John Leahy MAKING RENTAL PROPERTY A VIABLE INVESTMENT OPTION www.irishlandlord.com MAKING RENTAL PROPERTY A VIABLE INVESTMENT OPTION

The Question… How can we keep existing landlords in the market and attract new investment into the private rented sector? www.irishlandlord.com

I will discuss… The profile of landlords Issues they face Some possible solutions www.irishlandlord.com

What is the profile of landlords? 3 types of landlord REITS Small Investors Pension Accidental Landlords Many are ‘double renters’ www.irishlandlord.com

What is the profile of landlords? 65% own just one property 84% own two or less properties www.irishlandlord.com

A sector in crisis? Landlord sentiment is at an all time low Landlords are selling up Source investopedia www.irishlandlord.com

Why are landlords selling up? Financial Pressure 25,000 BTL mortgages still in arrears Loan books being sold Interest rates will go up Tax Treatment Impact of RPZ Rules Complexity of the Rules and Regulations of BTL Mortgages - are in arrears www.irishlandlord.com

Taxation Residential rental is not treated like a business for tax purposes Other property sectors are, Why? Landlords can pay tax on a loss! Landlords can make a cash loss and still have a tax bill! Need to distinguish between tax treatment and tax incentives www.irishlandlord.com

Up to 131% increase in tax burden Source: DKM Report

Penal Tax Rates Irish Tax Institute Recent Report Effective Tax Rate between 84% and 123% www.irishlandlord.com

Identical Apartments, Same Location, Same Building RPZ Impact Identical Apartments, Same Location, Same Building Property A Sitting Tenant Decent Landlord Rent was €1,000 pm for 3 years Tenant moves out Max new rent based on the RPZ rules - €1,123 pm Property B New to Rental Market Market Rent €1,500 A Difference of €377pm Difference of €477 pm www.irishlandlord.com

Rules & Regulations Current rules are too complex They need to be Fair & Balanced Consistent Understandable “If you want me to do something, I need to understand clearly what is expected of me” A one property landlord www.irishlandlord.com

One Landlords View.. “There is no real rental profit for a small landlord, there are just significant downside costs and risks, a magnitude of rules & tenant hassles. There are no benefits in being a small landlord now under current legislation. I am getting out of the market”  www.irishlandlord.com

What needs to be done Protect EXISTING supply Immediate Actions Too much focus on driving new supply Not enough focus on protecting existing rental stock Immediate Actions Medium Term Actions www.irishlandlord.com

Immediate Actions Restore Mortgage Interest Relief Amend RPZ Rules Current target of 2021 is too late Tax Relief for tenants on rent payments? Amend RPZ Rules They punish decent landlords Have created a two-tier rental market Better termination procedures for non-payment of rent We need a solution for accidental landlords Double Renters / Tax off-set? Pension structure Simplify the Rules & Regulations Better understanding will improve compliance www.irishlandlord.com

Medium Term – A Fresh Approach New Legislative Framework A new Residential Tenancies Act – less complex, more reflective of the current and future market Complete Overhaul of Tax Policy Tax Treatment and Tax Incentives if evidence based New Tenancy Models? Norms of the past should not be assumed to be future norms White Box Look at the model of commercial property sector – FRI leases? A New Investment Model? Simple, cost effective pension based structure Long term holding, long term tenancy Same tax treatment as a pension plan www.irishlandlord.com

The 5 C’s CENTS - €€ Must be financially viable, tax treatment CONFIDENCE – Investors need confidence in the market and the system CERTAINTY – Certainty of rental income, political & policy stability CLARITY - Rules & Regulation (too much ambiguity in the rules & regulations, they are too complex) COMPREHENSION (they need to understand the rules and what is expected of them, information & advice) www.irishlandlord.com

John Leahy www.irishlandlord.com Thank You