Why are investors leaving the buy to let market?

D2WW

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There is a report in today's Times from Sherry Fitzgerald saying that "for every one private investor who has bought in the market during the year to date, two have exited the market,” Ms Finnegan said, adding that it was having “a debilitating impact on the rental sector.”

Any opinions on why this is the case?
I ask because I'm thinking of getting a one or two 3 bed semis' to rent out as a cash buyer.
 
Too many risks, too much tax at over 50% if you get your full rent paid promptly, a big if that, too much maintenance costs when tenants change over, too much paperwork and governance and PRTB useless when it comes to owners rights and tenant accountability. Costs for accountant whilst not essential needs to be costed, insurance costs etc etc , I've drilled into this as I'm sitting in near cash in prize bonds which are also useless but there pending choosing a final investment choice, my yield assuming I get paid with a rental and little vacancy was 3%ish so I need to factor in solid appreciation and I like others don't see that in the short term.

Good luck to you, you are braver than me...
 
Too many risks, too much tax at over 50% if you get your full rent paid promptly, a big if that, too much maintenance costs when tenants change over, too much paperwork and governance and PRTB useless when it comes to owners rights and tenant accountability. Costs for accountant whilst not essential needs to be costed, insurance costs etc etc ,

Great summary.
 
Haven't read the article but presume some of those exiting are/were accidental landlords? Though Palerider's points are true is it any harm if the accidental landlords leave and the market is left more to professional landlords?
 
Haven't read the article but presume some of those exiting are/were accidental landlords? Though Palerider's points are true is it any harm if the accidental landlords leave and the market is left more to professional landlords?
Most of the investment properties however are being bought by owner/occupiers according to the report
 
Palerider's analysis is spot on – for taxable investors, the risk/reward analysis very rarely justifies becoming (or remaining) a residential landlord in the current environment.

The risks are just not worth it in the vast majority of cases.

D2WW could invest in a basket of highly diversified REITs with a net yield of around 3%. Could s/he beat this return by investing directly in rental properties? Probably not without taking on a lot of uncompensated additional risk and a world of stress and hassle.
 
Looked a property investing myself and it's just not worth the hassle , I've been buying REITs like sarenco mentioned seems much easier and shares also , I'm sitting on a lot of cash myself no idea what to do it with , it's funny how all the free advice I get off people is to buy a few houses rent them out and clean up . Nobody talks about the hassles.
 
Looked a property investing myself and it's just not worth the hassle , I've been buying REITs like sarenco mentioned seems much easier and shares also , I'm sitting on a lot of cash myself no idea what to do it with , it's funny how all the free advice I get off people is to buy a few houses rent them out and clean up . Nobody talks about the hassles.

That's the Irish obsession with property. Usually that free advice has absolutely no analysis on the actually returns.

The dividend yield with Vodafone is 5.7%. You can buy shares with yields that high to diversify. No hassles, can sell in a couple of days.


Steven
www.bluewaterfp.ie
 
it's funny how all the free advice I get off people is to buy a few houses rent them out and clean up . Nobody talks about the hassles.
I bet those offering the free advice don't have rental properties. I've heard that too and when you mention tax etc, it's normally greeted with a blank stare.
 
As a landlord with plans to get out of the business I am in total agreement with all the negative contributions above. I could not find any fault with the negative contributions above.
If you get into a problem either with the PRTB or the Courts you will be deemed to be in business and should know all the laws and regulations surrounding the renting business and it has become hugely bureaucratic over the years.
When it comes to taxation and allowances/expenses and passing down the business to another family member it is not treated as a business.
It is and will continue to be seen to be an easy target for taxation by politicians into the future. You are a sitting duck and politicians love sitting ducks. The next bullet will be a wealth tax.
There are not many friends in the Media or Political world for Landlords.
It can be a slow process to disentangle yourself from the business as it is not a very liquid asset.
You have no long term strategy from any party or Government which a serious new investor would need to enter the market. There is and has been too much chopping and changing with the rental market for it to be an attractive long term investment going forward.
A serious plan would need something like 20 years or so and that maybe with a review (to tweak not change completely) every 10 years by a serious non compromised independent group who would know what they are talking about.
A few of the major problems that I have with the rental business are 1) not treated as a business from a taxation point of view and inheritance issues 2) The complicated (deliberately so and no need for it) way that the Tenancies Act is written and the incomprehensible administration of the law by the PRTB.
Bad Landlords and bad Tenants should not be tolerated. Delayed repairs/delayed rental payments and delayed decisions by the PRTB is wrong. The whole process of getting a case by a landlord to a hearing with the PRTB is totally unacceptable. There should be no room for bias in a fair system and I have read enough about decisions and listened to a few people who have got a bad deal from the PRTB to support the view that there is an in built bias within the PRTB against landlords.
When the vulture funds see the opportunity to divest themselves from the residential investment market they will be off to pick the flesh from the carcasses in another market. They are not going to hang around in the Irish market for too long more.
 
I am currently exiting a rental property. for the following reasons albeit rents are going up rapidly right now
Mortgage Rates >5% for BTL
Regulation - Can only put up rent once every two years - means that you have to factor in what the rent will be in two years - bad for tenants
Buyer Rules - over 220k they need 20% deposit - puts a ceiling on max prices for cheaper properties
Tax Relief for Individuals is lower (75%) than if your are a business that owns property (100%) - the talk was this would go to zero over time - this was the first inkling that this was not going to go well for individuals
High Service Charge Costs - albeit in my development they are spent well and there is good governance - it is normally about a months rent
Speculation that the government will change rules regarding rent supplement tenants - landlords should be free to choose their tenants
Extra Tenants rights (good for bad landlords and good tenants , but terrible for good landlords with bad tenants)
PRTB – this expenditure can be offset against your rental income but it introduces extra rules
Property Tax – this is not an allowable deduction against your rental income like a lot of things they have introduced
Water charges - Irish water stated landlords would be chased for tenants arrears but they would not be able to tell landlords if the tenant had paid due to Data Protection. Essentially makes us liable for bad tenants
Any income liable to tax @>50%
 
Too much risk & cost for too little return.

Its unclear if future govt policy will make this worse either.
 
We were told that this funds local services.

"Property Tax – this is not an allowable deduction against your rental income like a lot of things they have introduced"

Not only that the tenant who benefits from the proceeds of this tax never pays it.
 
Yep, LPT is effectively a wealth tax masquerading as a local authority charge.

The Minister acknowledged that LPT should be deductible but failed to make it so.
 
Since LPT has been introduced rents have increased a lot. Could it's introduction be part of the reason for that increase? I think that it might be so one could argue the case that it is the tenant who is paying the LPT.

Furthermore, maybe tenants are paying double the LPT everyone else is paying to give the landlord's his/her LPT payment once 50% tax etc. is paid?
 
I think that it might be so one could argue the case that it is the tenant who is paying the LPT.
As a renter: a rental property is worth exactly what somebody is prepared to pay to rent it. From this perspective, LPT comes of the landlord's bottom line just like any other expense except that LPT is not tax deductible.
 
The main factor that will determine what somebody is prepared to pay to rent a property is the cost of renting similar properties. I think it would be more relevant to take a wider view of the market.
 
Since LPT has been introduced rents have increased a lot. Could it's introduction be part of the reason for that increase? I think that it might be so one could argue the case that it is the tenant who is paying the LPT.

Furthermore, maybe tenants are paying double the LPT everyone else is paying to give the landlord's his/her LPT payment once 50% tax etc. is paid?

The basic rules of economics tell us that the ultimate consumer of a good (in this case tenant who "consumes" a property rental) absorbs all additional costs borne by third parties in the supply to them of that good.
 
As a landlord the main thing that might prompt me to exit the rental market is the opportunity for a tenant to refuse to pay rent.

I would have no effective means of enforcing my debt nor of evicting the tenant.

This has happened to me only once, and the situation continued only 2 months, but the opportunity exists for any unscrupulous person to do this to any landlord. Potentially the situation could continue for a much longer period.
 
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