1. John Leahy MAKING RENTAL PROPERTY A VIABLE INVESTMENT OPTION
MAKING RENTAL PROPERTY
A VIABLE INVESTMENT OPTION

2. The Question…
How can we keep existing landlords in the market and attract new investment into the private rented sector?

3. I will discuss… The profile of landlords Issues they face
Some possible solutions

4. What is the profile of landlords?
3 types of landlord
REITS
Small Investors
Pension
Accidental Landlords
Many are ‘double renters’

5. What is the profile of landlords?
65% own just one property 84% own two or less properties

7. A sector in crisis?
Landlord sentiment is at an all time low Landlords are selling up
Source investopedia

8. Why are landlords selling up?
Financial Pressure
25,000 BTL mortgages still in arrears
Loan books being sold
Interest rates will go up
Tax Treatment
Impact of RPZ Rules
Complexity of the Rules and Regulations
of BTL Mortgages
- are in arrears

9. Taxation
Residential rental is not treated like a business for tax purposes
Other property sectors are, Why?
Landlords can pay tax on a loss!
Landlords can make a cash loss and still have a tax bill!
Need to distinguish between tax treatment and tax incentives

10. Up to 131% increase in tax burden
Source: DKM Report

11. Penal Tax Rates Irish Tax Institute Recent Report
Effective Tax Rate between 84% and 123%

12. Identical Apartments, Same Location, Same Building
RPZ Impact
Identical Apartments, Same Location, Same Building
Property A
Sitting Tenant
Decent Landlord
Rent was €1,000 pm for 3 years
Tenant moves out
Max new rent based on the RPZ rules - €1,123 pm
Property B
New to Rental Market
Market Rent €1,500
A Difference of €377pm
Difference of €477 pm

13. Rules & Regulations Current rules are too complex They need to be
Fair & Balanced
Consistent
Understandable
“If you want me to do something, I need to understand clearly what is expected of me”
A one property landlord

14. One Landlords View..
“There is no real rental profit for a small landlord, there are just significant downside costs and risks, a magnitude of rules & tenant hassles. There are no benefits in being a small landlord now under current legislation. I am getting out of the market” 

16. What needs to be done Protect EXISTING supply Immediate Actions
Too much focus on driving new supply
Not enough focus on protecting existing rental stock
Immediate Actions
Medium Term Actions

17. Immediate Actions Restore Mortgage Interest Relief Amend RPZ Rules
Current target of 2021 is too late
Tax Relief for tenants on rent payments?
Amend RPZ Rules
They punish decent landlords
Have created a two-tier rental market
Better termination procedures for non-payment of rent
We need a solution for accidental landlords
Double Renters / Tax off-set?
Pension structure
Simplify the Rules & Regulations
Better understanding will improve compliance

18. Medium Term – A Fresh Approach
New Legislative Framework
A new Residential Tenancies Act – less complex, more reflective of the current and future market
Complete Overhaul of Tax Policy
Tax Treatment and Tax Incentives if evidence based
New Tenancy Models?
Norms of the past should not be assumed to be future norms
White Box
Look at the model of commercial property sector – FRI leases?
A New Investment Model?
Simple, cost effective pension based structure
Long term holding, long term tenancy
Same tax treatment as a pension plan

20. The 5 C’s CENTS - €€ Must be financially viable, tax treatment
CONFIDENCE – Investors need confidence in the market and the system
CERTAINTY – Certainty of rental income, political & policy stability
CLARITY - Rules & Regulation (too much ambiguity in the rules & regulations, they are too complex)
COMPREHENSION (they need to understand the rules and what is expected of them, information & advice)

21. John Leahy
Thank You