Donohoe Ignored Official Advice on Rent Tax Credits

Officials told Paschal Donohoe that rent tax credits would cause rents to go up for people who don’t live in areas where rents are high. In the Budget, the government gave renters a tax credit of €500. This will cost €200 million a year. BusinessPlus communication.

ie shows that people in the Finance Department were worried. In an August briefing note on property-based tax incentives, it said that a landlord’s “rational response” to tenant relief would be to raise rents in a “heavily skewed rental market.”

The memo said that this is a financial benefit for tenants in a rent pressure zone (RPZ) because this isn’t possible above 2%. Landlords may raise rents on new leases or outside of RPZs to take advantage of tenants’ increased purchasing power.

Official statistics on “rent inflation” only include new leases, so there are gaps in the data. Officials warned that tenant relief could “make the official rate of rent inflation worse.”

75% of renters live in RPZs, so the rent could go up for the other 25%. Pearse Doherty, who is in charge of money for Sinn Féin, asked for a tax credit and a rent freeze. The government says that putting a limit on rents would make less housing available.

Mr. Doherty pointed to comments made by Mr. Donohoe earlier this year when he said that a tax credit for renters would “very likely” involve a transfer of Exchequer money directly to landlords, “which would not reduce cost pressures on tenants.”

Sources in the government say that Sinn Féin’s plan for tax credits is underpriced at €302.9 million and could cost three times as much. Sinn Féin proposed a refundable tax credit of up to €1,500, which would be equal to 8.3% of the annual rent paid per tenancy.

Donohoe Ignored Official Advice on Rent Tax Credits

“It’s for each rental, not each renter. People who get social housing help like Housing Assistance Payment, Rent Supplement, and Rental Accommodation Schemes can’t get this refundable tax credit.”

The number came from the Residential Tenancies Board, the spokesman said. He said that if you took out the social housing tenants, there would be 206,000 tenants who could get tax credits.

The price is based on RTB’s average new rent. Existing rents are less than new rents, so the estimated cost is likely high.

A spokesman for the Housing Department said that the two departments looked at different options, such as a €1,500 credit. He said it was a “normal and healthy way to make decisions.”

He said that more housing would ease rent pressure in the middle term. A spokesman for the Department of Finance brought up the argument between Donohoe and Doherty last week.

Mr. Donohoe changed his mind about rent credits because so many landlords have left the business and “because inflation has made things worse for everyone, especially tenants.”

More to Read: