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

Timing belt

https://www.boards.ie/discussion/comment/119634450#Comment_119634450

I’m not one bit surprised…all the talk of investors selling and we will have a fire sale whilst the talk within investment funds is that there is a large opportunity for returns as it’s a captive market. The biggest issue they are calling out is the lack of opportunity to invest. they aren’t scared of SF coming to power as they have already have been given guarantees.

Alot of young people are talking about emigrating due to struggles here with cost of living, rent, and finding a place to live. Cost of living protests on next weekend.

cnocbui

If these were bought by REITs, they should remove their tax free status. If an individual living overseas owns an Irish rental property, they will be taxed in Ireland on that rent and CGT if they sell it, so I see no reason why a REIT should be treated any differently.

Villa05

https://www.boards.ie/discussion/comment/119634523#Comment_119634523

Grim stuff, we've sold our kids to bail out the financial industry, giving them the strength to batter them while their on the floor

I'm half afraid to ask, but what guarantees?

Timing belt

https://www.boards.ie/discussion/comment/119634599#Comment_119634599

REITS never really took off on Ireland. These will no doubt be bought by an SPV that is owned by a REIF.

The issue with taxation is that you if you tax funds you kill an industry in Ireland and in the process and cut off funding for new builds.

If they are to introduce a way of increasing tax specifically on funds they need to do so in a way that doesn’t impact other asset classes and still provides the necessary funding for new builds.

kaymin

https://www.boards.ie/discussion/comment/119634649#Comment_119634649

Can't be difficult to structure a tax that targets funds investing in Irish property (a tiny % of funds administered / managed out of Ireland anyway). It should never have been allowed in the first place.

Timing belt

https://www.boards.ie/discussion/comment/119634633#Comment_119634633

SF meet with institutional investors to say there would be no material change and that they still needed them…they did the same with big tech a few weeks back.

I’m no lover of big institutional investors but there is a place for them as without them there really would be a rental shortage. Problem is that because social housing hasn’t been built in sufficient numbers it gives them more or less a monopoly of the rental market.

interesting article in the times….sheds some light on the 54% of renters receiving supports. The largest portion being people in council or housing agencies and not renting in the private sector.

https://www.irishtimes.com/business/2022/09/18/local-authorities-should-get-construction-companies-to-tackle-housing-crisis-says-economist/

Dav010

https://www.boards.ie/discussion/comment/119634599#Comment_119634599

Do they have a tax free status? I thought the tax was paid on dividends and if they taxed rental income as well, it would amount to a double taxation.

dontmindme

https://www.boards.ie/discussion/comment/119634450#Comment_119634450

"...You could cover all your land in concrete and prices will still rise..."

kaymin

https://www.boards.ie/discussion/comment/119634702#Comment_119634702

Yes if they're Irish residents but not if they're non-resident:

Non resident investors will not be liable to Irish capital Gains tax because the REIT is a publicly listed company. 

However, the investors may be liable to such taxes in their home jurisdictions. In relation to dividends, it is intended that the REIT will apply dividend withholding tax (DWT) at the rate of 20% from income distributions to non residents. Certain non residents may be entitled, under their tax treaties, to recover some of this DWT from Ireland or otherwise should be able to claim a credit for DWT against taxes in their home jurisdictions. 

Certain Irish resident pension funds, insurance companies and other exempt persons will be exempt from DWT.

Dav010

https://www.boards.ie/discussion/comment/119634799#Comment_119634799

Thanks, I remember hearing an economist explain that it was incorrect to say they don’t pay tax, I just couldn’t remember the details.

cnocbui

https://www.boards.ie/discussion/comment/119634649#Comment_119634649

They have been buying completed builds that they did not fund the construction of, including in 2019, an entire apartment block. The Germans clearly have the same problem because they recently passed legislation to specifically forbid funds from purchasing residential properties.

We have been over this before and yet this false belief persists that commercial interests are a major funder of construction and that the supply of housing depends on them being allowed to compete against individual buyers.

cnocbui

https://www.boards.ie/discussion/comment/119634702#Comment_119634702

Dividends are taxed, but in likely the vast majority of instances, those individuals are not resident in Ireland so may end up paying very little tax here.

"And here lies the problem. Irish resident individuals pay Income Tax and USC at their marginal rates while a non-resident investor may pay little or no Irish Income Taxes on the REIT dividend. This is inequitable.

With no business taxes collected at the company level, and limited Income Tax collected on dividends from REITs, some overseas investors are obtaining profit and gains on Irish property and making very little or no monetary contribution to the State. In this way, the REIT regime undermines the principle that Ireland hold onto the right to tax profits and gains from Irish land and property." https://www.rte.ie/brainstorm/2021/0513/1221319-ireland-housing-property-reits-tax-investment-funds/

HerrKapitan

https://www.boards.ie/discussion/comment/119634450#Comment_119634450

You will own nothing and you will be happy - WEF

cnocbui

"'Most apartment developments pre-sold'

At the time, Cairn chief executive Michael Stanley said that cuckoo funds accounted for 30% of its sales in the medium term, adding that “almost all” apartment developments (exempt from the Government’s new rules) are forward-sold. 

Mr Stanley said: "There is nobody building speculative apartments where they don’t yet have a buyer or a forward buyer.

...

Funds bought 57% of new homes in 2019

Investment funds bought over 5,800 homes in Dublin in 2019 at a cost of €2.4bn, with 57% of all new builds in the capital snapped up.

While focus has been drawn to the purchase of 135 homes at an estate in Maynooth, the scale of that spending is seen in a report on the Dublin property market, which was published by estate agents Hooke & MacDonald in February." https://www.irishexaminer.com/news/politics/arid-40296650.html

Heres a clue, you don't need to 'buy' something if you commissioned and funded the construction.

Villa05

https://www.boards.ie/discussion/comment/119634688#Comment_119634688

I'd be very surprised if SF allowed a 0 tax policy on investment funds

I agree they have a place in the market but we are really asking for trouble when they are dominant

Would you dis/agree that we are firmly in bubble territory? I think we need a crash now to minimise future damage. Hard to tell what rising rates will do. Will it divert the funds elsewhere or will it eliminate their competition ie ftb's in completely dominating the housing market. I fear the latter

Politicians will Need security when door to door canvassing for next election

Timing belt

https://www.boards.ie/discussion/comment/119635641#Comment_119635641

I agree that prices are not sustainable over the long term but can’t see it improving when the backlog of housing needs never gets touched due to an ever increasing population.

I wouldn’t count on a housing crash because they are not that common and the one we did see was due to exceptional circumstances. A perfect storm of over supply combined with a credit crunch none of those exist at the moment. What I do see happening once the supply issue gets sorted is a long period where price plateau…

At the current rate we would need to be building 60k a year to make any difference to price and the first sign of prices stabling will be when there are more properties to rent than required only then will renters be able to negotiate lower rent and pressure to buy reduce.

with regards SF policy there is no chance that they would be able to implement what they say and will be forced to move more to the centre unless they are willing to accept only one term in power. They make a lot of noise and give sound bites that people fall for but if you read any of there alternative budgets you can see fast that they won’t work. Just look at the number of houses they say they will deliver and look at the money allocated it works out at something stupid like 120k per house. So unless you truly believe that the can build for that price it means they will massively overshoot the budget or deliver way less.

Bass Reeves

https://www.boards.ie/discussion/comment/119634688#Comment_119634688

When this figure was quoted earlier in the week I asked did it include council and housing association rentals and I was replied to that not was private rentals only. 54% including LA and housing association would indicate that HAP and RAS are only effecting less than 25% of the private rental market.

Timing belt

https://www.boards.ie/discussion/comment/119635502#Comment_119635502

No where did I say that the supply of housing depends on them being allowed to complete against individual buyers…what I said is they they are the source of finance for 99% of all building in Ireland as banks won’t lend any meaningful amounts to developers due to the capital costs.

There is a place for institutional investors in the housing market. At present they are the main supply of rental properties without them we would have a real housing crisis.

Should they have a monopoly absolutely not..that is where we are headed though And something needs to change but we need to be careful with any changes as it needs to be targeted and not make the housing situation worse than it already is.

Timing belt

https://www.boards.ie/discussion/comment/119635760#Comment_119635760

That is close to the figures quoted in the article.

cnocbui

https://www.boards.ie/discussion/comment/119635764#Comment_119635764

You are talking nonsense. You do not have to buy something you funded and paid for. There are many reports of developers selling near completed projects to funds, which means those funds did not provide the financing and that the banks will provide funding to developers.

"A global investment company has been involved in the acquisition of a new development of 112 houses in north Dublin in order to rent them out.

Round Hill Capital is the same company which also bought most of the houses in a Maynooth, Co Kildare, housing estate." https://www.irishtimes.com/news/politics/investment-firms-buy-estate-of-112-new-houses-in-dublin-to-rent-out-1.4554949

"Vulture funds 'spreading their wings' and snapping up property all across the State

Investment firms are buying homes in Waterford, Cork, Limerick and Galway, the Dáil heard ...

"In 2019, six out of 10 new homes in Dublin were taken off the market and the vast majority were sold to the investment funds. Indeed, in the last four weeks, 400 houses have been snapped up by these funds,” she said.

“They are not stopping with Dublin; their plan is now to spread their wings across the State. These investment funds are now moving to Waterford, Cork, Limerick and Galway, with leading developers saying that they will be selling more than 40% of their new homes to these funds in the years ahead." https://www.irishexaminer.com/news/politics/arid-40286690.html

"Institutional investors are now the main buyers of apartments in Dublin; they are also paying - on average - more than household purchasers." https://www.irishtimes.com/business/economy/2022/06/12/are-property-funds-turning-us-into-a-nation-of-renters/

"One of Ireland’s biggest housebuilders has sold a block of 90 apartments in Dublin to a German pension fund.

Glenveagh Properties announced yesterday that it sold the development at Herbert Hill in Dundrum for €55 million. A report published this week showed that investment funds had snapped up hundreds of apartments across Ireland in the first nine months of the year.

Glenveagh did not name the investor the bought the block at Herbert Hill but it is understood that the buyer is Realis, a German pension fund."

Provide some links proving that banks won't lend for large scale property development projects, except to large property funds. I have posted multiple examples disproving your assertion, but go on.

Timing belt

https://www.boards.ie/discussion/comment/119635909#Comment_119635909

have a look at the banks balance sheets and see how much lending they are providing developers if you think I’m talking nonsense…..

why would banks lend to developers in significant amounts when they need to hold more capital that the amount they have lent. you can do your homework look up CRDIV regulation imposed on banks with the main aim to prevent a crash like 08.

just because a fund provides financing for a development doesn’t mean the development can’t be sold to a different fund. Is that really that hard to get your head around?

cnocbui

There are none so blind as those who will not see. FFS, how many more links proving you wrong do you want?

Timing belt

https://www.boards.ie/discussion/comment/119635987#Comment_119635987

how exactly am I wrong?

Do you think banks are providing funding to developers? You do realise that their are multiple types of funds…real estate, equity, debt, private equity, fund of funds etc. The majority of the banks exposure to developers is when they come in and sub partipate in the investment once it is up and running or buy some form of subordinate debt from a fund.

how hard is it to understand that funds buy and sell to each other?

all you posted are links saying funds purchased….every man and their dog knows that….it proves f all….

99% of funding to developers come me from investors with the majority via funds…. Probably some that you have contributed to if you have a pension or any form of insurance.

jimmybobbyschweiz

https://www.boards.ie/discussion/comment/119634005#Comment_119634005

Patience, Timing Belt, it's playing out now. I've always said to wait a year after COVID to see how it plays out because the reason nothing had happened during COVID was due to the sensational government support for all sectors of the economy - businesses were literally getting paid to not trade and workers getting paid for doing absolutely nothing, just sitting at home.

To think something would happen in that context, as I had always said at the time and am saying to you again now, is blatantly wrong.

Dav010

https://www.boards.ie/discussion/comment/119636171#Comment_119636171

So if we wait long enough, eventually a collapse will happen?

Out of interest, how many of the predictions you posted on boards over the years have been accurate?

On a separate note, SF have called this morning for the government to pay the equivalent of one months rent into each renters bank account, and put a ban on rent increases for 3 yrs. The first is just bonkers, the second will be further proof (if it was needed) to small LLs that they must leave the market before these loons may be in a position of power.

Villa05

https://www.boards.ie/discussion/comment/119636171#Comment_119636171

I'm not so sure that sensational government support will stop. The next budget will be giving out an extra 6 billion and that pit won't refuse it.

jimmybobbyschweiz

https://www.boards.ie/discussion/comment/119636193#Comment_119636193

Read my posts on the last few pages. It's all there about interest rates, the MNC gravy train stalling, inflation not being transitory - I am only parroting what the private sector is saying and Not what official Ireland and its cheerleaders are saying so they aren't technically my predictions but other's analysis that I hang my hat in.

And you are literally subscribing to the Magic Money Tree school of economics If you think it won't crash - the State is totally bankrupt and continuing to spend like there is no tomorrow whole failing to raise taxes. This is only facilitated by borrowing, which means you also accept that the only way this show continues is for the debt to be just wiped out without being repaid and for borrowing to continue.

Villa05

https://www.boards.ie/discussion/comment/119635760#Comment_119635760

I suspect these are more up to date figures

More than a third of private rentals are fully or partly paid for by the State (HAP, RAS, rent supplement).

https://www.thejournal.ie/readme/rental-market-budget-2023-5866794-Sep2022/

Bass Reeves

https://www.boards.ie/discussion/comment/119636334#Comment_119636334

So what do expect the government to do, let old people without heat for the winter. Let younger families in there low energy homes that are dependent on electricity freeze as well. Let's schools unable to afford to turn heating over the winter

https://www.boards.ie/discussion/comment/119635909#Comment_119635909

Banks will not lend to developers unless they can find 20-40% of the development themselves. Because of this they have to look for institutional funding. I imagine that in the case of apartment blocks these funding institution's would look for these units to be pre sold l.

It would be the same with housing development's funding institution's would give lower rates of some houses were contracted to be sold to other institutional buyers