Ireland: Overview

RENTAL YIELDS

Yields are low at 4.06% in Dublin

Yields are around 4.06% for apartments and 4.96% for detached houses in Dublin, the centre of the rental market. Yields are around 4.64% in other major city centres in the country, such as Cork and Galway.

Nationally, rents are on the rise after a decline and are now back at their nominal Jan 2002 levels, up 11.9% over the past two years. However more dwellings were built in 2006, at 93,419, than ever before, so oversupply is a potential concern.

Nevertheless we believe that if house prices do continue to fall, rents are likely to recover further, because of high immigration, and because when house prices fall, people who might otherwise have bought tend to switch to renting.

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TAXES AND COSTS

Taxes are in the medium range

Effective Tax Rate on Rental Income
Monthly Income	€1,500	€6,000	€12,000
Tax Rate	10.1%	11.5%	13.9%
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Source: Disclaimer

Rental Income: Gross rental income is taxed at 20%, withheld by the tenant. At the end of each fiscal year, the taxpayer has the option to file a tax return and to claim relief for expenses related to his rented property (i.e. maintenance, renovation, repairs, insurance, and management fees).

Capital Gains: Net capital gains are taxed at 20%. Acquisition costs, incidental expenses, and improvement costs are deductible from the gross selling price.

Inheritance: Inheritance tax is a flat rate of 20% and is applied after deducting certain thresholds or nontaxable amounts from the gross inheritance.

Residents: A resident is taxed on his worldwide income and the taxable income is determined by the taxpayer’s marital status and how many children he has, if any.

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BUYING GUIDE

Buying costs are moderate in Ireland

Round-trip transaction costs are around 6.8% of the property price. This can go up to 13.6% because stamp duty is computed at a progressive rate based on the purchase price of the property. Properties that cost more than ?630,000 have the highest stamp duty, at 9%.

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LANDLORD AND TENANT

Strong but fair tenant protection in Ireland

Ireland has strong tenant protection laws.

Rents. The parties are free to negotiate rents, but the amount must not exceed the open market rate. The rent may be reviewed and can only be adjusted once a year. Rent disputes go to the Private Residential Tenancy Board (PRTB).

Tenure Security. Security of tenure is effective for four years; during the first six months, the landlord can terminate the leasing contract without specifying grounds but once a tenancy has lasted six months, the landlord can only terminate the tenancy for the next 3 1/2 years citing just causes.

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ECONOMIC GROWTH

Economic growth has weakened

GDP Growth in 2007 is estimated at 4.75%.after 5.7% growth in 2006 . Growth is forecast to slow to 3.25% in 2008. However, this slowdown is expected to be temporary.

Strong economic growth has been the primary factor behind the strong demand for housing. But another factor is migration, given that Ireland allows citizens from EU new member states to access its labor market. Since May 2004, population inflows have amounted to 4% of Ireland’s population or 8% of its labor force. Like immigrants everywhere, these immigrants are initially tenants, not buyers.