Confirmed: Tax changes would have kept 44% of former landlords in the market and the eviction ban is not working

“One in five said they would have considered keeping their properties if renting was more profitable, and a third said they would not have sold if there was less regulation….”

According to two key indices published this week, the value of Irish investment properties decreased in 2022 and the decline accelerated in the last quarter of the year. The MSCI/SCSI Ireland Quarterly Property Index, which monitors over €9 billion of direct Irish property assets, saw a 4.5 percent decline in capital values in Q4, bringing the annual rate of decline to 6.2 percent.  The latest JLL Property index reported similar trends and shows a decline over the last six months to 6.6 percent. The decline is attributed to increased interest rates and investor return requirements. The report points out that despite the decline, investors still have a requirement to invest in real estate, but it is a matter of timing and having a verifiable pricing base through transactions to reinstate stable values. Industrial property in south west Dublin was the strongest as values rose by 5.9 percent. The largest and most liquid market, central Dublin offices, posted a -4.8 percent value decline. Retail values declined by 4.5 percent in Q4 and by 6.2 percent for the year, and residential investment property values declined 4.1 percent over the last six months of 2022.

In other news – that will not be surprising to many here – a recent survey conducted by the Residential Tenancies Board (RTB) confirmed that two in five former landlords say tax breaks would have prevented them from leaving the rental market. The survey questioned 100 landlords who had recently sold their properties, and found that around 44 percent of them would have considered not selling if they had to pay less tax. 49 percent indicated that nothing could have prevented them from leaving the sector as they wanted to sell for personal reasons. One in five said they would have considered keeping their properties if renting was more profitable, and a third said they would not have sold if there was less regulation.

The RTB also noted that the most common reason for eviction notices from autumn 2019 to spring of last year was because the landlord intended to sell the property. While landlords are required to keep the register of tenancies up to date, the RTB reported low compliance, with landlords failing to remove properties once lease agreements had ended. However, landlords are now required to register their properties annually, and those that are not registered are automatically removed from the register, giving the RTB more accurate and up-to-date information on rental properties. 

Better rental data is to be welcomed, but it needs to feed directly into policy making, which does not appear to be happening at the moment. Speaking on Newstalk earlier this week, Financial Advisor and Analyst Karl Deeter stated that there is no evidence that the eviction ban put in place last November has actually worked and has actually resulted in an increase in homelessness. The ban is in place until April 1st and despite the evidence that it is not working, it may well be extended.

Ian Lawlor
086 3625482

Managing Director 
Lotus Investment Group