1,000 rental properties face closure over change to regulations
UP to 1,000 pre-1963 rental properties worth an estimated €500m are in danger of being shut down next year because the owners say they cannot comply with new legislative changes demanded by the Government.
Under The Local Government Charges Act of 2009, pre-63 property investors are obliged to convert all of their units to ensure that each one has a separate bathroom attached.
The deadline for compliance is February 1 next, after which units without bathrooms cannot be let out. The work involves substantial and expensive structural work, mostly to sensitive period properties.
Most, but not all, pre-63 buildings are Victorian or Edwardian multi-storey houses, which are divided up into flats and bedsits.
They are known as pre-63s after 1963 legislation prevented any home being thus subdivided after that year.
According to the Irish Property Owners Association (IPOA), which represents 5,000 landlords in the Republic, almost all pre-63 owners have been hamstrung by a series of issues, mostly financial.
The IPOA believes that the majority of pre-63 owners, whose buildings hold around 6,000 tenants, have been thus far unable to comply and won't manage it by the deadline.
The main obstacle it says, is negative equity, which is preventing those who cannot afford to make the costly renovations from selling their properties to someone who can actually afford to undertake the work.
Almost all properties bought since 2002 are now in negative equity.
In addition, according to the IPOA, 55pc of its members surveyed late last year revealed that they were in financial trouble by saying that they had renegotiated the terms of their bank loans since the recession kicked in.
"The IPOA will not stand for sub-standard rental accommodation and urges its members to sell up if they can't afford the upkeep of standards. But a good many of those who are in negative equity actually can't sell up right now," it said.
Since the legislation was introduced in 2009, tax costs for pre-63s have also ratcheted up well ahead of those charged on regular rental properties.
The €200 "second house" tax applies on a per-unit basis -- as does the new €100 household charge.
This means that a house in six bedsits entails new taxes of €1,800 per annum.