The Government will be offering tax incentives to small landlords to remain in the rental market, Minister for Finance Michael McGrath has said, but the exact details of the plan have not yet been finalised.
Speaking in Cork on Monday, where he was attending a regional meeting of employers’ group Ibec, Mr McGrath said he was keen to bring stability to the rental sector as too many landlords have been exiting, reducing the number of properties available.
“We have seen too many landlords exit the market. It’s not always because of tax reasons, but tax can be a factor in some cases,” he said, adding that rising interest rates and some property owners coming out of negative equity and deciding to exit the market were also factors.
The Minister acknowledged that some landlords have sold up due to unhappiness with regulation in the sector and the approach taken by the Residential Tenancies Board, but he stressed that the State had to ensure there was proper oversight of the market and that good housing standards were maintained.
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Steady supply
He said the Government’s first priority was to retain existing investment in the rental sector, and then to make it more attractive for new investment to come in given “a steady, long-term supply of rental accommodation” was needed.
“And what I have underlined in my public comments is the need for any additional support that we provide to the rental sector to be linked to security of tenure and to a commitment by landlords to remaining in the markets and that for me is the key issue,” he added.
Mr McGrath confirmed the details of a report in the Business Post which said Minister for Housing Darragh O’Brien was continuing to push for a tax break for small landlords as well as “a backstop” incentive for developers to keep building apartments.
Under this backstop measure, the €450 million Croí Conaithe scheme announced last year would be extended in an effort to boost the number of apartments for sale, with the State subsidising developers to the tune of €144,000 per unit.* The State would buy apartments that developers cannot sell on the open market and then lease these on a cost rental basis in an attempt to help developers secure funding and increase the rental housing stock.
Mr McGrath said the State has been involved in buying up part or full apartment complexes on a significant scale through the Land Development Agency embarking on partnerships with private developers through schemes such as Project Tosaigh.
“We have made no final decisions yet on the nature of any tax changes in the rental sector or indeed the reach of them… but we do intend to examine data in further detail and make decisions in the next number of weeks that I think will help to bring stability to the rental market.”
‘No secret’
Mr McGrath was supported in his comments by Minister for Enterprise Simon Coveney, who said the Government wants to see a stable and growing rental sector that is affordable for families, couples and individuals. He said “it’s no secret that we have a real supply challenge at the moment”.
“Ultimately our rental market will be stabilised by a significant increase in supply and that also means trying to support the building of more affordable accommodation of all types. The Cabinet sub committee on housing has spent a lot of time teasing through these issues and taking advice on it,” he said.
“And that advice will feed into the budgetary process now to try and increase supply further, to continue to support tenants in terms of affordability and to make sure that we have landlords that are willing to make their properties available at affordable prices.”
* This article was amended on 30/08/23 to clarify the State subsidy available to developers under the Croí Conaithe scheme
