Pearse Doherty (Donegal, Sinn Fein)
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183. To ask the Minister for Finance his plans to ensure real estate investment trusts, REITs, do not charge excessive rent given their preferential tax treatment; and if he will make a statement on the matter. [23316/18]

Paschal Donohoe (Dublin Central, Fine Gael)
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Real Estate Investment Trusts (REITs) are collective investment vehicles designed to hold rental investment properties in a tax neutral manner. They are focused on long-term holding of income-producing property as opposed to short term speculative gains.

The function of the REIT framework is not to provide an overall tax exemption, but rather to facilitate collective investment in rental property by providing the same after-tax returns to investors as direct investment in rental property and removing a double layer of taxation at corporate and shareholder level which would otherwise apply.

The issue with price inflation in the private rental market is the same as that in the market more generally – lack of supply. In fact, lack of supply in the private rental market is more acute than in the owner occupier sector. Recent reports from industry participants show that there are record low levels of properties available to rent. Such scarcity is naturally driving up the market rent.

As a response to unsustainable rent increases the Government has introduced Rent Pressure Zones (RPZs). RPZs have their legal basis under the Residential Tenancies Acts 2004-2016. The Rent Predictability Measure under section 19(4) of the Acts, which limits annual rent increases to 4%, applies to every dwelling in an area designated as an RPZ, irrespective of whether the dwelling is owned by a REIT or a private individual, subject to limited exemptions under section 19(5).

57% of all tenancies are now in a designated RPZ giving full rent certainty to tenants. These measures are starting to have a positive impact. According to the Residential Tenancies Board (RTB) in Q4 2017 rents in Dublin increased at their lowest rate since 2013.

However, the only way to permanently tackle high rent inflation is to increase supply. That is why Government policy is focused on increasing investment in both the owner occupier and private rental sectors.