It was revealed in the Sunday post that several tax breaks are being considered for smaller landlords. It’s been a rough couple of years for the industry, with many legacy landlords leaving the sector entirely. So the news of possible tax breaks for them is widely welcomed.
But for now, what’s…….
The situation as it stands?
The Irish property market has been an economic minefield, and there is no singular cause; many factors need to be considered to understand how the housing industry ended up in its current state.
The most significant contributors to the housing crisis were Covid, Economic Crisis, Remedial Tax Measures, legislative changes and most recently, the War in Ukraine.
Each of these events has profoundly affected the property market and the landlords operating within it.
Why are smaller landlords so crucial to the rental market?
As with any industry, balance is critical. By smaller landlords leaving the sector, it means that there are fewer rental properties available.
Not everyone is financially able to purchase a property; a fair percentage of the population still requires rental properties to be available. Smaller landlords exiting the market only increases the demand for rental properties while decreasing the amount available.
The number of landlords leaving the sector must stabilise for the housing crisis to ease.
The hope is that tax breaks will slow the attrition and attract smaller landlords back to the sector.
What would tax breaks mean for smaller landlords?
Although nothing is set in stone, the hope from many landlords is that during this year’s budget meeting, the eviction moratorium will be lifted, and new tax incentives will be offered to non-institutional landlords.
In the survey conducted by daft, 40% of landlords leaving the sector said they would re-enter if new incentives were introduced.
One of the new tax breaks being considered is targeted explicitly at smaller landlords and is a move to try and lower the ever-increasing rental cost across Ireland. Landlords willing to offer lower than market-rate rent will be entitled to a tax break.
If implemented, it would require the landlord or property owner to charge rent a certain percentage below the market rate to qualify for the scheme.
Government officials have indicated that it may also include a salary threshold for renters to ensure it assists those who need it most.
What made Landlords leave the rental market?
Many factors have contributed to the attrition of private landlords, but the overwhelming majority stated that they left the sector because of reduced profit margins. Rising interest rates, rent caps and regulative changes caused this.
These regulative requirements were introduced during covid and have since been un-enforced.
The second most pertinent reason the landlord left was problems with tenants, either poorly screened or problems with collecting rent.
All these factors illuminated the sector’s issues, which is why so many private landlords decided to instruct a registered property management company on their behalf.
How does a property manager help?
As mentioned above, most landlords left the sector (survey by daft.ie) because of new regulations and control; this factor, for the most part, could have been mitigated by instructing a property management company.
A property manager’s singular focus is the profitability and sustainability of the asset.
This means that the appointed agent deals with any changes in regulation, new legal requirements or things as simple as returning tax/property docs.
If you are unsure whether your property is up to date regarding regulative change or would like to discuss how a property management company can help decrease costs and increase profit, then reputable companies such as KPM Group in Dublin offer a free consultation service.
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Let KPM be your property expert, from finding the right tenant to collecting rent and everything in between. Contact us today to speak with a member of the team.
