Property Investor

Letting is the only game in town at the moment and the older players will have to wise up to the threat posed by the new entrants, writes JACK FAGAN

IN BOTH good times and bad property always seems to attract its share of opportunists. Turn the clock back even three years and you will recall the overnight appearance of high street shops selling either foreign properties or over-the-counter mortgages. Some have been replaced by head shops, others by property letting outlets.

It’s a fair bet that for the foreseeable future we are unlikely to see either the overseas properties or the mortgage stores making a reappearance given the wipeout of both businesses.

If you are a bit depressed about the negative equity on your spanking new apartment in Dublin then count your lucky stars that you didn’t put your money into holiday homes in places like Bulgaria (down as much as 75 to 80 per cent); Florida (back anything from 50 to 60 per cent); many coastal areas of Spain (down 40 to 60 per cent); or Hungary (down at least 50 per cent). A great many of these were bought through the high street shops or at weekend property fairs in hotels up and down the country. Many more were marketed via cheap flights to the destination with “celebrity” hosts. Now that these markets have bombed, the original selling agents are, naturally, nowhere to be seen.

This means that owners under pressure to offload properties even at substantial losses have little option other than seeking out selling agents with offices in the same areas as the holiday homes. At least they will be better informed about market conditions and the prospects of selling. Some of the Irish under pressure to sell have been finding it increasingly difficult to keep up mortgage repayments because of a change of circumstances, such as a cut in income or job losses. The approaching summer season will be seen as an opportune time to test the holiday markets and, with any luck, mortgages just might be more readily available in these countries than in Ireland . . . and Irish owners might find it easier to sell.

Now a new group of hungry young people chasing the only real action in the Dublin property market – the apartment letting sector – have been setting up offices and shops in the city with the intention of grabbing as much of the business as possible.

With most landlords now using Myhome.ie or Daft.ie to pitch for tenants, the new agencies are increasingly chasing the advertisers by text, e-mail and phone offering a range of services and cut-price rates to let the apartments. Some of the agencies claim to have a list of clients waiting to rent apartments in the areas mentioned in the advertisement – but then what else would they say?

The arrival of a new generation of letting agents is hardly surprising given that some (not all) of the long established agencies are still pushing their luck on fees long after the rental market has run out of steam and owners are getting used to substantially lower rents. Only a few months ago one agency charged a fee of €1,800 after showing three clients around a D6 apartment. If you think that is on the grabby side, then consider another of the big name agencies which charged a full month’s rent (€2,900) even though the tenant only signed a six-month lease.

Some of these agencies have been relying on their reputation for handling corporate business but even that is no longer assured and, with the ambitious new generation of letting agents now desperately chasing that business as well, the older companies will have no option but to look again at their extravagant fee structure if they are stay in the game.