News - Republic of Ireland

This afternoon, Lisney chartered surveyors made several observations on Budget 2019 in relation to property.  In particular, Lisney welcomed the assistance given to private residential investors, the increased spending on housing generally and the increase in the threshold for Group A in Capital Acquisitions Tax.  However, Lisney expressed disappointment that the VAT rate in the hospitality and tourism sector is reverting to 13.5%.

 

Private Residential Investors 

Private residential investors, who generally have just one or two properties, had some relief in the Budget from the very stringent tax treatment of their income.  100% mortgage interest relief will be reinstated from the start of 2019 (and not the previously earmarked 2021) on a loan used to pay for a rental property from the start of 2019. 

According to Aoife Brennan, Director of Research at Lisney:

“Reinstating full mortgage interest relief is a very welcome move.  Private investors have been taxed out of the market in recent years.  In addition to the mortgage interest relief restrictions, rental income is subject to PRSI and USC (which can often be at a loss), the landlord is liable for the local property tax and they must pay RTB registration fees.  Data from Lisney’s sales in Dublin show that 33% of our sales are investors selling their rental property, while just 14% of the purchasers who bought properties from us were investors.  This means that for every 2.5 investment properties sold, just one is bought back as an investment.  RTB figures also confirm this trend.  At the end of June this year, the number of landlords registered with the RTB nationally fell by 2.3% compared to a year earlier and the number of tenancies fell by 1.2% over the same timeframe.  This is unsustainable in a rental market where there are such significant issues in terms of supply and rising rents. 

Hospitality & Tourism VAT 

It is widely acknowledged that the reduced VAT rate of 9% in respect of food sales in the hospitality and tourism sector has been a contributing factor in returning the overall sector to growth since 2011.  But as well documented, not all parts of the sector are comparable.  For those outside of Dublin and particularly those removed from tourism hotspots, the recovery has not been so strong and reverting to a VAT rate of 13.5% will have serious consequences for them. 

According to Tony Morrissey, Director of Licenced Premises at Lisney:

“Licenced premises that rely significantly on food sales to generate large parts of their turnover or even those that rely on food to boost drink sales, will be particularly hit.  Many licensed premises in non-prime locations continue to struggle in terms of profitability and for them, this measure is serious and may result in job losses and some closures.”   

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