Considering selling investment property given the ongoing legislation challenges facing landlords

Eistigi

Registered User
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15
Hi All...
  • I have been living in Australia for 20 years.
  • I purchased a house in Ireland in 2016 as an investment, with a view to possibly moving home to at some stage. It is the only investment property I own.
  • Since then I have purchased a house (PPR) with my family in Australia (20 year mortgage). Plans to move home are probably less likely (but never say never).
  • My plan has been to retain the investment property in Ireland for the next 5-10+ years, monitor the market and potentially sell.
  • I have good tenants (at the moment), never missed the rent in 6 years and keep the house in good condition.
  • I have adhered to the RPZ allowances, and to be honest, I have no desire to keep increasing the rent, given the good tenants residing.
  • I have outlined the financial details below.

The reason for my post...I have been following all the recent discussion in the news and on AAM about the current landlord exodus and upcoming legislation on lifetime tenancies, rent caps etc. I am concerned that my plan to retain my investment property may not be the best plan anymore, and I am considering an exit. I am trying to get a feel for the worst-case scenario if I keep the property - I have read many of the posts on this forum and this has been very valuable info. My preference would be to retain the property but I am now considering selling (I could use the funds from the sale to reduce interest repayments on Australian mortgage).

Financial Details:
  • Jan 2016 - Purchased 3-Bed Semi-D, Wicklow Rathnew area for 240K. 6 years old when purchased.
  • Loan Amt 150K / 20 Years. Remaining Loan to date 118K.
  • Monthly Rent 1,400. Monthly Mortgage Repayment P+I = 865.
  • Additional monthly expenses = 175 (letting agent fee + insurance + misc).
  • + Usual expenses (repairs + LPT) + Tax payable each year.
  • I usually break even each year in respect to any cashflow profit (LPT, Letting Agency fees, Tax payable, Insurance, Repairs etc).
  • Similar houses are currently selling for approx 335K on the same road. Potential buyers would most likely be PPR buyers.

Any advice/input would be appreciated (and apologies in advance for any delayed response to questions, I am on Australian time!) Thank you, Eistigi
 
In your circumstances I don't think much has changed. Rent is limited to HICP or 2% whichever is lower but that doesn't seem to bother you as you have good tenants. But for a new tenancy you could be stuck below market rate essentially forever. Would you live that that?

Otherwise you will still be able to terminate the tenancy if you want to sell the house or return to live in it yourself. A lot of people seem to think there are changes on these two points but there are not.
 
There is a reason that landlords are leaving with rents at all time highs.
Its all about risk at the moment and the risk for you that you wont be able to sell to who you want to or for the tenant to leave in the time period you require, if they leave at all.

For example a recent property that went sale agreed in the latter half of last year and the tenant was moving out in November. Well that tenant decided not to move and have the housing agencies on their side. Yes, they should still be able to remove them eventually, but there are cases in Ireland now where tenants stopped paying rent and are taking 2 to 4 years and counting to remove them. Well that sale has fallen through.

Have a look at bidx1. A fair few properties on there recently at knock down prices. Too good to believe. When you look into them they have sitting tenants. Tenants who the landlord decided it was easier to leave in there and sell at a huge discount to get away from them.

Then there is the risk of what kind of roll of the dice legislation any change in government brings in. Because the one thing you can be sure of is that legislation will change at least twice a year and never in your favor.

You have to ask yourself this question. Given the money tied up in that property and the amount you are making from it at this point, are there easier ways to use that capital to make money.
 
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