In the recent Focus Ireland report on homelessness it was revealed that one of the primary reasons those experiencing homelessness left their last stable home was due to their landlord selling the property, given the divergence in the treatment for tax purposes of private landlords versus various fund investors in residential property, according to IPAV, the Institute of Professional Auctioneers & Valuers.
The organisation says the divergence is so great that it is a foregone conclusion that the private landlord will continue to exit the market.
Speaking ahead of the organisation’s annual conference, Pat Davitt, IPAV’s Chief Executive, said it is private landlords largely who provide accommodation for the less well off.
“The preferential tax treatment of the funds, sometimes termed ‘cuckoo’ funds, is vastly disproportionate. There is now so little reward for the private landlord but mega incentive for the funds industry.
“While the area is complex it means that while many private landlords pay tax rates of 55 percent on rental income and are subject to stamp duty and capital gains taxes on sales, many of the funds pay little or no tax," the Chief Executive remarked.
He pointed to the RTB (Residential Tenancies Board ) Rent Index for Q3 2018 which found there were 1,778 fewer landlords than three years previously and tenancies had declined by 8,829. Recent Banking and Payments Federation Ireland figures for buy-to-let mortgages show a 30 percent year-on-year drop in mortgage approvals.
IPAV’s own member survey last year found that for every landlord entering the market over two were leaving. High taxes and onerous regulation were among the top reasons cited.
“This trend is going in one direction only. We will continue to see the flight of the private landlord from the market, unless the tax situation changes,” Mr. Davitt continued.
He said institutional investors are needed in the property market.
“However, there should be a level playing field. Such funds should be part of the solution, not be facilitated by such extraordinarily favourable incentives that they dominate residential property activity. Their acquiring monopoly status would be dangerous for society,” Mr. Davitt concluded.
