I don’t think you’d find one landlord who is looking for sympathy, he knows he won’t get it for a start, but in truth he or she doesn’t want sympathy. They want what every investor wants – a fair return on their investment.
Landlords are not in the business to provide a social service, they are there to get a monthly income and the capital gains on the property over the years. It is an income stream and a pension plan. And we need landlords in the market – they do provide an essential element of our social structure.
But while foreign vulture funds were welcomed into Ireland to “pick the bones of the property market” as the Finance Minister put it at the time and were granted enormous tax holidays, the small landlord was left to flounder against high costs and high taxes.
Yes rents have risen alarmingly in the past 5 years, but rent controls brought into effect in 2016 have stymied the decent landlord who had decent tenants and did not put the rent up every year as she could have done. Now that landlord can find herself as much as €500 per month below the market rent.
As well as income tax on profits of up to 52%, landlords have to pay interest charges, Local Property Tax and USC as well as putting a percentage of earnings away to pay for repairs and refurbishment. And a rogue tenant can easily wipe out 2 or 3 years profits.
The last budget brought the amount of interest claimable against tax back to 80% and while that’s welcome, it is probably worth a net €100 per year to the landlord.
With all of those costs, the only landlords who can make a decent return are those who bought with cash and who don’t have a mortgage to service.
It’s difficult for ‘the small guy’ to make his or her voice heard at budget time, but the country needs landlords to stay in business. Every year the percentage of people renting rises and we need landlords to provide them with homes.
What can the Government do to offer them sufficient incentives – simply to allow the small landlord make a decent return on his investment.:
- Allow each landlord charge the market rent for a new tenancy
- Landlords time and travel expenses should be tax offset
- Allow small landlords run their business through a limited company and pay corporation tax levels.
- Allow them put rental properties into a proper pension fund – in most cases that’s exactly what it is
- A reduced rate of Capital Gains Tax for long term buy-to-let properties
- Additional allowances to entice new rental properties to the market.