AIB: give landlords a break and extend help-to-buy scheme

AIB has called on the Government to level the playing field between private landlords and their institutional counterparts.

The State-owned bank also urged Finance Minister Paschal Donohoe to extend the help-to-buy scheme beyond 2019 as soon as possible to avoid an “inevitable scramble” by prospective buyers ahead of October’s budget.

In its second annual report on the Irish housing market, it also warned that construction labour has become a “scarce resource” and that it will become a major challenge for new housing supply.

AIB’s head of real estate finance, Donall O’Shea, said the bank plans to fund around 5,500 residential units this year, up from 4,700 in 2018.

“In line with 2018, this report shows that – to make real change in the level of supply in the short-term – viability, labour, policy initiatives and social and affordable housing are key issues,” O’Shea said.

In the report, AIB also stated that the help-to-buy scheme was “working effectively” but that it has had very limited impact on residential property prices. The scheme, which was launched in October 2016, offers a tax rebate on income tax paid, which can be used as a deposit on a newly-built home. It was extended for another year in the budget but is set to expire this October.

AIB said that there was a “notable upswing” in the volume of new homes bought by first-time buyers. The total number of first-time buyers of new homes went from 2,107 in 2016 to 4,387 in 2018.

“An early decision to extend the scheme would avoid an inevitable scramble by prospective buyers to transact in the months leading up to October and would allow developers to plan with greater certainty for 2019 and beyond,” the bank said.

The country’s biggest lender also stated that the Central Bank’s macro-prudential rules were becoming an “increasingly binding constraint”, citing the fact that the proportion of first-time buyers borrowing between 3.25 and 3.5 times their income rose to 31.8pc last year.

The most recent figures from the Residential Tenancies Board have also shown a sizeable drop-off in the number of landlords servicing the rental market. According to the board’s December data, there were 1,778 fewer landlords in 2018 than in 2015.

AIB called for reform of the tax code for private landlords and stated that they should be “encouraged” back into the market. The cost of building a new home was also cited as a significant issue.

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