Gerald Nash (Louth, Labour) | Oireachtas source

I welcome the opportunity to speak on this motion on behalf of the Labour Party. The Minister knows that we are in the midst of a real cost-of-living crisis. The reality is that we have faced an affordability crisis in our housing and rental market for far longer.

Over the past year alone, we have seen house prices in County Louth experience double-digit growth with young couples from places like Drogheda, Dundalk, Laytown, Bettystown, east Meath and all across the constituency unable to settle down close to their families, friends and wider support networks. Like people across the country, they remain caught in a vicious cycle of not being able to find an affordable home while being caught in a dysfunctional rental system that continues to eat up their weekly wage cheque and savings.

Rents in County Louth, for example, are now well in excess of double what they were during the last recession, with average rents in the county standing at just under €1,400 per month. The situation is much more acute in the Drogheda area. Average rental prices in County Louth are now an astonishing 118.7% higher than at their lowest point during the last recession. In the last 12 months alone, rents in Louth have increased by more than 8%. This is at a time when many people have been left out of pocket from the pandemic because of the impact on their employment or business and when other costs are also rapidly rising.

Not only can our young people not afford rent; many are lucky if they can even find a place to rent. Last week in Louth, for example, there were just 54 properties available to rent and this is in a county with a population in excess of 130,000 and growing. We should spare a thought for the young retail worker, childcare worker or single mother operating within thisHunger Games-style rental market. Imagine the feeling when they click on to a room-to-rent advertisement that has more than 2,000 views or when the prospective landlord tells them that he or she had 500-plus other inquiries about a room. That is something I know everyone across this Chamber has experienced from representing their constituents day in, day out. Even if a person is lucky enough to get a viewing, he or she will often be only one of many. This desperation inevitably feeds into a diminution of standards. It pushes up prices, as many have no choice but to accept the miserable offer that is available to them. This is not some distant reality.

In this very House, political staff - people working in our national Parliament - are forced to live at home with parents, unable to find even a room to rent at an affordable price. This is apart from the skyrocketing cost of living and energy prices, which are making it nigh on impossible for many renters to get by each month. It is no exaggeration when the head of Threshold, which is on the front line of our rental crisis, says many people are cutting back on other essential expenditure such as food or heat. That is the reality of life at the moment.

I remember 2012 and 2013 very well. The economy started to move again and housing demand in cities and large towns grew, but access to finance for builders hardly existed. This is not that long ago. Access to skilled labour was very limited, with many of those skilled tradespeople having to emigrate to find work because of the economic situation in this country. Institutional investors were the only entities prepared to build to any scale at that point. However, time does not stand still and the time is long since past for stronger regulation and fair taxation of these funds. This is not 2012 or 2013. The economic and financial situation is markedly different today. Yet, from 2016 to 2020, we saw the then Government add fuel to the flames of an overheating housing and rental market by allowing institutional investors to operate with free rein and unencumbered, with no change worth talking about in terms of the tax or regulatory regime applied to these funds. Last year alone, we saw large investors pay more than €2 billion for nearly 5,000 private rented sector properties, with institutional buyers paying up to 32% more for each residence compared with the average price paid by household buyers.

I am aware of situations in my home town of Drogheda where young first-time buyers are competing with funds for fairly modest former local authority homes, for example, in which they might start a family before later, potentially, moving elsewhere. They cannot compete because funds are buying up these properties en masseeven before they are publicly advertised. We know the average first-time buyer simply cannot compete with these funds but a question we do not ask ourselves often is why institutional investors are willing to pay so much above what might be the market rate. In short, it is because they believe in Ireland's property market and have the confidence that, with the odds heavily stacked in their favour, it is a safe bet. That requires some reflection. We cannot allow institutional investors to continue to rake in virtually tax-free profits off the backs of workers in the real economy.

In successive budgets, the Labour Party has called for a package of measures to rein in cuckoo funds, including an increase in the dividend withholding tax to 33% on real estate investment trusts, REITs, and Irish real estate fund, IREFs, a minimum 10% stamp duty levy on bulk sales of apartments to private investors and an increase in stamp duty on non-residential property and €1 million-plus purchases. We have repeatedly called for the scrapping of capital gains tax, CGT, relief under section 604A of the Taxes Consolidation Act 1997, which might once have served a purpose but is now costing the State more than €500 million in tax expenditures. This funding would not only help to stem the dominance of institutional investors but would also serve as an important source of additional capital funding to local authorities and approved housing bodies.

I turn briefly to the Labour Party amendment, which recognises the broader issue of taxation of rental income. We know the majority of landlords - more than 85% - own only one or two properties. These landlords, like institutional investors, must be, and are being, properly regulated and they also must be taxed fairly and consistently to ensure a fair playing field for all. The Labour Party believes this income, like any other source of income, should be progressively taxed. We cannot allow a situation to continue whereby the worker who pays the rent is liable for tax while the landlord who collects it has a different experience. That is the reality of the situation at present. There will be scaremongering in certain quarters that this would lead to a further exodus of landlords from the property market but there is no evidence whatsoever to back up that unsubstantiated claim. When we look at the difference between mortgage repayments and average rental costs, it is clear the majority of landlords can well afford a modest tax on their rental income. Indeed, it would be foolish of them to leave the market for tax reasons alone.

We need to see consistency. As our amendment proposes, taxes on rental incomes should not be any less than the marginal tax rate levied on income from work. That is the fairest, most consistent and most equitable thing to do. The Labour Party fully supports the principles of this motion and we call on both Opposition and Government parties to accept our amendment to ensure full and fair taxation of rental income.

See this speech in context