Landlords NOT selling up

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Knuttell

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There have been a lot of stories, articles, threads etc on Landlords selling up due to the very challenging environment.
Not going to go into these reasons. Well laboured and stated in previous threads and understood by all Landlords currently engaged in the rental market.

Who I would like to hear from are that cohort of Landlords who have taken the view that what they have they hold and will not be exiting the rental market and the reasons behind that decision.
 
I'm not selling. Seriously considered it earlier in the year and the reason is largely because of the good advice here for which I am very grateful. https://www.askaboutmoney.com/threa...sition-should-we-sell-rental-property.227038/

It's definitely been a hard decision, but as you say what you have you hold, it's a great little house, in a nice small development, we may live in it ourselves when retired, and there's a tracker mortgage on it so we've decided to keep going and just hope we continue to get good tenants as we have so far.

Part of what I was agonising over earlier in the year was increasing the rent - it was rented since 2019 at a very modest rent (800 for a 3 bed detached really nice warm house with a home office / second sitting room.). It's not in an RPZ but we know that's only a stroke of a pen so the stupid rules had me in a position where my preference would have been to leave the rent as is for my excellent tenants but if I did that it would be to my detriment as I couldn't increase it for others if they moved and RPZ landed. So I decided in the end to increase it just to 1,000 but now the tenants have bought their own place so I will give it to a letting agent and probably look for 1,200 and insulate myself a bit from RPZ landing and God knows what other changes. Similiar are asking 1,400-1,500.

My main concern now with tenancies of indefinite duration is getting good tenants. I thought that would be a simple call to the letting agent but turns out not! She said because there's such demand they find it difficult to even advertise a place because there's a deluge and how do you sort through so many people or what way do you do it. Sounds a bit to me like she doesn't want the job (weird? when she very successfully looks after another property for me which belongs to my deceased brother's estate). I might try another agent but thought it was an interesting point I hadn't thought of. I want to go with a letting agent because I just think tenants would not be as quick to mess around / leave the rent late etc. when there's a professional in the middle.
 
I should add I was hoping there would be some small bit of good news in the budget but we had already made our decision, disappointing that there wasn't something though.
At least mortgage interest is allowable so that softens the blow of it rising so rapidly.
 
noobie said:
I'm not selling. Seriously considered it earlier in the year and the reason is largely because of the good advice here for which I am very grateful. https://www.askaboutmoney.com/threa...sition-should-we-sell-rental-property.227038/

It's definitely been a hard decision, but as you say what you have you hold, it's a great little house, in a nice small development, we may live in it ourselves when retired, and there's a tracker mortgage on it so we've decided to keep going and just hope we continue to get good tenants as we have so far.

Part of what I was agonising over earlier in the year was increasing the rent - it was rented since 2019 at a very modest rent (800 for a 3 bed detached really nice warm house with a home office / second sitting room.). It's not in an RPZ but we know that's only a stroke of a pen so the stupid rules had me in a position where my preference would have been to leave the rent as is for my excellent tenants but if I did that it would be to my detriment as I couldn't increase it for others if they moved and RPZ landed. So I decided in the end to increase it just to 1,000 but now the tenants have bought their own place so I will give it to a letting agent and probably look for 1,200 and insulate myself a bit from RPZ landing and God knows what other changes. Similiar are asking 1,400-1,500.

My main concern now with tenancies of indefinite duration is getting good tenants. I thought that would be a simple call to the letting agent but turns out not! She said because there's such demand they find it difficult to even advertise a place because there's a deluge and how do you sort through so many people or what way do you do it. Sounds a bit to me like she doesn't want the job (weird? when she very successfully looks after another property for me which belongs to my deceased brother's estate). I might try another agent but thought it was an interesting point I hadn't thought of. I want to go with a letting agent because I just think tenants would not be as quick to mess around / leave the rent late etc. when there's a professional in the middle.
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What makes you think you can live in it when you retire? Tenancies of indefinite duration. SF want to prevent you evicting someone.
 
I am a landlord for 20 years with 7 properties (six rented and one is my family home).
I am over exposed in the property sector, but will not be selling (at the moment anyway) I even have one of my properties eligible to be sold with no capital gains tax this year (after holding it for seven years)
Don’t get me wrong, I am extremely concerned about the Shinners getting in. I am also concerned generally about the increased regulation, lack of support from the RTB and the burden of 52% tax, PRSI and USC.
For me, personally, I will be staying in the market for the following reasons.
I have great long term tenants and enjoy a great relationship with them, I take pride in fixing or replacing broken items immediately. Rent has always been paid on time.
My average gross rental yield is approximately 9%.
For me, over the last 20 years
one of the biggest burdens about being a landlord is when tenants are constantly moving in and out. The cost (both financial and in time) of preparing a rental property to be re-let is a nightmare. However, because of the current housing crisis tenants have nowhere else to go, so this burden is almost gone.
The truth is, I enjoy being a landlord. The interactions with my tenants have always been a positive experience for me.
I am fickle when it comes to investing in stocks and shares. I am personally not great handling the volatility. For me, when it comes to investing in property, it might be considered the slowest horse in the race, but I sleep better at night, knowing the property market isn’t going to drop by 10% overnight.
Also 4 of my 6 rentals have HAP tenants living in them. With a possible recession on the way and potential job losses on the horizon that gives me some peace of mind in terms of secure rent.
I am one of those people that cannot sit still for a minute and need to be kept busy so realistically I could see myself holding these into retirement.
I am seriously hoping, possibly somewhat naively that within the next 20 years politicians will come to their senses and stop meddling in this sector.
 
landlord said:
Also 4 of my 6 rentals have HAP tenants living in them. With a possible recession on the way and potential job losses on the horizon that gives me some peace of mind in terms of secure rent.
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I’d have thought those on HAP are most exposed to job losses in hospitality etc, and once the HAP tenant cannot pay the Council stop too. What’s your thinking on it?
 
Zenith63 said:
I’d have thought those on HAP are most exposed to job losses in hospitality etc, and once the HAP tenant cannot pay the Council stop too. What’s your thinking on it?
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I have two sets of tenants on HAP and two sets of tenants on Homeless HAP.
The two sets of tenants on standard HAP already have decent jobs, and to be honest, I was surprised, and I think they were too that they qualified for HAP… perhaps they fudged the figures. They were actually surviving okay and paying the rent comfortably before they got the HAP bonus, so this gives them a buffer.
The other two sets of tenants on homeless HAP have almost all of their rent paid for them. coincidentally, they both have jobs as well. Regarding the financial/security benefits of homeless HAP. I started this post a few months ago.
https://www.askaboutmoney.com/threads/appeal-to-landlords…consider-homeless-hap.227891/

Forgot to mention, they’re all on ECB trackers, 0.75% above ECB. interest only.
Apart from one which was bought for cash.
I would be very reluctant to give up this tracker.
 
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I am a landlord with a few properties, more than 5 less than 10, I have no intention of selling.

Here is why.

I have borrowings against some of the properties, so my value invested is small, at one time I had negative equity of a property. The % return on my investment is infinite. Property value €200k, mortgage €210k rent €18,000 pa, interest €1,575. So allowing for other costs a return of €15,000 on an investment of minus €10k. Today that property is probably worth €220k so a return of 150% per annum on my investment.

I also have unmortgaged investment properties typically paying 10% return on my investment with the possibility of capital gain. Where else would you get that.

All the government interference in the market has the effect of pushing rents up. Of course there is the possibility of issues, but in the real world as opposed to the fevered imaginations we sometimes see on here, most tenants pay the rent in full and on time. I would be cautious about renting to a family with children or anyone with a very settled life who is likely to want to stay forever. tenant churn can be a pain as @landlord above says, but it is healthy.

I realise I am very exposed to the Irish property market, but I have a long term view. The actual price of property next year or even in 5 years is irrelevant to me. The 2007 crash reduced my rents maybe 25%, it took 4 years for them to come back. If that's the worst the market can throw at me I'm happy.

If I knew that rents would fall 25% next year, would I sell, no. My return on the unmortgaged properties would fall from 10% to 7.5%
 
I'm a non-resident landlord with one property in Dublin. It's an ex PPR from when we moved abroad a few years ago. The yield is only 4%.

We are not selling up for a few reasons:
  1. It's in an RPZ and rent is approx €200 (~10%) below market rates. For us that's okay, absent RPZ rules we would have it at this level as tenants are good and pay the rent on time
  2. Value is 80%-100% more than purchase price now but we are shielded from CGT for a large amount of this uplift having purchased between 2011 and 2014
  3. We've spent 15% of gross rent over the years on management agency fees, insurance, maintenance, repairs - this includes one redecoration in between tenancies. This may seem on the high side but we are trying not to let the house get "tired" the way a lot of rentals do
  4. Mortgage interest is still 25% or so of rental income which reduces rental profits. We are on PPR rates still, and if on BTL rates the arithmetic would be different.
  5. Due to non-resident status we only pay 20% tax on rental profits. This is the big one and if were being taxed at 52% like everyone else we would be long gone
  6. Home serves as a potential place to live if we or kids ever return to Dublin, also a hedge against Irish property per se
  7. It generates a cash surplus of €5k the last few years but was negative the year tenants left and we had to redecorate and pay estate agent fees. We have a cash buffer of €10k to deal with any potential rent arrears or major repairs. This has an opportunity cost of course.

As you can see there are a lot of factors behind our decision but TBH the biggest one is tax. If we were being taxed at 52% we would be only a bit above breakeven in cash terms. We'd still be paying down capital but for that return it just wouldn't be worth the risk.
 
We have one rental property and not selling up. We have our mortgage fully paid, pension fully loaded, some money in shares and fully own the rental property (ie. no mortgage). We're in our late 30's.

We're keeping it because its a diversification of investment. We are saving for a second one (to purchase outright, not BTL via mortgage) now too. For all of the potential pitfalls, its the only asset class (along with S&P500) right now that can give a good return in the long term of 30-40 years for us
 
flyingfolly said:
We are saving for a second one (to purchase outright, not BTL via mortgage) now too.
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flyingfolly said:
some money in shares
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Clearly I would disagree with your strategy of having such an undiversified portfolio - all your eggs depending on the future of house prices, rents and the whims of government policy.

I also don't believe in borrowing to invest as it increases risk.

But in your situation, where you have decided to buy a third property, I don't know why you don't sell your shares, add the proceeds to your savings and buy a property now? You will have the loan paid off soon enough at the rate you are going.

Brendan
 
Brendan Burgess said:
I also don't believe in borrowing to invest as it increases risk.
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It also increases return:)


It's a question of degree. A 100% LTV on your property portfolio is very risky, a 0% LTV is not. Something like 40%-50% for me strikes the balance between increased return due to leverage while still being able to deal with a dud tenant or liquidate portfolio for other reasons if needed.
 
Brendan Burgess said:
Clearly I would disagree with your strategy of having such an undiversified portfolio - all your eggs depending on the future of house prices, rents and the whims of government policy.

I also don't believe in borrowing to invest as it increases risk.

But in your situation, where you have decided to buy a third property, I don't know why you don't sell your shares, add the proceeds to your savings and buy a property now? You will have the loan paid off soon enough at the rate you are going.

Brendan
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We have money in shares already. Therefore to diversify further, we should have more money in property.

We are not borrowing to invest - all property is purchased outright with no mortgage.

We don't sell the shares now because the market is down. No point in selling shares at a loss to buy property at its peak.
 
2 years ago I had 3 rental properties. I now have 1 sold, 1 rented and 1 with a family member in it.
Reason to sell: rogue tenants, tenants rights and taxation. They were planned to be my second income and pension. I sold one rental after going through the long process of getting difficult tenants out, They blocked up the vents causing mould but kept using it against us to not pay rent. I spent a lot on professional repairs and to confirm it was their fault not mine. I gave them notice to sell but Covid made that a long drawn out process. Believe it or not, Threshold helped us get them out more than the RTB did!

Another property is in a desirable area beside a university and hospital.
Reason to keep: That property has my daughter living in it but no one else (despite being 3 bed) as I can't get the rent a room tax relief and I am afraid of the grey area or changes around licensee / tenant rights.

The third property is rented at abut 75% of market rate. It is non RPZ and I do put the rent up every 2 years but the market rent is going up faster than I can reasonably keep up with. I increase it around 10% at a time as trying 20% could damage my good relationship with the tenant. ( I know, I know.......) This house was my PPR in the past and I plan to downsize to it within the next 5 years.........it is beside my present PPR. Otherwise I would give notice and sell and may yet do so because of the risk of not being allowed to move back in to it.
Reason to keep: Good tenants and future PPR and willing to take risk.
 
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