Those property owners worrying about such matters as landlords insurance should spare a thought for those across the Irish Sea.
For many Irish buy to let owners, the least of their worries is whether they have the right kind of landlords insurance.
Indeed, insurance for landlords is a small matter for many Irish property owners with rented properties that face, so they claim, financial hardship, or in some cases bankruptcy.
And it all comes down to what’s known as Section 23 tax reliefs which were set to go in the 2011 budget, but now look likely to be scrapped in 2012 instead. Section 23 tax relief applies to rented residential property in areas of tax designation. It meant that such property had the benefit for investors of being able to offset between 75% and 90% of the purchase price against all of their Irish rental income. In short, it meant that Irish tax payers were able to cut their tax bill.
The problem is, that it was announced at the start of the new year that in future, relief could only be offset against rental income which came under the Section 23 property areas, as opposed to previously when it could be offset to rental income from all of the Irish properties that an investor might own. Overnight, by announcing such a change, it became worthless relief for many investors.
Protesters felt that the changes would affect the smaller landlords and investors, as the larger concerns had already used up all the available allowances and relief in the first year. Smaller landlords are livid that the Irish Government is effectively changing the goal posts and that many investors took the decision to invest based on the Section 23 relief. Had they known it was about to be scrapped, they argue, they would not have invested in the first place.
Matters are further complicated by the forthcoming elections when it looks likely a new Government will be in power and will have to address the issue of Section 23 again.
A spokeswoman for the IPOA told The Irish Times:
“A lot of people are in a situation where they would be better off to have nothing [no property]. They’d be better off on social welfare instead of working and paying money towards their investment properties. They’re in a situation where they have pared down their own expenses to the bare bone.”
In Ireland therefore, landlords insurance worries are way down the list of priorities, but it does demonstrate the vulnerability of people who see property as a way of making a return on their money. The problem is, that whenever an economy hits a bad patch (the UK may not have such bad issues as Ireland who faced financial meltdown and had to be saved by the EU), property investors feel an unwelcome backlash.