Irish Property Market chat II - *read mod note post #1 before posting*

freemickey

https://www.boards.ie/discussion/comment/119153485#Comment_119153485

It wasn't incompetence at all, quite the opposite. Purposeful, is what it was, and highly effective.

Now, however, that it's reached it's zenith, it's just becoming more obvious. It was too easy to look away up until now and play games of pretend. Not anymore.

Nobody in their right mind looks at the housing situation and decides that an extra 40,000 people is what's needed to alleviate the housing crisis, or any other national woe. Nobody.

Therefore, as rational, intelligent organisms, surrounded by an army of sensible, rational organisms on hand for advice, what IS the rationale for more and more people into a housing crisis? What does it serve? What effect will it invariably have on housing scarcity? What effect does scarcity have on the cost of necessary commodities?

Bingo.

keoclassic

https://www.boards.ie/discussion/comment/119153469#Comment_119153469

He should be arrested for treason the prick. Time and time again they interfere to keep the transfer of wealth from the taxpayer to landlords going. It's criminal.

AlmightyCushion

https://www.boards.ie/discussion/comment/119153465#Comment_119153465

Extending rent-a-room to landlords will cause more problems than it solves. It will remove 2+ bedroom properties from the market. If a 1 bed studio can get 1,000 a month tax free, then it doesn't make sense for a landlord to own a bigger property than that as they won't get any extra cash after tax unless they rent it for 2500 or more. They will just sell their bigger properties and buy smaller ones. Either that or they will divide up bigger houses to make them 2 or 3 smaller properties.

Timing belt

https://www.boards.ie/discussion/comment/119152461#Comment_119152461

We all know that QE has an impact on asset prices because the holders of bonds saw their asset price rise as the yields fell and when the crystallised this gain the money then finds its way to other asset classes.

It was the printing of money element I was interested in because a lot of people talked about the dramatic rise in the M1 money supply and said this was due to QE.

Especially YouTube armchair analysts/economists. Which was totally false as the rise was due to a reclassification of how they measured the M1 money supply. And the overall m2 supply (which includes the M1) didn’t increase because all that happened was savings were moved out of the M2 and into the M1.

e.g.

AlmightyCushion

https://www.boards.ie/discussion/comment/119154214#Comment_119154214

Even if you just look at the M2 supply, you're still talking about it increasing from just under 16T to 20T in the space of a year. That's more than a 25% increase.

The Student

https://www.boards.ie/discussion/comment/119154148#Comment_119154148

Tailor it to the property size. I would have thought that was obvious without the need to explain that.

iColdFusion

https://www.boards.ie/discussion/comment/119153021#Comment_119153021

That is the craziest thing in all of this, the crowd most likely to get elected next want to double down on social housing, buying up full estates, part V and generally billions of government money being poured into housing while removing HTB and increasing income taxes, it will be dire times for anyone trying to buy their own home when SF are in power, they might as well quit their jobs and go on the dole now because the Shinners know giving out free houses will buy them a few elections.

It gets even worse when you see the 54% HAP figure and you realise your tax money is being used to subsidise the rent of people on minimum wage so companies don't need to pay them properly and can pocket the profits.

AlmightyCushion

https://www.boards.ie/discussion/comment/119154519#Comment_119154519

You never mentioned that. You just said anything up to the rent-a-room limit was tax free. Ok, how does the property size part of this work?

The Student

https://www.boards.ie/discussion/comment/119154594#Comment_119154594

I said extend the rent a room scheme. I did not say keep the same limits.

The number of bed spaces. Typical 3 bed semis have 5 bed spaces. Two double rooms and a single room. If you have three double rooms it's 6 bed spaces. If you have a two bed apartment it's either a 3 or 4 bed space.

The above is the concept.

AlmightyCushion

https://www.boards.ie/discussion/comment/119154720#Comment_119154720

Ok. What is the tax free amount you can charge per bed space? What is defined as a bed space?

The Student

https://www.boards.ie/discussion/comment/119155043#Comment_119155043

A bed space is the term used when applying for planning permission for a house which is used to calculate private open outdoor space requirements.

You could say for example €300 per bed space subject to a max of €1400 per property. So a two bedspace property which is a one doublebed apartment gets 600. A two bed apartment a double and single room gets 900 and so on.

Even at 1400 for a 6 bed space property two double rooms and two single rooms a small landlord is not clearing 1400 after tax.

By limiting the tax free rent to 1400 the tenant only has to pay 1400 and not 2500 or even more in rent.

The reduced rent allows the tenant save to purchase their own property should they wish to.

Pussyhands

What good does giving tax breaks to small landlords do? Does it mean more houses built? No. It's just shuffling around current housing stock.

Get Real

https://www.boards.ie/discussion/comment/119155981#Comment_119155981

I think where its applicable is the rent a room scheme.

Say you have an older person in a 4 bed house. They can rent out a room/rooms up to C. 12k a year tax free.

For arguments sake, let's say a room is 500 a month. If they rent out 2 rooms a year, they fall under the tax free limit. The third bedroom is left vacant.

If they rent out the third room, they breach the limit and are taxed on ALL income. So they may not bother renting the third room, or renting out any rooms at all if they're paying higher rate of income tax.

"The income you receive must not exceed the exemption limit. If it does then you are taxed on the TOTAL amount."

https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/land-and-property/rent-a-room-relief/index.aspx

Not saying I agree or disagree with any of it. Just that some people may in theory be further incentivised to rent more rooms with that extra tax break.

AlmightyCushion

https://www.boards.ie/discussion/comment/119155974#Comment_119155974

Bed space is a term I have only ever heard used when discussing student accommodation. I have never heard anything about it in a residential context and a quick google can't give me a definition either. What is stopping a landlord claiming the sitting room is a 2 bed space room. Then a landlord with a 1 bed apartment can charge 1200 a month for it and it would all be tax free. Even if a landlord is legit and doesn't claim the sitting room is a bed space, then it still might not make sense for them to lower the rent. 1200 after tax would be about 600 give or take. There are plenty of 1 bed apartments on Daft in Dublin that cost more than 1200 a month. Under this scheme you propose, there is no incentive for these landlords to drop the rent so no saving for the tenant there.

A 2 bed apartment can get earn a landlord 1200 a month tax free. A 3 or 4 bed can earn max 1400 tax free. Landlords who own those 3 and 4 beds will just sell up and buy 1 and 2 bed apartments instead. Financially, it makes sense. They could probably buy 2 or 3 relatively cheap 2 beds for the price of a 3 bed. So, now you have restricted availability of family housing in the rental market. Any landlords who own properties in more expensive areas will sell up as well. A 2 bed in Ranelagh or D4 earns as much as a 2 bed in Finglas or Clondalkin under your scheme but the Finglas 2 bed costs a lot less. So, you have also just removed parts of the country from the rental market.

Then there is the fact the those prices would be cheap in Dublin, Cork or Galway but in other parts of the country it would be very expensive. 1400 for a 3 bed in Dublin is good value but in a small town in Sligo, Leitrim, Roscommon etc it is hugely expensive. Why should a landlord trying to charge 1400 for a 3 bed in a town like Tubbercurry in Sligo get to do that tax free when it is a crazy price. Then there is the fact that this will result in a huge loss of revenue for the tax payer. Which wouldn't be too bad if it worked and actually reduced rents instead of massively screwing up the rental market.

Timing belt

https://www.boards.ie/discussion/comment/119156349#Comment_119156349

Not to mention that no one will invest in a property to rent when the yield ends up being lower than a risk free investment especially when the risk of tenants not paying or damaging property exists….you would just end up with a bigger supply issue with less properties being built and a black market where people would pay cash on the side to get a rental property and pay the tax free element via a standing order.

Villa05

https://www.boards.ie/discussion/comment/119154214#Comment_119154214

We all know that QE has an impact on asset prices because the holders of bonds saw their asset price rise as the yields fell and when the crystallised this gain the money then finds its way to other asset classes.

We may all know, do we all know the extent of that impact. Below is a link to a graph of the Nadaq. Set the range to max and check out the graph. QE makes the dot.com and 2008 crash look like little ripples. QE was meant to be an aid to recovery from a house price bubble burst in 08, it has delivered a bubble in all assets

https://g.co/finance/.IXIC%3AINDEXNASDAQ?window=MAX

The Student

https://www.boards.ie/discussion/comment/119156349#Comment_119156349

Bed space is included in the housing standards see https://www.dublincity.ie/dublin-city-development-plan-2016-2022/16-development-standards/1610-standards-residential-accommodation/16102-residential-quality-standards-houses for ref.

We have an issue with supply. So rather than deter existing supply we should be encouraging its retention. If all properties were rented based on bed spaces as per the housing standards definition then any landlord who rents a sitting room as a bed space falls out of the extended rent a room definition I am suggesting. It is very easy to work out the number of bed spaces by comparing the returns with the lpt returns for an location and running an exceptions report. This is exactly what revenue do when profiling tax returns for different segments of tax payers.

You tax corporate landlords exactly the same way as private landlords. They are encouraged by economic forces to reduce rental prices.

Charging 1600 to 1800 for a one bed apartment is unaffordable to most people. But with the limited supply and the private landlords selling up supply will further dwindle.

We need to at a min maintain the supply we have while buying time to increase supply. Forcing changes on small landlords will prompt them to react eg selling up and will discourage new entrants.

The suggestion I made can be tailored to each area.

MoneyPrinterGoBuurrrr

https://www.boards.ie/discussion/comment/119157091#Comment_119157091

The bigger the bubble the bigger the crash. Most people who bought in the past couple of years who are highly leveraged will be in for some pain ahead.

Anyone buying now needs to rethink their strategy.

Timing belt

https://www.boards.ie/discussion/comment/119157460#Comment_119157460

So how much do you think property prices will fall? Interested as your other predictions about rate rises were at the extreme end of the spectrum.

Sierra Oscar

It looks like, as predicted, the increase in material costs for construction is likely to drive down the supply of new homes.

If there is a slow down in the economy we need to keep building to sort out the supply crisis long term, but I suspect the opposite will happen in reality.

Material price hikes cause slowdown in housing schemes being built

A number of developments around the country are being shelved temporarily until the construction materials market settles down, according to senior sources in the building industry, according to the Sunday Business Post. The unprecedented volatility in materials prices and the risks associated with fixed price contracts have led to a noticeable slowdown in the number of new residential housing developments coming through the project pipeline, it said. Soaring prices for key construction materials such as steel, timber and concrete over the past six months have made it increasingly difficult for building firms to price tenders.

https://www.irishtimes.com/business/2022/06/05/government-to-consider-new-tax-breaks-for-small-landlords/

combat14

https://www.boards.ie/discussion/comment/119153568#Comment_119153568

at this stage it would be much cheaper or economically viable for the government to essentially pay anyone without a house or on the HAP scheme to leave the country and not come back instead of building new houses ...

we might have some room then to house those from east europe and asia etc. that are more in need of houses then our very own

politically though that would probably go down like a lead balloon 🎈 but thats where we are as a nation after FF-FG running the place into the ground the last 10 years from a basic essential housing perspective....

jo187

https://www.boards.ie/discussion/comment/119160478#Comment_119160478

Whenever the government are asked about housing it's all "housing for all" will solve everything and we will hit our targets.

Ignoring doing anything at the moment to solve the issues. Be interesting if this slows down housing for all, what will they say then?

Timing belt

https://www.boards.ie/discussion/comment/119150279#Comment_119150279

Don’t think it’s a total pause on new hires

https://www.corkbeo.ie/news/local-news/facebook-plans-major-expansion-cork-24148699

Amadan Dubh

https://www.boards.ie/discussion/comment/119161511#Comment_119161511

15 new jobs are all that are listed so far. That's more sustainable to see more muter growth going forward with 41 rentals available in Cork city today. For separate reasons, I don't think we'll see Facebook in the mega tech stock category in the next few years so I wouldn't be worrying too much about them creating too many jobs compared to the rentals available; Sandberg is gone, Zuckerberg has cashed out a lot of his shares and cannot hold control of such a huge publicly listed entity and expect that to meet with ESG obligations (the G in particular). Long story short, it will end up splitting up its parts while what's left goes into the undefined metaverse project.

wassie

https://www.boards.ie/discussion/comment/119157460#Comment_119157460

With the majority of borrowers having LTI's of 3.5, I would dispute they are highly leveraged.

Not saying there are those that wont potentially be affected such as those with exemptions (4.5x max) may feel the squeeze. But its still not ridculously high like other countries where LTIs of 6 or 7 are common enough.

Also other cases, such as couples who have relied on 2 incomes that if they are considering starting a family however that may be in for a reality check. But not most people I would say.

As for buying now, a simple strategy would be lock in for the long term. Eg Finance Ireland art present offer a 25 year mortgage @ 2.9%. Provided you have a stable income to cover the mortgage then it really wouldnt impact what housing prices did in the long term.

newmember2

https://www.boards.ie/discussion/comment/119161817#Comment_119161817

Surely it's preferable to "lock in for the long term" at the lowest cost possible, so buying now might not be the best move?

growleaves

https://www.boards.ie/discussion/comment/119160507#Comment_119160507

Perhaps they are just waiting for a recession and Irish safety valve of emigration to kick in. Every generation of Irish politicians has relied on this to maintain the standard of living of remaining non-emigrees.

Bass Reeves

https://www.boards.ie/discussion/comment/119161960#Comment_119161960

2.9% mighr not seem a bad bet. Hard to not see inflation for the next three years. After that who knows. But climate change regulations will see inflation as as an issue for the next ten years. Remember we are after 5years of virtual negative interest rates.

If I was fixing at present I would definitely fix for ten years especially if I felt repayments might put me under pressure

MoneyPrinterGoBuurrrr

https://www.boards.ie/discussion/comment/119158284#Comment_119158284

They weren't extreme at all, after a few mere 0.5 basis point hikes in the US, mortgage rates are already up 4-5% since the start of the year and there is still more hikes to come.

The ECB terminal rate is projected (conservatively) at 1.8% by year end, so too put it in laymans terms, 0% we had mortgage rates between 2-3% for high LTV, at 1.8% we will be looking at around 3.5-5% rates and mix in the fact there is many more rate hikes to come it's likely those coming out of fixed terms in 2023/2024 might see at least 5-6% rates.

I fully expect most property under 500,000 to drop at least 20% by 2024, although the lower end may hold up. The macro environment has never been so precarious, the vast majority are under estimating the impact of this downturn.

MoneyPrinterGoBuurrrr

https://www.boards.ie/discussion/comment/119161817#Comment_119161817

Many may have taken out additional loans to fund the deposit. They haven't factored in inflation hasn't even taken off yet, when their cost of living expenses on food and energy are up over 100-200% plus mortgage rates up a few percent, most will feel the squeeze. This belt tightening will be felt on all areas of the economy, unfortuantely, as millions reign in spending.