'Small-time landlords' are being forced out of market
Small-scale 'mom and pop' landlords are leaving the market in droves, pushed out by big international funds, says a new report on the landlord sector in Ireland.
Despite rents running higher than in the boom years, twice as many private landlords are now leaving the market as are entering it.
A transactions survey undertaken over the last year by 90 members of the Irish Professional Auctioneers and Valuers (IPAV) shows that 1,022 landlords sold private investment properties while at the same time just 452 bought properties.
The top reason cited for their departure was "high taxation".
Pat Davitt, CEO of IPAV, said: "People with one or two properties are paying 55pc tax on their rental earnings compared with just 12.5pc paid by the big funds which are moving in to develop entire blocks for rental. Government currently appears to be favouring the latter.
"Small private landlords can write off only 75pc of interest (charged to them on loans) while write downs for something like a washing machine have to be carried on over periods as long as five years."
The next most common reason for selling up was "onerous regulation", with "irresponsible tenants" third.
Mr Davitt said the reduction comes as no surprise. "It's not a good situation and it holds serious implications for the future. Big fund landlords don't raise the rents for a handful of people, but hundreds at a time."
In Ireland, the lettings sector has traditionally been dominated by small players who own between one and three properties to let, often instead of having a pension.
But last week another report showed that big fund residential investment (primarily build to let) is now accounting for more investment deals than the office and retail sectors.
The Q2 report by Hooke and MacDonald shows transactions in the residential market have overtaken all other investment classes for the first time. Big fund residential accounted for 42pc of the investment market in Q2 (almost €300m in three months) compared with offices at 27pc and retail at 24pc.