‘I’m trapped because I’m in negative equity’
Joe Doyle, landlord and owner of insuranceworks.ie
SITUATION: “I have been a landlord for about 12 years now and have rented properties around west Dublin. I specialise in renting properties to people who are in receipt of social welfare payments, some sort of government-assisted payment. When I got into it in 2004, the prices were higher in terms of the purchase price of the property. But the rental values were similar. The major difference between now and then is that the taxation treatment of landlords’ rental income is far more stringent now.”
PROS:“Property, if you buy it correctly in the correct location and you have good mortgage terms with your lender, is an excellent investment for the long term, no matter what way you look at it.
“I run a company called insuranceworks.ie. That’s a property repair company, so there is a bit of a crossover between the maintenance of my rental properties. If people are not in the area of dealing with properties or property maintenance to some degree, I don’t think they should be near them.
“Landlords have no choice but to put the rent up, the reason being that on one side it looks like they’re making money, but yet when they do their tax return at the end of the year, they’re actually losing money. It’s quite a unique system, where you can break even all year, and then still get a tax bill at the end of the year. A professional landlord will have that taken into consideration, to a certain degree. But an accidental landlord, or somebody who only has one or maybe two properties, will not be able to shoulder that burden, so they end up paying that out of their wages. That then results in more people wanting to get out of the property market and puts more pressure on an already stretched market.
“I’m kind of trapped in it because I’m in so much negative equity because I bought a lot of the properties at the height of the market. I don’t have a way out, put it that way. But luckily enough for myself, I have sufficient amount of properties whereby if I make a profit on one I can use that to cover a loss on the other. It’s very difficult to make a living. I have a job in addition to being a full-time landlord as well.
“The problem is not the properties, but the level of borrowings that most of the landlords will have against their properties. And then when you have interest rates going up, and taxation getting more severe, it squeezes people out of the market. We only have a certain amount of housing stock available now, and that’s split between people that are going to live there as a home, and people that are going to rent there. It’s going to take five years minimum to have any effect on the increase in the stock that’s available, so the Government needs to do something to incentivise investment into the property market that will put more stock into the rental sector, as opposed to just the home owner sector.
“The uncertainty caused by the Government is a major con because we don’t know what they’re going to do. The property market is like a rising tide at the moment. And what’s happening is, as the tide keeps rising, because people have resigned themselves that they’re not going to make any money, when they get to the point where they can break even, they’re just selling the property. That property then gets taken out of the rental market, and into the private housing stock. So the amount of rental property that’s available year on year gets less and less. So some major incentive needs to be done to get people back into the industry.”