Changes to rent controls announced - discussion

[letitroll]

Given that our rents are amonmg the highest in the world, then surely there should be a queue of landlords willing to rent?

Your forgetting the math of it all.....the rent is the numerator, sure it's high by international standards.....but your forgetting the denominator (build cost) which is just so much higher for apartments than you can imagine....combined you get the the gross yield.....and its pretty low.

The math on building an apartment block in Dublin is outrageous.....due to dual aspect etc etc......the gross yield is just not as high as you would think (given the cost to build). Then a PRS provider needs to factor in the RPZ stuff....you've got serious sovereign risk in Ireland that RPZ v.4.0 to come when Sinn Fein get into power could just wipe out the already poor math I outlined above. These are folks with options....they can go to Birmingham to build an apartment block they dont have to do anything in Dublin....what woud you do....you wouldn't take the risk, you'd go somewhere that has no RPZ nonsense at all.

 

[Dr Strangelove]

I don't understand why landlords have or are focussing on the 2% per annum change in rents, versus focussing on the level of rents.

It’s a fair point but a few factors to note but compared to other major cities:
1) income tax treatment of rents very high
2 little can be written off against tax
3) CGT is high
4) capital is expensive - BTL rates are very high and limited lending
5) construction costs high
6) planning process slow and uncertain
7) limited upside due to rental caps but unlimited downside

All of this raises the hurdle rate a project has to get over to be profitable.

 

[landlord]

I wonder about this.

Given that our rents are amonmg the highest in the world, then surely there should be a queue of landlords willing to rent?

(in my opinion rents need to halve if they are to be sensible)

If landlords or potential landlords won't supply at among the highest rents in the world, then there is something wrong.

I have posted before regarding these comments, but I feel I should do it again.
I keep track of the number of rental properties in Swords county Dublin and a few years ago they were between 200 and 300 properties available. As of this morning there were only 4 properties available in the whole of swords.
A sample or 4 rental properties in Swords, out of thousands being rented, being used to determine rental inflation seems absurd to me. These four properties could easily be landlords renting for the first time or potentially landlords just ignoring the rent pressure zone rules for reletting. Meanwhile 99% of the other rental properties in Swords are stuck at potentially way below market rents with the rent pressure zone rules. As a large Landlord I am in this boat.
I’m sure almost every other landlord reading these comments about high rents is thinking the same thing!!!

So it is extremely frustrating when it is expected that landlords should accept this new legislation (and not sell up) “because their rental income is so high”

 

[TomEdison]

I don't understand why landlords have or are focussing on the 2% per annum change in rents, versus focussing on the level of rents.

Surley the level of rents is so high, that for any landlord not locked into below market rents for the past few years, the rental profits and capital gains have been and are huge?

If you bought the property a while ago, yes, you have enjoyed substantial capital appreciation. But in order to realise that you have to sell the property which, in the current market, requires that it be vacant which, under these rules, will be difficult to acheive.

If you're investing in a property today, you'd be mad to expect the same rate of capital appreciation. The rates of appreciation that we have seen up to now are directly responsible for the current housing crisis; they cannot be sustained into the future. So if you are investing in lettable property now, you're looking to the rental stream as the major component of your return on investment.

 

[misemoi]

A sample or 4 rental properties in Swords, out of thousands being rented, being used to determine rental inflation seems absurd to me.

It would be but maybe naievly I assume that average rents are calculated by PRTB and not Daft, although the Daft report is what gives the headlines? Though from what I hear about their IT systems I shudder to imagine how. But it must be broadly correct.

 

[Greenbook]

If you bought the property a while ago, yes, you have enjoyed substantial capital appreciation. But in order to realise that you have to sell the property which, in the current market, requires that it be vacant which, under these rules, will be difficult to acheive.

100% correct. Because of the inability to get vacant possession, the minute you hand over the keys to a tenant, the value of your property has probably halved. It will only go back to market value when the tenant leaves.

Banks won't lend to BTL investors either - they will be taking the same risk. If they have to repossess, they will be selling with a sitting tenant.