Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie
2021 Irish Property Market chat - *mod warnings post 1*
Options
Comments
-
I’d be very surprised if many private landlords are enjoying a 40% premium on rent over mortgage. Intentional policy of make their mortgage unaffordable? Sounds like populist boll*x to punish the evil landlord class. I don’t see how that solves the issue of their being insufficient supply in the market. If there is sufficient supply consumers have more more choice to find a better deal in the market. That will result in rents falling. A better solution is a vacancy tax which kicks in after 2 months (or whatever the average duration of vacancy is). Then we would see if there are the magical hundreds of thousands of vacant units hiding in plane sight around the country (excluding the luxury developments in d2 and d4 everyone knows about).
I presume you have not been reading the news for the last five years as there is a housing crisis, predominantly due to the hyper growth of rents. It is not just a supply issue, but also a cost issue. If you think it is just the one then you do not accept it is a "crisis" or an "emergency" but something a lot less severe. Sure what good would a doubling or tripling of supply be if it was of 2 bedroom apartments starting at €2k per month?! Just about affordable for two well paid finance or tech workers sharing but how would that help people trying to raise their families?
And I use 40% for rents to decrease as, from looking at the average salaries and average rents, that would be a much more equitable level to pay for your rent and it would ensure people are not as financially stretched, unable to save, plan etc. For house prices, I think they aren't actually that unaffordable , maybe something like 15-20% reductions on new builds and an increase in supply would go a long way to alleviating the crisis.
You also have to think of the bigger picture post-covid; it is not sustainable for the cash in the economy to get sucked into rents instead of being circulated constantly into more productive sectors. Ensuring that workers have more cash in their pockets after they pay their rent and bills is far better for the economy.0 -
As if landlords unable to afford mortgage on their (extra) rental property is a justification for maintaining the status quo - yeah no. You have to accept that some people will lose out. Any landlords who cant afford the mortgage after a drop in rents should sell. They took a risk, it didnt pay off. Life goes on.
Haven't there only been something like 65 BTL mortgages per year drawn down over the last few years?
Assuming that figure is correct, what's the impact of say 10% of them leaving the market?0 -
See below in response to a proposal to decrease rents up to 40%.
As if landlords unable to afford mortgage on their (extra) rental property is a justification for maintaining the status quo - yeah no. You have to accept that some people will lose out. Any landlords who cant afford the mortgage after a drop in rents should sell. They took a risk, it didnt pay off. Life goes on.
The state should not be trying to keep these people in business.
I agree, it's such a weak argument to not look to implement a policy which makes rents more affordable. Especially when you note that even with rents skyrocketing the past few years, landlords have been exiting the market en masse so it is clear that prices do not keep landlords in the market, it is something else.0 -
Haven't there only been something like 65 BTL mortgages per year drawn down over the last few years?
Assuming that figure is correct, what's the impact of say 10% of them leaving the market?
Should they sell, either a larger institutional landlord will buy (because they can make do with a lower yield) or the home can be bought to live in for a homeowner.
The other thing to consider is that if rents go down, then house prices too.
The maximum price a REIT or similar fund will pay is based on target yield and current rental prices. If they still target the same yield of ~3% but market rents fall, then the maximum price they would pay to buy property also falls.
A very rough approximation would be maximum price = annual_rent * (100/target_yield)
As rent decreases, so too does the max an REIT would pay for property.
So its good for the market all round.0 -
Amadan Dubh wrote: »I presume you have not been reading the news for the last five years as there is a housing crisis, predominantly due to the hyper growth of rents. It is not just a supply issue, but also a cost issue. If you think it is just the one then you do not accept it is a "crisis" or an "emergency" but something a lot less severe. Sure what good would a doubling or tripling of supply be if it was of 2 bedroom apartments starting at €2k per month?! Just about affordable for two well paid finance or tech workers sharing but how would that help people trying to raise their families?
And I use 40% for rents to decrease as, from looking at the average salaries and average rents, that would be a much more equitable level to pay for your rent and it would ensure people are not as financially stretched, unable to save, plan etc. For house prices, I think they aren't actually that unaffordable , maybe something like 15-20% reductions on new builds and an increase in supply would go a long way to alleviating the crisis.
You also have to think of the bigger picture post-covid; it is not sustainable for the cash in the economy to get sucked into rents instead of being circulated constantly into more productive sectors. Ensuring that workers have more cash in their pockets after they pay their rent and bills is far better for the economy.
I’m not denying there isn’t an issue. There clearly is. But tell me how policies designed to make investment unattractive will encourage investment? Who will take on that risk? I don’t think private investors will. That leave “funds” or REITs but everyone seems to want them out of the industry too. Is it then Just the state? What is the capital cost of this? What are the operational costs going forward? Many many extra public servants are required to manage this? Additional public sector salaries and pension obligations?0 -
Advertisement
-
I’m not denying there isn’t an issue. There clearly is. But tell me how policies designed to make investment unattractive will encourage investment? Who will take on that risk? I don’t think private investors will. That leave “funds” or REITs but everyone seems to want them out of the industry too. Is it then Just the state? What is the capital cost of this? What are the operational costs going forward? Many many extra public servants are required to manage this? Additional public sector salaries and pension obligations?
I disagree that it necessarily follows that investment would be unattractive if rents climbed down to more affordable levels. We know there is significant demand and the population is projected to increase (due to the jobs anticipated to be created) so the outlook is good from the demand side.
It is important to note that while the targeted outcome is to increase supply and reduce rents, it is not as straightforward to isolate rent decreases directly like it is with targeting an increase in supply, so I think that by increasing the supply of appropriate developments, rents should drop that way - it should be a goal with the focus on increasing supply I suppose I mean. I'm fully in favour of competition and a fairer tax regime as well as stronger rules to enable eviction of non-paying tenants. The social housing tenants need to be taken out of the private market as the State is having too much of an impact on the market (1/3 of all tenancies getting support from the State!), which obviously means the State getting its own housebuilding going.0 -
You make some good points and I’m not in a position to disagree on the numbers as I don’t have any myself. However, look at it from an investment perspective. Landlords are needed, only an idiot would think otherwise. If policies are intentionally introduced to make an investment unattractive why would another investor take that risk? What happens further down the line when another wave of populism leads policy makers to make more bad decisions?
Just to echo comments made by a few others. If rents were somehow forced down (not saying this is easy to do, although I do think when you look at the level of government subsidy in the private rental sector - it's somewhat artificial at current levels).
In order for investors to continue to achieve the same yield, apartment prices would fall. Given building costs are relatively inflexible (and high), this theoretically would mean land values would have to fall also for more development to occur.
So we'd end up in a new era with lower rents, lower land values, lower apartment prices and investors still getting their yields. Sure the ones who bought in 2018-2021 would get stung, but that's investing for you and life would go on. Given that most of the BTL going on in 2018-2021 was done by large institutional investors, there's arguably no better time to pursue something like this as there's fewer than ever Joe Public Landlords to get stung by it.0 -
And if such a ridiculous policy was implemented resulting in a large number of private landlords being unable to afford their mortgages? Populism is great but real solutions are required.
With the greatest of respect, this is nonsense.
So what if private landlords cannot afford their mortgages? They'll simply be replaced with landlords/owners that can afford the property.
If the problem we're trying to solve is the unaffordable cost of housing then obviously rents falling by 40% will solve this problem.
Rubbishing such ideas as populism is just populism for landlord/property owning classes!0 -
Just to echo comments made by a few others. If rents were somehow forced down (not saying this is easy to do, although I do think when you look at the level of government subsidy in the private rental sector - it's somewhat artificial at current levels).
In order for investors to continue to achieve the same yield, apartment prices would fall. Given building costs are relatively inflexible (and high), this theoretically would mean land values would have to fall also for more development to occur.
So we'd end up in a new era with lower rents, lower land values, lower apartment prices and investors still getting their yields. Sure the ones who bought in 2018-2021 would get stung, but that's investing for you and life would go on. Given that most of the BTL going on in 2018-2021 was done by large institutional investors, there's arguably no better time to pursue something like this as there's fewer than ever Joe Public Landlords to get stung by it.
They would not achieve same yields, and if property price fall significantly, supplies would go down as well. Shortage of properties problem would grow.0 -
They would not achieve same yields, and if property price fall significantly, supplies would go down as well. Shortage of properties problem would grow.
In order to achieve same yield, they would need to buy in at a lower price. So their maximum affordability drops which will stop price inflation to a certain degree.
Inevitably there will be some loss in supply as some investors will pull out, but plenty will remain and some new ones will enter to buy in once prices dip enough to get that yield again.
Its not a silver bullet - the govt cant just hand-wave the rent to be 40% lower than it is anyways. Just stating that should rents fall 40%, its not the end of the world for the landlord class - and it certainly isnt a reason to want to keep rents high in the first place.0 -
Advertisement
-
With the greatest of respect, this is nonsense.
So what if private landlords cannot afford their mortgages? They'll simply be replaced with landlords/owners that can afford the property.
If the problem we're trying to solve is the unaffordable cost of housing then obviously rents falling by 40% will solve this problem.
Rubbishing such ideas as populism is just populism for landlord/property owning classes!
The point I am making is that if you introduce policies to make investment unattractive and drive investors out of the market you cause uncertainty in that market (whatever that market is property or otherwise). If there is uncertainty in a market it will deter investors as they may not want to take the additional risk. Are you really suggesting that introducing uncertainty in a market will not deter investment? That’s just nonsense, total nonsense. Rents obviously need to fall but to suggest regulating the sh*t out of the market will have the desired effect without unintended consequences is nonsense0 -
The point I am making is that if you introduce policies to make investment unattractive and drive investors out of the market you cause uncertainty in that market (whatever that market is property or otherwise). If there is uncertainty in a market it will deter investors as they may not want to take the additional risk. Are you really suggesting that introducing uncertainty in a market will not deter investment? That’s just nonsense, total nonsense. Rents obviously need to fall but to suggest regulating the sh*t out of the market will have the desired effect without unintended consequences is nonsense
9% stamp duty on investment property ring any bells ?
Or Rent controls?0 -
My response wasn't about keeping rents 40% higher.See below in response to a proposal to decrease rents up to 40%.
As if landlords unable to afford mortgage on their (extra) rental property is a justification for maintaining the status quo - yeah no. You have to accept that some people will lose out. Any landlords who cant afford the mortgage after a drop in rents should sell. They took a risk, it didnt pay off. Life goes on.
The state should not be trying to keep these people in business.
My argument was about people flip-flopping on the argument.
Ireland needs landlords, since not everyone is ever going to be able to buy. On this thread, people are arguing for driving out the funds, and also decreasing the number of individual landlords. Fewer landlords and fewer rental properties is only going to send rents in one direction.0 -
The point I am making is that if you introduce policies to make investment unattractive and drive investors out of the market you cause uncertainty in that market (whatever that market is property or otherwise). If there is uncertainty in a market it will deter investors as they may not want to take the additional risk. Are you really suggesting that introducing uncertainty in a market will not deter investment? That’s just nonsense, total nonsense. Rents obviously need to fall but to suggest regulating the sh*t out of the market will have the desired effect without unintended consequences is nonsense
Ok fair enough, but there is a difference between policies to encourage lower rents - eg remove rent controls in RPZs, vacant property tax, tax incentives for longer leases etc and "regulating the sh8t out of the market".0 -
The point I am making is that if you introduce policies to make investment unattractive and drive investors out of the market you cause uncertainty in that market (whatever that market is property or otherwise). If there is uncertainty in a market it will deter investors as they may not want to take the additional risk. Are you really suggesting that introducing uncertainty in a market will not deter investment? That’s just nonsense, total nonsense. Rents obviously need to fall but to suggest regulating the sh*t out of the market will have the desired effect without unintended consequences is nonsense
And if you introduce "incentives" to use property & land as speculative assets you also get unintended consequences. Some of which we are seeing right now, such as apartments being kept empty, central buildings & sites being left derelict because the speculative price keeps rising.
I'm not a fan of over regulation in any aspect of live, but property and land in this country needs it to stop speculators.0 -
In order to achieve same yield, they would need to buy in at a lower price. So their maximum affordability drops which will stop price inflation to a certain degree.
Inevitably there will be some loss in supply as some investors will pull out, but plenty will remain and some new ones will enter to buy in once prices dip enough to get that yield again.
Its not a silver bullet - the govt cant just hand-wave the rent to be 40% lower than it is anyways. Just stating that should rents fall 40%, its not the end of the world for the landlord class - and it certainly isnt a reason to want to keep rents high in the first place.
The rents definitely needs to go down, I'm all for it, Dublin rents are really high, but the only real solution, is increase level of supplies, and increased competition on supplies side. All the restrictions, and price controls does not help to increase it.0 -
Today's Indo has a piece about the housing crisis: "IMF says Irish government can afford to boost public spending and must tackle housing crisis"
https://www.independent.ie/business/imf-says-irish-government-can-afford-to-boost-publicspending-and-must-tackle-housing-crisis-40418593.html
An interesting take by the IMF on how the government can address the housing crisis. Increased spending is the overall gist. Tax rises to pay for it, but not until the impact of covid is over. Supports the increase in borrowing by the government.0 -
Today's Indo has a piece about the housing crisis: "IMF says Irish government can afford to boost public spending and must tackle housing crisis"
https://www.independent.ie/business/imf-says-irish-government-can-afford-to-boost-publicspending-and-must-tackle-housing-crisis-40418593.html
An interesting take by the IMF on how the government can address the housing crisis. Increased spending is the overall gist. Tax rises to pay for it, but not until the impact of covid is over. Supports the increase in borrowing by the government.
Think I read the line elsewhere that this was to be paid for by "widening the tax net"? Which really means - you need to tax lower paid workers more and increase property taxes. They're the two areas we lag behind peers, there's no more blood to be taken at the upper end give our 52% marginal tax rates.
Problem is both of those mechanisms of raising the tax take will be ferociously unpopular. I also think it's a real problem that, whilst it's clear those earning €10k - €30k don't pay anywhere near their "fair share" by international standards - given our very generous welfare system, how much can we increase taxes on lower paid workers before it becomes completely pointless to work at all? Choppy waters ahead for public finances.0 -
The rents definitely needs to go down, I'm all for it, Dublin rents are really high, but the only real solution, is increase level of supplies, and increased competition on supplies side. All the restrictions, and price controls does not help to increase it.
Price controls dont help, I agree.
However we need disincentives on keeping units vacant. And an actually enforceable vacant site levy.
REITs are dependent on rental prices to get their yields.
If they paid 400k+ for an apartment to get 3% yield, they are expecting an annual rent above 12k. If they rents fall in future, then so does their yield.
SO what they can do instead is trickle apartments on the market to ensure that rents stay high. Because if they rented all their units but then rents began to fall because of increased supply, it would hurt them more. Not only would they fail to achieve their desired rental yield, but the value of their properties would also fall along with the yield. Apartment prices are based around an expectation of what rents you *could* get. So if those expectations fall, so too do prices.
We need punitive measures to punish people for withholding rental supply to try and fix prices in the market.0 -
In todays SBP, Larry Summers reckons we need to wean ourselves off the FDI juice sooner or later...
Ireland should not attract multinationals through tax policy, former US Treasury Secretary saysIreland should move away from attracting multinational companies through tax policy, the former US Treasury Secretary and Chief Economist of the World Bank has said. Changing to attracting business through non-tax incentives will “pose certain challenges” for Ireland, Larry Summers added.
Summers said he hopes there will be “negative pressure” on Ireland to make itself attractive through “it's very substantial real advantages” rather than as a location to pay less tax.
I get the impression we're approaching a similar moment to "it's our currency but your problem"
https://www.businesspost.ie/economics/ireland-should-not-attract-multinationals-through-tax-policy-former-us-treasury-secretary-says-65e85f820 -
Advertisement
-
Hubertj wrote:I was responding to the posters suggestion policy should drive rents down 40%. That wouldn’t solve anything, in my opinion.
In the past 10 years rents have risen 100% in a period of close to 0 inflation in the non fire sector. Would you not agree that a bit of re balancing is required
I would imagine that 30 to 40% of that inflation occurred in the last 3 years. Every investment is based on some degree of certainty. Long term investors are put off by supernormal returns especially in a commodity that everyone needs as its a sure fire sign of a bubble
Is rent inflation creating an unsustainable bubble or helping to restore the supply/demand imbalance. The current situation would suggest the former and we are well aware of the consequences of real estate bubbles
Populism is dangerous, extremely dangerous if its for a small sector that has huge pricing power over everyone
We are at that point now. How we manage it will define the country for decades if not forever. I'm talking Argentina like0 -
Today's Indo has a piece about the housing crisis: "IMF says Irish government can afford to boost public spending and must tackle housing crisis"
https://www.independent.ie/business/imf-says-irish-government-can-afford-to-boost-publicspending-and-must-tackle-housing-crisis-40418593.html
An interesting take by the IMF on how the government can address the housing crisis. Increased spending is the overall gist. Tax rises to pay for it, but not until the impact of covid is over. Supports the increase in borrowing by the government.
Their whole shtick is based on spending as a proportion of GDP. We know that GDP is a fundamentally flawed measure generally, and is particularly flawed as regards Ireland due to our FDI/corporation tax racket.
If we did big up spending in a big way, the average joe and josephine will be strangled with taxes and charges.0 -
Price controls dont help, I agree.
However we need disincentives on keeping units vacant. And an actually enforceable vacant site levy.
REITs are dependent on rental prices to get their yields.
If they paid 400k+ for an apartment to get 3% yield, they are expecting an annual rent above 12k. If they rents fall in future, then so does their yield.
SO what they can do instead is trickle apartments on the market to ensure that rents stay high. Because if they rented all their units but then rents began to fall because of increased supply, it would hurt them more. Not only would they fail to achieve their desired rental yield, but the value of their properties would also fall along with the yield. Apartment prices are based around an expectation of what rents you *could* get. So if those expectations fall, so too do prices.
We need punitive measures to punish people for withholding rental supply to try and fix prices in the market.
REITs rent almost all of their apartments. It's only speculation here that they keep large portion vacant. Yes, there is disruption during Covid with around 1000 or so unrented higher end apartments in city center. New policy would be abit late to solve it, as lockdowns may end in few months, and most of it will be rented out.
Although I agree on vacant site levy.0 -
Problem is both of those mechanisms of raising the tax take will be ferociously unpopular. I also think it's a real problem that, whilst it's clear those earning €10k - €30k don't pay anywhere near their "fair share" by international standards - given our very generous welfare system, how much can we increase taxes on lower paid workers before it becomes completely pointless to work at all? Choppy waters ahead for public finances.
This is a massive problem...and the fact that income tax didn't fall so much during the pandemic really shows up that those on lower incomes do not pay their "fair share" as you say...0 -
I know there's a Leinster House bubble but wow from Hugh O' Connell's Twitter -The Tánaiste told colleagues about a Waterford Whispers article he had seen last week, headlined ‘Fine Gael and Fianna Fáil parliamentary parties have just discovered the housing crisis’, and said he doesn’t want this impression to be created0
-
Think I read the line elsewhere that this was to be paid for by "widening the tax net"? Which really means - you need to tax lower paid workers more and increase property taxes. They're the two areas we lag behind peers, there's no more blood to be taken at the upper end give our 52% marginal tax rates.
Problem is both of those mechanisms of raising the tax take will be ferociously unpopular. I also think it's a real problem that, whilst it's clear those earning €10k - €30k don't pay anywhere near their "fair share" by international standards - given our very generous welfare system, how much can we increase taxes on lower paid workers before it becomes completely pointless to work at all? Choppy waters ahead for public finances.
Legalise, regulate and tax cannabis for medical initially and then recreational. It will happen in next 5 years, guaranteed. Look across Europe. We could even go full Amsterdam!
Link to property - increased use of industrial / commercial and office space in direct and indirect industries. Increased FDI. Increased tourism to support recovery.0 -
REITs rent almost all of their apartments. It's only speculation here that they keep large portion vacant. Yes, there is disruption during Covid with around 1000 or so unrented higher end apartments in city center. New policy would be abit late to solve it, as lockdowns may end in few months, and most of it will be rented out.
Although I agree on vacant site levy.
Yeah it kind of smacks of the same people who said that making AirBnB illegal would bring so many properties onto the rental market that they would force rents down. Turns out most of them either sold to the council or rented to the council afterwards.0 -
Think I read the line elsewhere that this was to be paid for by "widening the tax net"? Which really means - you need to tax lower paid workers more and increase property taxes. They're the two areas we lag behind peers, there's no more blood to be taken at the upper end give our 52% marginal tax rates.
Problem is both of those mechanisms of raising the tax take will be ferociously unpopular. I also think it's a real problem that, whilst it's clear those earning €10k - €30k don't pay anywhere near their "fair share" by international standards - given our very generous welfare system, how much can we increase taxes on lower paid workers before it becomes completely pointless to work at all? Choppy waters ahead for public finances.
But how many lower paid workers are also already in receipt of HAP and other family income supports etc. For example, Simon Coveney stated a few months ago that:
"there could be as many people in his department on the Working Family Payment as in the whole of the Defence Forces."
Tax them more? All that means is that HAP, family income supports etc. will just rise in tandem. And, remember, carbon taxes (home heating) are increasing, they will also be shortly strongly encouraging more of these low paid workers to pay into a pension (that's really a tax as the chances of them getting a return out of that are minimal IMO) etc. etc. Where's the benefit outside of making the less well off feel even worse than they do already and making their lives harder?
The real issue is the current artificial high cost of renting and purchasing a family home. The rest would resolve itself fairly rapidly were these two issues resolved IMO
Link to article on Simon Coveney here: https://www.independent.ie/irish-news/politics/coveney-many-civil-servants-in-my-department-are-on-family-income-top-up-like-members-of-defence-forces-39601376.html0 -
Yeah it kind of smacks of the same people who said that making AirBnB illegal would bring so many properties onto the rental market that they would force rents down. Turns out most of them either sold to the council or rented to the council afterwards.
A knock on impact of the Funds and REITs advertising properties at aspirational rents and leaving them vacant is the state is most likely overpaying on these bad value for money inflation proofed leases it's entering into in the first place.
From DCC's own literature on their leasing schemes:
"Rents will be paid at 80% of the current DAFT rate for properties which do not have a Management Company in situ. Properties which do have a Management Company in situ will receive 85% of the DAFT rate. The rent is reviewed upwards or downwards at review date in accordance with the lease agreement. This rent discount is applied to take account of the management/maintenance of the property by DCC and the elimination of vacant periods where a property owner would normally not receive a rent payment."
Do we really have faith in a member of the DCC staff to engage in some critical thinking and challenge the initial rent levels being sought by generous investors approaching them with gifts of 25 leases on "discounted terms"?
I shudder to think of the deals being done at present from funds, REITs, HAP and even the immigrant Investor programme that we have running (used to fund some 3500 social homes between 2012 and 2019 -"however it should be noted the approval does not equate to actual builds" https://www.irishtimes.com/business/construction/cash-for-residency-scheme-has-funded-3-500-social-homes-1.4471395?mode=amp)0 -
Advertisement
-
Twice in two days in the dail it has been mentioned that homelessness has reduced.
Are those living with parents into their 30’s considered homeless? (No)
Do we have any figures on how many people co habit with parents/family vs other years in the past?
If the vast majority of homes purchased in Ireland are bought on a buy to rent basis this housing crisis must be many many magnitudes greater than I or others ever thought.0
This discussion has been closed.
Advertisement