Tax relief for landlords ‘will not stop general flow out of the market’

A tax relief for landlords announced in the budget will not stem the flow of property investors out of the market, a letting agent has warned.

Kersten Mehl manages more than 1,000 properties in Limerick on behalf of landlords.

Budget 2024 included a temporary tax relief designed to benefit small landlords.

The measure would see relief, at the standard tax rate, on rental income of 3,000 euro for 2024, 4,000 euro for 2025, and 5,000 euro for 2026 and 2027 – as long as landlords stay in the market for that full, four-year period.

That could see landlords saving 600 euro in year one and 1,000 euros in each of the final two years.

Mr Mehl described the move as “too little, too late”.

“Some people may stay in, but it won’t stop the general flow out of the market,” he said.

He said continuing to blame landlords for the housing crisis will see even more leave the market and worsen the supply problem.

Mr Mehl said an increasing number of landlords feel “vilified” and see “no win” in renting out properties and are deciding to sell up.

He said one of the main factors driving people out of the market is rent pressure zones, a system introduced in 2016 that places a cap on the total rent landlords can charge, with annual increases limited to 2%.

“I don’t think the political parties have the courage to do what’s necessary, which is just remove all this pressure zone nonsense, they’re not going to do that,” he said.

Mr Mehl, who has worked in property management for 45 years, said while he is seeing new landlords entering the market, targeting properties not caught in the pressure zones, he said there are more owners constrained by the zones selling up.

“So you have this conundrum – will the landlords leaving exceed the landlords coming in, I believe they will. So the supply issue doesn’t improve. And that’s the central point,” he added.

“I don’t think there’s going to be a fundamental shift in landlords leaving the market, which ironically creates a more limited supply, which creates increased rents.

“If you actually stand back the whole thing is a mess.”

Mr Mehl said most landlords were very ordinary people who were just looking to build a small nest egg.

“The media is blaming the landlord for anything and really the housing shortage is a consequence of failed state policy, it’s not because of landlords,” he said.

“Most landlords are buying a house for their kids’ education down the road or whatever, they are the ‘mom and pop landlord’, and that sector will ultimately disappear.

“They are vilified. They have been vilified for the past five or six years.”

Mr Mehl said politicians know the problem but are reluctant to do anything that would be seen as supporting landlords.

“They’re afraid of the media reaction and the trolls on social media, the politicians are afraid of them,” he said.

“And, consequently, they know that landlords are getting beaten up, a lot of them know that these people who bought properties and an investment are being beaten up.

“But they won’t step in and say ‘hold it now, we need a supply’.”

Mr Mehl did not confine his criticism to the current government and said another factor causing landlords to leave the market was the prospect of a Sinn Fein-led administration and the potential of it introducing a policy that meant owners would be unable to ask tenants to vacate their properties ahead of selling them – meaning the purchase process would go ahead with tenants still in-situ.