In June last, the Government published Action on Housing, which set out a comprehensive package of measures, taking account of recommendations made by Dr. Bacon in his report and including a range of improvements to the social and affordable housing schemes. It is too early to assess the full impact of the measures taken in Action on Housing, but the indications to date are positive. House price increases are moderating, housing output has increased and first time buyers are gaining an increasing share of the new housing market.
Stamp duty changes introduced in Action on Housing were designed to ease the burden on first time buyers and owner occupiers and to discourage speculative investment which was negatively impacting on the ability of first time buyers to enter the market. A temporary anti-speculative property tax was also introduced to discourage short-term speculative investment by those seeking to make a quick capital gain, with exemptions for landlords who comply with specific regulatory requirements, indicating a commitment to the long-term availability of the accommodation for renting. The measures introduced to discourage speculative investment do not affect the existing supply of rented accommodation. On the other hand, speculative investment provides little long-term accommodation in the rental sector and by driving up house prices also fuels rent increases. The increasing share of first time buyers in the market, as a result of measures to curb speculative investment, should ease somewhat the demand for private rented accommodation and moderate the rate of increase in rents, as those potential first time purchasers had previously been forced into private rented accommodation.
Measures to improve the position of tenants in the private rented residential sector have been introduced in the last two budgets. The ceiling for income tax relief in respect of rent paid by tenants under 55 has doubled. In the case of tenants over 55 a doubling of the ceiling, coupled with standard rating of the relief means that 80% of such tenants gain a doubling of relief. Further measures to increase the availability of private rented accommodation announced in the recent budget include a rent-a-room scheme which provides for an exemption from income tax in respect of gross rental income of up to £6,000 per annum, for accommodation provided in a person's principal private residence.
Additional Information.This measure will facilitate the provision of accommodation thereby easing the pressure on the private rented sector and will improve the utilisation of the housing stock.
I understand that the projected increase of 20% in rents referred to by the Deputy relates to rental properties in premium locations in Dublin and not the wider private rented residential market.
I established a Commission on the Private Rented Residential Sector which reported in July last. The commission identified a growing need for accommodation in the private rented sector and set out a number of recommendations to increase supply, including recommendations aimed at increasing long-term investment in private rented accommodation. The commission also recommended improvements to the regulatory regime for the private rented residential sector with a view to ensuring full compliance with the requirements of the regulations on registration, rent books and standards. The Government is considering its response to the report of the commission.
