Who would be a landlord?
Published 05/06/2016 | 02:30
Not only is 'landlord' one of the most outdated terms in the English language, in Ireland it carries deeply negative connotations associated with the Famine, when in the mid-1800s 1.5 million people left the country for good, many evicted by absentee landlords.
In today's housing market, echoes of our past linger in the name. A survey of 'landlords' in 2014 by Red C found that 65pc owned just one property with a further 17pc owning two and 9pc three. About one in three households in Dublin, Cork and Galway are renting from these 'landlords', whose aspirations for the most part remain a pipe dream.
The study found that seven in 10 had an outstanding debt on the rental property and for nearly three-quarters of these, the rental income did not cover their loan. However, recovering rents will no doubt help alleviate the situation for some. Central Bank figures indicate that arrears capitalisation - that is, adding the arrears onto the end and making the debt bigger - is the most popular so-called 'restructuring'. The re-default rate among buy-to-let mortgages is the highest at over 40pc. Not a pretty picture.
These providers of homes are dropping in numbers. Nearly a third intend to sell as soon as they can and just 4pc, who are ineligible to avail of major Nama discounts available to vulture funds, plan to remain on and increase their number of properties. On May 1, 2015, there were just 4,340 properties to rent nationwide, the lowest in seven years, according to Daft.ie. This is a devastating prospect for the country socially, and economically, as it will impact investment.
DKM Economic Consultants led a major 2014 study that examined the state of the private rented sector and its likely future. They concluded: "The tax regime for landlords investing in the residential investment sector is, in the main, less favourable than for investors in commercial investment property." That refers to a 25pc less favourable tax treatment of interest payments but also non-entitlement to deduct for property tax. Fiscal changes between 2007 and 2014 had "increased substantially the tax burden on residential landlords". Compared with other jurisdictions, our tax treatment of the sector "does not encourage investment or long-term holdings of stock". Owners of agricultural land investments over age 50 have very attractive incentives for long-term leases.
As the State demands more of private 'landlords', it is surely unjust that their treatment is so unequal. Far from lording it up, many of our modern day 'landlords' have become paupers.
The promised Action Plan for Housing is eagerly awaited.
Pat Davitt is chief executive of IPAV, the Institute of Professional Auctioneers and Valuers