Mr. John Kennedy:

I thank the Chair for inviting us today. I am John Kennedy, president of the Institute of Professional Auctioneers and Valuers, IPAV. I am joined by Ms Lisa Kearney, senior vice president of IPAV.

IPAV has more than 1,500 members. We operate a comprehensive system of professional education and development for members and for those wishing to enter the profession. IPAV welcomes the introduction of the residential premises rental income relief and the mortgage interest tax relief in budget 2024.

In regard to the mortgage interest difficulties at present, the challenge with increased rates for borrowers is the ability to fund these. Many borrowers were taken aback by the pace of mortgage rate rises last year and cashflow difficulties arose for many. On the extra repayments, four scenarios arose. Borrowers funded the increase from surplus monthly salary or from savings as there was no surplus salary to absorb the extra cost. This may not be sustainable for many as the borrowers' savings could erode. In another scenario, borrowers were not able to meet the extra repayment or borrowers moved their mortgage from tracker to fixed rate mortgage, so they had certainty for the fixed term.

In our submission document on this matter, we recommended that relief interest is capped at €10,000 to give a maximum income relief of €2,000, which is €166.66 per month; the outstanding loan balances range of €80,000 to €500,000 should be removed, for example, the range penalises a mortgage holder who has say €50,000 of a mortgage to, on the other hand, a mortgage holder of say €750,000 of a mortgage; and we are concerned about the requirement to file a tax return to obtain the relief, given it is well known that considerable refunds are not claimed by normal PAYE taxpayers. We recommend the aim that borrowers' bank credits, the refunds to a bank account nominated by the mortgage holder directly, be given in February 2024 as a lump sum refund. As of this morning there was a submission from an accountant to try to log the actual tax refund; it is not available currently with the Revenue Commissioners to submit and get the actual refundl. I do not know whether the committee is aware of the fact that the actual Revenue software system does not support the refund at the moment.

On investment property owners' difficulties, rental income is taxed at between 52% to 55% for higher rate taxpayers. Investment property owners are allowed to deduct property expenses and mortgage interest but the actual mortgage repayment is not deductable. If investment property owners purchase fixtures they do not get a full deduction in the year of purchase but get a deduction for 12.5% of the cost of the fixture over eight years. Given the above, different scenarios arise for investment property owners - a cashflow deficit whereby the investment property owner either has to fund the deficit from savings or monthly income but the reality is that owning the property is costing the owner; a cashflow surplus arises whereby the surplus can be small, moderate or substantial; or the property is break even.

Many investment property owners are normal PAYE tax workers, who may be accidental landlords. Common examples would be an owner who would have bought a small property and subsequently got married so needed to purchase a bigger property for their family, or someone who bought an investment property, or properties, many years ago or inherited a property. Clearly, in a scenario where a deficit arises for an investment property owner, it is not sustainable for them to retain the property. The big challenges they face at the moment are a high income tax liability on the rental income each year and increased mortgage repayments. Many investment property owners find themselves in a straitjacket as a result and reach the conclusion that they cannot afford to continue in this loss situation. In our submission document on this matter, we recommend that the relief should be increased by a further €200 per year and be given in the form of a credit, like the married credit. For a landlord who has a section 23 property - that is probably less prominent now - in reality they will not benefit greatly from this so we recommend the relief be given as a form of credit, as outlined. For a landlord whose expenses exceed the rental income in a tax year he or she will have a taxable loss so do not appear to be able to avail of this and, hence, we recommend the relief be given as a form of credit, as outlined. Finally, we are concerned about the clawback provision and recommend that this be removed. The sentiment on the ground is that any sort of conditions are feared by the landlords. Whether significant or not, that has not been communicated and they are not. They are afraid to avail of the tax credit, which is an issue because they fear that there are other conditions buried in that.

In summary, we welcome the changes but feel greater supports are needed, and changes should be simple and straightforward in their implementation. I would also like to echo some of the comments of Mr. Hall who spoke very eloquently.