Give landlords a reason to stay in the residential market

Jun 17, 2019

If many of Ireland’s homeless are finding themselves without a home because of landlords selling up their rental property, something urgently must be done to keep landlords in the rental market.  Speaking at the launch of CCAB-I’s pre-Budget 2020 submission to the Department of Finance, Public Policy Manager at Chartered Accountants Ireland, Cróna Clohisey said “Landlords are an essential feature of a fully functioning residential property market. 

But many are part-time, accidental landlords, are heavily indebted and face crippling tax bills which they cannot afford to pay.  Faced with a choice between a 52% tax burden and rising property prices, many are choosing to exit; leaving their tenants in a stark position.  This problem was highlighted further by the Focus Ireland research published this week” 

This exit puts unprecedented strain on the housing market where rising house prices also means would-be purchasers are at the same time being pushed into the rental market.  Chartered Accountants Ireland recommends changing the tax system to keep these landlords in the market and have asked Minister Paschal Donohoe to consider proposals in the profession’s pre-Budget submission.

The Institute is very clear that it does not want to see a return to an era of “Section 23” type reliefs. “The problem with property reliefs is that the market became flooded with small property investors who were average earners and purchased houses and apartments on the back of tax reliefs which were not sustainable.  Instead we want to see a more measured approach to tax reliefs. For example, allow Local Property Tax as a deduction against rental income. Encourage landlords to repair their properties by giving a tax write off for expenditure incurred over 4 years rather than the current 8 years. Enable landlords to offset rental losses against other income like the self-employed can,” said Ms Clohisey.   

Back in April 2017, the Department of Finance had a public consultation on the tax treatment of landlords and in the two years since, with no response from the Department, calls for change seem to have gone unheard. 

“In order to have an effective consultative process, we need to see tangible evidence that suggestions are being listened to and are being considered. We haven’t seen this when it comes to the rental market. With over 10,300 people homeless in Ireland and with current building levels not even close to the 51,724 units built in 2008, we are calling for urgent action.  Reforming the tax system for landlords would be a good start.” said Ms Clohisey.