The Government should increase the tax-free threshold of its rent-a-room scheme from the current level of €14,000 in order to combat the State’s growing accommodation crisis, according to most respondents to a survey carried out by Taxback.
Some 53 per cent of the 2,000 taxpayers on Taxback’s database that took part in the pre-budget survey said the threshold should be increased, according to the tax repayments company, which was founded by Kilkenny businessman Terry Clune.
Almost one in three of those surveyed say strict rent controls are the most effective way to allow potential first-time buyers to save for a deposit to take out a mortgage. Some 19 per cent said the Government’s Help-to-Buy scheme, which currently gives a tax rebate of up to €30,000 or 10 per cent of the price of a new home to first-time buyers, should be extended.
“The appetite is definitely there to increase rent-a-room relief,” said Marian Ryan, consumer tax manager with Taxback. “Homelessness in Ireland has hit record highs this year yet Ireland has one of the highest rates of underoccupied homes in the EU, with almost seven in 10 Irish people living in homes that are too big for their household heeds.”
The average rate of underoccupied homes across the EU stood at just over 33 per cent in 2021, less than half the Irish level, according to the latest figures from Eurostat, the union’s statistics agency.
Underuse of residential space “often happens when older individuals or couples remain in their home after their children have grown up and left”, Ms Ryan said. “There are clearly a lot of available rooms in such properties around the country, and boosting the amount of tax-free income available under the rent-a-room scheme could encourage more of these people to make a room free in their home for those struggling to secure accommodation.”
The number of people recorded as homeless in the Republic increased to a record 12,847 in July from 12,600 recorded in the previous month, according to the Department of Housing.
Earlier this year the rent-a-room plan was widened to also allow council tenants to rent out rooms for up to €14,000 a year tax free.
Minister for Housing Darragh O’Brien said last month that the Government would also consider extending the scheme to include private landlords under measures in Budget 2024 to keep and attract “mom and pop landlords”.
Sherry Fitzgerald estimates that there has been a net reduction of 80,000 homes for rent in the State in the past decade as small buy-to-let investors have been exiting the rental market on the back of higher taxes and increased regulation, aggravating a supply shortfall and pushing up rents.
