I’m A Private Landlord

at

Pat Davitt, chief executive of the Institute of Professional Auctioneers & Valuers

This morning.

A total of 6,824 private landlords left the market between 2018 and 2020.

Why are they leaving during ‘good times’?

Via Pat, Davitt, of the Institute of Professional Auctioneers & Valuers:

Other organisations have documented in budget submissions and elsewhere how poor an investment proposition it is now to invest in residential property, given that one pays over 50 per cent of rental income in tax and with capital gains of 33 per cent on the sale of such property. Commercial property investment is treated much more favourably by comparison, with some very attractive tax breaks.

Exacerbating the issue is the unequal treatment between private landlords within Rent Pressure Zones. Where properties are on a first rental and in cases where properties have not been rented for a two-year period, landlords are free to charge market rent – or in other words, the rent the market will bear.

Other private landlords in the same areas are confined by the RPZ legislation to minimal increases. Those worst-hit, ironically, are those who didn’t rush, as many did, to increase their rents to market level before the RPZ rules took effect in December 2015.

What is not often understood is how this differential impacts the value of one’s property when selling on. A tenanted property rented at 50 per cent of market rent, will achieve only 50 per cent of the market value of that property as an investment property.

This forces affected landlords to end tenancies and gain vacant possession so that they can achieve market value by selling the property to an owner-occupier. The tenant has to find another property at much higher rent or face becoming homeless, adding to the problems for the State.

Private landlords would be willing to sell tenanted properties if they could get market value. Other investors would buy them, just like in several other countries were it not for the unfair restriction imposed via the current RPZ legislation…

Anyone?

Why are private landlords selling up despite record rents? (Pat Davitt, Irish Times)

Pic: via IPAV

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43 thoughts on “I’m A Private Landlord

  1. Sara

    Last night I couldn’t sleep thinking of the poor private landlords and their profitless plight. Is there an address we can send donations to?

    1. James

      And many are breaching the terms of their mortgages by using them for a commercial use
      It happened to a mate of mine in the UK

  2. SOQ

    Can someone explain to me the advantage TO TENANTS of having a small private landlord over say, an investment fund?

    Unless it is some sort of illegal deal, you are going to be paying the market rate either way surely?

    1. Mr. T

      From personal experience, certain small landlords do a better job than institutionals.
      One very large Irish institutional is woefully run, not even aware of the furnishings in the place. Constantly chasing up after we moved in to get things fixed replaced that should have been done prior to re-letting, and then when we quickly left after a few months they attempted to hold out deposits for the missing items that had caused us to leave in the first place! There is much more to it than that also, but that particular disorganisation was mindblowing.

      Some accidental landlords actually care for the property, but it sounds like they are the minority also.

      1. K.Cavan

        You know that experience you had with your landlord, Mr. T? That’s everybody, all the time, with all landlords operating under the very landlord-friendly laws that our landlord TDs passed, back in the day.
        Soon enough, though, it’ll be everybody experiencing that.
        You’ll Own Nothing.

    2. Covid19000

      I have a investment fund in a Rent pressure zone. I would never ever go back to a private landlord.

      I know its very OCP but I’m wary of private landlords from previous experiences.

      Also, you can buy shares in the REIT so technically I can be my own shareholder in the landlord.

      Rent increases are capped at inflation OR 2%, whichever is lower. Good right?

      But yeah ask away if you want info that isn’t a/s/L

        1. K.Cavan

          Since virtually all those Vulture Funds are owned & run by American Jews, I think that qualifies as Anti-Semitism, Rob.

    3. stephen moran

      What he’s talking about is the basic premise that if there is a stock of rental property that is failing to keep pace with demand i.e. we aren’t building enough rental units then any reduction is supply by private landlords either selling their properties to owner occupiers (or I’d guess in some cases passing it on to a son/daughter who can’t afford a property on their own) this will automatically put upward pressure on the rental cost of the remaining diminished rental stock. I don’t think he is making a Robin Hood versus Scrooge argument / comparison

    4. SB

      Ah, but what is “the market rate”? If a fund buys up a whole apartment block off the plans, then it can decide what “the market rate” for that block is – and it’s going to be higher than if there was competition for tenants (remember when there was competition for tenants?). If there are a few of these blocks, then the rate for the area can be predetermined.

      1. Rob_G

        Funds own about 1% of property in Ireland – even if they managed to buy up a few blocks of apartments in the manner that you describe, they could set the price anywhere they like, but if it was too expensive relative to the the other 99% of property available, renters would rent 1 minute down the road at the cheaper market rate.

        1. K.Cavan

          Can you give us a more detailed address than “one minute down the road” where those properties are available cheaper, Rob?

    5. James

      Absolutely none
      They can easily set up a company and use that and claim operate it like a business but no they want to moan
      And avoid paying tax along the way if they can
      It’s time they got out
      Maybe some are actually trying to get rid of their tenets by saying they are selling up
      Then a few weeks later suddenly rent it out again gouging the new tenant
      We need proper regulation in the rental market with compulsory land lords insurance

      1. K.Cavan

        I definitely think the landlord TDs are gonna pass laws that impact on them.
        Any day now.

  3. Termsgant

    Is there a legal or moral imperative to be charging the market rate at all times? Because “Poor me, the hoops I have to go through to squeeze the absolute maximum amount of money possible out of people” doesn’t really fill me with sympathy.

  4. Diddy

    What the market will bear? Rents don’t rise themselves. Landlords work out how much they can get away with charging .

    1. stephen moran

      supply and demand – the market clearing price is where they intersect – if you actively constrict supply (as we’ve done since the GFC because the traditional funding model for building is broken, our NIMBY planning lunacy and legal challenges, the lack of any meaningful public housing building indeed its outsourcing to the private sector and a semi-official policy of prioritizing repairing bank balance sheets and restoring positive equity over new builds etc. etc. etc.) added to the lack of any tradition of European style long term legally binding contractual rental agreements means rents go UP and UP

      1. K.Cavan

        stephen, all the social & public housing initiatives have to be run by & through Local Government. While our Civil Service isn’t exactly competent, when you get to Local Government, you’re talking a whole nother level of utter lunacy.
        I’ve personally witnessed stuff that would make any sane person just give up, actually, even a mad person would despair. Our County & City Managers are tinpot dictators & our Elected Local Representatives have no power over them and neither has central Government.

        1. stephen moran

          Well I would concur having some knowledge (and I can’t elaborate) on the PPP (public private partnership) process and just knowing the sub optimal outcomes for the redevelopment of say the St Michaels estate i.e. the state ended up paying at least 30% more than they would have if alternatives had been pursued – its an ideological thing with FG in particular (I’m actually fairly apolitical despite the pigeonholing I get) – I live close to the diamond in Marino which was built in the ’20’s by the state when we were broke (deigned I think by a Dutch architect) and its still one of the best examples of public housing in Ireland with its innovative use of public spaces and roads that go nowhere to prevent through traffic.

  5. TenPin Terry

    It simple really.
    Landlords are cashing in on steep property prices and vacating a market which is now solely geared towards tenants and not landlords rights.
    Or they’re turning them into holiday rentals to avoid having full-time occupiers.
    Who needs the hassle of dealing with scumbags who game the system and are almost impossible to get out if they stop paying rent ?
    The local Irish are the worst tbh. A long time ago I decided to only rent out my properties to East Europeans and I’ve never regretted it. Most have been with me for years as excellent reliable tenants and all have good jobs. We came to a satisfactory agreement during the pandemic where I basically waived most of their rent. In return they helped out with some work in kind – painting and renovating the properties etc.
    They threw a big aul’ party when things got back to normal. They’re excellent, trustworthy people and they were very grateful for the breaks I gave them.

    1. Covid19000

      I love living with all the new/non/soon to be Ireland dwellers. So much quieter and respectful.

      1. TenPin Terry

        The thing I noticed early on years ago is that my Irish tenants always came with a sense of entitlement – and were often outraged when I demanded references.
        And they always left the place looking like a tip when they went. Always.
        My East European tenants and their families are wonderful, respectful people who appreciate the effort I put into each property.
        They’ve become good friends.

          1. Mad

            Indeed.
            Charlie Santorum is a slum landlord who rents to the most vulnerable and easily exploited in society and then complains there are too many immigrants.

        1. jonjoker

          “my Irish tenants always came with a sense of entitlement” … “always left the place looking like a tip when they went”

          It sounds like you are a typical Irish landlord so.
          People give as good as they get, so I imagine that you rent out slums at the lowest end of the market, so you got the sort of tenants who couldn’t find anything better. And when they eventually did, they left the place a tip, just as they found it.

    2. Diddy

      Your Irish tenants would have in yesteryear been babysitterd by the state in social housing until drink drugs and cigarettes killed them

      1. TenPin Terry

        A1 brother.
        Our East European chums have a great work ethic and desire to better themselves and it shows in the way they treat their accommodation.
        In my early days as a landlord you wouldn’t believe the state some of the Irish tenants left the houses in – how can people live lives like that ?
        Best decision I ever made was to put up an Iron Curtain.
        Slovakian, Latvian and Polish tenants form my rental portfolio at the moment and they’re not an ounce of trouble.

      2. K.Cavan

        Ah, Diddy, you another “Sales Counter Executive” who thinks he’s Middle-class? Smash the oiks!

  6. AssPants

    It’s not just rental income that private individuals suffer with over taxation, it’s their total income.

    Why is the base rate of Corporate Tax 12.5%; yet private individuals base rate of income tax is 20%, plus levies such as PRSI, USC.

    Maybe take a look at the whole corporate entity taxation -v- private individual taxation, you will find a significant margin between the cumulative tax take of a corporation and a private individual.

    1. K.Cavan

      The majority of every working-class person’s income goes back to the government in direct or indirect taxes, levies, fees, duties, contributions & fees, they like fees.
      How else can they pay a lad who got a pass Leaving Cert 30 years ago three times what a Computer Science Graduate earns?

  7. Boe_Jiden

    people still have a bad view of land lords even though they have to pay taxes on their rental income AS WELL as any income from their employment/other businesses which is unbelievable in this day and age and people don’t realise that a lot of l and lords now are accidental land lords who ended up with properties to rent out that they didn’t plan for theres a lot of headaches to go along with being a land lord but people just like moan and bash them

    1. K.Cavan

      Yes, they do like to moan & bash them, don’t they Boe? Even though they pay tax!
      Ungrateful, that’s what I’d call it.
      If I was a landlord.

  8. Shea

    Ironically the real reason why the private landlord is being pushed out of the market has a sponsored advert immediately under the article that Broadsheet is capitalizing on – “Quayside Quarter – Dublin Rental Apartments and More”

    1. K.Cavan

      Broadsheet, capitalizing on things, eh? What next, I ask you.
      Did you get a backhander for drawing our attention to that ad, Shea? You should’ve.

  9. Horsethieving Dopesniffer

    ECB’s interest rates are going up this year.
    The current state of Germany’s realestate market was described as “overheated”.
    Word “correction” is getting mentioned more often.

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