From top: Minister For Finance Paschal Donohoe; Vanessa Foran
Derek Mooney was right, I know that doesn’t get said about here a lot, but he was right to question the need for the Red Carpet Event around the Annual Budget
But then I suppose RTÉ would be bereft of 50 hours or so of programming across their various platforms and deprived of scooped soundbites direct from Government Ministers.
This Budget was undramatic, unexciting and just too well flagged that it became irritatingly boring; like compulsory Ethics hours for those of us that have to oblige annual CPD requirements.
Similar to last year , I have handpicked some elements to highlight here, but it was impossible stay ignorant on the squeals that it was a budget for Landlords.
Anyone that has followed my view on the rented sector will have heard me insist that we need more Rental Units, and more again, but more specifically we need more rental units from Private Landlords and less from Reit type lettings.
We have an accommodation emergency; the time for calling it a crisis or a shortage has long since passed. Up to now, private sole-trader type landlords were departing the sector like flocks heading South.
Therefore, I’m of the opinion that relieving their tax burden is a good thing, and hopefully it might encourage more Buy-To-Let investors into the sector.
By the same measure, this move might also serve to reassure those in there already, the lads that do not have the benefit of being incorporated and en’Trusted, or party to cheap sale prices and charitable tax rates.
More Units mean more HAP availability, so there’s that too, despite my reservations on that whole scheme, if it keeps families out of hotels then let’s not fix it just yet.
Since I mentioned Reit, it is worth mentioning now that the Exit Tax Regime was addressed with new Foreign Controlled Corporation Rules.
Many easy shots and sneers at this will mention it was reduced from 33% to 12.5%, but what might be missed was that the drop came with a nice sidebar; the exemptions to the Exit tax (which is also due on the transfer of assets and not just when they cease to be tax residents) have been removed; in full.
And as we all well know exemptions in Tax Law have made many a man a millionaire or more. I’ll take 12.5% on everything, rather than 33% of feck all any day of the week.
While I still think the hotel sector are being bailed out unfairly to the rest of us, I also want to reintroduce something from last year’s comments that is still ticking me off, Employers PRSI.
Many of you will say the increase is only by one tenth of a % – a so-what-of-it perhaps; but anything that shoehorns employees into Sub-Contracting arrangements, while keeping the PRSI frameworks as they are for the purposes of current cashflow, is not good long-term strategy, nor is it good value-for-money for the taxpayers that fill those Social Insurance reservoirs.
Budget ’19 did offer something for those who may be qualify for distributions from the Bank of Mum and Dad; they got themselves a ten grand top up to their (Group A) Gift Tax exemption.
This Government had a summer long of opportunity to address what I think is one of the principle failures of our Housing and Accommodation emergency; Long-term Rental in the family Home Sector not being considered as a viable option, or even as an alternative to Social Housing or Owner Occupied.
It is my opinion this is a sector that should be studied and trailed and tested.
This city is falling over with associations and groups representing tenants and renters; yet I have yet to see any organisation come up with an approach to Affordable Rental Housing that makes it a confident long-term option or choice for anyone.
And since the Government hasn’t, then naturally neither has any one else interested in long-term investments.
I suspect we will have another Budget within the next nine months. Like last year’s, this was not an election budget.
My advocacy for a stronger, wider, healthier, and more competitive private Rental sector will continue, and I will keep shouting until someone in Government cops on that Social Housing needs to be Local and needs to go back to the Local Authorities.
Then we can start to Rebuild this Country on behalf of all of us.
Vanessa Foran is a principal at Recovery Partners. Follow Vanessa on Twitter: @vef_pip.
I’m confused by this recipe
we need less landlords, period.
Fupp off & work like the rest of us have to.
Anne, I admire your almost childlike innocent view of the world.
Not everyone can afford a mortgage, in fact not everyone wants a mortgage.
The majorty of landlords own one property and have entered the market to provide for themselves in old age. They work, pay tax, have families, don’t have horns growing out of their heads and treat their tenants fairly.
The majority of landlords don’t fit your stereotype. I know this is uncomfortable reading for you but these are the facts.
Lots of people want mortgages but are being gouged by landlords so can’t save a deposit. The market needs more home owners and less landlords.
Communities want more home owners & less landlords.
Landlords have no interest in the community.. or in well maintained houses, & parks in the area.. they want to gouge. They don’t reside there, why would they. They want to collect money & put as little as possible back into homes & communities.
Ten thousand people marching is not out of innocence.
Having a roof over your head shouldn’t be treated as a commodity to enrich the few.
Tax them to sh*t is the way forward..drive them out. Ban foreign funds from buying property like they’re doing around the world..
anne: we need more homes built – fullstop.
Some of these for social housing; some for people to buy to live; some for landlords.
Absolutely not. There is far too many landlords as it is. The more leave the “market” the better.
Why do you prefer private landlords over REITs?
Because REITs have more control over pricing than individual landlords do. REITs can restrict supply in short term and then release units on to the market at higher prices. They’re big enough to be able to manipulate the market.
REITs are about 2-3% of the market i think, i don’t think they have that much pricing power – you say they can restrict supply but on the flip side they have the ability to finance and build supply quicker than most when there is demand. They have investors so don’t think they would let homes go vacant, the housing market is not that efficient in pricing
but if the unit is empty they are losing out on income, how long will it take them to recoup that lost income?
A REIT would be more likely to agree to long term leases. Most REITs are owned by pension funds, they are looking for long term steady returns.
They are not you are wrong, again:)
Given your obnoxious handle I can’t be bothered explaining why.
Up to now, private sole-trader type landlords were departing the sector like flocks heading South.
Presumably they were leaving the market in their droves because the record fees they can charge for rents was too much to handle?
I fail to see how landlords leaving the market is an issue. The house still exists. Somebody will buy it. Somebody will live in it. We don’t need more (or fewer landlords) – we need more houses. Reasonably priced ones.
anyone got as evidence that landlords are departing in large numbers?
Sensible analysis though i’d argue we need both more sole landlords and more REITs, the individual landlord will convert the odd property into a rentable unit while REITs are trying to build big apartment blocks
both are needed
Giving landlords more money does not build or make more homes, it just allows them to ‘buy to let’ more homes, usually elbowing others out of the market. There is no social justice motivation there, just straight down the line greed.
There is a wealth division emerging in Irish society between those who own thier homes AND others, and those who cannot afford even one. And, a lot of those in the second category are younger who are getting right royally screwed over.
If someone buys and rents a property to provide a pension how is this classed as greed?
Surely greed is not seeking work, claiming social welfare, having 7 kids and expecting a free house.
Well it is the same something for nothing attitude for sure. If you want a pension then invest in a pension scheme not gouge people who are two paychecks away from being homeless and then excuse it with platitudes like ‘market rates’.
so you’re ok with pension schemes investing in REITs then?
“Well it is the same something for nothing attitude for sure.”
Not really; the landlord has to earn the money to buy the property in the first place. He/she also bears all of the risk; if a tenant decides to overhold, it can take up to two years to get them out. Two years paying the mortgage with no rent coming in, and likely a trashed house at the end of it – no wonder so many are selling up.
@Vanessa
Your business you see the hard cases but nobody was ever forced to buy a home. For historical reasons it is in our dna however and the lack of stress testing by the banks was a huge part of the problem.
The government is proactively encouraging buy to let which is a policy that may come back to bite them. Thatcher was strongly in favour of home ownership because home owners were much more likely to be conservatives. You can already see the mobilisation of the left in the housing activism and that is set to grow.
Also – who are people supposed to rent from if there are no landlords?
If there is no buy to let’s then there is a lot more buy to live.
People can do what they want but then trying to sell it as some sort of service to society just does not wash with me.
I’m very confused SOQ
So help me clear this up
Are you saying there should be no private rental sector
at all
just Social Housing and owner occupied?
If so
Can you reply and advise how you would service the PPR market with just those two sources of residential accomodation
Please
very confused huh.. were you on the vino again Vanilly?
“If there is no buy to let’s then there is a lot more buy to live. – good lord, but that is trite.
If you move to a new city, you are hardly going to want to buy a flat/house immediately; you will rent for a year of two until you get a feel for the place.
Landlords do provide a service to society – same as butchers, plumbers, accountants, or anyone else who is providing a service for profit.
The rental market is saturated with people who need longterm homes. People who are settled & would like to buy.
Those people you are talking about, moving to a new city are few & far between and they probanly won’t be able to find a property to rent because of massive uptake of people renting.
Wilfully ignorant again.
“Those people you are talking about, moving to a new city are few & far between”
– a full 12% of the population is foreign-born, Anne. And do you think 18 year-olds from down the country who move up to Dublin for college, or 23 year-olds moving up for their first job, are going to be looking to buy a starter home?
Of course not – but then, that doesn’t fit in with your blinkered view of a world that is always black & white…
Rob G.. 30% of all occupied dwellings are being rented. Again the people you are referring to who may need temporary to medium term accommodation cannot find properties.
The CSO have the figures.
You have Irish families renting who don’t necessarily want to be renting.
You are referring to renting as a short term thing & the lack of security of tenure for tenants still treats it as that.. people are stuck renting now as they cant get mortgages.
@Vanessa
Of course there will always be private landlords but the plain fact is, the more of there are, the less homeowners there will be so the suggestion or inference that they are doing what they do out of some sort of social conscience is just nonsense.
The market as you put it is just a limited number of flats and houses and if I don’t own my home then someone else will. I do not believe that government should be encouraging buy to lets in any shape or form.
Any which are selling up are doing so because they can make more by getting rid. The focus imo should be firstly on affordable ownership rather than social or pvt. That may not be the practical answer you are looking for but as an aspiration or even policy, it is not a bad one.
We are a nation of homeowners after all.
+1
Well put
And unfortunately
That insistence that people need to be on a housing ladder as soon as possible is exactly why you have a mortgage arrears crisis that is out of control, more bankruptcy adjudications last Monday alone than there was in the full decade of the 80s, and a string of other unsustainable outcomes that includes vulture funds and families living in hotels.
Forcing home ownership onto people is exactly why we have a society that only values wealth, and why it is so protected by our legislators.
Additionally, our main street banks are, imo, still not fit for purpose. If they were, a very important issue going back and forth between Johnny and myself here on this thread, inability to fund large scale development, wouldn’t have need of mention at all.
Forcing people into home ownership as their only option for a family home, if Social Housing is not available to them, or when they are not just ready for either the responsibility of a mortgage contract, or the property itself is just a stop gap and not a forever home, and this is only my opinion but it does come from experience, not healthy, nor is it sustainable.
On the subject of Reit type ownership, picture this; if even one of them decides to change its policy of accepting HAP, with just a stroke of a pen, where do you think all those families will go?
And there is nothing to stop them.
Overpriced house & an overpriced property market caused arrears, not affordably priced homes. Hap costs are too high. Social welfare for landlords basically -the money has to come from somewhere when property is overvalued and in short supply.. (i.e. the taxpayer)
Landlords : bad Vanilly.
Homeownership: good.
Concentration of ownership is never conducive to lowering prices.
Less confused now?
Reckless lending from banks yes but there is no insistence and there was no forcing.
But, common sense should tell you that the desire to close your own front door without the fear of balaclava thugs kicking if not your then your’e neighbour’s in because you (or them) cannot afford to pay the rent is going backwards.
This is a society, not an economy. Something FFG has wilfully ignored and, until SF members (not just TDs) declare their interests in other people’s homes, I have no faith in them either.
Uni three times and I still can’t communicate properly. Yup.
It’s a pyramid scheme
Renting a vulture funded owned apartment.
Best Landlord I have ever had, and am ever likely to have as they engage with a professional and very well run Property Managment company to be our point of contact. They realise it’s a business, and run it like oe.
Too many private landlords don’t see it this way. If you buy a property to rent it out, it’s an investment and a business. Expect to have to pay the taxes, expect to have increased expenses, it’s a long term investment.
Too many are too short sighted, or too greedy or just too pig ignorant to realise this and got into it thinking it’s profit every month and the house gets paid for 100% by rental income. If this was the case, everyone would buy property though!
“Too many are too short sighted, or too greedy or just too pig ignorant ”
I don’t suppose you can back this up? Didn’t think so……..
Are you serious?
Good piece Vanessa,a little disappointing nothing done to improve liquidity for builders/developers.
The back section of the savills valuation report on here,regarding the sale that dog track is worth a read,for those interested in the housing market.Its written by an active participant in the marketplace with access to excellent data and in a reasonable style, in summary no capital for speculative development-housing is speculative in contrast to say a free standing Krispy which is pre let.
REITs-hm
GLV GLENVEAGH PROPERTIES PLC -IPO 1.25 closed yesterday .90
https://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/company-summary/IE00BD6JX574IEEURSSMU.html
Johnny, This is just one of the reasons I suspect we may have a mid-year Interim Budget
Regarding Harold’s Cross
That was a bailout
We don’t need expert valuations or knowing that there are a number of vacant school properties up the road in Dublin 12 to know it was exactly that,
A bailout with some nice commission
Jobs for the Boys is expensive even when they’ve moved on, and usually upwards
And I doubt it will be the only one we will hear about either
Even here there is a Jobs for the Boys protection scheme going on
John O’Sullivan is Chief Valuer,expect him before the PAC shortly.
“In December 2017, the Government decided that the functions of the merging organisations should be transferred from the Department of Justice and Equality to operate under the aegis of the Department of Housing, Planning and Local Government, as and from 1st January 2018.”
http://www.valoff.ie/en/Publications/Annual_Report_2017.pdf
Building housing is extremely capital intense,one the biggest challenges in Ireland is,lack of cheap and cheerful capital.
The savills section referenced,pertains to market conditions affecting the valuation of the site.
I live near there
the only problem with that site
Might
Might be traffic restrictions while works are going ahead
So market conditions only need to worry about what the end use us
Residential or Educational
Because the site works will still have the same restrictions
also its a savage location for anyone in the City
btw, Working Capitol for big scheme builds is why I suspect very strongly we have another budget already in the pipeline
I haven’t followed the Irish legislation covering REIT’s but if they have not the govt should consider expanding it,allow mortgage REIT’s which can be a source of liquidity.They are credited with assisting in building almost 2 million homes in US.
The govt or NTMA raised your debt by 3 BILLION via a Green Bond this week, the provisions covering it are wide enough to allow funding ‘eco or green houses’.
There is strong market demand for Irish govt backed debt, issue a housing bond or use some this green bond for green buildings.
Lots solutions available, but they need get capital flowing into the home building sector.
https://www.reit.com/what-reit/types-reits/guide-mortgage-reits
Ps-that Savills report is quite good on market conditions:)
Tis a actually, I’d even go further and say that Savilles report has the old Lisney’s standard about it.
Re: The Government Bonds. I alluded to these, although badly, in a previous show, in February probably, when the Government YE came out, by highlighting the Central Bank’s dividend.
We are sitting on billions of cash. The Credit Unions alone, and the CB told us this only this week, 17.3 billion, and no one wants or is available to lend it to.
It seems the preferred use is to hold tight and secure our national Payroll and Pension liabilities.
Why have you several usernames?
-i switch between devices-this morning was on a new Iphone and accidentally left out the extra ‘n’ so it was Johny instead Johnny-I’m prone typos-but i don’t post under any other names-it may be johnny but that hardly counts-
Wasn’t asking you Johnny but thanks anyway
@Vanessa off the Telly
re: €17bn in the credit unions. Is this €17bn that they have in cash and can lend?
or is this their total assets (which includes loans)?
also, when you say “we are sitting on billions of cash” – who is ‘we’? the government (i.e. national debt); or ‘we’ Irish people in general that have savings
Hi Cian
The cautious answer to that re. Credit Unions is 70% is cash and investments. Easily
And regarding the wealth.
There is a lot of institutional wealth for sure
But the cash sitting in individual savings, doing nothing but causing angst to the Institutions regulated by the Central Bank is staggering
@Vanessa:
thanks – its a bit confusing when you jump from government bonds, to saying “we” the people of Ireland are cash rich (or at least some of us are) and then talk about government Payroll and Pension liabilities. These are totally unconnected.
And as far as being regulated by the CB – they are forced to keep a certain percentage of their assets in cash.
I’ll never understand the desire to treat peoples homes as investments. The buy-to-let concept is fundamentally flawed. If you want to put money into something that will see you into your old age, then…put it into a pension, or a savings account or somewhere where you’re not treating people’s homes as ‘units’ (mentioned above). I abhor this thinking. The idea of encouraging people to stretch themselves financially and get involved in buy-to-let is wrong-headed.
+1
+1
If you invest in a pension, at least some proportion of it will be invested in property, some of which will be people’s homes.
(though I largely agree with you about not having a buy-to-let as a pension, but probably for different reasons)
+1 Rob.
not in new zealand..they’ve banned tgese funds from buying there. Canada has had huge tax increases for funds investing in property..
that way you know residents can buy their own houses & a roof isnt treated as a commodity for investors.
That would be the ideal world Anne
Where the only commercial investment in residential property is at development/ start-up phase.
Followed with a restriction on only being allowed long-term investment in commercial properties.
Unfortunately this country is only interested in wealth. Even just to be seen alongside it.
And remember something I repeat a lot on the show
The first person a Paddy will try to rip off is another Paddy
Yeah wonderful.
Less landlords Vanilly.. not more.
@Rob G
You can’t compare landlords with plumbers or butchers etc, as they don’t demand half your salary every month, it’s not just a service, a roof over your head is essential so holding people to ransom for something you need, is abhorrent.