Neighbors Mary Loftus and Anna Gallagher use the same word to describe their reaction to a rent review they both received last month – shock.
The women told RTÉ’s Prime Time that their landlord, owner of the two properties in Tubbercurry, Co Sligo, had informed them that their rent would be increased by €600 a month.
Mrs Loftus’ four-bedroom house will go from €880 to €1,500 a month. Ms Gallagher’s rent, which is for a three-bedroom house, is rising from €800 to €1,400 a month.
“There’s a bit of me that’s still in denial. I still can’t believe it’s true,” Ms Loftus said.
Ms Gallagher said while she was planning for a rent review of up to €200, the €600 increase, which equates to a rise of more than 70%, was far beyond her expectations.
The women, who live in the Cnoc na Sí estate, have 90 days to decide whether they will pay the increased rent.
“I expected that at some point we would get a rent review,” Ms Gallagher explained.
“But, for me to earn an extra €600, I would need a massive pay rise to be able to cover that kind of money.”
Tubbercurry is not in a rent pressure zone so the landlord has the right to increase rents at market rate once a lease has been in place for 24 months and the new rent can be demonstrated to be on par with others charged in the area.
In this case, the landlord could show three of his own properties in the same area as examples of houses advertised with the highest rent.
“The rules need to be changed,” Ms Loftus said. “We are all very angry that this is legal.”
Potentially having to find a new property is a daunting prospect for women.
The northwest of the country has seen the highest rent increases over the past year, with an average annual rise of around 20%, according to Daft. There are just 11 rental properties in Co Sligo – and just three in Tubbercurry.
“My local nursery has a one-year waiting list. If I take my son out of there, I may not get another nursery,” Ms Gallagher said.
“Your home is something very intimate, very personal and very special to each person. I don’t want to sound too dramatic but, at the same time, it really hurts,” Ms Loftus added.
The owner in question did not respond to questions from Prime Time.
Ireland’s population now exceeds five million and continues to grow. But the number of properties available for rent goes in the opposite direction.
According to the Residential Tenancies Board (RTB), there are 15,000 fewer rentals than four years ago. Between 2017 and 2021, more than 7,000 owners have retired from the rental business.
Today, according to Daft, there are only 832 properties available to rent in Ireland.
The Irish rental market relies heavily on smaller, so-called “Mom and Pop” landlords. Some 86% of landlords only own one or two properties, and more than half of all tenants in Ireland rent from a small landlord.
The percentage is even higher outside cities, where large investors have yet to buy large-scale properties.
Mary Conway, a former nurse, has been an owner for more than 20 years and described the current market as “very tight”.
Ms Conway owns eight properties and runs Janus Estates, a rental agency in Dublin.
“There may be landlords who make a lot of money but, for the honest landlord who declares everything on rental income, there is very little money at the end,” she told Prime. Time.
Ms Conway said income tax, PRSI and USC are all payable on rental income and while some expenses can be deducted from tax, mortgage principal repayments cannot.
“You can say that in a few years you’re going to have a property paid off and you have an asset, but there’s a lot of roads between when you take out your mortgage and when you pay it off,” he said. she declared. said.
The owners argue that large investment companies are treated differently for tax purposes.
Individual landlords pay income tax on the rent they collect – often at over 50%. If they sell the property, they are also required to pay capital gains tax, at 33%. Landlords who pay a mortgage can deduct their mortgage interest, but not principal repayments, from rental income.
In contrast, REITS, or real estate investment trusts, which allow individual investors to join large-scale investment portfolios, pay no tax on their rental income. If a property is sold, it is not subject to any capital gains tax.
Individual shareholders are liable for tax on dividends but, if resident abroad, some, if not all, of the tax may be refunded.
Calling for tax reform, Ms Conway said the industry was being wrongly blamed for the housing crisis.
“Most of the time I won’t say I’m an owner because people have this perception that you’re someone who has a lot of money and you don’t do anything about it.”
According to Ms Conway, 44 different laws have been introduced since 2008.
She explained that landlords, especially older people, are reluctant to stay in the area.
“They’re terrified of legislation, they’re terrified of paperwork, they’re terrified of RTB,” she said.
Ms. Conway’s experience is reflected in the statistics. Despite the boom in the rental market, some small owners are selling.
According to the Residential Tenancies Board, 544 lease termination notices were issued to tenants in the last three months of 2019, with just over half, or 290, issued to landlords selling the property.
By the same period in 2021, the number of terminations had risen to almost 1,000, with 64%, or 614, being indicated because the owner intended to sell the property.
Properties are not lost to the housing stock, but they are no longer an option for tenants.
In Dublin alone, housing charity Threshold told Prime Time that last year it helped more than 700 people who received termination notices because the landlord was selling the property.
Some 350 rentals in Cork faced a similar situation, while Co Galway had the second highest number of termination notices, with tenants at 200 properties being told their homes were being sold.
In total, the organization advised more than 4,000 private tenants on termination notices in 2021.
“So far in 2022 we are seeing an increase in termination cases, largely for sale – and the majority are valid, meaning there is little that private tenants can do to keep the house,” said said Threshold chief executive John-Mark McCafferty.
In 2019, the RTB independently surveyed 500 small landlords and found that almost one in ten of their rental properties were “likely” or “very likely” to sell within the next 12 months.
The main reasons given concerned the profitability of the sector. The survey asked landlords how much they earned from rental properties after taxes, deductions and mortgage repayments.
For almost one property in four, the total net income fluctuates between €1,000 and €4,999. Total net income was between €5,000 and €9,999 for one in five properties.
One property in 20 brings in an income of €10,000 or more. But, according to the owners, 14% of properties bring in a net income of less than €1,000 and one property in 10 “makes a loss”.
There have been plenty of calls for property tax reform — with more consensus than you might think. Sinn Féin agrees the landlord tax needs to be looked at, while Threshold suggested that landlords who sign long-term leases with tenants could pay a reduced rate of tax.
“Agreements should be for at least 10 years and could only be terminated by the landlord if the tenant breached the agreement,” McCafferty said.
Threshold has also proposed to treat rental income in the same way as those who rent out a room in their own home – exempting it from tax if the gross income does not exceed €14,000 per year.
“The private rental sector would not exist without landlords. If they choose to sell their properties and alternative housing options are not available to tenants, action is needed to retain landlords in the sector,” said Mr McCafferty.
The government is committed to reviewing the homeowners tax this year and any changes will be included in the budget.
Agent Ray Cooke also assists with the departure of the owners from the market.
“A third of our sales are from owners who are selling right now,” he said.
“These ‘Mom and Dad’ owners own the houses. The vulture funds just build apartments and buy apartments.
Mr Cooke told Prime Time that in 48 hours he had received 125 inquiries for a newly let property at Drimnagh in Dublin.
In total, Mr Cooke said he had received more than 500 inquiries for the three-bedroom house, which is advertised to rent at €2,400 per month.
“If I had 30 properties today, I could rent them all in this neighborhood. That’s where the demand is.”
Patrycja, 35, was first in line to view the property.
She arrived an hour early for the viewing to make sure she didn’t miss her chance.
“My landlord decided to sell his house and I’ve been looking for it for the last year,” she told Prime Time.
Patrycja has until the end of this month to find a new home for her and her son. She works two jobs and has been on an exhausting search for months. The lowest point came when a potential owner asked her for sex.
“A man called me and said he has a house in Blanchardstown, and we can meet once a month for a little something and he will sign the paperwork for HAP and I can live there. “
Patrycja broke down in tears as she described the impact of the landlord’s proposal.
“We are human and we have rights. Everyone is supposed to respect us, not use our bad situation.”
Like many others struggling to find rental property, Patrycja is out of options.
“I can’t go back to Poland. My son has been here for ages and this is his home. It’s mine too,” she explained.
“We have built our lives here.”