Why are Rents Rising?

"Rents are rising because the cost of providing rental accommodation is rising," he said. "30% of Landlords own their properties outright. Renters would be shocked to note that approximately 62% of the rent they are paying is going straight back to the Government in the form of Income Tax, USC, PRSI and Local Property Tax. Around 15% goes on the normal rental business expenses, with the balance going to the landlord. On a rent of €1,000 per month, the Government takes €620, expenses take €150 and landlords keep €230 net."

He added that "70% of landlords have loans and 71% of them have insufficient income from their rental property to cover the mortgage repayment. This is an appalling statistic and unsustainable." The difficulty is the tax treatment of the sector; it is treated as unearned, costs that are clearly expenses are not allowed as costs. 25% of the interest paid to the banks is not allowed as an expense and therefore taxed as income. The Local Property Tax is not an allowable expense. The cost of providing rental accommodation has increased by 20-26%.

Commercial Investors are treated more favourably in tax law than residential investors. It appears that homes for people are less important. Traditional bedsits have been outlawed, reducing the number of homes available. It is now illegal to let a bedsit with a designated bathroom, solely for the unit, outside the door of the unit. "It is unconscionable that the Government forced the closure of these properties without putting alternative accommodation in place." said Mr Faughnan. " A stroke of a pen by the Minister can change this situation and immediately increase the amount of accommodation available."

Statistics available to the Irish Property Owners’ Association also indicate that 30% of landlords in the sector intend to sell as soon as they can. "The sector needs fair tax treatment, which will encourage investment and supply will increase. If the current tax treatment continues, we will face less rental property available and people looking for accommodation will suffer.” said Mr Faughnan.