Landlords selling up - Rents rising

I sold our rental property, which was originally our PPR back in 2013, at a loss after buying it in 2002. We had some equity in it, so came out OK.

I still rejoice at exiting the rental market to this day. I don't even have one of those really bad renter stories, but it's still a painful experience for no gain other than a marginal property value increase which you only may eventually get and pay CGT on anyway.

""The President won't sign legislation if it's unconstitutional. Doesn't need to go anywhere near the courts. It's not as if SF can/would try to do this quietly""

Always wondered how that works... probably stupid question but does the president have to sign off on every amendment to an act, eg if theres a new SI, or are later changes just authorised by the relevant minister?

Edit, sorry a bit off topic but helps to understand how changes can happen

I was considering selling my rental due to the hassle and the current hostile environment towards LLs but after reading Eoin Ó Broin's comments I am definitely selling. Why are Gov and its opposition incentivizing investors to get out of the private rental market when they should be doing the opposite.

“Crucially, one of the big concerns we have is, in the last quarter, data from the Residential Tenancies Board (RTB) shows that the number of vacant possession notices to quit, of landlords selling properties, has dramatically increased"

Has the man no sense of self awareness, he is one of the biggest reasons for the flight of small time Landlords from the market.

As someone who may move back to Dublin to work, is the rental scene really that bad?

There is definitely a reduced quantity of professional rentals on the market, but they are still being advertised, at before Covid level prices. Nothing out of the ordinary. You'd think more people working remotely means less demand.. What can I expect as a prospective renter? Will it be difficult?

I'd love to see some figures to back up your 'barely breaking even' claim.

Is it a... rent 18 grand, mortgage 12 grand ,tax 5 grand ,I'm only making a grand,it's not worth it type scenario?

Barely breaking even on cashflow is not the same as barely breaking even on profit.

You can pay tax on a loss with property rental in Ireland.

I couldnt believe it myself when i found that out.

I wonder why they all are leaving then?

Maybe they are making a profit but the amount of hassle is just not worth the profit they make.

Or maybe the potential for financial ruin is just too great and its time to leave the business to the REITs and councils.

Breaking even as in getting an asset for nothing?

I can never understand this logic. The LL has their money (& borrowed) on the table, most likely hundreds of thousands. It is far from risk free, and it has never been a case of getting an asset for nothing.

I strongly view, for the short term anyway, that the tenant is in touching distance of getting an asset for nothing because "It is my constitutional right, and I know my rights".

I can't blame the small/traditional LL's for selling up. They have been scapegoated for societies housing problems, rode sideways with taxes, and with legislation that erodes their control of their property and exposes them to the risk of delinquent tenants with zero come back. In a few more years all rentals will be REIT, or similar owned. These are operations with deep pockets and their own legal departments. They won't mess around, they won't be flexible, they won't compromise their bottom line.

If you think todays LL's are demons, wait until you see what is coming behind them.

The profit is the asset that you get after 20 years.

Break it down for us?

Small landlords have always left the market. Many decide the hassle is not worth it. The real issue is why so few landlords are coming into the market to replace those who leave.

In any normal circumstances, low interest rates and rising rents should have been causing landlords to barrel in to the market. There are a number of reasons why this is so:- inability to raise finance on reasonable terms, high taxes with restricted deductions for expenses, RTB, BER and HAP regulations ll make for a massive burden on the one property landlord. Houses and apartments are being left empty by their owners because of the hassle in renting them out. I know a man who had a 4 bed house in Carrick on Shannon. He was getting €500 a month. When it went empty at the end of the tax break period he stopped letting it. I looked at Carrick on Shannon on DAFT recently. There were 2 properties to rent in the town itself. I then checked AirBnB and found there were about 10 entire properties available. It is obvious something is wrong.

The solution from some quarters is more rent restriction, more restriction on sales, more taxes, more regulations. It is nuts.

What sort of expenses do you think could possibly equate to 50% of an annual rent?

The total sum of the rent is eligible for tax as it is for social insurance and USC, so if a 1 bed apartment which is likely to go for 1250-1450 and the landlord is already on the higher rate (or moves into it), then all their rental income will be subject to tax at 42%, plus however that affects their social insurance payment plus additional percentage for USC, it depends on their overall income really.

Lets just say a round 1400/mth, 16800/annum, you think someone can legitimately offset 7056 of that to expenses? on what? technically you can only write off white goods at 12.5%/annum or 1 item of each type over 8 years (and from previous experience with tenants, white goods do NOT last that long).

I dont think you can write off anything for social ins (prsi/rsi/whatever its is called now) OR USC.

You have an effective 50%+ taxation, which the State/Revenue commissioners get their take one way or the other, which ine ssence means they get first dibs/main priority on that income, and that is why many landlords are either not even breaking even or subsidising the cost.

You cant claim for any of your own time. I can see legitimate reasons why a persons own time isn't claimable because it cant be proved and it could be scammed/there is no way to prove how many hours work was undertaken or if zero hours were undertaken, and as such it somewhat incentivises landlords to pay for work legitimately so it CAN be claimed back (which imo is understandable) What I dont understand is why people think landlords are making any profit on any given month, unless they got the property before prices took off and have long since paid significantly or completely, but anyone with a mortgage is unlikely to be making much if any profit, hence there is no reason to be involved in such a high risk, work intensive situation, that requires constant attention.

It could be made possible to make private landlording legitimate/legal, of better quality and finccially viable for tenants and rewarding for someone investing their time/money in it, but it would require sensible legislation.

Your post makes it sound like you think like a lot of people do, that you get to pay all expenses out of the rental income and then are taxed on whats left over, and thereby a landlord would have all their costs paid and then pay a paltry tax, thats not how it works, a person may pay their mortgage first (ie monthly) but the Revenue commissioners have a more significant claim on that income.

There would be a quick easy fix (given that it seems legislation can be written and enforced in a short time) but that would require the State to forgoe whatever paltry income they take from small landlords and offset that against the rental cost or a set value so the a tenants rent could be reduced by that amount.

The state has already done this for REITs who pay little to no tax, and they dont reduce market rates? yet the state wont do this for small landlords? That is why landlords are getting out/selling up, these sold properties usually have less people living in them, new housing stock isn't replacing housing sufficiently/ie demand outpaces the actual need. An increase in sold properties creates a further increased need for rental properties too, where the demand already isn't being met across all the market, hence rents increase even more.

The State is complicit in worsening the situation by introducing restrictive legislation that discourages existing landlords and discourages new landlords from entering the market, so they are either doing this unintentionally (meaning they are incompetent) OR they are doing it intentionally meaning imo they are compromised as politicians because they are either corrupt or biased towards large businesses owning/running rentals or even having such a significant influence on owner occupiers (see businesses outbidding for new properties geared towards first time buyers).

The entire housing system is dysfunctional, from inaction, corruption, poor planning.

A start out of this would be to tax REITs at levels small landlords have been taxed at, encourage them out.

Your reply suggested to me you didnt understand what profit means, or how it is generally interpreted by tenants.

Who seem to think all rent is profit, and arent aware of costs incurred

Revenue deems all rent as taxable income, profit (whats practical) to me is whats left over after all costs are paid.

If you are suggesting that someone is in profit, because they have made a payment off the prinicipal, thats a long wait to get your return, there is usually a significant outlay to get that potential return over a long period of time, which doesnt factor in non paying tenants or the difficulty getting rid of them. I think most landlords would be happy to get the capital paid off, because that is the only avenue for profit (if there is no profit in it, why would anyone get involved). Do you even think that should be allowed? or do you expect people to put up the capital to acquire a property to allow someone to live in for free.

When someone puts up the initial capital to put a property up for rent, they are saving the state from doing so from taxation, why do you think there should there not be a regular income from that ie some form of profit? without landlords where would anyone who needs a roof over their heads live? The state doesnt want to do it? Are you ok with REITs not being taxed at all? do you think they will be a better option for renters?

I worked out the capital appreciation over the years I had a rental property, taking into account taxation (significant 50+%) all the time, hassle dealing with unreasonable tenants, by the time CGT was paid, I would have been better off doing OT in work.