According to a report, Landlords who provide long-term leases for tenants would get tax breaks under new proposals.
With negotiations set to intensify between the Government and Micheál Martin’s party in the coming weeks, Fianna Fáil has said it wants this year’s Budget to be a “housing budget”.
A number of proposals on how to bring forward affordable homes, as well as tackling the homeless crisis, are set to form a centrepiece of the party’s stall in the Budget talks.
One suggestion currently being teased out by Fianna Fáil is a proposal to provide tax rebates for landlords who provide their tenants with long-term leases.
The rebates would apply to individual landlords and would go some way to addressing the differences between the tax treatment of corporate landlords and individual property owners, according to a party source.
It is understood a detailed submission on housing will soon be completed and will decide how much of a carrot landlords will be offered.
One approach being explored is that a landlord who provides, for example, a five-year lease would be able to be given a tax rate in one band, while a 10-year lease would allow the landlord to get a higher rebate.
Housing expert and DIT lecturer Lorcan Sirr has said that the proposal is “not a bad idea in theory” but faces complexity around issues of ownership and the right of a landlord to end a lease.
“There’s a real imbalance with the way big landlords and small landlords are treated when it comes to tax, so instead of giving a tax rebate to all small landlords, getting something back in return is probably not a bad idea in theory,” he said. “But the Residential Tenancies Act still gives landlords the right to terminate leases if, for example, they want the property for their child, so there would need to be a way around that. “In principal, getting something back for a tax rebate is a good idea, but there are still complexities in how you engineer a five-year lease. “You can’t contract your way out of the act.”
The twin challenges of landlord rights and the rights of tenants to exit a lease present the key challenges.
However, Mr Sirr said that for tenants’ security of tenure “without a doubt we need to be looking at a way to develop long-term leases that satisfy both landlords and tenants”.
He explained that Ireland’s wealth is largely wrapped up in property, and that dependency would need to be addressed in order to make long-term leases viable here.
“The devil will be in the detail around landlords’ rights to repossess a property and a tenant’s right to exit the lease,” he said. “But ultimately, in Ireland everything comes back to home ownership. Ultimately, you need to have that mortgage under your belt by the time you are 65. “The only game in town is home ownership, and unless we can address that and make renting a viable long-term option, it will continue to be, and if this proposal went some way to redressing the balance of home ownership, then it’s a good one.”
Housing Minister Eoghan Murphy is set to bring details of his latest proposal to tackle the housing crisis to Cabinet in coming weeks.
The National Land Development Agency will have a €1.25bn war chest to buy land and vacant sites, including those owned by the Church.
The agency will purchase State-owned land banks to build housing developments and will also have the power to take over the lands by compulsory purchase orders.
Around €2m in funding will be injected into the establishment of the new scheme.
However, the agency is understood to be facing some resistance from members of the Cabinet.