The Government has been urged to reduce the tax paid on rental income in an attempt to halt the exodus of smaller landlords from the rental market.
The Irish Property Owners Association (IPOA) said the Republic was “out of step” with other European Union member states in terms of providing financial support to smaller buy-to-let investors.
“Based on comparative evidence throughout Europe, it is clear that a strong private rental sector supported by a range of financial subsidies and tax relief can ensure sufficient levels of quality accommodation by incentivising small landlords to both invest in the market and to continue to let their properties to tenants,” it said.
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The exodus of small investors from the rental sector here has been cited as one of the principal reasons for the current supply shortages. According to estate agent Sherry FitzGerald, the exit of landlords reduced the number of available tenancies by nearly 22,000 between 2016 and 2020.
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The IPOA called for the introduction of a “dedicated” 25 per cent tax rate for the sector. At present rental profit is added to an individual landlord’s income and taxed at either 20 or 40 per cent depending on whichever rate applies. The IPOA noted that property investment funds pay zero tax on rental income.
It also called for the implementation of a rollover relief on capital gains tax and double tax write-offs on certain expenses, such as refurbishments.
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The association noted the Government last month approved a €1 billion package of support to expedite the delivery of new homes. And despite private, or non-institutional landlords providing 94 per cent of residential rental accommodation, the sector was not included in the package of supports, it said.
IPOA chairwoman Mary Conway said: “Our research published today demonstrates that, relative to other EU member states, Ireland is notably out of step on the provision of supports to private landlords.”
‘Growth of sector’
She added: “As a priority, policymakers must recognise the central role that property owners play in housing provision, through introducing targeted subsidies that allow landlords to remain in the market and support the growth of the sector in a tangible way.
“While Government is making efforts to increase the supply of housing, the reality is that without direct and immediate funding, private landlords will continue to leave the market.
“This will only serve to negate broader progress on enhancing supply. The fact remains that 78 per cent of IPOA members will remain in the rental market if there is a meaningful reduction in the headline rate of taxation. Ireland is experiencing a national housing emergency — these measures need to be expedited as a matter of urgency.”
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