"Rents are at a record high – so why are private landlords selling up?"

[Purple]

It’s a mistake that lots of people make.

They compare what we’ve been through to a recession or a crash.

It’s neither; we consciously and deliberately switched off elements of the economy in order to save lives. And now we’re rebooting it.

If you look at what’s happening in the US, and indeed globally, I’d argue that it’s more likely we’re entering a golden era rather than a period of woe. Look at what happened post Spanish Flu and World War I; the Roaring Twenties.

I've no idea what will happen but governments were much smaller as a proportion of national income back then and State debt levels were also much lower.
In the 1920's government spending in developed countries was 10-25% of GDP. Now it's 40-50% of GDP. In Ireland it's doubled since the 1920's That's not a bad thing but it does mean that recessions require far greater levels of borrowing to make up the shortfall.

 

[Ravima]

Getting back on topic, many landlords in Ireland are owners of one perhaps two other properties, that they may have bought in the past 20 years as investments. Now they are approaching retirement and the hassle of being a landlord is just too much. The mortgage is probably paid off and there is a lump sum on sale of the property that can be invested elsewhere or spent on the holiday of a lifetime.

Its not that the high rents are taxed as tax is the price we pay for all the services, but the other costs all add up. There is maintenance; management charges; prtb; insurance; property tax etc. Some will say that there are tax deductible and so they are, but they must still be paid. Add in the hassle of the 2am call to say the toilet is blocked; the washing machine is broken; the neighbours complaining either justifiably or unjustifiably and the nightmare tenant.

If there was money to be made in it, people would become landlords and not the reverse.

 

[AlbacoreA]

Something like 70% of LLs have one rental up to 85% have one or two.

I don't buy into the idea of the great sell off. Landlords often buy them to provide income as a form of pension (passive income) when they retire. There is no need to sell them off, once they are paid for. I think people are a little obsessed with the capital appreciation of rentals as if thats only objective of property.

 

[odyssey06]

Something like 70% of LLs have one rental up to 85% have one or two.

I don't buy into the idea of the great sell off. Landlords often buy them to provide income as a form of pension (passive income) when they retire. There is no need to sell them off, once they are paid for. I think people are a little obsessed with the capital appreciation of rentals as if thats only objective of property.

The article mentions that as one of the reasons why landlords sell up, but it seems to suggest there isn't a next generation of small scale landords replacing them adopting the same strategy.

 

[The Horseman]

Something like 70% of LLs have one rental up to 85% have one or two.

I don't buy into the idea of the great sell off. Landlords often buy them to provide income as a form of pension (passive income) when they retire. There is no need to sell them off, once they are paid for. I think people are a little obsessed with the capital appreciation of rentals as if thats only objective of property.

The rtb, threshold and even the govt have acknowledged landlords are selling. If they are paid off logic would suggest continue renting them out.

Whether you accept it or not these are the facts borne out by those who want rental stock to increase rather than decrease.

 

[AlbacoreA]

Just in case people pick me up wrong I'm NOT saying they aren't leaving.
I'm saying people shouldn't assume they usually sell up once the mortgage is gone.

IMO.
They are selling up because the risk vs return, and return vs hassle is no longer worth it.
New landlords are not entering in the same numbers because the cost to entry vs return is too high.

Large landlords stick to high end, where the number of units, means the profitability is still viable.
Also the risk is spread over many units. Not just one.

Also RPZ and the new rules mean buying a new rental gives you higher rent than buying a property stuck on a low rent. Which encourage people to sell off older and cheaper places and buy new places. Then you have the fair deal factor. Which both takes the rental property and the income from it (ok the rules have changes slightly).

Which (after supply and demand (population) which is the main issue) has the knock on effect of removing the cheaper property and moving the the price upwards.

So not just people selling up as they clear the mortgage, in my opinion. Though some do just do that.

There's a lot of nuance to it. In my opinion.

 

[Allpartied]

Property in Ireland is cheap to buy, by comparison with building costs and by comparison with international price/income ratios.

Most couples working full time earn well over €70k per annum.

The percentage of rent, as a portion of earnings, is rapidly rising.
This is punishing people, at the expense of small time rentiers and the overseas investors.
Literally, sucking capital out of the economy.

I don't think large rental companies is , necessarily , a bad thing. For one, it is much easier to regulate them and they are much more likely to implement regulations. It's easier to inspect them and easier to punish them. They are more likely to have a comprehensive maintenance team , as well.

When I rented off a private landlord, repairs, replacements, emergencies were a nightmare.

" I'm in the Algarve, I'll give Seanie a ring, see if he can pop around next week."

 

[AlbacoreA]

The percentage of rent, as a portion of earnings, is rapidly rising.
This is punishing people, at the expense of small time rentiers and the overseas investors.
Literally, sucking capital out of the economy.

I don't think large rental companies is , necessarily , a bad thing. For one, it is much easier to regulate them and they are much more likely to implement regulations. It's easier to inspect them and easier to punish them. They are more likely to have a comprehensive maintenance team , as well.

When I rented off a private landlord, repairs, replacements, emergencies were a nightmare.

" I'm in the Algarve, I'll give Seanie a ring, see if he can pop around next week."

All these things, regulation, big companies, supply, small LLs leaving, are pushing the prices up. Supply is the main one. But the rest are all a factor. Not that small LLs keep the price low either.

 

[Delboy]

All these things, regulation, big companies, supply, small LLs leaving, are pushing the prices up. Supply is the main one. But the rest are all a factor. Not that small LLs keep the price low either.

The population of the Republic has increased by 1.5m (43%) since 1995. Supply could never match that especially given that nobody ever planned for or envisaged a population growth rate at anything like that. And the Govt continues to encourage population growth at every turn.

And the population continues to rise at a greater rate than houses/apts are coming on stream. The housing crisis will be with us for the next 50 years and more

 

[NoRegretsCoyote]

The population of the Republic has increased by 1.5m (43%) since 1995. Supply could never match that

Housing units in 1991 were 1 million.

Housing units in 2016 were 2 million.

Housing increased considerably more than population. Perfectly possible to do if the conditions are right.

 

[AlbacoreA]

I would say the devil is in the detail here. What's the breakdown of those housing units vs demand.

 

[NoRegretsCoyote]

I would say the devil is in the detail here. What's the breakdown of those housing units vs demand.

Well population increased 50% and dwellings increased 100%.

Supply exceeding demand.

 

[Purple]

Well population increased 50% and dwellings increased 100%.

Supply exceeding demand.

Household unit size has to be factored in.
In the 1990's if you were an adult living at home with your parents because you couldn't afford a house. A person in the same scenario now is homeless.
As long as the State gives away free houses there will be a housing list.
As long as being homeless gets you further up that list there'll be a homelessness issue.
As long as the State used your money to price you out of the housing market there'll be a housing affordability issue.

The main driver in house price inflation is the States social housing policy. The more it does, the more expensive housing becomes, the fewer people can afford to buy or rent, the more the State has to do. I'm not saying we shouldn't house people but we should acknowledge the unintended consequences of the policies we have.

 

[joe sod]

Well population increased 50% and dwellings increased 100%.

Supply exceeding demand.

Is the devil not in the detail though, in the 90s emmigration was still a big factor in Ireland mostly the young were emmigrating reducing the demand for houses so the same body of housing with small increases was more than sufficient.
This completely changed in the 2000s the young were staying and forming families here as well as that we were attracting new immigrants also forming families, so that 50% increase in population were virtually all looking for housing.
The 100% increase in housing is a bit illusionary because much of it was built in the wrong places in fields in longford and leitrim rather than in the cities, the infamous ghost estates, some of these were even demolished during the crash because there was absolutely no demand for them. A lot of that housing that was built like one off houses in the country does not satisfy housing demand.

 

[Gervan]

It is primarily the regulation that deters me from becoming a 'landlord'.
I currently have a family living in my house under the rent a room relief scheme. It is not ideal; they would love to have a place to themselves, but there is nothing in their price range. Schools and jobs mean there is only a specific area suitable.
I have considered downsizing and letting them the whole house, but I couldn't face having to register with the RTB. The insulation is not up to their requirements, I don't have a cooker hob etc.
If it is all right for me as an owner to live in a non-perfect house, why must tenants have a higher quality?

The second deterrent is that I am the one who deals with leaking fridges, cleans floors, opens windows and treats showers against mould, works out why the tumble dryer isn't working, all the little things that if left undone would lead to the property deteriorating. They are not deliberately careless, but don't seem to understand how things work. It must be rare tenants who take care of a property as well as the resident owner would.

 

[Firefly]

It is primarily the regulation that deters me from becoming a 'landlord'.

For me, a bad tenant not paying the rent and hiding behind the regulation / rtp would just mean too much downside risk. I am in favour of better standards of housing for tenants, but think it needs to be 50-50....the place should be nice but if the rent is not paid, then tenant should be made leave. I think this would lead to more landlords entering the market, which would lead to an increase in supply....

 

[AlbacoreA]

Well population increased 50% and dwellings increased 100%.

Supply exceeding demand.

I'm just not seeing that in the market. I see the opposite.

I think some supply of new builds, and vacant properties are unsuitable for the demand. Or are deliberately kept vacant.

 

[Purple]

I'm just not seeing that in the market. I see the opposite.

I think some supply of new builds, and vacant properties are unsuitable for the demand. Or are deliberately kept vacant.

Family units have got smaller. 30 years ago it was normal for siblings to share a bedroom. Now it's a breach of their human rights.

 

[AlbacoreA]

The rooms and houses are smaller too. Not just families.

You go into show houses these days and you realize theres all sorts of trick's with fitted tables and beds to disguise the size of the rooms.

 

[Purple]

The rooms and houses are smaller too. Not just families.

You go into show houses these days and you realize theres all sorts of trick's with fitted tables and beds to disguise the size of the rooms.

They did that 30 years ago too.