There is an “inherent paradox” that if you are a provider of the rent-a-room scheme your tax situation is “highly favourable” compared to smaller landlords with registered tenancies, the national housing charity has said.
John Mark McCafferty, chief executive of Threshold, said those who are renting a room should enjoy “a number of circumscribed rights” as they “effectively have no rights”.
Mr McCafferty was speaking as the charity released a survey on Thursday that found owning a home is becoming a more distant dream for renters, with two-thirds of clients saying affordability had shut them out of the property market.
The survey of 212 renters who had sought help from Threshold found while 62 per cent aspired to buy a home within the next five years, just 28 per cent felt they would be able to afford one.
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The rent-a-room scheme allows people to earn up to €14,000 a year tax free by renting out a room in their home to private tenants.
Mr McCafferty said Threshold was not against the rent a room scheme as “all supply is better than the abject lack of supply right now”.
“There is an inherent paradox though that if you’re a provider of a rent a room scheme your tax situation is highly favourable compared to smaller landlords with registered tenancies who are letting out an entire house to two, three or four people,” he said.
“People in those rented rooms effectively have no rights and that came to the fore at the beginning of the pandemic, the first lockdown, where the moratorium came in clearly for tenants, recognised tenancies, but there weren’t any rights for licensees.
“We’re not advocating that rent a room licensees receive exactly the same legal treatment that mainstream tenants enjoy but a number of circumscribed rights needs to be considered and that’s one thing that research has identified.”
Aideen Hayden, chair of Threshold’s policy and research group, noted the Government has been “promoting” the scheme.
“The rent-a-room scheme is basically where you rent out a room in your house, that person is not a tenant, they have no protection under RTB [Residential Tenancies Board], they have no rights whatsoever basically, they are a licensee in your home and for that you can earn up to €14,000 a year tax free,” she said.
“If you were a landlord, you would actually have to make €28,000 plus a year to get the same income. Therefore we are actually actively supporting a tax policy that gives people fewer rights, puts them in much more precarious positions with nobody to turn to such as the RTB. How is that logical? It’s not.”
Ms Hayden said the issues of tax policy and retaining landlords in the sector had to be taken on board and examined.
“Realistically we see this day in and day out,” she said. “People are getting notices of termination because landlords are leaving the market ... we do need to look at why they’re leaving, but they say they are leaving because of tax.”
Ms Hayden also said renters were facing into “a really difficult winter and probably a really difficult spring next year”.
She said as people were paying more for food and energy, tenants would inevitably “fall into rent arrears”.
