BUDGET 2018

RLAI SUBMISSION TO GOVERNMENT ON TAXATION ISSUES RELATING TO LANDLORDS

BACKGROUND

Increased supply of private rental accommodation is required to accommodate the people’s needs in the Ireland. Encouraging new and existing Investors is the rental market is vital.

WITH THE CONTINUING MAJOR PROBLEM WITH HOMELESSNESS IN IRELAND, AND THE GOVERNMENT PROMISING THAT HOUSING WILL BE A PRIORITY IN THE TERM OF GOVERNMENT, THE RLAI MEMBERS BELIEVE THAT THE SUPPLY OF RENTAL PROPERTY SHOULD BE REVIEWED AND SIMPLE MEASURES BE TAKEN TO MAINTAIN EXISTING SUPPLY AND ENCOURAGE INVESTMENT IN THE SUPPLY OF RENTAL PROPERTY.

THROUGHOUT THE RECESSION, DETERRENTS HAVE BEEN PUT IN PLACE, DISCOURAGING INVESTORS AND EXISTING LANDLORDS WITHIN THE PRIVATE RENTAL SECTOR, LEADING TO A MAJOR SHORTAGE IN ACCOMMODATION FOR PEOPLE IN IRELAND. AMONG THESE MEASURES WERE, OVER REGULATION, RESULTING IN DWELLING PROPERTIES BEING CLASSED AS ‘UNSUITABLE’ LEAVING PEOPLE IN BUDGET ACCOMMODATION, HOMELESS. AND INCREASES IN COSTS, TAX AND ADMINISTRATIVE BURDEN ON LANDLORDS, FORCING UPWARD RENTAL PRICES TO MEET THESE REQUIREMENTS.

RESIDENTIAL LANDLORDS ASSOCIATION OF IRELAND (RLAI) PROPOSES THE FOLLOWING RECOMMENDATIONS

1 ENCOURAGE INVESTMENT INTO THE PRIVATE RENTAL SECTOR AND CGT

Firstly, we welcome the eventual reinstatement of the mortgage interest expense to 100% - although point out that the restriction happened overnight – while the reinstatement is over a 5 year period.

Echoing the Irish tax institute, we point out that Ireland’s 33% CGT rate is the fourth-highest rate in the OECD and is having a negative impact on investment in Irish business. The median rate in the OECD is 23%.

High CGT rates are not generating high receipts for the Exchequer – CGT represented only 1.7% of the total tax yield in 2016 (Revenue annual report 2016 (April 2017)

We again point out that as supply is increased to meet demands, rents will automatically reach a market equilibrium which, over time, will ensure more affordable and better-quality accommodation and provide a choice for tenants depending on their budget.

RLAI recommend that the Government outline to the public and therefore existing and potential investors that their intentions will be to encourage investment in the private rented sector rather than increasing barriers to entry into the sector.

2 CLARITY IN RELATION TO DEDUCTIBLE EXPENSES – PROPERTY TAX

Property Tax was to be ‘phased in’ as a deductible expense – It is past time for this to be fully deductible - All expenses that are wholly for the purposes of obtaining rental income should be allowable expenses as with other sectors.

This new government should confirm the position – that these expenses are fully deductible - as soon as possible.

3 REVIEW OF TAXES ON RENTAL INCOME - PRSI

The addition of PRSI on rental income has led to an increase of 4% on the cost of letting out a dwelling property. With none of the benefits attached to the PRSI class, this seems very unreasonable.

PRSI is supposed to be a social tax – to pay for things like illness benefit, state pension etc. Therefore, this tax should be reversed on rental income, given that the payments do not count towards PRSI contributions for the individual.

CONCLUSION

We understand that other measures regarding social housing will need to form part of the plan to tackle the housing shortages but a key element will always be the private rental sector. Until the government make a commitment to encourage investment by introducing some of these measures and reducing barriers, we will continue to see a decline in the supply of accommodation in the country.

Finally, we are available to meet with any government officials to discuss the above proposals at any point. Feel free to contact us.

Kind Regards,

Residential Landlords Association of Ireland

Submitted by:

Liam Burns BBS, ACCA, AITI - Founding Committee Member of the RLAI

Contact Details:

RLAI: This email address is being protected from spambots. You need JavaScript enabled to view it. Liam Burns: This email address is being protected from spambots. You need JavaScript enabled to view it.