Excellent free Irish Times article on why private landlords are leaving the Irish market

MakersMark

Really good article, well worth reading, that looks neutrally at why Irish landlords are dumping their rental properties.

https://www.irishtimes.com/opinion/why-are-private-landlords-selling-up-despite-record-rents-1.4838303

tommybrees

Good read

One of many many reasons I'm sure

JohnnyChimpo

not (or no longer) a free article fwiw

JimmyVik

https://www.boards.ie/discussion/comment/118854839#Comment_118854839

Its free for me. Good article actually.

Mad_maxx

Yields are very good still in many places, only for the inability to evict promptly, there is no reason we should be seeing such an exodus

Peregrinus

Good, but not strictly speaking neutral. It's written by a guy from the of Professional Auctioneers and Valuers, who would be more attuned to the concerns and interests of landlords than of tenants.

He starts off by making the point that average rent being paid by tenants is likely well below the average rent on new tenancies, which is true, and a good point.

He then talks about the number of private landlords exiting the market and the fact that, preparatory to doing so, they terminate the existing tenancy. He suggest that, because of the RPZ rules, they have to terminate tenancies and sell properties in order to realise the market value of their investments; this creates a perverse incentive, if your object is to maximise the number of properties available for rent, and make rents lower.

But he doesn't make the link between his two points; if average rents are in fact signficantly lower than new rents, this is in large part because of the RPZ rules. And, therefore, if RPZ rule are relaxed or abolished, this is going to cause average rents to rise, unless we can find some other way of squaring the circle. And I suspect the reason he doesn't point this out is because he doesn't have another way to suggest.

So, he's pointing to a problem for landlords, but not really to a solution which won't burden tenants.

JimmyVik

https://www.boards.ie/discussion/comment/118854932#Comment_118854932

IMO we have passed the point of no return.

Landlords are going to get out. Tenants next rents are going to shock them to the core.

Nothing will convince new landlords to replace the ones getting out. The only ones staying are REITS and those trapped by the hoops they have to jump through to get out.

And the REITs are not going to be renting properties with low rents.

maestroamado

Good article but its not today's news. I suspect its personal view and that like me he see things going in a direction that may not be best (thats my opinion) Because rental properties value is worth a multiplier of annual income landlords need to have them vacant to sell.

I had a conversation about 3/4 years with an Estate Agent at the time one of these Cuckoo funds bought all 300 apartments around Liffey Valley... I experssed the view that i didn't like it and asked his opinion... he replied... my name.. you dont know the half of it ans your better off not knowing...

L1011

Its an opinion piece (look at the URL, and the category on the website), not an article; written by someone very much on one side of the argument.

It doesn't cover one obvious large potential source of private landlords selling up - single property "accidental landlords" selling now that a property is no longer under water due to increased value. How many of the sales are those isn't quantified anywhere that I can see, though - the two I know are unlikely to be the only two but they're the only two I know!

spaceHopper

I’m kind of in that position, my father had a house in flats. He kept the rents reasonable because it made life simple for him and the tenants. There are 3 beds sits, and two 2 bed flats , rents are about 600 for the bed sits and 1000 for the flats, it’s 20 minutes’ walk  to Grafton’s street.

Dad got ill and spent 6 months in hospital before dying. I look after the house for mother and Dad always wanted me to one day to inherited it.

When eventually I inherit the house it will on paper be worth 1.2 Million, the first 330k is tax free. I have to pay tax on the rest at 30%  so that’s 900k and 270 tax. Then I’ll have to do work to bring it up to date. So probably 400K borrowed.  Which I’ll have 10 years to pay back.  I can offset the interest against tax but not the capital repayments. Lets say 50K rental income, that’s not going to cover repayments. I could pull money out of my pension to fund part of it.

Typing this I think I’ll have no choice but to sell.

Now rental property is valued based on 15 years rental income, but selling it with tenants who are paying below market rent isn’t viable. I’ll have to empty the house. I’ll be taxed on the estimate value 1.2M but I probably won’t get close to that. 

JimmyVik

https://www.boards.ie/discussion/comment/118855192#Comment_118855192

Of course landlords who are no longer underwater are selling. They would be very stupid not to.

If there was a profit to be made they would stay in, but there isnt. They have been forced out. Some were trapped and couldnt sell while their property value was lower, but thats no longer the case. Time and inflation has seen to that. The gate has been opened and they are walking straight out through it as fast as they can.

L1011

Most of them saw themselves as being forced to be landlords and prices increasing letting them out; rather than being forced out!

landofthetree

https://www.boards.ie/discussion/comment/118854924#Comment_118854924

Invest in a property fund instead. Better yields, a much more liquid investment and it makes people who spend 5k a year on alcohol very bitter.

Mad_maxx

https://www.boards.ie/discussion/comment/118855317#Comment_118855317

you mean a REIT ?

yes , dividends are good but REIT,s dont in anyway track the on the ground market in terms of price appreciation , they are really only like a utility , good for income but not much else

growleaves

https://www.boards.ie/discussion/comment/118855192#Comment_118855192

Does anyone refer to themselves as an "accidental father" if the condom breaks?

"Accidental landlord" is an absurd phrase but I suppose it'll have to do.

L1011

https://www.boards.ie/discussion/comment/118855573#Comment_118855573

Well, people sometimes do say kids were accidents.... I don't like the term either but it is what has stuck.

dennyk

Heck, I'd say that a pregnancy can be far more "accidental" than becoming a landlord, seeing as how the latter requires knowingly and and deliberately making major financial decisions on at least two separate occasions (deciding to purchase the property in the first place, and then deciding that the best financial option would be to rent it out rather than to sell it or occupy it). There's nothing "accidental" about that. It's even more annoying when people use that "accidental landlord" phrase in a self-pitying moan about having to learn and/or follow the applicable laws when letting their property; if you didn't do your research and due diligence when you made the decision to acquire a property and the subsequent decision to let it out in order to make money, that's on you, I'm afraid.

cronos

https://www.boards.ie/discussion/comment/118855573#Comment_118855573

They probably don't for the sake of the children but you can sure bet some are thinking it.

Claw Hammer

https://www.boards.ie/discussion/comment/118854932#Comment_118854932

If average rents rise, landlords who are able to secure market rent may be less likely to sell. Even if market rent is being achieved a property is invariably better sold unoccupied. It is generally a condition of mortgages that vacant possession is obtained before closing. Landlords who want to get out will empty the property, regardless.

The problem with the rent cap is that the vacant property is still governed by the rent cap meaning an investor won't buy it. The property is lost to the rental market. The rent cap may be the straw that is breaking the camels back for some landlords. Rent controls create winners and losers. The winners are the tenants benefitting from capped rents at lower than market levels. the losers are tenants seeking to rent who have to pay an artificially high rent because of the shortage of available rentals due to the rent cap. Any change to the regime will also create winners and losers.

lawrencesummers

https://www.boards.ie/discussion/comment/118855192#Comment_118855192

Im in that boat to a degree

Bought at the height of it, another two months and a lot would be different.

In the meantime we have managed to move and rented that place and now we have the option of washing our hands of the place thats rented and walking away from it. Maybe with 15-20k after fees but thats 15-20k on a place we paid a mortgage on for 10 years and income tax on for the remainder, so i think im going to stick it out and suffer the annual tax bill because i cant see the problems getting fixed in this country with regards housing and ive kids that will need a place to live in time.

Ive a sister selling up currently, tenants evicted to allow her to sell so she can walk away from the hassle of renting and she wont have a penny to show for it.

I know a few friends with similar stories, had their own places before they met partners and moved into one, rented the other, never set out to be landlords and cant see any upside to it now.

Anecdotally the biggest purchasers in the market are the gov and the funds, so if anywhere goes back for rental it will be top dollar.

whippet

https://www.boards.ie/discussion/comment/118856646#Comment_118856646

10 years ago I was one of those who would have been described as an 'accidental landlord' .. you are correct the decision to become a LL was mine - but it was a loaded decision - live in an unsuitable property for a growing family or rent it out and find a more suitable property. The negative equity made it impossible to sell so if I wanted a quality of life for my family I would need to rent it out.

I did everything by the book - expensive as it was; charged a market rate - which was very low as it was in the shadow of the great financial balls up of the last decade. While I was happy enough with the situation it was quickly evident that the whole system is designed to ensure that there is only one party in any rental contract who has any responsibilities. Our tenants absolutely shafted us, no rent for 6 months, over held, caused about €10k worth of damage to the house and about €5k worth of damage to the furniture and fittings. The biggest kick in the teeth was the attempted blackmail from the tenants - they wanted €10k to leave. I did everything by the book .. eventually they left (I think they were trying to escape garda attention for something else) .... I had zero comeback or avenue to re-coup a penny. As soon as I could sell the house I did. I chose to leave it empty for 6 months as the cost to get it ready for another tenant, taxes and grief it was better to leave it and just pay the mortgage.

The whole system is a disaster ... risky investments need to have a premium return --- renting out your asset in Ireland is risky and that is why investors need a premium return. If you can't get that they won't invest

Topgear on Dave

Another similar article caught my eye a few weeks ago mainly for comments within it. RTB went to the PAC and said that landlords were leaving.

https://m.independent.ie/news/concerns-raised-that-new-retrofitting-scheme-could-see-landlords-evicting-tenants-41380757.html

RTB Head of communications Caren Gallagher told the committee that at the end of 2018, there were 307,000 landlords, however, that this number dropped to 297,000 by the end of 2020.

She said that 72pc of landlords said that they sold properties and that there was a drop in landlords “by quarter”.

However, Brian Stanley said that figures from the RTB show that in 2005, there were 50,000 landlords and that this “tripled” to 2020, where they were 165,000 tenancies.

“There’s been no exodus,” he said.

For the politicians the problems of renters and landlords just don't matter. Its all about voting homeowners.