IPOA Reaction to Budget 2010

Landlords to Challenge Abolition of Section 23

The Irish Property Owners Association (IPOA) is set to challenge the Government‘s abolition of Section 23 Reliefs.  The Government brought in the incentives to encourage investment, and were successful but are now fleecing the people who purchased these properties.    It is unacceptable for anyone to change the terms of a contract after it has been signed and the monies paid, but for a Government to do so is bordering on Criminal.  

Property owners purchased Section 23 in good faith because of the section relief and now face bankruptcy and ruin.  It is outrageous and scandalous that the state encouraged the purchase of these properties and put the incentives in place and when they have been purchased these incentives have been withdrawn.  Stamp Duty was paid for these properties and they were more expensive that comparable ones because of the tax relief.  In some cases they were in areas that are difficult to let and only purchased because of the tax relief.   
 
Stephen Faughnan, Chairman of the Irish Property Owners Association stated that an “all-out effort will be made by the IPOA to Challenge this situation.  It must not be forgotten that section 23 and 27 incentives have been extremely valuable to the state in refurbishing and reinstating properties in cities and towns throughout the country caused by the Rent Control Acts of the 1930’s and 40’s.  Landlords put up money, most of which would have been borrowed to refurbish these and create good quality affordable accommodation for the people of Ireland.”   The measures introduced by the budget will cause dereliction in the future not alone in the older properties but in the newer unsold properties that stand as a monument of the lack of control on the incentives and of banks that capitalised on these incentives.    The landlords of Ireland must stand united and fight this attack on their livelihood.

Taken from the Irish Property Owners Association website December 2010

Comment:  The multi-million Euro bonus package paid to certain AIB staff was justified by the government on the basis that there were contractual obligations.  It would seem only fair that property investors would have their contractual terms honoured, especially as it was the Government which introduced these property incentive schemes.  The wealthier investors have already used up their Section 23 allowances so it’s the people with large borrowings that haven’t been able to use their allowances yet. It’s also unfair that the interest allowed against rental income was reduced in 2009 from 100% to 75%. How can the Government change the rules of their own incentive schemes? There will be a trust issue for any future schemes introduced by Government. For many landlords, rental income is their main source of income. It’s insulting that such income is described as “passive”, the result being that such income is non-pensionable.

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