Leaving an apartment empty for two years

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Mamamia22

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A relative has just done their tax review for 2021. 2 bed apt in west Dublin is generating 12800 after deduction of annual management fees. This is before deduction of tax, PRSI, USC. Tax will be payable at the higher rate.
A landlord friend has advised vacating the apt for 2 years. Then charging the market rent. The landlord who has multiple houses is planning the same approach on several houses. The relative has had a good experience with these tenants. They have never given him any problems. He is reluctant to issue notice but as he is approaching 60 the amount of rent lost will be significant on retirement and over many years with inflation will be hard to justify. Any thoughts. Rent is currently at 1300.
 
Not a good idea as he sacrifices €6,500 a year net for two years or €13,000 up front.

After two years, the legislation may well be changed and he could be stuck with charging the same rent.
After two years, rents may have fallen so he might not be getting more than €1,300 a month.

If he is still unhappy in two years, he can sell the apartment and buy another one which has not been let and charge market rent. Or he can do that now or just exit the market as many landlords are doing.

Sinn Féin is proposing to require landlords who want to sell to be forced to sell with the tenants still there. So it is probably time to get out anyway.

Brendan
 
Thanks Brendan. Good synopsis. His landlord friend is quite adamant that vacating the property is the only way to go. I thought with 2% pa he might catch up a bit eventually. I suppose he could also sell and buy back in. Would cost him at least 10k between auctioneers fees, stamp duty and moving furniture. Would be hassle. The upside being that rents aren’t likely to fall in the near term. But they could ?
How likely are SF to enforce sales with in situ tenants ? Is it against owners rights ? Would devalue many properties esp those with low rents.
 
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There could well be a significant increase in Vacant Property Levies and also a Compulsory Rental/Use Scheme has been spoken about whereby owners could be charged a levy equivalent to the rent foregone. Seems your relative could do with getting better friends.
 
Neither levy situation applies at present though to a 2 bed apt. The owner of the apt is permitted to vacate it for family use or to sell.
Surely all holiday home owners would kick up a fuss about levies.
All his savings were invested in this apt. He is now stuck with a less than 2% yield.
 
Always listen to the ould wans is what I say. They would tell you that " a bird in the hand is worth 2 in the bush". Keep your clients, more especially as they're good ones.
 
No problem you are the solitary dissenting voice. Hold on you reckon, even for such a low yield ? Would you really stay invested ? All the others say exit now.
 
It seems crazy that a property investment can become an asset to the tenant

What kind of socialist country are we living in?
 
Government interference has brought about this dysfunction whereby some apts are now 3500 a month to rent (I see them asking more than that on Dublins Quays, views of the Liffey not guaranteed) and my relative is told he has to be content with 1300 and a fixed 2% annual rise on his life savings investment.
We are a joke of a nation to put up with it.
 
Why does he not tell his story to the Irish Times?

Irish Times wants to hear your story if you are a "small landlord"

https://www.irishtimes.com/property/residential/2022/08/11/do-you-own-a-rental-property-share-your-experience-as-a-small-landlord/ Tánaiste Leo Varadkar has said the Government will examine what “we can do to reduce the speed at which landlords are leaving the sector”. “More and more landlords...
www.askaboutmoney.com

We only hear the tenants' stories and the stories about bad landlords.

Brendan
 
Mamamia22 said:
No problem you are the solitary dissenting voice. Hold on you reckon, even for such a low yield ? Would you really stay invested ? All the others say exit now.
Click to expand...
Yes, I would. I'm not too worried about being the only dissenting voice. If everyone agrees with you, then you can be sure something's wrong.
He can always sell down the road, the return is miniscule but where else is giving 2% tax paid right now?
 
Thanks no problem. Yes you are correct. It’s impossible to get a return on deposits, so selling will give him a lump sum that will slowly be eroded by inflation. Unless he buys some equities. But he has no experience of the stock market. I will look at costs of selling and re entry with him. I will also ask him re the IT.
 
I have left a house empty for 5 years. The value increase has worked out greater than the nett rent I could have got.
Of course the neighbours are ready to kill me.
Looking to sell it now.
 
Hoarding like this is antithetical to a functioning capitalist market. It removes low-availability, high-value property from the circular flow of money, artificially raises prices for a basic necessity, and promotes non-consumption/stagnation as consumers are priced out.

It also undermines public policy, ignores the moral issues, and defies the very practical need for a functioning liberal economy to have a large group of people with enough disposable income to pay for new goods and services. Very hard to do if a big chunk of your pay is going on rent/mortgage and homes are being kept off the market for years. There is a loss of government revenue too as every sale would result in stamp duty.

What happens if there is another property crash? Owners would likely choose not to sell because they would realise a loss. Even if they are sold/repossessed, if property has been left vacant for years the refurbishment bill could be very high.

Wasteful at every turn, surely this is ultimately a type of rent-seeking behaviour?
 
Hi arbitron

If government interference forced me to leave an apartment empty for two years to maximise the long-term yield, I would do it. I wouldn't be unduly worried about it being "antithetical to a functioning capitalist market".

Anyway, it's not a capitalist market, where good landlords are punished by having their rents frozen at old rates or where people are told to whom they can rent their property and to whom they can sell their property.

Brendan
 
He worked out that 2% annual increases will still leave him with less than 1500 a month income in 2030.
With inflation the way it is, he really should sell.
The State is dictating what he can do in relation to rent levels.
The State has made landlords provide cheap housing by their non stop regulations. The State doesn’t care about small landlords. It looks after the big guys who pay v little tax. But perhaps a lobby group for the big players (those that enjoy renting 3500 a month apartments) will change PRTB rules in the long run if their tenants lose their jobs and suddenly can’t afford their 3500 rents and refuse to leave.
 
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