The Government is giving renewed consideration to the introduction of pre-budget tax breaks for the rental sector just a week after deciding against them.
It comes amid ongoing criticism over its decision to end the eviction ban, with some in Government now of the view that tax breaks for landlords and tenants should be brought in early to reverse the political momentum and keep renters in their homes.
While cautioning that the most likely outcome was still to wait for the budget, senior sources acknowledged an earlier intervention was now being given fresh consideration – one describing it as a “judgement call” on which would work best.
Minister for Finance Michael McGrath and Minister for Public Expenditure Paschal Donohoe held the line at a key Cabinet meeting last week when faced with arguments from some colleagues that more could have been done on the tax side, and are likely to resist any moves to revisit the decision.
But given the volume of the fallout, and figures from the Residential Tenancies Board (RTB) which indicate thousands of people will face eviction in the coming months, others in the Coalition feel the decision to wait until the budget should be reconsidered.
“The pressure is going to come on Michael and Paschal to respond more fundamentally to the wider issue,” one Minister said on Monday. “I’m not sure waiting for the budget is a sustainable position.”
Any move is expected to face resistance from the two financial departments. Working towards the budget was agreed by the Cabinet last week.
Behind the scenes a small working group has been set up between the Departments of Housing, Finance and Public Expenditure. It is drafting options for the Government to be ready during April. Sources say there is an opportunity to attach agreed options to a Finance Bill which gives effect to the cost-of-living measures approved in February. These measures could then come into effect thereafter, with July mentioned as a probable date if the decision is made to go before the budget.
One source involved in discussions said they “would prefer to move sooner rather than later and the current Bill could be used for that”, fearing a loss of political momentum if the issue is not addressed now.
There is also a view that introducing tax breaks for landlords who sell to the State or a government-backed entity would encourage them not to evict their tenants in the short term, and to sell off in a way that increases social housing stock and keeps tenants in their homes.
One such change would be to offer a capital gains tax cut to a landlord selling to the State with their tenant in situ, an idea that has been discussed in Government for months. Sources believe this would improve the attractiveness of the Government’s “backstop” option, which was launched alongside the decision not to extend the ban.
Under a policy being worked out tenants will be given a chance to buy from a landlord selling up, or a local authority or Approved Housing Body buy as a “backstop” option if that was not achievable. The changes could convince landlords to hold off an eviction in favour of achieving a tax break, Government sources believe.
Options for renters are on the table, but are more likely to be focused on in the budget proper. Meanwhile, further actions to speed up supply of social housing and cost rental housing are being considered.
The Opposition is planning to keep the pressure on the Government over the issue. Sinn Féin is likely to submit the wording of its Dáil motion on the Bill today, seeking to extend the ban, take emergency measures on prevention and introduce new supply.
