What’s causing flight of Ireland’s buy-to-let landlords?
Volume of buy-to-let mortgage approvals fell 29.8 per cent to 118 in the year to April
Despite rising rents, there has long been talk of landlords deserting the rental sector in their droves.
Even the Government’s cap in so-called pressure zones hasn’t had the effect of dampening rent in any significant way, yet landlords have closed up shop amid complaints of onerous regulation in the business.
Figures from the Banking and Payments Federation Ireland indicate there’s no imminent reversal of this trend in sight, at least where those without a wad of cash are concerned.
The figures show the volume of buy-to-let mortgage approvals fell 29.8 per cent to 118 in the year to April, while values dipped 32.4 per cent to €17 million.
What factors are at play here?
Firstly, it’s worth noting that cash buyers make up just below half of the market. And Central Bank research indicates that these buyers typically snap up properties at the lower end of the market that are seen as being more suitable for leasing. So while we don’t know where this cash is going, it’s probably safe to assume that some of it is going into properties for rent.
Nevertheless, anecdotal evidence from real-estate agents suggests that the hassle of leasing is too much for the existing crop and, if we assume that cash buyers are only bringing a small volume of stock back to the market, then there’s something more significant happening in the market.
BPFI’s figures suggest that investors are shying away from property, something that could be seen as prudent at this point in the economic cycle. While rents are attractive from an investor’s point of view, property prices are rising towards their boom-time peak, meaning that yields are falling.
So, can we take it from these figures that the speculative property investors of the past are gone? Perhaps that’s a step too far, but the falling volume of buy-to-let mortgage approvals suggests that some have been reflecting on events of the past decade. While that’s no bad thing, the State will have to ensure that this isn’t a more systemic problem.