It could also be sold to another landlord
It could also be sold to another landlordyou can only realise the capital value if it is withdrawn from the rental market, and sold to an owner-occupier
The rational investor would not have decided upon direct property investment, even without considering the new rules you mention.so if you had a lump of cash to invest, you would not expect it to maintain its value in real-terms?
Yes, but the new landlord would be legally obliged to charge a below market rental rate. That rent level will not have kept pace with inflation (as per the reasons in my table). Thus it's not clear the capital appreciation will have increased in line with inflation.It could also be sold to another landlord
Why do you say this?The rational investor would not have decided upon direct property investment, even without considering the new rules you mention.
A rational investor would look to have a diversified investment portfolio. Depending on one's particular point of view, between 0% and 15% should be on property. We'll assume 15%. That 15%should be made up of multiple properties, across multiple locations (preferably different countries) and in different sectors (residential, commercial, industrial). Well he generous and say there should be 3 properties making up that 15%. Assuming an initial residential property purchase price of €300k, the overall investment portfolio would need to be €6m.Why do you say this?
At a massive discount... not the market worth because any potential buyer would only be able to rent it out at the rent you were giving..t could also be sold to another landlord
No, of course not, that is an investment risk he is taking. His costs might have gone up but because of poor economic conditions he can't increase the rent, so he just has to bear it.Oh, I could see why a landlord would want to increase rents to meet expenses, whether interest payments or nursing home costs. But there's no reason why he should expect that rents will increase to meet the various demands on his purse, or feel hard done by if either market conditions or regulatory constraints mean that this can't happen.
I’m clearly irrational on your metric. Because the idea of multiple properties in different countries is massively problematic unless you’re referring to multi millionaires who can deal with different languages, different legal systems, cgt rules, inheritance tax ramifications etc.A rational investor would look to have a diversified investment portfolio. Depending on one's particular point of view, between 0% and 15% should be on property. We'll assume 15%. That 15%should be made up of multiple properties, across multiple locations (preferably different countries) and in different sectors (residential, commercial, industrial). Well he generous and say there should be 3 properties making up that 15%. Assuming an initial residential property purchase price of €300k, the overall investment portfolio would need to be €6m.
You may say the property will be funded by a loan, but leveraged investing is a high risk field and goes against rational investment. Of course, as a small percentage of a €6m investment it's probably not such a big deal, but I don't think that's what's being discussed here.
Cost Misalignment: Operating costs (e.g., maintenance, insurance, compliance) rise with inflation, not RPZ caps. This creates a widening gap between income and expenditure.
Tax and Credit Distortions: Tenants benefit further from tax credits and energy subsidies, while landlords absorb full inflationary pressure with no offset (RPRIR will be of limited benefit to many).
it doesn't take a genius to understand why no one would invest in such an environment
Possibly because AI was used to draft it?That seems like a pretty poor argument tbh.
Even if we disregard all costs and assume they're zero, the investor still suffers a real-terms loss in income year after year. 14.3% in my example above if costs are 0% (over 5 years). Why would anyone choose to invest in property if that's the legal framework? (I've addressed capital appreciation point earlier)However costs are not the rent amount. If they are say 20% of the total rent then inflation is only on the costs. So a 2% increase in rent count be considered a 10% increase in costs.
Doesn't it highlight how much better off the sitting renter is in real terms? i.e. I've demonstrated they get a real terms rent cut due to RPZ, and then to boot they get a tax relief on top. I don't see how this helps the housing crisis which needs more apartments built.I’m not sure how the renter tax credit is really relevant.
I guess this is my point, rent tax credit is another addition to the demand side in addition to them getting rent rising at rates below the rate of inflation. It doesn't help supply at all.Although HAP has definitely inflated the rental market and regardless if you have a HAP tenant or not it’s pretty likely you are benefiting from more people with more money in the market. To a lesser extent the renter credit puts more money into the demand side also.
Fair enough, I really did think this was a obvious one. I've not made my argument well it seems. But I am rebutting counter arguments as best I can.Probably not the tone you want to hit.
Give me a break - I did and am trying. I'm coming back on any counters. If there is a factual inaccuracy let me know.Possibly because AI was used to draft it?
the investor still suffers a real-terms loss in income year after year. 14.3% in my example above if costs are 0%.
Agreed. It’s not ment to buy how does it impart the investor. Just sounds like you are complaining “they” got something.It doesn't help supply at all.
You should have declared this from the outset in my opinion.Give me a break - I did and am trying.
You should have declared this from the outset in my opinion.
Put 15% of your portfolio on something like this:Can you give a clear concrete example of this 15% investments in multiple countries please
There nothing unique to property about this. Look at some other asset types:the investor still suffers a real-terms loss in income year after year. 1
And suffer a deemed disposal every 8 years, so you either have to save up to pay this tax or you have to actively sell some of your holding to do so.Put 15% of your portfolio on something like this:
They have tax relief available for just this purpose, and it allows investment in property or ETFs.The government here seems to be actively against people building up personal wealth themselves over their lifetimes to provide for themselves in their old age
So you're saying invest via a personal pension scheme?They have tax relief available for just this purpose, and it allows investment in property or ETFs.