The Government should consider Danish-style reforms which force owners of vacant homes to make them available to renters, a new report on the rapidly expanding rental sector has recommended.
The report, which was considered by Cabinet on Tuesday and published on Wednesday, recommends that the Government should consider “the introduction of requirements on the owners of vacant properties to make them available for rent”.
In the Nordic state, if an owner moves and doesn’t wish to sell their property, they must rent it out or try to sell it. If it is empty for more than six weeks, the owner has to report it to the municipal authority, which then seeks to provide tenants which the owner has to accept.
The report also recommends that the Government consider introducing an “NCT-style” system of minimum standards for rental accommodation, with landlords mandated to demonstrate compliance with minimum standards.
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According to the report, overcrowding is less prevalent in Ireland than in many other jurisdictions, but it still said there should be an overhaul of Ireland’s legislation on overcrowding, which has not been updated despite commitments in December 2020 that the Residential Tenancies Act would address the issue.
The National Economic and Social Council (NESC) report also flags concerns over the inspection regime which applies to rental properties – both the high failure rate and the structure of the system.
It outlines how the current system of local authority inspections could be adjusted on a phased basis, and how the failure rate for rental inspections in 2021 was close to 90 per cent. “It is of concern that, of those properties that did not comply, only a minority are brought up to the required standard within the same year.
“Effective action is needed to address this issue, including consideration of the introduction of a system based on the National Car Test system whereby landlords would be required to demonstrate compliance with minimum standards.”
The report also recommends consideration of further actions to improve the tax treatment of landlords, which should be linked to improved security of tenure for tenants. It suggests that a lower rate of income tax for rental income could be considered, or some form of capital gains tax relief for those who hold property for longer or partake in tenant-in-situ purchase schemes – where a home is purchased for social housing with the tenant retained. Longer leases are also considered, with a time frame of 15 years mooted.
The report finds that the rental sector is now contracting at a time of rapidly growing demand, with more people being frozen out of home-ownership and becoming long-term renters, advising that this “requires immediate action”. It flags the emergence of new challenges in the long term, such as how rents would be paid in retirement.
It recommends extending the repair and leasing scheme in another move to combat vacancy, as well as providing more professional staff in the public system to advise and support property owners thinking of restoring vacant properties, as well as further reviewing the scope for regulatory changes to facilitate renovation of older properties.
