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

I thank the Deputy very much. Landlords are an essential feature of a functioning housing market. Rising rents are driven by a shortage of supply, so stabilising and increasing the supply of rental properties should ease upward pressure on rental prices and make it easier for prospective tenants to find affordable homes.

The new residential premises rental income relief is a tax relief at the standard rate of 20% against private rented residential income. The purpose of this relief is to provide an incentive for landlords, specifically targeted at attracting and retaining small-scale landlords in the private sector.

The relief will be €3,000 in the tax year 2024; €4,000 in the tax year 2025; €5,000 in the tax year 2026 and €5,000 in the tax year 2027. This will equate to a tax credit of up to €600 in year one, €800 in year two and €1,000 in years three and four. The relief is capped at the individual's tax liability on rental income from residential property.

As the Deputy will be aware, the potential for deadweight was considered as part of the process of creating this relief and it was determined that, as with most tax reliefs, there is, indeed, an element of deadweight in the scheme. On balance, however, this measure is worth implementing and is necessary to retain small landlords in the rental market. To mitigate the issue of deadweight as much as possible the relief is targeted and is only available for the tax years from 2024 and ends in 2027, is capped at the individual's tax liability and rental income from residential property, relates only to tenancies registered with the RTB or where a landlord leases a property to a public authority. Equally, a relief will be clawed back if at any point within the four years of the first year of assessment in which the credit was claimed the landlord disposes of any of the residential rental premises owned in the first year in respect of which a claim was made. The first-year cost of the relief in 2024 is estimated to be €45 million. Compared with the rent tax credit I announced in the budget, this measure is estimated to cost an additional €88 million in terms of the increase in that credit to the already €200 million it was previously estimated to cost for 2024.

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