‘NCT-style test for landlords would improve standards’
LANDLORDS should face an ‘NCT-style’ test to ensure they are compliant with minimum standards for rental accommodation, a new report given to the Taoiseach has stressed.
There have also been calls for relief from capital gains tax when a landlord sells a property with tenants in situ to a local authority or approved housing body, with the tenants becoming social housing tenants.
The National Economic and Social Council (NESC), which has members from across the public, private and charitable sector, published a report on private rental yesterday.
It said that the fall in private rental tenancies is the result of individual landlords exiting the market. ‘There may be a case for providing improved tax treatment of landlords tied to improved security of tenure for tenants,’ the report said.
Germany provided a possible model for Ireland to follow, according to the NESC, with landlords there not liable for capital gains tax if they held the property for at least ten years. In return the sale of property is not a ground for ending a tenancy in Germany.
The Social Democrats housing spokesman Cian O’Callaghan said: ‘If there are plans for tax relief for landlords linking them in with better standards and security for renters, it is a good idea.
‘Ultimately we are out of sync with most European countries for renters. As long as they are paying their rent or not misbehaving they are not subject to eviction, it’s treated as their home.’
He warned that any measures should be ‘targeted’ to ensure that landlords get a benefit but tenants do not see a commensurate change in their conditions, remarking: ‘If they are not designed well, then the concern is you don’t get value from those, the landlords that are staying anyway get a smaller tax bill.’
Mr O’Callaghan said that recent research showed that most landlords were leaving the market regardless of the tax treatment of their rental income.
The report noted that the failure rate in rental inspections in 2021 was close to 90% according to the National Oversight and Audit Commission.
It added: ‘Effective action is needed to address this issue, including consideration of the introduction of a system based on the National Car Test system whereby landlords would be required to demonstrate compliance with minimum standards.’
The report said that an NCTtype system could be based on adaptation of the current system of local authority inspections and could be introduced on a phased basis.
The report also said more research was needed on the effects of Ireland’s rent pressure zones (RPZs).
‘Consideration should be given to whether there is sufficient market sensitivity in Ireland’s model of rent control in situations where rents have fallen substantially below the market rate,’ the research said. The report found that the share of households headed by a person in the private rental sector has increased from 8% in 1991 to 18% in 2016, while the share of owner-occupied housing has fallen from 79% to 67.6% over the same period.
The report stated that ‘some shift’ to private rental was ‘inevitable’ because of the increase in immigration, with 38% of households in the private rental sector having a foreign national as head of household.
A spokeswoman for Housing Minister Darragh O’Brien said that establishing a certification system would be ‘very complex’ and that the potential impact on the supply of rental accommodation ‘can’t be underestimated either’.
She also noted that the Government’s Housing for All plan takes an approach of increasing inspections of rental properties and that there may be a ‘potential extension of the role of estate agents’ to support compliance of rental properties with the required standards.
‘Improved tax treatment’
System would be ‘very complex’