Brendan Griffin (Kerry, Fine Gael)
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186. To ask the Minister for Finance if he will consider the introduction of a tax-free allowance for landlord's rental income in line with rent supplement caps; and if he will make a statement on the matter. [35005/16]

Michael Noonan (Limerick City, Fine Gael)
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I assume that the Deputy's proposal would envisage a tax free allowance for rental income received from a tenant in receipt of rent supplement, and not a general tax free allowance for all residential landlords in respect of rental income from all tenants in line with rent supplement caps.

To introduce a tax exemption for rental income received in line with rent supplement caps would, in effect, see the State provide a double subsidy: first to the tenant who is in receipt of the housing support, and second to the landlord who receives the income tax-free.  Such an incentive could also give rise to distortions in the housing market. It would incentivise landlords to only accept tenants in receipt of rent supplement, and as a consequence put increased pressure on tenants currently renting in the private market, which could potentially result in increased need for social housing supports. It could also create particular difficulties for tenants who transition out of rent supplement for example as a result of gaining employment or increased income as their landlord would be incentivised to end the tenancy in order to continue renting to a person in receipt of rent supplement.

The Deputy may be aware that last year in Budget 2016 I introduced a new incentive to encourage landlords to commit to letting their property to tenants in receipt of social housing supports for a minimum period of three years.  The incentive acts by allowing such landlords to claim a deduction for 100% of qualifying mortgage interest relief, in place of the 75% deduction which currently applies in respect of rented residential property in general.  This was introduced as a time-limited measure, specifically targeted to improve certainty of supply of rental housing for such tenants.

In Budget 2017, as part of a package of measures designed to support housing supply, I announced that a full 100% deduction of qualifying interest for all residential landlords will be restored.  However in order to preserve the current incentive for landlords to house tenants in receipt of social housing supports, full deductibility for other landlords is being restored on an incremental basis over the next 5 years.

It is my view that these measures are more appropriate than a tax free allowance of the nature proposed by the Deputy.