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https://www.irishtimes.com/news/ireland/irish-news/uk-arms-firm-strikes-housing-lease-deal-with-dublin-council-1.4730697 shocking..

There's a new post on Property118 that once again points to Ireland as a possible case study for the potential impacts of Clause 24 (h/t Bland Unsight for flagging on the BTL Regrouping thread) which I'm quite pleased about because it gives me a good excuse to highlight an interesting paper from the Central Bank of Ireland that was recently referenced in both HM Treasury's December 2015 Open Consultation: Financial Policy Committee powers of direction in the buy-to-let market and The Financial Policy Committee's tools over the buy-to-let mortgage market - Impact Assessment, produced jointly with the Bank of England, in October 2015. First, though, I'm going to run through a few points from the Property118 thread in relation to the Irish PRS: The most obvious thing to mention, of course, is that the legislation in Ireland, while at certain points similar in some respects, is not identical to Clause 24. While Clause 24 ultimately disallows finance costs as a deductible expense it does allow "all financing costs incurred by a landlord [to] be given as a basic rate tax reduction" (HM Revenue & Customs, Policy Paper: Restricting finance cost relief for individual landlords, July 2015). Clause 24 is therefore significantly less onerous than Ireland's full removal of deductibility and all tax reliefs on landlords' finance costs (barring certain restricted exemptions) between 1998 and 2002, and potentially much more akin to the limited reduction in tax breaks for landlords' finance costs (achieved simply by limiting deductibility to 75% of the interest on the loan) that has been in effect in Ireland since 2009: Irish Tax & Customs Tax & Duty Manuals - Section 16 Part 04-08-06 (PDF, 116 KB) - Deductibility of Loan Interest (section 97(2)(e)) With this in mind concerns over the implications for a post-Clause 24 United Kingdom of rent price increases over the earlier period in Ireland seem somewhat exaggerated. This is further emphasised when said increases are considered in real, rather than nominal, terms. To begin with the uncited claim that "[f]ollowing the measure, rents rose by at least 24% in 1998" does not, as far as I can see, appear to be well supported by the cited literature. For instance, the Housing Policy Review 1999-2002, Michelle Norris, The Housing Unit and Nessa Winston, Department of Social Policy and Social Work, University College Dublin directly contradicts this claim (emphasis added): "The available evidence in this regard is set out in FIGURE 2.5 [. . .] It reveals that rent inflation averaged at 3 per cent per annum between 1990 and 1996, but that this jumped to 5.3 per cent between 1997 and 1998.1999/2000 and 2000/2001 saw particularly high growth in private residential sector rents, which increased by 10.5 per cent and 14.6 per cent respectively during these years." This apparent error may have crept in from either a direct misreading of FIGURE 2.5 in the above social policy paper (I would personally tend to have more faith in the authors' interpretation of their own chart) or a reference to a 1998 24% increase in Dublin-specific rents in The Housing Crisis in Dublin, BA Dissertation, National College of Ireland, April 2001, Karl Thomas Connell. As the deductibility of landlords' finance costs was removed across the whole of Ireland and not just in Dublin any regional variation in rent movements obviously cannot be attributed directly to this legislative measure and so either source would render the claim incorrect. (As an aside the third pre-financial crisis paper cited in the Property118 post, OPPORTUNITY KNOCKS?: Institutional Investment in the Private Rented Sector in Ireland, July 2004, Professor ADH Crook and Dr Steven Crowley, University of Sheffield notes that "[t]he Private Rented Sector in Ireland has grown at an unprecedented rate in the last six years for reasons" i.e. between 1998 and 2004. It also expresses concerns over the predominance of individual investors in the Irish PRS: And goes on to detail an increase in Irish first time buyers as a direct result of the tax changes: It's also worth noting that - unsurprisingly given the reputation Ireland has for having massively over built during the boom years - completions of new housing did not drop off over this period, though housing permits did, and the overall Irish housing stock continued to rise: Sourced from Global Property Guide, Ireland In the United Kingdom, of course, housebuilding activity seems likely to be supported against any possible impacts from Clause 24 by all of the various Help To Buy schemes.) Given the other papers cited in the Property118 post all pre-date the second period of reduced tax breaks on Irish landlords' finance costs, and the information for rents during the first period of total removal of said tax breaks is broadly similar across all, I'm going to focus on Ronan C. Lyons, “The spread of rents in Ireland, over time and space”, in Lorcan Sirr (ed), Renting in Ireland. Dublin: Institute of Public Administration, 2014 (PDF version of the relevant chapter available here). On Property118 emphasis is placed on nominal rent price movements, as illustrated in Figure 1: However, when we consider the overall rate of rent price movements this first period of totally removed tax breaks for Irish landlords' finance costs (1998-2002) does not actually appear to be sufficient to cause a significant deviation from the long-term trend in the annualised 10-year change; just as the second period of reduced tax breaks for Irish landlords' finance costs (2009-onwards), which is arguably a better parallel for the reduced tax breaks that will come in for UK landlords' finance costs under Clause 24, appears unable to significantly lift the 10-year change much above zero: (I've posted on this graph previously and I think I may have been mistaken, or at least overly strong, in my interpretation of the 1-year change for 2002 and 2009, due to irregular spacing on the x axis making the rate of changes in these specific years more obscure, but the overall trend in the 10-year change seems quite clear.) Additionally, it seems quite misleading to consider nominal rent price increases in isolation as Ireland adopted the Euro in early 1999 (possibly explicating the fact that nominal Irish rents only appear to take off in 1999, a year after the tax changes are introduced, and meaning that average rents did not literally increase from €600 in 1998 to almost €900 in 2001 because Irish rents were not denominated in euros in 1998) and experienced a general uptick in inflation at this point, with a doubling in general inflation as measured by the Irish harmonised consumer price index (Inflation.eu, Worldwide Inflation Data, Ireland): Hence, turning back to Lyons, it's hardly surprising to see that the rent price increases in question appear to be significantly less marked when rents are considered as a fraction of income; and on my reading neither seem to have succeeded (as yet) in defeating the long-term trend in this respect: So, having established a bit of background on the subject, back to the CBI paper I mentioned at the start, ‘House price volatility: the role of different buyer types’, Central Bank of Ireland Economic Letter Series, Vol 2015, No.2 (h/t The Bank of England ): There are two graphs in particular in this paper that stand out for me a great deal: Thoughts?

Just posted this on the long running car pcp hpc thread, but thought it deserved its own thread.. Allegedly, Is this a massive bubble creating fraud , by mis -reporting / overestimating the sales figures to deceive potential buyers by exageration .?. 'hey , everybody is doing it, get on board !' Could it also be a sign of desperation ? edit: Central Bank finds fewer PCP deals in the State than previously thought Bank revises down number of outstanding contracts by 50,000 https://www.irishtimes.com/business/transport-and-tourism/central-bank-finds-fewer-pcp-deals-in-the-state-than-previously-thought-1.3628052 https://www.thetimes.co.uk/article/car-loan-estimate-goes-into-reverse-n0wv58k26 https://www.irishexaminer.com/breakingnews/business/pcp-lending-falls-15-in-first-half-of-the-year-868889.html — potentially reducing the prices of used cars in the future and pushing existing PCPs towards negative equity.