(Potential) Landlords - What Would Get You Into / Keep You In The Market

[Always Learning]

I started another thread regarding the tax treatment of landlords, which evolved into a conversation around what the real issue is behind landlords leaving the market. So I thought I would address the issue here in a dedicated thread.

Potential Landlords - what would convince you to invest in the property rental market over your other investment options

Current Landlords - what would keep you in the game and stop the current exodus of landlords.

Personally, I'm in the game and I'm here to stay. For me, I find it an attractive investment. However, if I were to rate my top three issues it would go like this

1) Tax - I'm not saying we deserve tax breaks anymore than anyone else, however, I'm in this to make money, so if I was paying less tax or there were incentives there, it would encourage me to invest more.

2) RPZ's - these are very worrying when trying to future proof my investments. At the moment I won't buy a property in an RPZ, but who is to say they property I buy on the out skirts of town won't be included in the RPZ next year? This is a serious concern for me.

3) Uncertainty Over Rights - I do worry over the eviction ban that's in place, the liklehood of these becoming more common place, the difficulty in evicting a problematic tenant etc. I'm not too bothered by a tenant having a right to a property for life (as long as they are law abiding tenants) because I'm in this for long term rental income, however, I do want the ability to be able to sell if I decide I want the money for something else. So this area of tenant's / landlords rights is definitely concerning.

That's my top 3, what about you?

 

[PebbleBeach2020]

Current Landlords - what would keep you in the game and stop the current exodus of landlords.

In no particular order:

1) Taxation. Landlords are vilified and yet the government takes most of the rental income at 52% of same. I think it's unfair and I think to retain me in the sector, I would want to see a tangible change in this area. Tying in with my second point, I would like to see my tax rate on rental income reduced to 0% or 20-25-30% flat rate instead.

2) Rent reduction. I need to benefit from point one above, but equally, I am a rare breed that wants to be fair on tenants. I want to get a tax break and in turn reduce the rent for the tenants. Someone made an excellent point previously, that if you rent a property at say 1250 euro a month then it should be tax free. If you go higher, you are taxed punitively. I think that's excellent in that it encourages landlords to rent at affordable rates. Its a win for landlords (reduced tax) and a win for tenants (lower rents). The 1250 euro can vary based on house size, location or what.

3) It's my property. It's not the tenants home, sorry, that's not a popular thing to say, but it isn't theirs, it belongs to me. If I want to leave it idle, that's my decision. If I want to sell it, I want to be able to sell it. If I want my property back to let my son live in it, I want to be able to do that. I have zero problem with giving sufficient notice of repossession, BUT I WANT TO BE ABLE TO GET MY PROPERTY BACK. This is probably the driving reason to sell up and get out of the game. The tenant is being given right of possession to something that doesn't belong to them. Think about that. I own a house, paid for it with a mortgage and I make the repayments. And yet, the tenant has the right to live in it. The right to not be evicted. And if SF have their way, have a right to stay there for as long as THEY decide. My role in the transaction requires me to pay the mortgage replayment and don't complain. A bit like history repeating itself, the SF policy towards landlords involves them saying, "hands up, this is a holdup"


If a landlord wants to rent a property out for 30 years, then sign up a lease of that duration and sell with the tenant in situ. Both sides agree to the rules of the game from the off.

I signed up for a 12 month lease. I kept my side of the deal. Now the tenant cannot be evicted because of an eviction ban til 1st April 2023. They have tenancies of indefinite duration. If they stop paying in the morning, it'll take me 2 years minimum to get them out legally. If someone actually stops to think about this issue in point 3, you wonder why it's only thousands and not tens of thousands of landlords leaving the market.

 

[Protocol]

"1) Taxation. Landlords are vilified and yet the government takes most of the rental income at 52% of same. I think it's unfair and I think to retain me in the sector, I would want to see a tangible change in this area. Tying in with my second point, I would like to see my tax rate on rental income reduced to 0% or 20-25-30% flat rate instead."


I can't see any way how rental income could face a different tax rate than wage incomes?

Why should incomed from one asset (BTL) be treated differently than income from another asset (e.g. dividends)?

Okay, I think maybe something could be done about capital allowances, etc., but a different tax rate? I can't see it.

 

[RonnieShinbal88]

• If we want investment then I think money that goes into financing the investment, i.e. the portion of rent paying off a mortgage, should be tax free, in return small landlords might give up their right to no fault eviction for the old part 4 duration of 6 years/have to pay back the tax if they break this. The effective yields of property with and without a mortgage are very different it's essentially a different asset, it simply isn't worth it now with a BTL mortgage even with high rents, so something is amiss.

• A return to the old part 4, 6 year duration in general, reversing the indefinite duration stuff that no small landlord wants and is scaring everyone out of the market.

• Related to the question above about why income might be treated differently - purely to encourage investment in an asset that the state needs investment in and that people are no longer keen on investing in (to put it mildly).

• The disparity with rent a room being tax free doesn't make sense, maybe the first 15k for small landlords should be tax free in any case to be consistent.

• Tax credits from revenue or some governement insurance scheme to completely cover months with unpaid rent past 3 months of notice (these delays are being enacted by the government processes so if they have to pay for them it might speed things up), all reported and certified by the RTB of course. They need to get real here, no-one is going to sign up to provide free housing for the state while the state is responsible for evicting their tenants and takes forever to do so.

 

[PebbleBeach2020]

"1) Taxation. Landlords are vilified and yet the government takes most of the rental income at 52% of same. I think it's unfair and I think to retain me in the sector, I would want to see a tangible change in this area. Tying in with my second point, I would like to see my tax rate on rental income reduced to 0% or 20-25-30% flat rate instead."


I can't see any way how rental income could face a different tax rate than wage incomes?

Why should incomed from one asset (BTL) be treated differently than income from another asset (e.g. dividends)?

Okay, I think maybe something could be done about capital allowances, etc., but a different tax rate? I can't see it.

Have you ever heard of Section 23 Tax relief?

 

[The Horseman]

"1) Taxation. Landlords are vilified and yet the government takes most of the rental income at 52% of same. I think it's unfair and I think to retain me in the sector, I would want to see a tangible change in this area. Tying in with my second point, I would like to see my tax rate on rental income reduced to 0% or 20-25-30% flat rate instead."


I can't see any way how rental income could face a different tax rate than wage incomes?

Why should incomed from one asset (BTL) be treated differently than income from another asset (e.g. dividends)?

Okay, I think maybe something could be done about capital allowances, etc., but a different tax rate? I can't see it.

We have a housing crisis!

The anti landlord stance is actually quite sad. "Don't give landlords anything, the supply keeps shrinking, people have nowhere to live but yeah we gave the landlords nothing".

Do you not see how narrow minded this is? People are actually so bigoted they don't care who gets hurt once the landlord gets nothing.

 

[Always Learning]

We have a housing crisis!

The anti landlord stance is actually quite sad. "Don't give landlords anything, the supply keeps shrinking, people have nowhere to live but yeah we gave the landlords nothing".

Do you not see how narrow minded this is? People are actually so bigoted they don't care who gets hurt once the landlord gets nothing.

I think the tide is turning on that, maybe I'm naive, but I think by this time next year you will be able to noticeably feel a different attitude toward landlords. Now don't get me wrong, I don't think they will be having parades for us anytime soon, but I don't think landlord and villain will be synonymous with each other as public sentiment would dictate they are at the moment. I think people are gradually seeing that it's the government needs to step up to the plate here.

 

[HollyBud]

If I cannot sell or move a family member into my investment property then I'm out

I am unhappy about others things however I can deal with those.

So eviction notice on the way in March...

 

[Always Learning]

If I cannot sell or move a family member into my investment property then I'm out

I am unhappy about others things however I can deal with those.

So eviction notice on the way in March...

If you don't mind me asking, are you planning to invest the money in something else you see as more lucrative?

 

[Protocol]

Have you ever heard of Section 23 Tax relief?

What I am specifically asking about is the tax rates.

Could there be different tax rates on different types of income?

Did Section 23 tax relief involve different tax rates? I don't think so. I think it involved tax reliefs? Obviously, the net effect of Section 23 is to reduce the effective tax paid on rental income.

I am specifically asking could we have the following, for example:

Tax rates on wages/salaries/pensions/profits: 0%, 20%, 40%
Tax rates on rental income: 0%, 20%

Is that legally or technically possible?

 

[RonnieShinbal88]

What I am specifically asking about is the tax rates.

Could there be different tax rates on different types of income?

Did Section 23 tax relief involve different tax rates? I don't think so. I think it involved tax reliefs? Obviously, the net effect of Section 23 is to reduce the effective tax paid on rental income.

I am specifically asking could we have the following, for example:

Tax rates on wages/salaries/pensions/profits: 0%, 20%, 40%
Tax rates on rental income: 0%, 20%

Is that legally or technically possible?

Tax on artistic income was/is zero I believe?

 

[RonnieShinbal88]

Artists' exemption from income tax

Some income earned by artists, writers, sculptors and painters in Ireland from the sale of their work may be exempt from income tax. How to obtain exemption from income tax if you are an artist and satisfy certain criteria.

www.citizensinformation.ie

So I have a shop selling my sculptures, guy next door has a shop selling his hand made Aran jumpers, I'm tax exempt on first 50k of income, he isn't.
So it must be legal.

 

[HollyBud]

If you don't mind me asking, are you planning to invest the money in something else you see as more lucrative?

After paying off mortgage on property and also clearing home mortgage I hope to have 100K left. Really don't know what I'll do with this.

 

[RonnieShinbal88]

Be careful you don't suffer withdrawal symptoms from being a landlord/landlady and randomly pay some unsavoury types rent for them for a few years with some of it. Then find yourself paying to decorate someone else's home and buying them new kitchen appliances and a new boiler.

 

[Towger]

What I am specifically asking about is the tax rates.

Could there be different tax rates on different types of income?
I am specifically asking could we have the following, for example:

Tax rates on wages/salaries/pensions/profits: 0%, 20%, 40%
Tax rates on rental income: 0%, 20%

Is that legally or technically possible?

Yes. There are plans for a 3rd rate of Income Tax. It is also possible to play around with the USC bands and PRSI Class on rental (unearned) income.

 

[Always Learning]

Be careful you don't suffer withdrawal symptoms from being a landlord/landlady and randomly pay some unsavoury types rent for them for a few years with some of it. Then find yourself paying to decorate someone else's home and buying them new kitchen appliances and a new boiler.

Sounds like having kids

 

[Laughahalla]

Parity with rent a room relief would keep me in.

 

[Sconeandjam]

-Indefinate tenancies reversed and go back to 4/6year cycles.

-RPZ. Allow a re set of the rent once a tenant has left.
Tenants will not down size or upsize due to increase in rents on the open market.
I had a tenant for 13years and did not increase every year as I knew they could not afford it. Now the property is up for sale. Last rent was 900 but the market rent in the area is now 1750! More fool us.

-Make the big investors pay for properties that are over priced and sitting empty.

-Reduce the tax rates small landlords pay. When we started the tax was 20% but now with USC and payee it is approximately 52%. Property tax not allowed as an expense.

RTB speed up the process of eviction for non paying tenants. That you can engage in a sheriff sooner and not have to go to court after RTB decision. 2 years to evict a tenant is too long. Then trying to get the rent from the ex tenant is impossible or costly due to legal fees.

 

[Boyddbookman]

I started another thread regarding the tax treatment of landlords, which evolved into a conversation around what the real issue is behind landlords leaving the market. So I thought I would address the issue here in a dedicated thread.

Potential Landlords - what would convince you to invest in the property rental market over your other investment options

Current Landlords - what would keep you in the game and stop the current exodus of landlords.

Personally, I'm in the game and I'm here to stay. For me, I find it an attractive investment. However, if I were to rate my top three issues it would go like this

1) Tax - I'm not saying we deserve tax breaks anymore than anyone else, however, I'm in this to make money, so if I was paying less tax or there were incentives there, it would encourage me to invest more.

2) RPZ's - these are very worrying when trying to future proof my investments. At the moment I won't buy a property in an RPZ, but who is to say they property I buy on the out skirts of town won't be included in the RPZ next year? This is a serious concern for me.

3) Uncertainty Over Rights - I do worry over the eviction ban that's in place, the liklehood of these becoming more common place, the difficulty in evicting a problematic tenant etc. I'm not too bothered by a tenant having a right to a property for life (as long as they are law abiding tenants) because I'm in this for long term rental income, however, I do want the ability to be able to sell if I decide I want the money for something else. So this area of tenant's / landlords rights is definitely concerning.

That's my top 3, what about you?

I have posted previously on another thread about a decision my wife and I reached about a year ago to sell up our 5 x remaining Irish BTLs. We have provided long term residential lets for about 25 years. Over the years we compiled a small portfolio up to about 7 x rental properties, 5 in Ireland and 2 abroad. (We bought and sold here and there during this time, but maintained about 5 in Ireland). During this time, I continued to work my mid/senior management PAYE role while my wife managed the BTLs as needed.

The focus for us was to run it as a business in a fair and equitable manner towards our tenants while meeting all our statutory and regulatory obligations. The goal was to pay down all debt and continue to hold the properties long term, with some form of a controlled and normal exit in time.

While the changing regulations were onerous and cumbersome, they were the rules in play (be they fair or unfair), we always had the option of remaining in, or exiting. It’s a business decision at the end of the day. There should always be a correlation between market risk and return. With the business risk increasing due to the loss of ability to set rents as our ROI required or to deal with non-paying tenants efficiently or to decide when and how to sell a property, the correlation was skewed.

We learned difficult and expensive lessons along the way. Non paying tenants nestling under the cosy wing of the state, overholding, significant physical damage to property (€12K + 3 months turn around time with loss of rent, as an example). We experienced first hand how the state agencies regard small landlords and, at least in our experience, put roadblocks in the way of any perceived channel by which we could pursue recourse for damages, never mind unpaid rent. Lesson learned, expensive, but important lesson. Owners of BTLs must adhere to all legislative instruments and regulations, but the state can “interpret” and change the rules to meet its own needs as and when required.

Objectively, we charged under market rent and are one of many BTL owners who found themselves caught in a similar RPZ purgatory whereby there is no visibility as to how any our Irish properties could ever achieve market rent again. This has also significantly impacted the ability to maximize the sale value for each property.

So, to answer the question posed, each of the reasons outlined resonates with us, but the biggest single determinant simply boils down to continued market risk resulting from government intervention. Based on the volatility demonstrated by the office of the minister for housing since 2016, the only certainty for the future, is a continued raft of capricious and politically motivated provisory announcements that will further reduce the residential BTL market in Ireland to that of a junk-rated investment.

We have sold two of our or 5 Irish BTLs, a 3rd is close to sale agreed and the final two will go later this year (timing needs to align to other financial activities). Changes to the tax code, even sweeping changes will not be sufficient to change our minds and reinvest in Irish property. The RPZ has resulted in so much damage to the BTL market making it dysfunctional with skewing of all recent reports of market rents and trends.

In our experience, there are plenty of jurisdictions that offer far more stable BTL equivalent markets. I genuinely am sorry for those prospective tenants who will face severe difficulties in searching for residential rental accommodation certainly over the next few years.

 

[NoRegretsCoyote]

-Indefinate tenancies reversed and go back to 4/6year cycles.

Why? If you are a committed landlord you don't need to get rid of tenants arbitrarily. If you are not committed you can always regain the property for personal use or to sell.

-RPZ. Allow a re set of the rent once a tenant has left.
Tenants will not down size or upsize due to increase in rents on the open market.
I had a tenant for 13years and did not increase every year as I knew they could not afford it. Now the property is up for sale. Last rent was 900 but the market rent in the area is now 1750! More fool us.

I agree. Fixing new rent to previous rent was an anti-abuse measure to stop landords getting rid of tenants on a whim and letting to new tenants at a higher, market rate. But in the meantime it's been made very difficult for landlords to get rid of tenants anyway. So if tenants leave voluntarily landlords should be allowed to increase to market rates.

-Make the big investors pay for properties that are over priced and sitting empty.

This is a myth.

-Reduce the tax rates small landlords pay. When we started the tax was 20% but now with USC and payee it is approximately 52%. Property tax not allowed as an expense.

Would you carve out a whole different tax regime for rental income? I would, but it's a massive step to take and unlikely to be palatable.

RTB speed up the process of eviction for non paying tenants. That you can engage in a sheriff sooner and not have to go to court after RTB decision. 2 years to evict a tenant is too long. Then trying to get the rent from the ex tenant is impossible or costly due to legal fees.

Fully agreed. The RTB process takes too long and it should be easier to make tenants pay unpaid rent.