Landlords: Is Now the Right to Sell?
If you’re a landlord in Ireland, then now could be the right time to sell. You wouldn’t be alone: hundreds of landlords are leaving the rental market citing soaring house prices, onerous legal changes and the end of Captial Gains Tax (CGT) relief.
Why are landlords selling up?
Figures from the Residential Tenancies Board show that increasing numbers of landlords are leaving the rental market. Eviction notices issued to tenants rose from 352 in the first quarter of 2021 to 958 in the final quarter. Over half were given because the landlord wanted to sell up.
So, what’s behind this sudden exodus? Certainly, three major factors are at play:
- CGT relief has expired
- Rising house prices
- Tenant-focused legal changes
CGT relief has expired
The Irish government previously implemented a scheme whereby gains made on certain properties were exempt from CGT. The property had to be purchased between 7 December 2011 and 31 December 2014. It also had to be held for less than seven years for the full relief to apply.
For those who acquired a property in 2014, December 2021 was their last chance to sell and enjoy the full CGT exemption. This prompted many investors to put their property on the market.
If you bought under this scheme and you still own the property, then relief will be given for the first seven years. However, CGT will be incurred going forward. This will accumulate, so you might prefer to sell sooner rather than later, thereby limiting your tax liability.
Rising house prices
In 2021, house prices in Ireland rose by 14.4% nationally. They’re still climbing in many parts of the country. If this trajectory continues, it won’t be long before house prices exceed those seen in 2007. This presents an excellent opportunity for landlords who are no longer in negative equity, or who simply want to reap the rewards of a seller’s market.
The other option is, of course, to hang on a little longer. However, the government imposed further rent controls at the end of 2021. There is also concern that Ireland could see a 2008-style economic crash. Given these considerations, cashing in now might be an attractive proposition for many.
Tenant-focused legal changes
The Residential Tenancies Act was enacted in July 2021. It includes a number of tenant-focused protections, such as capped rents in rent pressure zones (RPZs). Margaret McCormick, information officer for the Irish Property Owners Association, called the law “needlessly bureaucratic”. She said “it’s legislation only barristers can understand.”
Then there are the added rules imposed by the Residential Tenancies Board (RTB). Amongst other things, landlords must register the tenancy with the RTB and update them of any changes. The RTB can investigate, caution and sanction landlords who break their statutory obligations.
Experts say the rules and regulations are forcing landlords out of the market. Either they cannot sustain the property due to the low rental cap. Or, they simply haven’t got the energy to figure it all out. All in all, they would rather sell than risk being penalised by the RTB.
Is now the right time to sell?
In weighing up these factors, many landlords are concluding that now is the right time to sell, before the market cools again. If you are one of them, we can help. We have a dedicated property team who can manage the conveyancing process for you. We work closely with investors and landlords, so we completely understand the unique pressures you face.
Speak to our property solicitors
If you are a landlord and want to discuss selling or buying a property, contact us at Mullins & Treacy LLP Solicitors. We are client focused and results driven.
Call us on 051 391 488 or email firstname.lastname@example.org for a no obligation enquiry.
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