Between the passing of Martin McGuinness, the latest Garda penalty point controversy and the build-up to tonight’s big match at the Aviva Stadium, one news item that might have got glossed over this week is proposed government plans to assist landlords.
A series of tax breaks are reportedly in the pipeline for “accidental landlords” in a bid to keep properties in the rental market and boost supply.
This couldn’t come at a more important time. Last week Keith Lowe, chief executive of estate agency DNG, told a Housing Agency event that 20% of all properties on his company’s books across their 78 branches was buy-to-let properties that were put up for sale.
This figure was even greater in Dublin at 27% with the numbers suggesting that landlords are looking to get out of the market.
At a time when rental properties are hard to come by across the country that is not ideal but there is an acknowledgement that changes to the system are required.
While rents are at an all-time high right now, issues such as the level of tax that landlords must pay means that many no longer see it as worthwhile.
In order to combat this the Department of Finance has set out a range of possible tax reliefs aimed at encouraged landlords to remain in or to enter the rental market.
Among the options to be considered to alleviate the rent crisis is a reduced tax rate on rental income for individuals, or tax reliefs to be targeted at "accidental landlords".
The public consultation document on the tax treatment of residential landlords also raises the prospect of the property tax liability being transferred from landlords to tenants.
It follows concerns that residential landlords were not treated in a similar fashion to commercial landlords, and that this could discourage some from entering or remaining in the market.
While various bodies have looked to cash in on the current trend of rising prices in the rental market, almost seven out of 10 landlords own just one property while 91% have three or less.
Large, professional landlords such as real estate investment trusts, corporate vehicles and investment funds, account for just over 2pc of tenancies.
While income earned by individuals from the letting of property is liable for income tax under self-assessment, rental income earned by companies is subject to a lower rate of corporation tax.
Also mooted is additional tax relief for expenses including restoration of 100pc relief on mortgage interest, deduction for the time allocated to managing a property, and deduction of the Local Property Tax.
VAT relief for construction of rental accommodation and the introduction of "penalty taxes" for vacant property or development land could also be introduced.
So far these matters are only being discussed but a working group has been established made up of officials from the Department of Housing and the Department of Finance, Residential Tenancies Board (RTB) and Revenue Commissioners with the closing date for submissions April 7th next.
The Government will examine if new tax reliefs or other measures are required to incentivise landlords to remain in, or enter, the rental market.
No decisions will be made until after the consultation is included, and EU state aid rules will have to be taken into account if any new measures are proposed.
The working group will report back in the summer with a view to proposals being announced in October's Budget.
Let us know your thoughts on the new proposals:
- Do you think more should be done to incentivise landlords to make properties available?
- Have you been put off entering the rental market as a landlord because of matters such as tax etc?
- What changes would you recommend?
Have your say below…
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