Landlord groups call for tax measures in Budget

Two groups representing landlords have called for a number of measures to stem the flow of landlords from the rental market.

A new tax rate of 25 per cent, inclusive of USC and PRSI, a reduction in Capital Acquisitions Tax and the ability for landlords to charge market rent on re-renting properties are among the measures being recommended in the joint pre-budget submission from IPAV, the Institute of Professional Auctioneers and Valuers and IPOA, the Irish Property Owners’ Association.

The document warns there is now “a real risk of serious oversupply of high-end properties” in Ireland, with in excess of 75,000 apartment schemes currently granted planning permission.

“The State cannot afford to allow funds with annual rental profits of hundreds of millions of euro to operate on a tax-free basis, whilst their smaller private counterparts pay tax at up to 55 per cent,” it says.

The new rate of tax the groups have proposed would be funded by applying the rate to all landlords, including investment funds.

It says, historically, private landlords looked to secure an independent source of pension income from their rental properties “but the risks and exposures for landlords have changed dramatically since 2006".

It says the current capital acquisitions tax regime means many families “are forced to sell their properties to pay the tax”.

It's calling for a reduction in the taxable value by 90% as applies to the inheritance of agricultural property and business assets. This, it says, would assist with retention of supply and incentivise new investment.

The introduction of roll-over relief in capital gains tax on the sale of all assets where the proceeds are reinvested in residential property within 12 months is also recommended to encourage existing and new investors in the rental market.

Commenting on the submission, IPAV Chief Executive, Pat Davitt, said: “The exit of private landlords from the market is at a critical stage and is now being felt throughout the country, not only in urban areas.”

IPOA chair, Mary Conway said: “Years of onerous, complex legislation and aggressive tax policy have led to the exodus of private traditional landlords, which is exacerbating the homelessness crisis. Private landlords have been the backbone of the rental market for many years providing homes in the absence of the building of social housing.”