Some landlords face significant increases in tax this year, although some may also see the amount of the increase pared back in 2014.
As these latest increases add to a range of charges which landlords have experienced in the last three years, they may be exacerbating the pressure that landlords are experiencing to get out of the business.
Other charges which have added to their costs in recent years include non-principal private residence tax (NPPR), household charge, personal tax, and the Private Residential Tenancy Board charges of €90 per registration and BER certification costs.
In addition, tax relief on interest was reduced to 75pc of mortgage interest so now landlords are paying tax on income they have not earned.
Landlords of houses that are let in flats have suffered even more because they are charged NPPR tax per flat meaning that they pay multiple NPPR for one house.
In addition, multi-let landlords this year will be obliged to ensure that all the flats in the old houses are upgraded to make them fully self-contained thus adding further to costs for those landlords who have to upgrade these bedsits to flats.
Many landlords will simply not be able to bear this cost, particularly at this time and as a result many tenants could face eviction from their home.
To illustrate how these measures, which applied up to the end of 2012 specifically target owners of multi-let properties, consider the following examples as shown in the above table.
House 1 in multiple units pays a staggering 400pc more in government taxes and charges (NPPR, household charge & PRTB) while generating a quarter of the income compared to a family house.
While the move away from a flat €100 household charge per flat to one tax on the whole property from July 2013 will be welcomed by multi-let landlords, this will not be sufficient to compensate for the extra investment required to bring these multi-unit properties up to the new standards.
Indeed, in 2013 all investors will actually be taxed four times – NPPR tax (March); property tax (June); PRSI and personal tax (October) resulting in a 38pc rise in the tax on House 1 in the example above.
When the grossly inequitable NPPR tax is abolished in 2014, House 1 in the above example will see an 11pc reduction in its tax bill. However this is quite small considering these were paying 400pc more tax than House 2 to begin with up to 2012.
These tax increases are likely to further add to the pressure on those landlords who are finding it difficult to meet mortgage repayments, not to mention those who owe the 18pc of buy-to-let mortgages which are already in arrears.
Consequently the extra charges could also affect the supply of the keenly priced residential accommodation which is needed by employees of many multi-national companies.
It is possible that such employers may well bring pressure on the Government to address any such shortage of accommodation because undoubtedly they are going to experience increasing difficulty in finding accommodation for their employees as rental stocks continue to drop as landlords who can afford to sell will do so.
Others will be pushed over the edge by these successive tax increases resulting in their properties being repossessed only to be bought by homeowners and not investors.
Reduced supply will put further upward pressure on rents and see more tenants queuing for flats.
So the Government must address this issue now before it becomes a major problem for both domestic tenants and multi-national companies and decide if they want a private rental sector or not.
Robert Lawson is divisional director Lisney Residential