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Important legislative changes impacting short-term lettings

It has been a busy week of news for the rental market, with the latest housing market monitor from Banking & Payments Federation Ireland (BPFI) showing that average rent in Ireland has increased by 82 percent since 2010. This is multiples greater than the EU average increase over this period of 18 percent. In fact, of all EU nations, Ireland saw the third largest increase in rents since 2011. Average monthly rent across the county now stands at €1,700 per month.  

In terms of house prices, the average increase over the same period was 55 percent in Ireland, as compared to less than 50 percent across the EU. The key takeaway from BPFI’s latest report is that high demand, driven by population growth and “considerable pent-up demand”, means that house prices are likely to continue to rise until supply increases substantially. For 2022, house prices across the country rose by an average of 10.8 percent year-on-year. 

Other more critical news for the industry this week included the establishment of a ‘Short-Term Tourist Letting Register’ through proposed new legislation. The changes impact all properties – in any location – that are advertised for short-term letting up to and including 21 nights. Essentially, any online listing, on any platform, will require a valid registration number, which will be provided by Fáilte Ireland. The Bill was championed by Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media, Catherine Martin, TD, and approved by the Government this week. The Minister also announced the “priority drafting” and publication of the Bill.

On the face of it, the stated ambition of this legislative change is to “provide a level playing field for all accommodation providers by ensuring transparency and visibility across the sector… the register will allow Fáilte Ireland, for the first time, to have a full picture of the stock of tourist accommodation across the State”. More importantly, registration with Fáilte Ireland will provide the Department of Housing and Local Authorities with an accurate register of all short-term letting stock across the country as the current regime of securing planning for short-term rentals does not appear to be working.

It is estimated that this move will impact more than 12,000 properties in Ireland and the expectation (or hope?) is that these 12,000 will come back into the long-term market. To minimise disruption, property owners who need to apply for change of use planning permission may continue to offer their accommodation as tourist accommodation while their application is being considered, for a time limited period of up to six months. The new legislation is due to be enacted in Q1 2023.

Finally, non-institutional Irish landlords based overseas are to face financial penalties as the Revenue Commissioners tighten rules around rent collection and tax declarations, according to a news report in The Irish Times this week. Until now, Revenue has adopted a “relaxed approach” to rules that require landlords either to appoint collection agents in Ireland if they are based overseas or have their tenants deduct 20 percent of the rent and pay it directly to Revenue. However, in a recent update to its Tax and Duty Manual, Revenue has warned that landlords must be fully compliant with the rules from this year or face financial penalties. 

Ian Lawlor
086 3625482

Managing Director 
Lotus Investment Group