System paints landlords as unscrupulous
Published 18/06/2015 | 02:30
Rents are expensive in cities, because investing in property is expensive. An investor purchasing a property for €330,000 in the Docklands can expect a rent of €17,000 per annum.
But service charges, property tax, interest payments, general expenses and taxation means the income does not exist. An investment has to cover its own cost or it is not sustainable.
We need more rental accommodation but there are numerous barriers for providers and the tax treatment of landlords is a disgrace. Legitimate business costs are not allowable. Local Property Tax and 25pc of mortgage interest are not allowed as expenses, and replacing beds or boilers can only be claimed as expenses over eight years.
The private rental sector is the only sector where tax can be due in a loss making situation. It makes no sense. Instead of encouraging improvements, it discourages them, to the detriment of tenants.
Standards are important and inspections necessary and essential, but the system of 'pass' or 'fail' needs to be addressed. A grading system should be introduced. A property should not fail because a vent is blocked in a bedroom, as this does not make it uninhabitable. The current system seems to suit the notion that all landlords are unscrupulous.
The State must also look at how social tenants are disadvantaged. The private sector is expected to provide homes, but the rent supplement system does not pay market rent, does not pay directly to landlords, and stops payments when the tenant has arrears or has not completed forms.
The minority of tenants who abuse the system and pocket the rent can remain in situ with no sanctions.
The PRTB dispute resolution service is also too slow and cumbersome, and it needs more staff to deal with disputes more efficiently.
The State is responsible for housing its citizens and the private rental market is part of it. It needs to be valued and supported for the sake of tenants and landlords.
Providing rental accommodation should be treated as a business like any other business.
Stephen Faughnan is chairman of the Irish Property Owners Association
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