Time for “significant’ government intervention for residential landlords
In its most recently published report, Sherry FitzGerald estimates that around 21,000 property transactions in the state’s residential market last year involved landlords exiting the market due to high taxes and complex tenancy laws. The departure of these landlords is deepening the already-chronic undersupply in the rental market. The estate agent expects the trend to continue – as it has since 2018 – leading to a further drop in rental supply, unless there is “significant” government intervention. Frankly, the increase in Pre-Letting Expenses for landlords is nowhere near enough to keep them in the marketplace.
The report welcomed the increased supply of homes last year, but warned that construction activity is likely to slow down in 2023. House prices are expected to grow by 3 percent this year, but there is a significant difference in price trends between Dublin and the rest of the country, which may converge in the future.
In wider housing news, the government released the latest Housing for All progress report. The initiative, which launched in 2022, aims to provide affordable and accessible housing to all citizens. Despite facing numerous challenges, the report showed that the target for housing supply was exceeded in the first full year of the initiative, with almost 30,000 (29,851) new homes completed, exceeding the target by over 20 percent. This was achieved by increased funding for the Affordable Housing Fund and the Cost Rental Equity Loan, the extension of the Help-to-Buy Scheme, the funding of €94 million to local authorities to address legacy land debts, and the publication of the Residential Zoned Land Tax Maps.
It is fair to say that the State scheme has benefited from the industry more than the industry has benefited from the scheme to date, and the delivery forecast for 2023 is well below the 2022 figures. However, there have been some important new initiatives introduced as part of Housing for All that have yet to make an impact, including Construct Innovate, Ireland’s Construction Technology Centre, which has been created to accelerate research and innovation in the construction sector. The government also published a report on the Analysis of Skills for Residential Construction and Retrofitting 2023-2030 along with an Action Plan to attract and retain the necessary workforce, which is most welcome. Also, the Vacant Homes Action Plan, which we are particularly excited about, has been developed to incentivise the conversion of vacant properties into homes.
Despite the progress made, the report acknowledges that the high inflation and rising interest rates have had a negative impact on the financial viability of home development. The government is addressing this through schemes such as Project Tosaigh and Croí Cónaithe (Cities) Scheme.
The Taoiseach, the Tánaiste and Environment Minister all commented on the progress report, emphasising the government’s commitment to providing affordable and accessible housing to all. They acknowledged the challenges faced in achieving this goal, but emphasised the government’s determination to solve the housing crisis and its commitment to reversing the trend of falling home ownership and rising homelessness. Time will tell…
Lotus Investment Group