Attention Landlords: Can You Risk being a Landlord under a Sinn Féin Led Government?
Sinn Féin is now consistently, by some distance, the largest party in the country. Their relentless campaigning against the ending of the eviction ban is a foretaste of the potentially hostile environment that may await landlords should SF lead the next Government, as they look set to do. Eoin Ó Broin’s recent retweet of a famine era eviction scene reworked to include Gardai assisting balaclava clad security workers may give an insight into the esteem in which he holds landlords, and an Garda Síochána for that matter.
Rent Pressure Zones have meant that landlords have long since lost control of setting the rate of rent for their properties. 52% tax on rent means that landlords often feel like employees of the State as they hand over any profit they may have made in tax every October. Landlords who have rewarded good tenants by not increasing the rent have been severely punished in terms of the devaluation of their investment as a rental property is valued at a multiple of its annual rent. When the rent is capped at a low level, the property is condemned to a low valuation.
Heretofore, the get out of jail card for these landlords has been to sell to owner occupiers, who are unconcerned by the rental cap, and as such full market value can be achieved. Full employment, a strong banking sector and the relaxing of the macro-prudential rules in January have meant that owner occupiers have been snapping up ex-rentals in their thousands at prices that deliver strong returns for landlords leaving the market. Of course these returns are again taxed at a punitive 33% CGT rate just in case a landlord might actually enjoy some of the fruits of their investment. However, the window for this asset value maximization strategy is closing fast.
Sinn Féin’s recent front bench reshuffle is a signal of intent that they are moving to an election footing, with a general election expected some time next year. If, after that general election, Sinn Féin leads the next Government, the already hostile environment for landlords could become potentially financially ruinous. Were a Sinn Féin Government to implement a permanent eviction ban, in tandem with the rigid RPZ rules, a property’s value would be decimated as the ability to sell to an owner occupier, while offering vacant possession, would be removed. That would land a devastating blow to all landlords.
With the most recent Daft report showing that price growth has run out of steam after a decade of strong gains, the smart money is cashing in its chips and moving on. Thousands of accidental landlords sleepwalked into the RPZ regime unaware that their kindness to tenants in terms of not raising rents would be harshly punished once the rigid caps were introduced. Make sure you’re not one of the thousands who sleepwalks into a new regime for landlords that transitions from the challenging to the potentially unbearable.
One of our landlord clients who recently sold up put it best when he said “what next, expropriation? I’m not hanging around for that - sell it!” Get out now while the going is good!