Buy to Let in Ireland: The Case for a Contrarian Property Investment

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gaelic_oc

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Many Irish landlords are getting fed up with the the legal landscape and selling up.

However, Warren Buffet's quote "Be greedy while others are fearful" comes to mind. I want to make a case that now could be a good time to invest in buy-to-let in Ireland (albeit only for a professional, tough and shrewd operator, with high risk tolerance). Not because I want to convince anyone, but in hopes that someone can critique the argument/show me what I'm not thinking of. Basically, I expect the following to be wrong, but want to understand where my error lies.

Here goes:
1. The exodus of landlords from the market creates an abundance of buying opportunities, providing better value for money to aspiring landlords (especially between now and the new rental rules coming into effect next year)
2. Property construction numbers have dipped in Ireland. Together with the landlord exodus, this bodes very well (that is, from the landlord's point of view) for market rental rates. Continued population growth adds petrol to the fire.
3. Landlords can afford to be very choosy about new tenants as it's easy to get 100s of applicants for a tenancy
4. To get around the rent increase restrictions, a shrewd landlord could then choose to only select tenants who they can be sure will be leaving of their own accord with in year or two. I know this could be tricky, but surely with some research, one could find a certain cohort of international postgraduate students, workers, diplomats, or something which has a minimal rate of staying in Ireland long-term?
5. Buy-to-let interest rates currently around 5.5% (corrected thanks to @Protocol) are significantly below rental yields of potentially 8%+, providing an opportunity to build equity

Obvious Risks:
1. If point 4 above didn't work out
2. Recession -> net emigration -> falling rents
3. Interest rate hikes
4. Additional new legislation making the legal landscape even worse for landlords
 
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Except the "landlord exodus" is a complete myth. According to RTB figures. The number of landlords is steadily increasing.
Narrative promulgated by FF/ FG to justify ever increasing landlord subsidies via HAP , ARP, RAS , landlord tax breaks etc.
 
gaelic_oc said:
To get around the rent increase restrictions, a shrewd landlord could then choose to only select tenants who they can be sure will be leaving of their own accord with in year or two
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Currently aiming for this. It does create additional work and a loss of some income in between rentals.
 
JohnFlory said:
Except the "landlord exodus" is a complete myth. According to RTB figures. The number of landlords is steadily increasing.
Narrative promulgated by FF/ FG to justify ever increasing landlord subsidies via HAP , ARP, RAS , landlord tax breaks etc
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An apparently convincing analysis by a Dublin estate agency was posted here within the past 24-48 hours and confirmed the exodus of landlords from the market.
 
I wouldn't consider the dip in new builds to be a factor, to me it is likely to be temporary

Big risk I see if is immigration slows, especially that related to FDI and people here start to go back to their home country as they can't afford to live here or if, for example, there was peace in Ukraine and 80% of them went back home. Demand would then drop and on from there.
 
gaelic_oc said:
However, Warren Buffet's quote "Be greedy while others are fearful" comes to mind.
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Pay close attention to the date on this.

m.independent.ie

The smart, ballsy guys are buying up property right now

SO THE sky is falling in again. The Irish stock market is apparently in meltdown, because of the housing market, which is also apparently in meltdown. The level of property horror stories is at an all-time high and everyone is tripping over each other to predict even greater gloom than the next guy.
m.independent.ie m.independent.ie
 
JohnFlory said:
Except the "landlord exodus" is a complete myth. According to RTB figures. The number of landlords is steadily increasing.
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Don't confuse more landlords with more registered landlords. Believe me, because I tried very very hard, it was impossible to register many tenancies for about a year after the RTB brought in their new registration system in April 2022. Many landlords, myself included (and I have always been 100% compliant) could not register tenancies. The result of that was that registered tenancies fell to 213K. RTB then sort out their problems and start to levy non registration penalties again. Low and behold the number of tenancies increases to 240k. This jump is then hailed as landlords entering the market.

It also represents a net increase of 27k tenancies in about 18 months. AirBnB is to be banned because that will bring 10k new tenancies it to the market. That is hailed as a game changer. Yet we have 27k new tenancies in about a year and a half and based on the daft.ie figures we're practically at an all time low for places to let - so something doesn't add up there.

The agent's story posted rings true. He has no reason to lie. Much better for him to say that he had hordes of landlords completing with first time buyers. That would encourage landlords to buy (people do follow the crowd) and panic FTBs in to buying and bidding higher. He'd push prices higher and get more commission. He manages rentals as well, so encouraging more landlords to buy would get him more business there. Saying only 3% of his sales were to landlords would definitely not encourage someone who is thinking of investing. Also, all estate agents say the same thing - landlords have been leaving since 2018 and are not being replaced at the same rate.

Eoin O'Broin in the recent Housing Committee hearing who is definitely not pro-landlord and is in favour of RPZs said his sense is that the sector is declined. He caveated that by saying that the decline was not in his opinion as great as some commentators said, but nonetheless his view is that it is falling.

Finally, and this is purely anecdotal - I know lots of ex-landlords, I don't know one newly minted landlord and at this day of my age I know a large number of people of all ages and all walks of life.
 
Greenbook said:
Believe me, because I tried very very hard, it was impossible to register many tenancies for about a year after the RTB brought in their new registration system in April 2022. Many landlords, myself included (and I have always been 100% compliant) could not register tenancies. The result of that was that registered tenancies fell to 213K. RTB then sort out their problems and start to levy non registration penalties again. Low and behold the number of tenancies increases to 240k.
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Same experience. I ended up registering a new tenancy in March 2023 as my previous tenant had left. I never managed to update my previous tenancy when the system changed in April 2022. I tried multiple times, I contacted by email and on the phone (waiting quite a long time for being told there was no issue)...
I found some more RTB stats saying that in 2016, there were 320K tenancy and in 2021, 276K tenancy. So it's difficult based on that to really know what's really happening.
 
Premos said:
I found some more RTB stats saying that in 2016, there were 320K tenancy and in 2021, 276K tenancy. So it's difficult based on that to really know what's really happening.
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This is AIs figures for 2016

Below is a link to the RTB annual report in 2018 which shows 336k registered tenancies and 175k landlords. We're now down to 240k tenancies and about 100k landlords. The RTB and the Department of Housing are cherrypicking their figures. We've had an increase over a very short period of time very likely due to a different factor entirely and they are using that to create a narrative that despite having rent control which is among the strictest in the world at around 2,000 new tenancies per month are flowing into the system.

2018 RTB Annual Report Summary
 
You are conveniently omitting that the 2018 figures include AHB landlords which are excluded from the 2025 figures. And that registered tenancies have increased every single quarter for the last few years. Even if the overall figures are slightly down from the high of 7 years ago the claims of a "landlord exodus" are exaggerated and the additional landlord subsidies introduced are unnecessary.
 
My understanding of who has to currently register with the RTB includes AHB's, providers of student specific accommodation and cost rental tenancies which would be included in the 2025 RTB figures
 
JohnFlory said:
You are conveniently omitting that the 2018 figures include AHB landlords which are excluded from the 2025 figures. And that registered tenancies have increased every single quarter for the last few years. Even if the overall figures are slightly down from the high of 7 years ago the claims of a "landlord exodus" are exaggerated and the additional landlord subsidies introduced are unnecessary.
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You are correct, that 336k figure does include AHBs. There is a link below to the 2019 Annual Report of the RTB, go to page 74, it clearly shows the breakdown between AHBs and private tenancies - Private tenancies in 2018 were 307k and in 2019 303k, so still very significant drops to the 240k now.

A drop of 307k tenancies and 175k landlords to 240k tenancies and 100k landlords in about 6 years is hardly 'slightly down'



RTB Annual Report 2019
 
My understanding of who has to currently register with the RTB includes AHB's, providers of student specific accommodation and cost rental tenancies which would be included in the 2025 RTB figures

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They do but Greenbook omitted them earlier when he gave a figure of 240,000 RTB registrations. This excludes AHBs . If you add them the actual figure is 290,000 registrations. Main point remains however people try to discount. Years of rising registrations is at odds with the "landlord exodus" narrative.
 
Dermot said:
My understanding of who has to currently register with the RTB includes AHB's, providers of student specific accommodation and cost rental tenancies which would be included in the 2025 RTB figures
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Student specific accommodation only had to be registered from July 2019 per Threshold here so despite this addition, there was still a fall in numbers between of tenancies between 2018 and 2019

These are all seperate categories in the reports now, so the current 240k doesn't include either AHBs or student specific accommodation.
 
By the way you are also excluding ARP landlords which do not have to register with the RTB. If you add the ARP landlords and the AHB landlords (which you included in 2018 figures) to the 2025 figures it is clear that number of landlords is higher than ever and that the numbers have been increasing quarter on quarter for years
The direct subsidy payments from taxpayers to private landlords are also higher than ever (€550 million per annum through HAP, €200 million from RAS, , €300 million from ARP etc)
If all the subsidies were used to build houses instead and those houses were sold to owner occupiers there would be no shortage.
So there is no "landlord exodus" .
The opposite is the case. There is an increasing number of landlords and state is paying them more than ever.
 
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JohnFlory said:
the numbers have been increasing quarter on quarter for years
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You mean since 2023.
JohnFlory said:
The direct subsidy payments from taxpayers to private landlords are also higher than ever (€550 million per annum through HAP, €200 million from RAS, , €300 million from ARP etc)
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That's a subsidy to the renters not to private landlords, renters who would have difficulties finding or paying for accommodation without them.
 
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