Pat Davitt, chief executive of the Institute of Professional Auctioneers & Valuers
This morning.
A total of 6,824 private landlords left the market between 2018 and 2020.
Why are they leaving during ‘good times’?
Via Pat, Davitt, of the Institute of Professional Auctioneers & Valuers:
Other organisations have documented in budget submissions and elsewhere how poor an investment proposition it is now to invest in residential property, given that one pays over 50 per cent of rental income in tax and with capital gains of 33 per cent on the sale of such property. Commercial property investment is treated much more favourably by comparison, with some very attractive tax breaks.
Exacerbating the issue is the unequal treatment between private landlords within Rent Pressure Zones. Where properties are on a first rental and in cases where properties have not been rented for a two-year period, landlords are free to charge market rent – or in other words, the rent the market will bear.
Other private landlords in the same areas are confined by the RPZ legislation to minimal increases. Those worst-hit, ironically, are those who didn’t rush, as many did, to increase their rents to market level before the RPZ rules took effect in December 2015.
What is not often understood is how this differential impacts the value of one’s property when selling on. A tenanted property rented at 50 per cent of market rent, will achieve only 50 per cent of the market value of that property as an investment property.
This forces affected landlords to end tenancies and gain vacant possession so that they can achieve market value by selling the property to an owner-occupier. The tenant has to find another property at much higher rent or face becoming homeless, adding to the problems for the State.
Private landlords would be willing to sell tenanted properties if they could get market value. Other investors would buy them, just like in several other countries were it not for the unfair restriction imposed via the current RPZ legislation…
Anyone?
Why are private landlords selling up despite record rents? (Pat Davitt, Irish Times)
Pic: via IPAV