Minister Murphy actively pushing landlords out of the market in the face of the latest Daft report

AlbacoreA

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...you have to get past the concept of the business that you are in is just the same as any other business. It is not. Tenants are not your customers, they are your tenants. Housing is not a commodity, it is a social necessity.
Govt should provide social necessities not the private market.

At this point the govt could do anything. They've turned a low risk into a high risk.

I think people should be allowed to leave the market under the rules at which they entered it.

If people are happy with the direction the govt are taking and it's a viable business, then most will stay in it and indeed more will enter it. So heres no reason to stop people leaving unless of course you don't believe it's viable.
 

AlbacoreA

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This all started partially when the govt sold off it's social and affordable housing stock.

Then it it outsourced its obligation to the private market. It then forced that market to take high risk business that the govt didn't want.

So the govt has effectively renaged on it's obligation to provide housing and forced it on someone else. So now it's that private business obligation to provide housing.

At the same the govt keeps changing the rules and goal posts.

So it's the govt ending the private rental market. The market that it's outsourced housing too.

The new landlords coming in are targeting the high end. That won't fix supply where it's needed.
 

Gordon Gekko

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Just to offer an alternative view, I’m considering buying an investment property at the moment. I’ve a number of reasons for doing so, but the current noise encourages me if I’m honest as I find it analogous to “blood on the streets” in investment parlance.
 

galway_blow_in

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I'm half considering buying a second commercial investment property, bought the first one in May 2016 for 120000 all in including stamp duty and legal fees, collected 36 k so far and not a single expense, only error I've made was paying off the ten year 50k loan early as it was a waste of cash.

New property would be a cash buy ( little Asian food place in Limerick city) but I would probably be over exposed to bricks and mortar and paying more tax, temptation will probably pass in a week :D

Having hefty debt seems to be the only logical way to make property pay with the draconian tax take?
 

Gordon Gekko

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I’m looking at something for €450k. Loan would be €315k interest only for 15 years at 5.5%. Rent would be €29k a year. Tax deductible interest of circa €17k a year. Tax deductible agent fees of circa €3k a year. Tax bill circa €5k a year. Keep the surplus €4k a year rolling up in the rent account to cover contingencies. Clear the loan using part of the future pension lump sums.
 

AlbacoreA

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Just to offer an alternative view, I’m considering buying an investment property at the moment. I’ve a number of reasons for doing so, but the current noise encourages me if I’m honest as I find it analogous to “blood on the streets” in investment parlance.
Imo it's just a bit early for blood in the streets analogy. People are getting out of a very specific rental type. They are how ever buying up other types of rental. Property is still being snapped up. It's just slowing at certain price points due to affordability.

If someone ends up with 10-20k damage to a property and no rental income for a couple of years, that's the risk. If you can carry that cost easily then it's not really a high risk. Like wise having capital tied up for a longer term.
 

galway_blow_in

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I’m looking at something for €450k. Loan would be €315k interest only for 15 years at 5.5%. Rent would be €29k a year. Tax deductible interest of circa €17k a year. Tax deductible agent fees of circa €3k a year. Tax bill circa €5k a year. Keep the surplus €4k a year rolling up in the rent account to cover contingencies. Clear the loan using part of the future pension lump sums.
Don't let Sarenco hear of this, any rate above tracker level is usury in his mind
 

galway_blow_in

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Imo it's just a bit early for blood in the streets analogy. People are getting out of a very specific rental type. They are how ever buying up other types of rental. Property is still being snapped up. It's just slowing at certain price points due to affordability.

If someone ends up with 10-20k damage to a property and no rental income for a couple of years, that's the risk. If you can carry that cost easily then it's not really a high risk. Like wise having capital tied up for a longer term.
Do you think commercial property might now appeal to more traditional residential investors?
 

Gordon Gekko

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My blood on the streets comment stands, but it’s more around sentiment versus reality. We’re being bombarded with tales of landlords fleeing the market. This is a market where demand massively exceeds supply, where borrowing costs are fully deductible, where Brexit is leading to economic immigration, and where interest only is available. It is also a market where institutional money sees potential.
 
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galway_blow_in

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My blood on the streets comment stands, but it’s more around sentiment versus reality. We’re being bombarded with tales of landlords fleeing the market. This is a market where demand massively exceeds supply, where borrowing costs are fully deductible, where Brexit is leading to economic immigration, and where interest only is available. It is also a market where institutional money sees potential.
I think your instincts are correct but are the rules of the game not very different for institutional money?
 

AlbacoreA

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My blood on the streets comment stands, but it’s more around sentiment versus reality. We’re being bombarded with tales of landlords fleeing the market. This is a market where demand massively exceeds supply, where borrowing costs are fully deductible, where Brexit is leading to economic immigration, and where interest only is available. It is also a market where institutional money sees potential.
The narrative that landlords are fleeing the market is a bit misleading. Few look at that properly. There is always a landlords leaving and new landlords entering the market. There is a slow move to landlords with more properties and a slow decline in landlords with one property. But it's far from fleeing. After the crash about 50k left but a lot have come back since. Still not what it was.

There other metric they point to it is lack of rental supply. But demand had increased. Population has increased and immigration is very high. Supply can't meet this demand. It's likely we can never meet this demand.

Finally the new supply is at the most profitable end of the market. If you have money you can find somewhere over priced to rent. Almost no one is building affordable or socal housing. The only people who will build this is the govt. They don't want to.

So I think that's what you'll find. Landlords who are getting out, are actually getting back in but perhaps into a Reit, or into a different more profitable part of the market. Because they are case rich and want that money to work for them.
 

AlbacoreA

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So the idea that you can force landlords to maintain social or affordable housing is flawed. They'll just move to something more profitable.

Unless of course the provision is tied to this none profitable housing and profits are controlled. Which is a bit like what they were doing in Austria. But all of Europe is struggling with immigration and govt not building housing.
 
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Folsom

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This all started partially when the govt sold off it's social and affordable housing stock.
This all started partially when the govt sold off it's social and affordable housing stock.

Then it it outsourced its obligation to the private market.
So the govt has effectively renaged on it's obligation to provide housing and forced it on someone else. So now it's that private business obligation to provide housing.
So the idea that you can force landlords to maintain social or affordable housing is flawed. They'll just move to something more profitable.
You talk alot of sense there Albacore.
Housing policy in this country has failed. Not just on foot of increased taxes and RPZ's. It has failed over a couple of decades as you rightly point out that the government outsourced its responsibility to provide social and affordable housing to the private sector.
The consequences of which we are living with today and witnessing the patchwork job of RPZ's etc being implemented.
The State needs to invest heavily in social and affordable housing to create a stable and sustainable market.
 

Sarenco

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I'm not sure about "blood on the streets" but I wonder if the recent price falls, particularly in Dublin, are prompting some landlords to think about getting out while the going is good.

If the net, after-tax, income is poor you are really left with the expectation of capital appreciation to justify an investment. Perhaps some landlords are sceptical of achieving meaningful capital appreciation in the medium-term in circumstances where median property prices are over nine times median income.

Having said all that, I think BTL can still make sense for a cash buyer with a low marginal tax rate. A retiree, for example, buying with a pension lump sum.
 
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