Selling apartment and rental price issue

jedentag

Registered User
Messages
25
Hi Folks,

I'm selling a 1 bed apartment and have had an offer €10K below asking, no more bids yet, on sale for 4 weeks.

Most of the people viewing have been investors but are put off by the fact that I rented to in-law family at 60% of market value for the 2 years before sale. In truth as I'm not a 'landlord' but was a short term solution to an issue at the time, I didn't realise that this would mean that when I went to sell, they wouldn't be able to put the rental price back up unless they left if vacant for 2 years.

It looks like I will be able to sell to someone who is buying to move in, but nearly half of the people viewing have been investors. Apparently that's the market for 1 bed apartments. As I'm pushing the boat out to secure what I hope is my family home for life, I could do with getting as much as possible for the apartment to help get me to the asking price of home we want.

My question is if there are any tactics to mitigate this issue or is it just something I'll have to take on the chin as a 'learning'. Not that I ever intend to be a landlord again if I can help it!

Thanks.
 
jedentag said:
Most of the people viewing have been investors but are put off by the fact that I rented to in-law family at 60% of market value for the 2 years before sale. In truth as
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You should have structured this differently at the time, perhaps as a licence agreement where their occupancy of the property and the rights attending thereto fell short of that entailed in a tenancy. The presumed quid pro quo for this was the sharp discount in the rent payable.

Get strong legal advice as a matter of urgency.
 
Not your fault - the reason investors and not FTBs or other owner occupiers are "half the market" is because of the 20% deposit requirement still hung onto by most banks. This effectively means that if there is a 250k 2 bed beside a 1 bed going for 200k, the deposit required is 40k for the 1 bed but just 25k for the 2 bed - this is driving FTBs away from buying 1 bed apartments, though probably slightly reinflating values given investor interest. I would imagine that you've already had the last tenant vacate the unit some time ago & there's probably a little work to be done, 2 years isn't really long for a potential investor - in the last apartment development I lived in, investors regularly moved in family members or left units empty for 2 years to circumvent the RPZ rules.
 
So the problem is not caused by the rent rules but by the banks' reluctance to lend for one bed apartments to home owners.

Of course, if the stupid rent rules did not exist, investors would be prepared to pay more.

Brendan
 
Brendan Burgess said:
So the problem is not caused by the rent rules but by the banks' reluctance to lend for one bed apartments to home owners.

Of course, if the stupid rent rules did not exist, investors would be prepared to pay more.

Brendan
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Thanks Brendan, do you know why the rules were brought in? I can't imagine it was to stop people renting to those who can't afford market price at a fairer rate. You'd think they could allow that exception as I'm sure it happens pretty frequently, seems to either penalise someone trying to keep someone housed who doesn't have any other options, or force people to bend the rules by getting the discount back in cash. I don't understand it at all, is it the loss of tax on the profit made from the rent at market rate?
 
Perhaps go back to the person who made the offer and meet them half way. I have never offered full price for a property but was always open for negotiation.
 
ClubMan said:
This doesn't add up.

Maybe your asking price is simply too high and doesn't reflect the actual market value?
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Sorry you're right, meant to say 'more than half'. Bear in mind I'm parroting back what agent is telling me, no idea first hand of course what's happening but I think agent is doing his best.

Yes I've already broached amending the price, been on the market for 6/7 weeks so not excessively long but ultimately it's only worth what people are prepared to pay. Last 2 went for €350K and €366K in April last year in the same block but no point getting hung up on that, mine is at €350K asking bought for €315K, 5 years ago.
 
So you’ve got an offer of €340k on a property with an asking price of €350k. Is that right?

If so, I would grab the offer with both hands!

What the property might have achieved last April is irrelevant.
 
jedentag said:
My question is if there are any tactics to mitigate this issue
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jedentag said:
Bear in mind I'm parroting back what agent is telling me, no idea first hand of course what's happening but I think agent is doing his best.
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The estate agent is best placed to advise on your original question.
Sarenco said:
So you’ve got an offer of €340k on a property with an asking price of €350k. Is that right?

If so, I would grab the offer with both hands!

What the property might have achieved last April is irrelevant.
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I would agree with this.
Obviously the property is only worth what somebody is actually willing to pay for it.
It's your call - in consultation with the EA - to decide when sufficient people have viewed it and expressed and interest/made an offer to finally bit the bullet and sell.
 
Probably due to the relatively heavy losses by that particular segment of the market during the bust, 1 bed units lost a very significant level of value - around 70% of such apartments were bought as rental properties, and I suspect banks may also still believe that a significant FTB segment may be buying 1 bed units with the intention of holding it as a rental unit later on, while buying a larger home. But that is just my guess, it could also be because the value of the loans are generally smaller than typical houses & profits are lower?

AIB still have this on their website - they insist on 20% deposits and will not lend for ANY studio apartments valued at less than 275k
https://aib.ie/social/blog/2018/07/what-are-the-criteria-for-mortgage-approval

It would very much depend where your apartment is. Apparently in most of Dublin some lenders will allow a 10% deposit, but some may still be rigidly be sticking to the policy. The fact that AIB have such a rigid policy might put a lot of buyers off even looking at 2 beds, especially if there isn't a very large difference between 1 and 2 beds in the same development.

As I have mentioned elsewhere on the site, one bedroom units & units have been subjected to significant levels of negative press, are frequently lambasted as "undersized" despite minimum sizes being effectively 50m2 or more since 2009 at least & there's so much rental demand some councils prior to the tenant-in-situ scheme were buying up private sector 1 bed units specifically to try to cope with the chronic shortage of social homes for 1 person households (67% of the social housing waiting list consists of one person households). All of this, plus very rental centric environments in many apartment blocks has created a great deal of stigma attached to apartments for FTBs, rightly or wrongly.
 
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