. That way they have the maximum value of the property and it can be sold on easily to a pension fund or the like. No pension fund will want to buy a development where the majority of the occupants are council tenants.

PropQueries

Claw Hammer wrote: »

The bigger buy to let investors would be nuts to renting their property to the councils. The whole idea of the bigger buy to let investors is dealing high calibre professional tenants at top dollar rents. That way they have the maximum value of the property and it can be sold on easily to a pension fund or the like. No pension fund will want to buy a development where the majority of the occupants are council tenants.

Well, below is the rent the investors are receiving in Dundrum. And no matter what the press state, very very very few apartments are receiving this level of rent anywhere in Dublin (prime location or not). Similar apartments in Ballsbridge etc. can advertise at the below level of inflated rents all they want, but they're still mostly empty and have been for the past 24 months.

Pension funds only care about the return. If the council takes them for 25 years and hands them back to them in the same condition they leased them to the council at, they can't lose.

"The Herbert Hill apartments are now set to be used as social housing with the council reportedly paying monthly rents of some €2,000 for one-bed apartments, €2,500 for two-bed units and €3,000 for three-bed units. However, protesters argue that rent paid by the council over the next 25 years will end up exceeding what Realis paid for the complex, which stands in a prime location next to Dundrum Town Centre."

Ozark707

nerrad01 wrote: »

has there ever been any talk of taxing the reit`s? its such a crazy situation made even more crazy by them holding onto so much vacant rental properties to hold prices up.

No and given that FF now hold that ministry I thought they might make some noises in that regard. Unless I missed it I have yet to see anything and given it would be such a no brainer my thinking is that if they were to do it they would have done it by now (or hinted that they were going to do it).

I saw mention elsewhere that pension funds might possibly have to write down values if they were truly to let these at market rates so they don't bother and are happy to leave them empty.

brisan

Timing belt wrote: »

Ulster bank update as per Q3 results

‘Our strategy to grow our Ulster Bank business in the Republic of Ireland organically and safely remains unchanged. We continue to evaluate the impact of Covid-19 and the challenges to the economy and we are reviewing our strategy appropriately and responsibly in light of these events.
In the event of any changes being made to our strategy, these would be undertaken with full consideration of any impact on customers, colleagues and shareholders in the first instance. Our priority now is to continue to remain focused on supporting our colleagues in serving our customers in these difficult times.
As at Q3 2020, Ulster Bank RoI had approved over 17,000 payment breaks and, of those who have rolled off their initial payment break, approximately 46% have opted for a second payment break, representing around 8% of the lending book by value.’

https://www.rte.ie/news/business/2020/0918/1166119-ulster-bank-analysis/

brisan

Donald Trump wrote: »

Investment always has some form of risk. Sometimes you win and sometimes you lose. Sometimes you "win" but you really lose relative to other investments you could have chosen. There can't really be a special consideration given to "small time investors" who buy houses to rent out. If they don't understand the risks, or don't have the capacity to manage or hedge those risks, then that's their own problem. I honestly don't mean that to sound harsh

Irish landlords have in the majority of cases expected to make annual profits off an investment that goes up in value every year and kick up when this does not happen
At the end of every advertisement for investments it will say
The value of your investment can rise or fall
Some people do not think this should apply to the rental market

PropQueries

brisan wrote: »

Irish landlords have in the majority of cases expected to make annual profits off an investment that goes up in value every year and kick up when this does not happen
At the end of every advertisement for investments it will say
The value of your investment can rise or fall
Some people do not think this should apply to the rental market

There was an interesting article by David McWilliams a couple of weeks ago on why there is so much derelict property in Dublin. He surmises that they're left derelict because the owners are too rich and not because they're too poor to take of them. Interesting viewpoint and one could make a kind of similar argument on why all those 'luxury' apartments are lying empty throughout Dublin.

"Dereliction exists because owners have too much capital. They don’t care because they don’t have to care. To stop dereliction you must make capital expensive. Once we price capital properly, the owners of that capital will react.

People who let good assets – like an old Victorian building – go bad are not too poor, they are too rich. If they were poor, they would mind the asset, take care of it, make it work for them, generate a return and bring the asset into commercial use.

Only the truly wealthy can be truly wasteful.

If owners are not waking up in the middle of the night wondering “How will I make this property pay?” then the price of holding that asset is not too high, it is too low."

Link to David McWilliams article here: http://www.davidmcwilliams.ie/the-rules-of-the-property-game-have-changed/

random_banter

I’ve just been taking a look at the property price register for various homes I was following this year and that were sold, and happened to notice these values (attached) for new homes in the Beech Park development in Cabinteely.

Would anybody be able to explain what the values marked €365,520** represent? When I asked about these, they were starting at circa €560k. Thanks in advance.

Interested Observer

random_banter wrote: »

I’ve just been taking a look at the property price register for various homes I was following this year and that were sold, and happened to notice these values (attached) for new homes in the Beech Park development in Cabinteely.

Would anybody be able to explain what the values marked €365,520** represent? When I asked about these, they were starting at circa €560k. Thanks in advance.

** means not full market price.

awec

random_banter wrote: »

I’ve just been taking a look at the property price register for various homes I was following this year and that were sold, and happened to notice these values (attached) for new homes in the Beech Park development in Cabinteely.

Would anybody be able to explain what the values marked €365,520** represent? When I asked about these, they were starting at circa €560k. Thanks in advance.

Usually it is the houses bought for social housing.

outland1985

Does anyone think house prices in dublin will fall over the next 12 months, because of lack of supply at the moment they seem to be holding steady. I'm hoping to buy soon and am wondering should I hold off for a while, I suppose no one has a crystal ball bout would be interesting to see what people think.
Also do prices generally go above the asking prices and by how much?

silver2020

nerrad01 wrote: »

has there ever been any talk of taxing the reit`s? its such a crazy situation made even more crazy by them holding onto so much vacant rental properties to hold prices up.

I think one tabloid (or the indo which is tabloid in all but style) had some sensationalist report about unrented apartments.

It was debunked within days.

brisan

silver2020 wrote: »

I think one tabloid (or the indo which is tabloid in all but style) had some sensationalist report about unrented apartments.

It was debunked within days.

Over 2000 apartments to rent (many with multiple units in one complex) in Dublin city alone would seem to suggest that there is indeed a lot of unrented apartments in Dublin city

https://www.daft.ie/dublin-city/apartments-for-rent/?s%5Badvanced%5D=1&s%5Bignored_agents%5D%5B0%5D=1551&s%5Bsort_by%5D=price&s%5Bsort_type%5D=d&searchSource=rental&offset=20

Pelezico

outland1985 wrote: »

Does anyone think house prices in dublin will fall over the next 12 months, because of lack of supply at the moment they seem to be holding steady. I'm hoping to buy soon and am wondering should I hold off for a while, I suppose no one has a crystal ball bout would be interesting to see what people think.
Also do prices generally go above the asking prices and by how much?

This thread has been addressing this subject for almost a year now. You can start on page one and by the time you get to the end, I doubt it very much if you are any wiser.

outland1985

Pelezico wrote: »

This thread has been addressing this subject for almost a year now. You can start on page one and by the time you get to the end, I doubt it very much if you are any wiser.

Haha

Marius34

brisan wrote: »

Over 2000 apartments to rent (many with multiple units in one complex) in Dublin city alone would seem to suggest that there is indeed a lot of unrented apartments in Dublin city

https://www.daft.ie/dublin-city/apartments-for-rent/?s%5Badvanced%5D=1&s%5Bignored_agents%5D%5B0%5D=1551&s%5Bsort_by%5D=price&s%5Bsort_type%5D=d&searchSource=rental&offset=20

Those are for rent. It doesn't mean that they are vacant for years purposely.

brisan

Marius34 wrote: »

Those are for rent. It doesn't mean that they are vacant for years purposely.

The post I replied to said quite specifically unrented apartments
A lot of those apartments are left vacant on purpose because the owners do not want to drop the rental price
Dropping the rental price reduces the book price of the asset

cubatahavana

awec wrote: »

Usually it is the houses bought for social housing.

That’s a good few houses going for social. It’s not a big development

brisan

cubatahavana wrote: »

That’s a good few houses going for social. It’s not a big development

Most new developments would have more than than the legal minimum of social housing ,some substantially more

random_banter

brisan wrote: »

Most new developments would have more than than the legal minimum of social housing ,some substantially more

This is good to know. We had a look around the development but they hiked the original prices from 530-560k between when we first enquired and when the first phase was released so we’re less inclined now.

I’ve seen these being much more heavily promoted recently so wondering if they’re finding it hard to shift them?

We’re looking in South Dublin and the supply seems to have gotten lower and lower while each house we’ve seen goes quickly and with a bidding war. It’s getting quite tiring but we’re thinking we’ll wait till the dust of this global shi*testorm settles at this point.

And thanks to those who answered my query about the PPR.