Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I thank Deputies for their contributions. In my budget 2024 address, I acknowledged the challenges that we face in relation to housing and noted that it remains a top priority for Government. As part of the response to assist renters, I announced an increase of the rent tax credit to €750. This is to assist renters in the private rental sector with the affordability of their rent. The credit will continue to be available until the end of December 2025.

Eligibility for the credit is also being extended to parents who pay for their student children’s rental accommodation in the case of rent-a-room accommodation or so-called "digs”. This change will apply retrospectively to the years 2022 and 2023. Previously, parents could only claim the credit in respect of their qualifying student children in the case of accommodation registered with the Residential Tenancies Board.

The rent tax credit is intended to provide assistance to those in the private rented residential sector pending further progress on the Government's Housing for All strategy. That strategy aims to deliver more homes of all types for people with different housing needs, including those who wish to rent at an affordable price.

The most recent Housing for All action plan update and quarter three progress report published last week by the Department of the Taoiseach demonstrates that housing supply is increasing and notes that the Government fully expects to meet its 2023 delivery target of 29,000 homes. Additional supply will help to moderate housing costs in the purchase and rental sectors.

In relation to making the tax credit refundable, as I noted earlier, the matter of refundable tax credits was examined as part of this year’s tax strategy group, TSG, process in advance of budget 2024. The analysis and findings of the review were published in the income tax TSG paper, which is available on my Department's website. In summary, the review noted that making tax credits refundable could lead to unintended consequences for labour supply, would be operationally and administratively complex and would come at a significant cost. The Government does acknowledge the current challenges it faces in relation to housing. It has acknowledged that too many people are paying too much of their income in rent and this is why, as part of the response, we did increase the rent tax credit to €750 for an individual and €1,500 for a jointly assessed couple in the budget. We are giving effect to that decision in this Finance (No. 2) Bill.

According to the Residential Tenancies Board rent index, rental inflation was at 8.9% as of the first quarter in 2023 but it is important to acknowledge that this figure covers new tenancies only. As such, this increase of €250 was deemed necessary and appropriate to further help renters against the cost of renting and rental inflation. The credit is to assist renters and specifically those who do not receive other housing supports from the State. The increase will apply for 2024 and beyond.

I acknowledge the increasing number of claims that are being made. As of 15 November 2023, almost 312,000 rent tax credit claims have been made by more than 268,000 taxpayer units. That consists of 203,405 taxpayer units that made claims for 2022 only, more than 43,600 taxpayer units that made claims for both 2022 and the current year, and almost 21,300 taxpayer units that made claims for 2023 only.

Reference was made earlier around the need for more information to raise awareness for those who are not claiming the credit. It will feature as part of the awareness campaign that Revenue is finalising, which will be launched shortly to help all taxpayers with the information they need to make sure they are claiming the credits to release the exemptions they are entitled to within our statutory taxation code. I expect the Revenue will complete that work very shortly and we will be in a position to launch that particular campaign.

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