Ireland’s Rental Crisis: A Market Unravelling from the Inside Out

Ireland’s rental housing crisis is being deepened by incoherent government policies that punish landlords with high taxes, rigid exit restrictions, and contradictory regulations.

By Michael Powell Principal, Powell Property Estate Agents, Cork

Image sourced from Unsplash.

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Over 43,000 landlords have fled the Irish rental market in the past five years – not by choice, but by coercion. That figure is more than just worrying—it is catastrophic, and all indicators suggest the trend is accelerating.

From the vantage point of a property professional actively managing hundreds of residential lettings and investor portfolios, it’s clear: the system is fundamentally broken. The government’s approach to housing has become reactionary, contradictory, and—frankly—economically incoherent. The proposed new policies force landlords to stay, taxing them heavily whilst restricting their ability to exit. The result isn’t tenant protection—it’s a crisis spiraling out of control.

Investment Without an Exit Is Not an Investment

Let’s start with the most glaring issue: the inability of landlords to exit the market. Under the proposed regulations, any landlord who owns more than four properties is effectively barred from selling their investment unless they meet very narrow criteria—bereavement, bankruptcy, or severe financial distress. Even then, they must seek permission through a convoluted process.

This policy is not only deeply flawed—it’s unconstitutional in spirit. No other investment class is treated this way. Imagine walking into a stockbroker to buy Ryanair stocks, and being told you couldn’t sell your shares for six years unless something tragic happened to you. The stock market would collapse overnight. Why are housing investors treated differently?

The Elephant in the Room: Taxation and Viability

Ireland now has among the highest taxation rates on rental income in Europe –  up to 52% for individuals. Corporate landlords face a 25% tax rate, plus a 20% surcharge if profits are not distributed. Meanwhile, those offering short-term emergency accommodation pay 12.5% tax and 0% VAT—because it is classified as a trading activity.

This is not a level playing field. The current tax regime penalizes the long-term landlord and rewards short-term or emergency-focused providers. The result? A proliferation of short-term lets, a surge in homelessness placements, and the evaporation of sustainable, mid-tier rental housing. We’re taxing domestic investors out of the market — while asking them to help solve the housing crisis.

If the government wants to encourage supply, it must make tax treatment fair and predictable, allow property investors a rational exit route, and stop treating landlords as de facto social welfare providers. Instead, we get policy that says:- “Stay in the market—but you can’t leave”- “Maintain your properties—but we’ll restrict your income”- “Invest long-term—but with no flexibility”

It’s a baffling contradiction. We're effectively driving out small and mid-tier landlords and pretending it’s tenant advocacy.

Policy by Optics, Not Outcomes

The government's policy stance appears increasingly driven by optics—short-term reactions to public pressure—rather than meaningful, data-led reform. Their messaging suggests a desire to protect tenants. Yet, the net result has been the opposite: fewer rental homes available, higher rents (especially in urban centres), increased pressure on remaining landlords, and the accelerated exit of experienced investors and pension landlords. You cannot claim to champion tenant protection while simultaneously undermining the very people providing rental housing.

A Simple, Immediate Solution: Tax Incentives to Retain Landlords

The government can act now. And it can do so overnight.

Reduce the tax burden on existing landlords who commit to staying in the market for a defined period—say, 10 years. Offer them a lower rate of tax on rental income (e.g., 25% or 20%) if they provide a signed commitment to maintain tenancies and keep their properties in the private rental sector.

This is a simple, clear, and immediately actionable solution. It gives landlords certainty, keeps properties in the rental market, and buys time for long-term reforms to take effect.

A Rudderless Approach to a National Emergency

There is no doubt that Ireland is experiencing a housing emergency—but it is one created by policy incoherence. We’ve seen constant turnover at ministerial level, overlapping agencies, delayed planning reform, and a failure to think long-term. The lack of coordination between taxation, planning, housing, and social protection has made the system impossible to navigate—for tenants and landlords alike.

Housing is too important to be left to short-term thinking and politically expedient decisions. We need evidence-based reform, cross-departmental coordination, and a clear strategy that acknowledges the private rental sector as an essential part of the solution—not a scapegoat.

Please take notice. Please act. Open your eyes. This is an emergency.

📩 If you’re a landlord, investor, or policymaker looking for guidance, contact our team today to discuss a strategy that works for you — and for Ireland’s future.