THE organisation representing landlords in the private rental sector has criticised the Government’s measures announced this week for dealing with the country’s housing crisis.
Tom O’Brien, Chairman of the Irish Property Owners’ Association said the measures failed to address the imbalance that exists in the tax regime for investment funds or Real Estate Investment Trusts (REITS) and private landlords. The Government announced that purchases of more than 10 houses at once will attract a stamp duty of 10%.
However, this will not apply to blocks of apartments, while local authorities and approved housing bodies will also be exempt.Under the plans, all owner-occupiers will also be eligible to buy reserved sections of new housing developments, rather than just first time buyers.
However Mr O’Brien said: ‘There was nothing in the announcement to address the inequity of the income tax regime that REITs enjoy over private landlords.
‘In fact, the proposals ignored the fact that these funds are paying no income tax on sizeable rental portfolios whilst private landlords pay income tax at 51% and cannot get the government to agree to allowing basic deductions for standard business expenses such as Local Property Tax.
‘There is no basis or logic for the disparity in treatment although the Government will point to supply as an excuse. Does the much greater supply provided by the private landlord not count in this regard?’
There had been concerns in certain sectors that the introduction of tax measures could result in an exit of investment funds from the market which Mr O’Brien disagrees with.
‘I don’t buy the claim that these funds will exit the market if a level of tax is levied on them. The level of return that these funds are enjoying from a gross rental roll up scenario far outstrips what they can get in other asset classes in other jurisdictions and therefore there is scope to introduce a flat rate of income tax without impacting demand from the funds.
‘This would also enable the Government to afford hard pressed private landlords some relief from the excessive tax burden that they currently pay.
‘The measures introduced this week will have very little impact on the REITs as the vast majority of their investments are in the apartment market which is exempt from the stamp duty measures announced.’
He repeated his call on the government to address imbalances that exist between private landlords and investment funds.
Cork South West FF TD Christopher O’Sullivan said the ‘issue of vulture funds, cuckoo funds and institutional investors, and bulk buying housing estates around the country is scandalous and has to be addressed.’
He welcomed the government plans and said he would would continue to fight on behalf of people with connections to rural areas who want to build in those areas. ‘That’s something I’ve always supported. Last week the government approved its affordable housing bill. This will deliver social and affordable homes on public lands.
‘This bill will start to deliver housing later this year and will ease the pressure on housing supply. I also welcome recent developments in Clonakilty, where we’ve seen 100 social houses built, and in Skibbereen where 50 have been built.’
FF TD for Cork North West, Aindrias Moynihan welcomed 16 new social homes approved at a scheme situated at Sleaveen East.
This is part four in a series about the West Cork rental crisis.
Read part one here.
Read Part two here.
Read part three here.
