A €6,000 “tax-free credit” against rental income or the personal taxes of landlords operating in designated Rent Pressure Zones (RPZs) would support the supply of properties to the private rented sector and “mitigate the worst aspects” of the Government’s system of rent controls, a professional body has said.
In a set of proposals published on Monday, the Institute of Professional Auctioneers and Valuers (Ipav) has also called for the controls to be relaxed to allow some landlords charge market rents in designated areas where rent increases cannot currently exceed 2 per cent each year.
Ipav chief executive Pat Davitt said that diminishing supply is an “internationally recognised” outcome of rent controls, pointing to figures from the Residential Tenancies Board (RTB) that more than 43,000 homes have left the rental market over the past five years.
These issues are “particularly acute because of the nature of the current RPZ system in Ireland,” Mr Davitt said, adding: “The series of measures we’re proposing are designed to mitigate the worst aspects of the RPZ controls.”
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Among other things, Ipav is calling for a €6,000 tax credit to be offered to landlords who are renting out properties in RPZs. It said that the credit could be made conditional on a commitment from the landlord to keep the property in the rental system for a further three years.
There is some evidence that RPZs have increased the rate at which properties are being withdrawn from the rental market and sold to owner-occupiers, a good outcome for first-time buyers but a bad one for renters, industry figures suggest.
Some 71 per cent of landlords who responded to a RTB survey in late 2022 said they sold their properties to an owner-occupier. This might be because properties in designated RPZs are less attractive to investors because they are not currently allowed to increase rents to market rates, meaning they are more likely to be sold to first-time buyers and owner-occupiers generally.
In a report published earlier this month, estate agent DNG said that the Dublin property market had been dominated in the first quarter of the year by investors selling their properties to owner-occupiers. It said that some 26 per cent of sales transactions over the period involved “landlords offloading investment properties”, warning that the squeeze on the supply of rental accommodation available was worsening.
Ipav’s latest report also recommends amending the RPZ rules to allow landlords to charge market rent in a situation where a tenant leaves of their own volition. This would “encourage landlords to re-rent properties rather than selling it up”, it said, and also encourage “better maintenance of such properties”.
Ipav also recommended that the Government set a target for local authorities to bring 25,000 vacant homes back into the rental market in each of the next three years and a target of 10,000 new modular homes to be built each year over the same period.
