Ms Mary Conway:

I thank members of the committee for the opportunity to speak to them today on behalf of the membership of the Irish Property Owners Association on the critical matter of the availability of rental accommodation, the challenges facing our members and the solutions being proposed by us to alleviate these issues. By way of introduction, the IPOA is a not-for-profit organisation that seeks to protect and promote the interests of private residential property owners and to encourage the supply of good quality accommodation and professional standards of property management. The IPOA is a national association, representing landlords from single property owners to multiple property owners throughout Ireland. Driven by our alarm at the housing availability crisis currently engulfing Ireland, we have been motivated to collaboratively work with like-minded associations such as the Institute of Professional Auctioneers and Valuers to devise targeted solutions to stem the exodus of private landlords from the property market. With that in mind, we jointly commissioned renowned economist, Jim Power, to compile an economic report detailing the state of the sector and on the back of this, we prepared a budget submission loaded with solutions focused on alleviating the crisis, providing a more equitable ecosystem for non-institutional landlords and avoiding the ever more scarce supply of rental accommodation.

At the outset, it should be noted that the pressures on landlords that were identified when the research was conducted have been further exacerbated since. Inflation has risen substantially, thereby impacting insurance and maintenance costs and the European Central Bank has raised interest rates by 1.25%, consequently increasing mortgage costs. Absorbing these challenging fiscal circumstances is extremely difficult for our members and is threatening their longevity in the market, which is bad for them, bad for prospective tenants and bad for housing policy. However, the significance of the impact of the foregoing is best understood against a backdrop of the sector more generally. Private non-institutional landlords provide 94% of rental accommodation in Ireland, and 70% of these landlords have five properties or fewer Some 43% of these landlords made the decision to invest in rental property as a means of pension provision and for a majority, rental income represents their sole pension income apart from the State pension. Finally, I wish to draw members' attention to the age demographics of non-institutional landlords. Some 75% are above the age of 50 and 48% are above the age of 60.

This is important to note as taxation issues around inheritance are contributors to landlords leaving the market. On foot of this, our organisations have prepared proposals in the area of taxation and included these in our pre-budget submission, which I will go through now.

On the introduction of a new rate of tax, the IPAV and the IPOA recommend that a new rate on residential rental income of 25%, inclusive of USC and PRSI. be introduced for residential rental profit to encourage small private landlords to remain in the market and to support new investment. We propose that this be funded from the introduction of a tax rate of 25% for all investment funds, including real estate investment trusts, REITs, operating in the residential rental market, which would bring much-needed equilibrium to the treatment of landlords. It is entirely inequitable that two different investors both providing identical product and service can have such disparity in tax treatment. The private investor is taxed at a marginal rate of up to 55% while the private equity funds, the REITs, pays 0% tax on rental profit once they exit the market within a defined period. While this practice is riddled with imparity for our members, it is the loss to the Exchequer that is astounding when one considers that some REITs continue to make rental profits totalling hundreds of millions of euro.

The Exchequer gain from subjecting funds to a 25% rate of tax should be used to encourage non-institutional landlords to stay, through a tax reduction that would allow them to remain viable and continue providing much-needed accommodation to desperate tenants who need a roof over their head. This would ensure the equal treatment of investors and these measures would help with retention and increase supply.

We propose the introduction of roll-over relief in regard to capital gains tax on the sale of all assets where proceeds are invested in residential property within 12 months. This would encourage existing and new investors to reinvest in the market, in short, enabling the retention of supply and incentivisation of new investment.

The IPOA and the IPAV also call for a reduction in capital acquisitions tax, CAT, on the inheritance of residential investment properties. Many families are forced to pay large CAT bills on the inheritance of residential property, which forces the sale of the residential property to fund these taxes. A reduction in the tax charge by reducing the taxable value by 90%, as applies to the inheritance of agricultural property and business assets, should be introduced as a priority for the inheritance of residential property. This would encourage current property owners to pass assets to the next generation, allowing the next generation to remain in the market, and encourage other individuals to invest in the market to take advantage of the relief. This would assist with retention and supply and would, in turn, incentivise new investment.