Landlord Flight:

You could be forgiven for thinking that this is a message addressed to the UK government, no, it’s a stark warning issued this week to the government of the Irish Republic.

The Republic has been way ahead of the UK government, years in fact, in introducing restrictive legislation, higher taxes, strict regulations and a form of rent control in the Irish rental market. Result: not surprisingly, landlords have been leaving like rats from a sinking ship, and tenants are struggling to find suitable accommodation.

A group representing Irish auctioneers are now so concerned that they are warning the Irish government that its combination of high taxes and over-regulation in the Irish rental market are the cause of landlords leaving.

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The Institute of Professional Auctioneers and Valuers (Ipav) has been citing figures produced by the Irish Residential Tenancies Board that show that there were over 1,700 fewer landlords in Ireland recorded in 2018 than there were three years ago.

Is this a lesson for the UK government? Will they take notice when introducing changes resulting from the current consultation on tenancy reform in England?

A New Deal for Renting Resetting the balance of rights and responsibilities between landlords and tenants: A consultation, can be viewed here

The Irish Ipav described their situation as the “tip of the iceberg” as they expect the number of landlords offering rental properties to the Irish public to have dropped yet again when the 2019 figures are released.

Ipav’s chief executive Pat Davitt says that high taxes, excessive regulation and irresponsible tenants were the top reasons given by landlords for leaving the market, when he told the Irish Examiner:

“This very much ties in with the experience of our members,”

“Many private landlords pay tax rates of 55% on rental income and are subject to stamp duty and capital gains taxes on sales,” he explained.

“Yet commercial landlords in the build-to-rent sector pay little or no tax.

“Investment in the private rented sector has become a deeply unattractive proposition for the private landlord, despite record high rents,” he added.

Reflecting what appears to be exactly the situation in England and Wales, Mr Davitt said that perceptions rather than reality often influence political debate and ultimately, policy. Perhaps the media can be blamed for some of this? He called on the Irish government to improve the tax situation for landlords in the forthcoming Budget.

He also issued the warning that if the situation, as far as landlords are concerned, is not improved: “We can expect more private landlords, who are the primary providers of accommodation for the less well off, to flee the market.”

In 2017, nearly one-million people (895,600) were living in rented accommodation in Ireland. The equivalent figure in England is much higher.

According to the latest available figures from the ONS for the UK:

  • The number of households in the private rented sector in the UK increased from 2.8 million in 2007 to 4.5 million in 2017, an increase of 1.7 million (63%) households.
  • Younger households are more likely to rent privately than older households; in 2017 those in the 25 to 34 years age group represented the largest group (35%).
  • Households in the private rented sector are getting older; between 2007 and 2017, the proportion of household reference persons aged 45 to 54 increased from 11% to 16% while those aged 16 to 24 dropped from 17% to 12%.
  • As at financial year ending (FYE) 2017, 62% of households in the private rented sector in the UK had spent under three years in the same accommodation and only a small proportion (4%) had been in the same residence for 20 years or longer.
  • Northern Ireland has the newest private rented dwelling stock (38% built after 1980) in the UK, while Wales has the oldest (43% built pre-1919).

[Image: The Ha’penny Bridge, or the Penny Ha’penny Bridge, and officially the Liffey Bridge, is a pedestrian walkway built in 1816 over the River Liffey in Dublin, Ireland. It’s a cast iron bridge from Shropshire, England.]

2 COMMENTS

  1. The evidence is overwhelming, if you make the returns too low from renting properties and the regulations too taxing, the landlords will leave.
    Simple demand and supply economics. Like rent controls – they only succeed in making less rented accommodation available, make what remains of lower average quality and they also reduce supply of new build to rent too.
    This is true everywhere in the world and at all times.
    But there are votes in simple sound bites and sound bites that gets votes trumps economic logic, every time.
    https://www.lettingfocus.com/blogs/2016/05/rent-controls-london/
    David Lawrenson

  2. The Irish Govt reached a tipping point where it realised belatedly that it would need to reverse all it’s anti-PRS regulations.
    Not sure where that tipping point might be in the UK PRS.
    It could be conjectured at length as to when such a point might be reached.
    Not sure if the Irish experience can be projected onto the UK PRS.
    However there must be some connection and so the Irish experience is surely worth considering as to what might happen in the UK market.
    I fear the UK Tory Govt will be so overwhelmed by what it perceives as political imperatives that they will continue with their destructive policies until it becomes politically unsustainable.
    When that might be is anyone’s guess!!
    In the meantime I believe the PRS will continue shrinking substantially.
    I cannot see how that would be socially advisable.
    At least with a private rental property tenants have somewhere to stay.
    Without PRIVATE HOUSING PROVIDERS there simply is simply insufficient other accommodation available in the numbers required.
    But this problem will continue as long as there is MASS UNCONTROLLED IMMIGRATION.
    This is NOT the fault of the migrants it is simply the case that the existing UK infrastructure is insufficient to cope with such uncontrolled immigration.
    It is simply not possible to build your way out if the problem.
    Demand needs to be controlled to give the UK a chance to build the infrastructure to cope with the mass immigration to date.
    BTR CANNOT be relied upon to replace the small LL.
    In case Govt hadn’t realised rent control proposals by Labour would put a substantial dampener on the appetite of those who may be considering investing in the BTR market.
    BTR needs and requires ever increasing rents to provide the dividends that investors require.
    An investor facing restrictions on how much money he may make is hardly likely to invest that much in such a market.
    Aside from that the BTR operators are inclined to invest only in markets where they may achieve higher rents.
    BTR while a very useful part of the PRS is nowhere near ever being likely to replace the small private LL.
    Like it or not the small LL us a vital part of the PRS and needs to be encouraged rather than discouraged.

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