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 Post subject: Re: Rental Costs - Unreal!!
PostPosted: Thu Dec 15, 2016 10:44 am 
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Of Systemic Importance

Joined: Nov 4, 2011
Posts: 5282
Location: SthDub
Even the 'experts' have taken some serious burnings

http://www.irishtimes.com/news/ireland/ ... -1.2906313
Quote:
In 2006, I purchased a small house as an investment for €610,000, paying €45,750 in stamp duty.
Having been vacant for seven years, it needed significant work – costing €110,000. And so my landlord days began.
Since then, I have had a number of tenants. I have been lucky – they have all paid their rent on time and generally looked after the house. Today, though, it is still worth less than I paid for it.
I had a tracker mortgage, so I was fortunate.
Nevertheless, the rent has never covered the mortgage – and that is before I paid the income tax due on the rent.
Despite this, I have always viewed the house as a pension.
However, the Government has again and again changed the rules.
Firstly, I used to be able to claim 100 per cent of the mortgage interest as a taxable allowance. In 2009, it was reduced to 75 per cent.
Secondly, a property tax was introduced which now costs me €573 a year. It is not deductible.
Furthermore, all of the rent is classed as “unearned” and subjected to PSRI, even though it is used to pay down debt....
...Meanwhile, the Residential Tenancies Board has increased its registration fees. In isolation, none of these matters are material. Together, they make the decision to become a landlord very questionable.
My current tenant arrived in June 2012, paying €1,450 per month – €100 per month less than the asking price.
I have always been relaxed about the rent and took the view that it was better to have a good tenant instead of a market-topping rent.
After two-and-a-half years, I spoke to the tenant about increasing the rent. By then, the market rate would have been about €1,800 monthly.
My tenant told me that he hoped to buy a house before Christmas. I agreed to leave the rent alone for a further six months, telling him that we would review it afterwards.
In June 2015, we agreed a €100 increase. It was still below the market rates, but it was done to help him and his family to save for a deposit. It was also done as a short-term measure....
...In 2015, my investment generated a before-tax return of 2.05 per cent.
For me, the decision to sell up is easy. Being a residential landlord provides poor returns; it is time consuming and it carries risk. It is certainly not worth the reward.
Being a landlord is a business. However, continual Government interference means it is a business in which I no longer have any interest.
When I sell up, the house will not be bought by a new landlord – since the new rules state that the rent the new owner would be entitled to collect is linked to the rent I collected.
As such, it is likely there will be one less rented property available.
Even before the latest changes it was clear to us in Lisney that an exodus by landlords had already started.
More than a quarter of all our sales this year were houses sold by investors getting out of the market. Just one-in-seven of our sales went to investors.
Less than four months later, the Government changed the rules again and imposed a two-year rent freeze.
Naturally, I felt a little stupid.
Roll on another year and there has been yet another intervention.
This time it is a suggested 4 per cent cap on increases. In June next year, I would be able to increase the rent to a maximum of €1,676 per month.
Meanwhile, my Lisney colleagues tell me the house would command about €2,100 per month if it was newly let.

James Nugent is chairman of Lisney

I don't know if this guy should be working in Property at all!!!! He seems more suited to a not-for-profit NGO!


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 Post subject: Re: Rental Costs - Unreal!!
PostPosted: Thu Dec 15, 2016 11:24 am 
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Too Big to Fail
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Joined: Aug 21, 2009
Posts: 4313
Location: Mesopotatia
He appeared on Pat Kenny this morning. He found a sympathetic ear.

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The real damage is done by those millions who want to 'get by'. The ordinary men who just want to be left in peace. Those who don’t want their lives disturbed by anything bigger than themselves. Those with no sides and no causes. Those who won’t take measure of their own strength, for fear of antagonizing their own weakness. Those people who roll up their spirits into tiny little balls so as to be safe. Safe?! From what?
Sophie Scholl


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 Post subject: Re: Rental Costs - Unreal!!
PostPosted: Thu Dec 15, 2016 11:32 am 
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Of Systemic Importance

Joined: Dec 28, 2006
Posts: 5578
All I take from that is that Landlords are heading for the door and the Government are keeping the market inflated temporarily for these people who see house ownership as a business so that they may exit in an orderly fashion passing on over-priced housing to people who are just looking to buy a home for themselves as shelter.


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 Post subject: Re: Rental Costs - Unreal!!
PostPosted: Thu Dec 15, 2016 11:43 am 
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Neo Landlord

Joined: Jun 28, 2010
Posts: 271
FreeFallin wrote:
Even the 'experts' have taken some serious burnings

http://www.irishtimes.com/news/ireland/ ... -1.2906313
Quote:
In 2006, I purchased a small house as an investment for €610,000, paying €45,750 in stamp duty.
Having been vacant for seven years, it needed significant work – costing €110,000. And so my landlord days began.
Since then, I have had a number of tenants. I have been lucky – they have all paid their rent on time and generally looked after the house. Today, though, it is still worth less than I paid for it.
I had a tracker mortgage, so I was fortunate.
Nevertheless, the rent has never covered the mortgage – and that is before I paid the income tax due on the rent.
Despite this, I have always viewed the house as a pension.
However, the Government has again and again changed the rules.
Firstly, I used to be able to claim 100 per cent of the mortgage interest as a taxable allowance. In 2009, it was reduced to 75 per cent.
Secondly, a property tax was introduced which now costs me €573 a year. It is not deductible.
Furthermore, all of the rent is classed as “unearned” and subjected to PSRI, even though it is used to pay down debt....
...Meanwhile, the Residential Tenancies Board has increased its registration fees. In isolation, none of these matters are material. Together, they make the decision to become a landlord very questionable.
My current tenant arrived in June 2012, paying €1,450 per month – €100 per month less than the asking price.
I have always been relaxed about the rent and took the view that it was better to have a good tenant instead of a market-topping rent.
After two-and-a-half years, I spoke to the tenant about increasing the rent. By then, the market rate would have been about €1,800 monthly.
My tenant told me that he hoped to buy a house before Christmas. I agreed to leave the rent alone for a further six months, telling him that we would review it afterwards.
In June 2015, we agreed a €100 increase. It was still below the market rates, but it was done to help him and his family to save for a deposit. It was also done as a short-term measure....
...In 2015, my investment generated a before-tax return of 2.05 per cent.
For me, the decision to sell up is easy. Being a residential landlord provides poor returns; it is time consuming and it carries risk. It is certainly not worth the reward.
Being a landlord is a business. However, continual Government interference means it is a business in which I no longer have any interest.
When I sell up, the house will not be bought by a new landlord – since the new rules state that the rent the new owner would be entitled to collect is linked to the rent I collected.
As such, it is likely there will be one less rented property available.
Even before the latest changes it was clear to us in Lisney that an exodus by landlords had already started.
More than a quarter of all our sales this year were houses sold by investors getting out of the market. Just one-in-seven of our sales went to investors.
Less than four months later, the Government changed the rules again and imposed a two-year rent freeze.
Naturally, I felt a little stupid.
Roll on another year and there has been yet another intervention.
This time it is a suggested 4 per cent cap on increases. In June next year, I would be able to increase the rent to a maximum of €1,676 per month.
Meanwhile, my Lisney colleagues tell me the house would command about €2,100 per month if it was newly let.

James Nugent is chairman of Lisney

I don't know if this guy should be working in Property at all!!!! He seems more suited to a not-for-profit NGO!


Crazy behaviour - €720K outlay on a BTL ?
It reminds me of the ridiculous 'Worth the Investment?'- 'Back of an envelope' graphic box that used to feature in the IT property page in the boomy years. OI don't recall the featured property ever washing its face. All these punters entered the game knowing the rent wouldn't cover the mortgage.


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 Post subject: Re: Rental Costs - Unreal!!
PostPosted: Thu Dec 15, 2016 12:10 pm 
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Under CAB Investigation

Joined: Aug 8, 2008
Posts: 2901
Location: Cathair na dTreabh
tommyt wrote:
Crazy behaviour - €720K outlay on a BTL ?
It reminds me of the ridiculous 'Worth the Investment?'- 'Back of an envelope' graphic box that used to feature in the IT property page in the boomy years. OI don't recall the featured property ever washing its face. All these punters entered the game knowing the rent wouldn't cover the mortgage.

But prices will only ever go up. If you don't buy now you never will. The banks will stop lending soon. The Joneses are doing it etc


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 Post subject: Re: Rental Costs - Unreal!!
PostPosted: Thu Dec 15, 2016 1:01 pm 
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Of Systemic Importance

Joined: Nov 4, 2011
Posts: 5282
Location: SthDub
So true ...610 +110 + 46 = 746k for a 'small' btl!!!


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 Post subject: Re: Rental Costs - Unreal!!
PostPosted: Thu Dec 15, 2016 1:25 pm 
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Real Estate Developer

Joined: Nov 20, 2014
Posts: 994
Image

Seen above on reddit, seems the answer is obvious, we need more flats and apartments (higher buildings) should bring us into European norms, Ireland is definitely the outlier above


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 Post subject: Re: Rental Costs - Unreal!!
PostPosted: Thu Dec 15, 2016 3:23 pm 
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User avatar

Joined: Apr 1, 2010
Posts: 9255
FreeFallin wrote:
Even the 'experts' have taken some serious burnings

http://www.irishtimes.com/news/ireland/ ... -1.2906313
Quote:
In 2006, I purchased a small house as an investment for €610,000, paying €45,750 in stamp duty.
Having been vacant for seven years, it needed significant work – costing €110,000. And so my landlord days began.
Since then, I have had a number of tenants. I have been lucky – they have all paid their rent on time and generally looked after the house. Today, though, it is still worth less than I paid for it.
I had a tracker mortgage, so I was fortunate.
Nevertheless, the rent has never covered the mortgage – and that is before I paid the income tax due on the rent.
Despite this, I have always viewed the house as a pension.
However, the Government has again and again changed the rules...
James Nugent is chairman of Lisney

This guy must be some class of a gobshite. Even if we accept that the mania in 2006 was an excuse for dropping three quarters of a million on a "small house" which sounds like it was a wreck, surely to god he knew in advance the rent would never cover the mortgage so why bleat about it now? And even if the government rule changes are ill-advised, the reason they're happening is because dopes like him wrecked the market.
And he's a chairman of Lisney? XX

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"Prediction is very difficult, especially about the future" – Niels Bohr


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 Post subject: Re: Rental Costs - Unreal!!
PostPosted: Thu Dec 15, 2016 4:44 pm 
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Real Estate Developer

Joined: Mar 17, 2008
Posts: 857
As I keep having to say this is not BUY to let - it's BORROW to let.

This is exactly the same as borrowing 765000 to fund your pension then put it all on shares in a single company - try selling that concept to someone. In each case you will end up paying an additional 50% of your investment in interest. In the case of property you will end up having to pay money to maintain your asset.

If you took that 1.1m and trickle fed it into a pension fund (instead of paying your mortgage) you would immediately attract tax relief, you would be buying at every point (highs and lows) along the way in terms of market performance so your chances of hitting the long term average are high, your dividends are reinvested in the fund tax free, all in all your chances of making a good return above inflation are high. In contrast having bought a single house at an overpriced point in the market you will not make much (if anything) in terms of real capital appreciation - you are also committed to a long-term contract where your interest rate could very well rise, eating even further into your 'dividend' (i.e. rent) on which you have to pay tax.

On average property is as good a way to match inflation as shares -but you need to have sufficient funds to diversify and you need to buy (on average) on the long term curve. If you work on a small scale (i.e. a single house) and/or you borrow you virtually eliminate your chances of a return that can beat a pension fund.



By the way I don't work for or represent anyone in the pensions industry.


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 Post subject: Re: Rental Costs - Unreal!!
PostPosted: Thu Dec 15, 2016 8:30 pm 
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Speculator

Joined: Apr 27, 2014
Posts: 420
http://www.irishtimes.com/news/ireland/ ... -1.2906313
Quote:
In 2006, I purchased a small house as an investment for €610,000, paying €45,750 in stamp duty.
Having been vacant for seven years, it needed significant work – costing €110,000. And so my landlord days began.
Since then, I have had a number of tenants. I have been lucky – they have all paid their rent on time and generally looked after the house. Today, though, it is still worth less than I paid for it.

...


You may not like what this says or implies. You may not want it to be true. You may be happy to sneer and gloat at the person’s experiences, lack of knowledge and misfortune. You may be happy to comment on his stupidity in paying so much for a residential rental property, so evident in hindsight.

But he was doing why lot of other people who do not receive pensions and who were trying to responsibly plan for their futures were doing. He followed advice and received wisdom.

I have made the point elsewhere about the effective subsidies large numbers of private landlord made to their tenants from the years 2008-2014 and this was rejected.

But none of the comments on this have addressed the core issue is that large numbers of the person classified as accidental or amateur landlords are leaving the market, reducing the pool of available properties. The replacement rate is not matching the rate at which the numbers are leaving.

Demographic pressures mean there is more demand for a smaller number of residential rental properties.

That is not changing and no amount of smugness, sneering, gloating, after-the-event smartarsedness or wishful thinking will make it change.

The only action that will make it change is building more residential property to relieve supply-wide pressures and satisfy demand.

Building more residential property will have many primary, secondary and tertiary benefits.


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 Post subject: Re: Rental Costs - Unreal!!
PostPosted: Thu Dec 15, 2016 8:55 pm 
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Of Systemic Importance

Joined: Dec 28, 2006
Posts: 5578
ChickenParmentier wrote:
I have made the point elsewhere about the effective subsidies large numbers of private landlord made to their tenants from the years 2008-2014 and this was rejected.

they were the authors of their own misfortune as they collectively bid up the market for houses expecting that their tenant would pay their mortgage and then discovered that the tenant wasn't there to or capable of servicing their mortgage.
whatever about sneering at them, they get no sympathy from me and I regularly have to listen to one of their cohort about how hard it is to make ends meet.

I'll remind you that those who saw their pension as a pension were screwed over too by Noonan.


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 Post subject: Re: Rental Costs - Unreal!!
PostPosted: Thu Dec 15, 2016 9:42 pm 
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Planning Tribunal Attendee

Joined: Jul 31, 2011
Posts: 1351
satechi wrote:

Seen above on reddit, seems the answer is obvious, we need more flats and apartments (higher buildings) should bring us into European norms, Ireland is definitely the outlier above


Flats are for underclass or immigrants. XD

The ones which are built here in Dublin are total rubbish usually by design. Lack of sunlight, shit location, no storage etc..

_________________
Why is it so windy here?

This is my best finding this year:
06/2007: Central Bank predicts soft landing for housing
http://www.independent.ie/business/iris ... 96858.html
It's all grand


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 Post subject: Re: Rental Costs - Unreal!!
PostPosted: Thu Dec 15, 2016 11:03 pm 
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Of Systemic Importance

Joined: Nov 4, 2011
Posts: 5282
Location: SthDub
ChickenParmentier wrote:
http://www.irishtimes.com/news/ireland/irish-news/there-is-a-rental-crisis-but-don-t-blame-the-landlords-1.2906313
Quote:
In 2006, I purchased a small house as an investment for €610,000, paying €45,750 in stamp duty.
Having been vacant for seven years, it needed significant work – costing €110,000. And so my landlord days began.
Since then, I have had a number of tenants. I have been lucky – they have all paid their rent on time and generally looked after the house. Today, though, it is still worth less than I paid for it.

...


You may not like what this says or implies. You may not want it to be true. You may be happy to sneer and gloat at the person’s experiences, lack of knowledge and misfortune. You may be happy to comment on his stupidity in paying so much for a residential rental property, so evident in hindsight.

He is a Director at Lisneys, hardly a novice!!!


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 Post subject: Re: Rental Costs - Unreal!!
PostPosted: Thu Dec 15, 2016 11:40 pm 
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Joined: Nov 6, 2006
Posts: 8176
Location: Australia
We have too many landlords already, 1 in 5 rent now. Is this progress? **** no it isnt
This is a symptom of the sheer number of investors who jumped in during the bubble. 40% of the market was investors who priced FTBs out of the market hard and fast.


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 Post subject: Re: Rental Costs - Unreal!!
PostPosted: Thu Dec 15, 2016 11:46 pm 
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Joined: Nov 6, 2006
Posts: 8176
Location: Australia
satechi wrote:
Image

Seen above on reddit, seems the answer is obvious, we need more flats and apartments (higher buildings) should bring us into European norms, Ireland is definitely the outlier above


Ireland is also one of the least densely populated country in the EU. The birth rate is also below replacement rate and we have a high unemployment rate so why do we need more high density living (despite already having a low average household size? Is the standard of living now low enough yet? Is the fact that people now pay mortgages for properties that are smaller than council properties, i.e the minimum standard that you got without needing to work, were 20 years ago now enough?

Quote:
THE AVERAGE SIZE of families in Ireland is continuing to decline – but at a slower pace than previous years – according to census data released today.

The figures show that the average number of children in each family is now 1.38


http://www.thejournal.ie/census-shows-f ... s#comments


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