Today’s offering is not quite as chunky as last week, all of the property sections/supplements feel a bit lighter today (in property news, features and advertising).
The Sunday Business Post has an excellent front page (of the Money Plus section) piece by the infinitely sensible Karl Deeter on the buy-to let market in Ireland – it’s worth going behind the paywall for that one article alone, more below.
Also, the Sunday Independent (Business section) details the range of tax incentives available to buyers and homeowners in the State.
The Sunday Business Post
It’s a country homes special!
Editor Tina-Marie O’Neill writes about the ‘Peaks and troughs for period piles’ on the front page of the property supplement this week. It is, as Tina-Marie suggests, an unpredictable market in terms of both supply and demand (these two factors are rarely in sync) but there appear to be reasons for optimism right now in Ireland with the market for period homes “hotting up again”. Featured homes include Wingfield House in County Wicklow, Borleagh Manor near Gorey, County Wexford, Furness in County Kildare and Ballymacoll Stud in County Meath.
Donal Buckley writes that forecasts of rising rental growth are likely to spur more investment in this area as ‘Developers wake up to the appeal of industrial property’. This has been the slow starter of the development push in recent years – particularly outside of Dublin – but this looks set to change.
Karl Deeter asks the big question ‘Is buy-to-let coming back?’. He cites low deposit returns, burdensome taxation and the stock market’s “historically enduring bull run” as reasons for investors to stick with an asset that let them down so badly in the recent past. We know that Ireland is a cash-rich country – although it might not affect us personally! -and of the €98 billion on deposit in Irish banks, almost 75% of this is held on overnight deposit i.e. it is immediately accessible.
Karl refers to new financial products for property investors through new players like Dilosk, which ring-fence the loans and let investors borrow against the cashflow of the asset.
Can we herald this as the return of controversial but supremely necessary, non-recourse lending to the investment market?
Such products are needed to support the business of property investing – and make no mistake, it is a business – to counteract the regressive taxation, the capped rental returns (in current rent pressure zones) and the associated expenses that are not currently allowed to be offset against income. One excellent point noted is that taxation is harsh for amateur landlords while being “exceedingly generous” for institutional landlords.
Regulatory issues and compliance are mentioned as an afterthought, however, given the most recent legislative changes and the lack of clarity among estate and letting agents, it is reasonable to assume that private landlords will struggle with these.
One aspect not mentioned here but certainly in the mind of investors I speak to is the limited deposit protection scheme, capped at €100,000. This effectively means that deposits in excess of that sum are invested in property and other assets, not just for diversification but for security – which sounds ridiculous in the context of the risk attached to property investing.
There are two distinct ways to view this, either investors are deliberately choosing not to learn from the past or (and this is the most likely to me) they are aware of the past and the considerable risks but they consider the risk of investing more palatable or perhaps more manageable than the threat of further global uncertainty.
Elsewhere in the paper
The Sunday Business Post has property-related news on almost every page – below are the more interesting ones, but I definitely recommend picking up this newspaper today for the most comprehensive read (no bias, it’s just the best one today!):
- Coillte may sell €1.5 billion wind farm portfolio.
- Aidan Regan has an insightful look at ‘How Googletown is driving up rents’
- Page 14 features hotel investments and the sale of Carton House , Mount Wolseley and The Knightsbrook – it also lists new hotels due to be built by NY-based Time Square Construction, Deirdre Foley/D2 and Johnny Ronan.
- British firm plans to build €50 million cancer clinic in Kildare town (including 400 houses)
- Galway developer Gerry Barrett is planning a 345-bedroom student complex near the city’s docks.
- Dublin-born, LA-based developer Tyrone McKillen (son of Paddy McKillen) is selling a luxury mansion in the south of France believed to have been developed together with U2’s The Edge.
There is a great feature on innovation in the Kerry, showcasing two digital hubs and co-working spaces for future entrepreneurs ‘Turning a challenge of geographical remoteness into business advantage’. Also two proptech companies get a mention elsewhere this weekend; BidX1 and Popertee – both worth checking out if you are interested in this space.
Also, while it’s not property related, Emmet Ryan has a very relevant article in the Technology section ‘Every business must be reimagined in terms of digital transformation’. This is exactly the key take-away Propteq 2017, a London-based conference focusing on European proptech , where I co-hosted discussions on the global housing crisis and the role of technology to address some of our pressing housing issues. For further discussion on the Irish proptech scene visit prop-tech.ie.
It’s pretty much advertising-focused in the Sunday Independent today – great for a relaxing look at properties and interiors to aspire to – with the exception of Ronan Lyons’s column, which tackles the thorny rent pressure zones issue.
The 4 of a kind features houses with so-called ‘Granny flats, from Tipperary (€795,000), Clare (€350,000) and Cork (€660,000) to Monkstown in Dublin (€725,000). This will be helpful to buyers who have this particular requirement on their house-hunting wish-list, and it’s more commonly sought after than you might think.
In Agents View, Senator Adrian Davitt (MD of Sherry FitzGerald Davitt and Davitt) writes how – even temporarily – ‘Reducing capital gains tax could ease housing pains’ as it would facilitate those who are willing to trade down or selling currently-vacant homes. Reducing the 33% tax would be one way to attract even a portion of the 250,000 vacant homes to the market. He admits “This measure alone would not solve the housing crisis but it would certainly help to alleviate it”.
Ronan Lyon’s column declares that ‘RPZs tackle the symptoms, not the cause’ as the latest Daft.ie report shows that rental prices continue to increase. The trend of rising rental prices is a nationwide one, although Dublin is more severely affected. The last time we saw increases at this level was at the start of the Celtic Tiger period, where rents doubled in the seven years from 1995 to 2002. Scarily, the drivers from back then are the same as we see in the marketplace today, that is, weak or low supply with consistently strong demand. Ronan goes so far as to say that the RPZs cannot work in such a market and believes the concept was based on a:
“…poor understanding of the housing system. It was the equivalent of the Minister for Housing banning high human body temperatures, because of the danger they pose to our health “. Ouch.
Michael Mahon writes ‘Housing Crisis will only deepen as skills shortage hits home’. This echoes what the CIF and the industry at large has been saying for a while now. While the Dublin crane count is at about 70, contractors and particularly their subcontractors are reportedly finding it difficult to hire the necessary skilled trades-people and construction professionals to deliver. It feels like a vicious circle at the moment as we need more homes to house the increased labour force, but we need labour to build those said homes. We know this is leading to delays and increased construction costs, and all of the representative bodies (CIFG, SCSI and others) are actively trying to solve the problem but there has been no impactful solution hit upon.
Elsewhere in the paper
In the Business section, Louise McBride writes how you can ‘Save thousands on buying your dream home with State digouts’. The range of impending tax breaks and grants include:
- Rural grants – pilot scheme to attract buyers (back) to rural areas, due to be rolled out shortly
- Vacant home loans – New State loans expected shortly across counties Carlow and Waterford to encourage owners to refurbish vacant properties in order to bring them to the sales/rental market
- Landlord tax breaks – Particularly aimed at ‘accidental landlords’, government are looking at introducing measures to reduce the tax liability and increase access to renovation loans where necessary
- Historic homes – Under the Living City initiative, buildings more than 100 years old in Dublin, Cork, Limerick, Galway, Waterford and Kilkenny attract tax relief on refurbishment costs.
The Sunday Times
Rarely can any other newspaper can beat the front-page, featured property in the Sunday Times, and today is no exception. No. 2 Mount Salus is one of Dalkey’s most stunning Victorian examples of period living in the modern age. This double-fronted, semi-detached home has views across Dublin Bay. With an asking price of €3.25 million, this truly unique property is listed with Lansdowne Partnership.
The Four to view this week take in Peninsula House in Lisheen in West Cork – a stone-clad, five-bedroom contemporary house on 1.6 acres; home of Donegal knitwear designer Edel MacBride and a stunning Tritonville Avenue conversion (number 4, available through Finnegan Menton).
Home hunter Eithne Shortall likens sunshine to alcohol , in its ability to affect your judgment when house-hunting and I could not agree more! Everywhere looks great in the sun, it’s an estate agent’s perfect day. And it is a fact that the sun does not just affect how the exterior looks, or how the interior appears more light-filled, it affects our overall mood. After a decade of professional house-hunting, I know that arriving late for a viewing in a Dublin downpour, when you can’t get parking, makes everything about the house (and the street, and the city, and the country, and your mother-in-law…) unsatisfactory. It’s hard to pinpoint but nothing feels right, slight defects are magnified. The opposite is true in the sunshine. Everything is great; defects are diminished (even big ones – subsidence… will that affect the picnic area out in the back garden?). Do yourself a, before you put that offer in, view the property and area in the rain. If you still love it then it might just be for you.
Cairn Homes is selling a portfolio of small, non-core, residential development sites, off-market, expected to exceed €30 million.