The demise of the small landlord
PROPERTY
Property Insights with Johnny Gannon, Fair Deal Property
Budget 2027 has overlooked a growing crisis in Ireland's rental market: the departure of small landlords. In Galway and across the West, where institutional investors have little presence, the consequences for tenants could be severe.
For generations, ordinary people owning one or two properties provided much of our rental accommodation. These were often modest investors who knew their tenants personally and valued a reliable occupant over maximising rental income.
Now they are leaving en masse.
Residential Tenancies Board figures show approximately 11,100 termination notices in the first six months of the year, with 50.2 % in the second quarter citing an intention to sell.
At Fair Deal Property, we see former rental homes increasingly purchased by first-time buyers. While positive for homeownership, each property converted to owner-occupation represents another home lost to the rental market.
Perhaps the greatest irony is that the landlords who behaved best have been treated worst.
For years, many small landlords kept rents below market levels to retain good tenants. An extra €100 monthly mattered less than having someone who paid reliably and maintained the property.
Then rent pressure zones arrived. Landlords who had shown restraint found future increases restricted by their existing rents, while those who had consistently raised rents started from a higher base.
Restraint was penalised and rent increases rewarded.
The consequences extend beyond income. A property carrying a tenancy substantially below market rent becomes less attractive to another investor. In effect rendering them unviable and unsellable to investors.
The paradox is striking; the exact measures introduced to protect tenants have directly contributed to the disappearance of the accommodation those tenants depended upon.
Taxation compounds the problem. Small landlords on the highest marginal rates can pay approximately 52 per cent of taxable rental profits in income tax, USC and PRSI, while mortgage capital repayments remain non-deductible.
Large institutional investors pay no tax on rent and only 25% when profits are distributed. They are largely Dublin based and are unlikely to replace landlords leaving the Tuam market.
More competitive taxation linked to long-term letting, alongside capital gains tax relief when properties are sold with tenants remaining in place, could help preserve small landlords and existing rental homes.
Tenant protections are essential, but so is maintaining the supply of homes available to rent.
Unless policy recognises both, the greatest casualties of the small landlord's disappearance may ultimately be the tenants themselves.
For more information, call 093 59014 or visit www.fairdealproperty.ie