Budget 2023: Tax credit for renters 'falls short of what's needed'

Under the measure announced by Mr Donohoe, tenants are in line for tax relief of €500 this year with another €500 to come in 2023.
Budget 2023: Tax credit for renters 'falls short of what's needed'

Cork Opposition TDs have hit out at the tax credit for renters, saying it will only work if a rent freeze is introduced as well. Picture: Denis Minihane

CORK Opposition TDs have said the tax credit for renters announced by Finance Minister Paschal Donohoe in Budget 2023 will go straight into the pockets of landlords unless a rent freeze is introduced.

Under the measure announced by Mr Donohoe, tenants are in line for tax relief of €500 this year with another €500 to come in 2023.

“For those taxpayers who are paying rent on their principal private residence, I am introducing a new rent tax credit valued at €500 per year.

“This measure, aimed at those who do not get any other housing supports, will apply for 2023 and subsequent tax years but I am providing that it may also be claimed in respect of rent paid in 2022,” Mr Donohoe said announcing the budget yesterday.

Approximately 400,000 people are expected to benefit from the initiative.

However, Cork North Central Socialist Party TD Mick Barry warned that without a rent freeze, any money saved in a tax credit for renters would go directly to landlords. This sentiment was echoed by Sinn Féin TD Thomas Gould.

“Number one is it’s not enough but the biggest problem with this rent credit is they haven’t capped rent. What we feel is going to happen now is some landlords are going to see this as a way of increasing the rent so the landlords are on a winner and the renters are trapped again,” Mr Gould said.

In the party’s Alternative Budget for Housing 2023, Sinn Féin proposed introducing a ban on rent increases for three years.

“If the Government had capped rents… then that money would have been worth something to the renters,” Mr Gould said.

Threshold’s Southern Regional Manager, Edel Conlon said the rental tax credit may give some relief to renters but that it ultimately falls short of what’s needed.

“€500 is just too low. For anyone who has an affordable rent it will go some way but the difficulty that tenants face now is those receiving notices of termination, if they have to go and look for alternative accommodation, renting is not affordable.

Edel Conlon, southern regional manager, Threshold, in the Cork office at South Mall.
Edel Conlon, southern regional manager, Threshold, in the Cork office at South Mall.

“This morning I had a look to see what was available in Cork. For a one-bed in Fermoy, you were talking over €1,200; a two-bed in Carrigtwohill was €1,500; a three-bed in Douglas you’re talking €1,800; a two-bed in Tower Street, €1,574; a one-bed in Shanagarry, €1,200 – so for a single person to pay €1,200 for a year and then just to get €500 credit back, it’s just too low.

“It’s not going to be of any real support for someone who is now having to go and look for accommodation and is facing those rent prices,” Ms Conlon told The Echo.

Fianna Fáil TD for Cork North Central Pádraig O’Sullivan welcomed the move as a “welcome step to help ease the burden on under pressure renters” and one which will “help people struggling with their bills and put much-needed cash in their pockets” during this period of high inflation.

Another headline measure in terms of housing in Budget 2023 was the retention of the Help-to-Buy scheme, which allows first-time homeowners tax relief of up to €30,000.

Mr O’Sullivan said uncertainty about whether the current rate of relief would be retained had caused anxiety for first-time buyers, but he believed the budget announcement was good news.

“It’s a very positive decision that the Help-to-Buy scheme is maintained, because it is something which is of huge benefit to first-time buyers, giving them up to €30,000 back in their pockets, which is much-needed cash,” he said.

In his budget speech, Public Expenditure Minister Michael McGrath said that housing “remains a key priority” for the Government and that €6.2bn in Exchequer funding would be allocated to the Department of Housing, Local Government and Heritage in 2023.

“On the face of what was announced, there’s a lot in there to be welcomed,” campaigns and communications manager with Cork Simon, Paul Sheehan commented.

“You would have to ask is it enough? Really it’s hard to say right now until you see the detail of how it will actually be rolled out.”

Also announced as part of the budget yesterday was €215m for homelessness services –a €21m increase on Budget 2022.

“In one way, the €21m additional budget for homeless services is welcome, absolutely welcome, but that’s really for the provision of emergency accommodation,” Mr Sheehan said.

“It kind of acknowledges that the homeless situation is going to get worse. So that would be a concern for us.”

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