Higher tax relief for landlords in rental market shake-up
Published 13/05/2015 | 02:30
Significant tax reliefs for landlords and longer leases for tenants are part of a radical new Government policy document to give the rental market its biggest overhaul in a generation.
It also proposes an end to the practice of ejecting tenants when a property is being sold.
These are all among the new proposals contained in the policy report that has been designed to shake up the Irish rental sector and was reviewed by Cabinet yesterday.
The report contains some stark recognitions of where the accommodation crisis is now headed - acknowledging that a third of the population will find it difficult to buy their own home in the future.
The report by the National Economic and Social Council (NESC) represents the outline of a new national policy for the private rental sector which is being put to Government.
An estimated one-in-five households (305,000) are now renting.
It states: "Government policy now recognises the reality that up to one-third of the population will find it increasingly difficult to achieve home ownership going forward."
It stresses that an effective solution to Ireland's rental shortages requires "breaking free of the current debate . . . in which some argue for rent control and others counter with the need to create better incentives to keep existing landlords in the sector and encourage developers and investors to resume construction and supply. Neither approach on its own will be effective."
Its authors describe the new proposals as a "multi-faceted approach" to providing more rental accommodation under improved circumstances for both landlords and tenants.
Titled 'Ireland's Rental Sector: Pathways to Secure Occupancy and Affordable Supply', the report calls for:
Longer leases, which should mirror European models to 10 or 20 years - as opposed to a maximum of four years and nine months, the maximum to which that an Irish residential tenant is currently entitled.
Rules to prevent landlords from ejecting tenants when they plan to sell the property. Tenants would thus "accompany" the property in a sale, as they typically do in the commercial property sector.
The beefing up of the powers of the Private Residential Tenancies Board (PRTB) to resolve disputes quickly .
The introduction of "real" rent controls - this is likely to limited on the basis of a four-year average index, looking backward. The PRTB currently has an index which could help to provide the necessary figures.
"Controlled incentives" for landlords - subject to them adhering to the property standards and terms.
The report is not specific about this, but Dr Larry O'Connell, one of its authors, told the Irish Independent that this would be about "bringing conditions closer to those of commercial property landlords".
This suggests providing residential landlords with full mortgage interest relief. At present they can claim 75pc as opposed to 100pc for a commercial property landlord.
Speaking about the Private Residential Tenancies Board, Dr O'Connell added: "At the moment the length of time it takes to resolve disputes - which could be more than a year - is a major issue for both landlord and tenant. This needs to be dealt with."
The document also says Government is clear that the goals of housing policy should be affordability, sustainability and inclusion.
More than one-third (34pc) are renting in Dublin, almost one-third in Cork (29pc) and even more in Galway (40pc).
NESC proposals on increasing supply of housing for both the social and private sector is expected to follow the rental report early next month.
Pat Davitt of the Institute of Professional Auctioneers and Valuers (IPAV) said: "Whether it encourages new landlords into the market or not, parity of mortgage interest relief with commercial property landlords will certainly prevent more leaving.".