Landlords must commit to stay in sector to win tax breaks, says McGrath

Michael McGrath has said landlords must commit to stay in the rental sector (Cillian Sherlock/PA)
Michael McGrath has said landlords must commit to stay in the rental sector (Cillian Sherlock/PA)

Finance Minister Michael McGrath has said he is examining measures that would see landlords giving commitments to remain in the sector in exchange for budgetary support.

Government ministers have previously said they are examining measures for both tenants and landlords in the upcoming budget.

Speaking on Thursday, Mr McGrath said: “I have indicated that I am examining taxation issues relevant to the rental sector, both for tenants but also for landlords.

“I think we do need to bring some stability to the rental sector and, for me, the key issue is getting a commitment that we will have a stable supply of rental accommodation over the medium to long term.

“So, it is very much through that prism that I will be examining what we can do to ensure that we retain the existing landlords that we have, and that we also make it more attractive for investors to come in to provide rental accommodation which we know is so badly needed across the country.

He added: “This is an area that I am examining closely, and I do think it’s important as we seek to bring some stability to the rental sector that this would involve a commitment to remain in the sector.

“So we have to stem the tide; the exodus that we have seen in recent years of landlords leaving the market.

“Now, I don’t think tax is the only reason why they have been leaving, I think for some it has been a factor.

“But there are other reasons including increased interest rates, the fact that many are now out of negative equity can see their way to clear a loan and exit the market; some may be concerned about the direction of policy in the future.

“But I do think it’s important, considering any changes to our taxation system, that it is linked to a commitment to remaining and actually staying in the market over the period ahead.”

Minister McGrath was speaking to reporters at Government Buildings for the publication of the annual taxation report.

The report examines the Irish tax system from a long-term, structural perspective.

The Department of Finance said the latest report details the concentration in the tax revenue base at a sectoral level.

While the public finances are heavily reliant on a relatively small number of taxpayers and large multinational firms, the tax base is also concentrated in a small number of “tax-rich” sectors.

The report particularly highlights the importance to the public finances of the ICT sector which, in spite of widespread lay-offs, saw continued overall employment growth in the year to the end of June.

The ICT sector now accounts for some 10% of income tax revenues and about 35% of corporation tax receipts – when including ICT manufacturing.

Elsewhere on Thursday, the Central Statistics Office announced the employment rate for persons aged 15-64 years was 74.2% in Quarter 2 2023, which was the highest rate recorded since the series began in 1998.