Implications of SF in government for landlords

Philip Slattery

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38
I am not a renting or a landlord. Still living at home hoping to buy a house soon. No one will argue that there is not an issue with housing in Ireland. Renting should never cost more then a mortgage. If there is a house for rent the landlord will look for the rent people are willing to pay, if someone offers 2k per month for a house they wont turn it down. I also know it is simplistic to simply say if people want rent to drop stop paying the draft prices and landlords will be forced to drop prices.
More housing is the issue but has to be build correctly and in the right mix between social, rental, affordable and open market. One idea i think was in soc dem manafesto was to ensure certain housing was affordable purchase or rental similar to current social housing rules.
 

cremeegg

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3,280
Renting should never cost more then a mortgage.
Is this meant as a philosophical point or a moral point ?

Leaving out the word 'should', and stepping into the world of economics, rents nearly always and every where cost more than a mortgage.

I also know it is simplistic to simply say if people want rent to drop stop paying the draft prices and landlords will be forced to drop prices.
Why is this simplistic, it appears to be what you have done yourself.

In the 2000s many international retailers decided not to open new outlets in Ireland as they believed that rents were too high. MacDonalds included i think.
 

fidelcastro

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128
prsi and usc on landlords is a wealth tax of sorts through the back door by FF/FG, ,
Income Tax on Rental income has been in place for FF,FG,Labour, Greens, PD's , durations in power etc etc.
In other words, its accepted as a society good that taxes are paid on rental income, just like they are for ALL incomes, employments, dividends.

The rental income received today is beyond the wildest dreams of most landlords, so please quit the moaning, grow up, and lets not spend an eternity moaning about providing housing for less fortunates than ourselves. Be happy that you CAN pay the 52% tax on your income, and have a roof over your head. Most of you have benefited in some-way from a leg up by the State be it from education, health, roads, libraries, and subsidies to IDA for MMC that you may work in. You didnt get to where you are on your own.

Unless you are fabously wealthy, and well done to you, there is a strong possibility that either your brothers,sisters, cousins, friends will find themselves at the sharp edge of the housing "situation". The health system is beyond a joke , infrastructure is lacking, and the balance between State expenditure and income is JUST in balance this year, with 200Billion debt.

In Finland, a country with same population and income, they have addressed this matter. Unlike Irish people, they believe in everyone contributing according to their means into the pot. Everybody, including your dole money, summer jobs for students, OAPS, landlords pay income tax (there is no refund at year end). As well as this, they have the best education system in the world.


Fidel.
 

Nicklesilver

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16
For the record the self employed are paying 55% marginal tax rate on rental income. 55% makes it very difficult to pay down debt. My FG former TD did not know this on the doorstep. The only people making money out of rental income are the funds.
 

RedOnion

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4,443
For the record the self employed are paying 55% marginal tax rate on rental income. 55% makes it very difficult to pay down debt. My FG former TD did not know this on the doorstep. The only people making money out of rental income are the funds.
For the record, people on a higher tax rate are paying 55% marginal tax rate on rental profits.
If you're not making profit, you're not paying 55% tax.
Anyone paying 55% tax is making money (just they don't realise it).
 

Philip Slattery

Registered User
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38
Is this meant as a philosophical point or a moral point ?

Leaving out the word 'should', and stepping into the world of economics, rents nearly always and every where cost more than a mortgage.



Why is this simplistic, it appears to be what you have done yourself.

In the 2000s many international retailers decided not to open new outlets in Ireland as they believed that rents were too high. MacDonalds included i think.
Rent should never be more then a mortgage to be a philosophical point. I pay a mortgage I have a house at the end of it if i am paying rent i have nothing to show for it at the end. So a mortgage should carry a premium for that point. In both cases you have a roof over your head but you have more control when buying over renting.
 

BourbonWithIce

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53
For the record the self employed are paying 55% marginal tax rate on rental income. 55% makes it very difficult to pay down debt. My FG former TD did not know this on the doorstep. The only people making money out of rental income are the funds.
And the government as well. Handsomely.
 

cremeegg

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3,280
I pay a mortgage I have a house at the end of it if i am paying rent i have nothing to show for it at the end. So a mortgage should carry a premium for that point.
I absolutely agree with the first sentence.

The fact remains however that rent is almost always more expensive than a mortgage.
 

Dermot

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1,053
Anyone paying 55% tax is making money (just they don't realise it)

That can be true in a lot of cases but is it worth it in certain areas of the country given all the hassle involved.

A friend of mine bought a lot of houses in the midlands in the boom for an average price of €215,000 plus legal fees,stamp duty and furnishing etc. He would have borrowed on average €165,000 each on them. He is not on Tracker rates. The average rent is about €700 per month. He has had the normal number of non payers over the years as you have in the midlands. He has other commercial property outside dublin. This is and was used to subsidise the the rental property.
Overall he makes a paper profit and is paying tax at the 55% rate because he is making a paper profit when he reduces his loans. He has very little cash flow when he pays tax and loans. If he were to sell the houses he would now get a max average of €120,000 less selling costs and he still owes bank in the region of €90,000 each. There are many (smaller) who are in similar situations who purchased in the boom to provide a pension and have ended up in poverty instead.

If he were to sell all including commercial property he would incur a substantial loss. On the income side when you include bank repayments and tax and other payments its and overall negative there too.
The reality is that outside of the big population centres its a battle to make rental pay especially for property purchase in the boom. Many have lost the battle
 

BourbonWithIce

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53
Most landlords are subsidising the rental property every year. They pay expenses, the tax man, repayments (interest and capital) and they are still have to paid a couple of grand on top from their own pockets to keep the house.

That's why, myself included, are selling up and leaving the rental game. Its not worth it long term to have to keep subsidising the rental property. Yes you have a house that you can sell at the end of it all but there's a cost to that (i.e. immediate spending, cutbacks, rainy day/pension planning).
 

BourbonWithIce

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53
If landlords aren't willing to continue to subsidise every year and sell up, where will the renters go? Who has an answer for that???
 

RedOnion

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4,443
If landlords aren't willing to continue to subsidise every year and sell up
Subsidise?
What are you subsidising? Your own investment by repaying your debt? Or am I missing something?
People seem to confuse cashflow with profit. If you can't see the difference, you shouldn't be making leveraged property investments.

where will the renters go? Who has an answer for that???
Are you planning to burn the house down, or will the same number of houses exist after all these landlords sell up?
 

BourbonWithIce

Registered User
Messages
53
Subsidise?
What are you subsidising?
As I explained, if you have rental income of say 10,000, mortgage interest of say 4,000 and expenses of 2,000 and a tax bill of 2,000, this gives you a paper profit of 2,000. Yes it does. If you are interest only, you are taking a lot of risk on with a rental property for approximately 167 euro a month.

If you are capital plus interest repayments on a mortgage, you might need to take this 2,000 paper profit each year and add 8,000 of your own money to pay the mortgage. Yes, you are repaying debt, but you are subsidising the rental property. This is what's driving landlords out of the market.

Are you planning to burn the house down, or will the same number of houses exist after all these landlords sell up?
No but the family I rent to cannot buy the house so the house will in all likelihood be sold to an owner occupier. That means one less house in the rental stock. If this is mirrored 5,000 times a year across the country (which would be a very conservative estimated) that means least stock, more demand and rental prices are driven higher.

Yes of course build more social/affordable houses etc, but building estates takes time. A long time. To build an estate with 300 houses would take 5 years at a minimum. There's an estate in Carriagline with 800 houses I believe (Janeville) and it's taking the developer 9 years to complete everything. You must keep landlords in the market who are in the market right now until these houses a ready.

Giving all stick (no carrott!) to landlords is only going to exaccerbate the problem. If you don't agree with that, they please provide your logic for doing so.
 

RedOnion

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4,443
If you are capital plus interest repayments on a mortgage, you might need to take this 2,000 paper profit each year and add 8,000 of your own money to pay the mortgage. Yes, you are repaying debt, but you are subsidising the rental property. This is what's driving landlords out of the market.
Yes, I'd definitely be getting out of the market with something like this! What have you got? 6% yield with 100% mortgage over 20 years? And you want that to be cashflow neutral to stay in the business of being a landlord?
 

BourbonWithIce

Registered User
Messages
53
I tried to private message you the details for your opinion but I cannot do so.

I'd be interested in your opinion as I've followed a number of threads where you have been very knowledgable and helpful with your advice.
 
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