The State needs to urgently incentivise small investors to stem the tide of private landlords leaving the rental market, according to national estate agency group Real Estate Alliance.
Real Estate Alliance (REA) members are reporting that small private landlords are exiting the market due to a combination of excessive taxation and the legislation involved in renting a house, which they find it difficult to deal with.
The association’s AGM heard that Rent Pressure Zones are not working with rents continuing to rise and available stock spiralling downwards.
“There are very few new small private investors coming into the market, and society needs this sector to provide rental accommodation,” said incoming REA Chairman Anthony McGee from REA McGee in Tallaght.
“When you add up taxation and stealth taxes, agency fees, management fees and insurance there is no incentive for private landlords to remain in the market
“What we are seeing are brow-beaten landlords who are exiting the market when they reach a point of equity parity in a property.
“The regulations are heavily biased in favour of institutional investors, which is why you see build to rents happening at the moment.
“There may be a feeling that with rents at an all-time high, that small investors are making money, but when they do the numbers and look at the taxation they are paying, many are deciding that it is not worth their while staying involved.
“It is doubtful whether the Rent Pressure Zones are actually working because we are seeing rents climbing far in excess of 4% per annum due to a severe shortage of rental properties.
“We are seeing instances where adjoining properties are renting for vastly different sums, and in our experience, some landlords are now finding it difficult to pay their mortgages.
“It is economically unfair that investors whose property becomes vacant cannot charge more than a 4% increase on the previous rent – even if it was set to an historically low level.
“The market is not functioning normally because tenants are renting places for a lot longer than they originally planned for due to the difficulties in raising the deposit for a property.
“As tenants struggle to pay the rent, wages are forced up and this is eroding the competitiveness of the economy – with many workers n ow leaving Ireland for other countries as they are finding it too expensive to live here.
“We need to take a new look at the rental problem – incentivise landlords and bring in measures to get people out of rental properties and into mortgages.
“Banks should be able to take into account that someone who has been paying €2,000 a month for the past ten years should qualify for a mortgage.”
REA is Ireland’s leading property group of Chartered Surveyors with over 55 branches nationwide, comprising many of the country’s longest-established auctioneers and estate agents.
New REA board: Chair: Anthony McGee (REA McGee, Tallaght), Liam Browne, (REA Paddy Browne, Ennis), Des O'Shea (REA O'Shea O'Toole, Waterford), Michael O'Donoghue (REA O'Donoghue & Clarke, Cork), Seamus Browne (REA Seamus Browne, Roscrea), Robert McGreal (REA McGreal Burke, Galway), John Stokes (REA Stokes & Quirke, Clonmel), Matthew Conry (REA Dawson, Tullow), Karl Tracey (REA Forkin, Bray).
Available for interview: Anthony McGee, Chairman, Real Estate Alliance, firstname.lastname@example.org or email@example.com 087 2799332