DEPENDING ON YOUR religious persuasion, the exodus of the Israelities from Egypt is likely viewed either as fact or myth.

It’s perhaps fitting then, that the supposed flight of landlords from the rental sector is in a similar bracket.

The tale of the supposed ‘mass exodus’ of landlords from the Irish market has assumed a similar level of religious reverence.

It is something which has been repeated over and over again in recent years, by business groups, the media and even by prominent politicians, such as Housing Minister Darragh O’Brien.

That last group is perhaps the most important. Because that is the group which has introduced a tax break for landlords – a measure which was a direct response to the exodus tale, and which will cost taxpayers €160 million a year from 2026 onwards.

The logic is that lots of landlords leaving the market results in fewer places to rent, driving up prices for tenants. If the tax break can convince landlords not to sell up, the rush to leave the market could be stemmed, helping tenants.

But like the one in Egypt so long ago, we’re still not quite sure if the exodus of Irish landlords ever happened in the first place.

And new figures published in recent days throw further doubt on the tale.

What do the numbers say 

The Residential Tenancies Board (RTB), the regulator which oversees the rental market, has reorganised the way it registers tenancies.

It has made the process more strict, now requiring landlords to provide extra details such as an Eircode and PPS number, in an effort to improve its data.

Publishing the new information last week, it found that the number of landlords and rental properties is apparently rising, rather than falling.

The time involved is small – the new data spans from just the middle of 2023 to the end of the year.

The increase was also relatively modest. The RTB said that the number of tenancies registered with it during the period (ie, the number of rental properties) rose from just over 213,000 as of the middle of last year to 230,000.

During the same period, the number of registered landlords also grew, going from just under 97,000 to 103,000.

And what do the numbers actually mean? 

But as is so often the case with Irish housing stats, there are caveats.

The rise in registered tenancies and landlords could just be because there’s some lag with compliance with the stricter RTB registration process.

So rather than the rental sector gaining an extra 17,000 properties and 6,000 landlords during the period, it could simply be the case that some landlords are taking a while to sort out their paperwork

This would also align with the fact that the overall number of RTB tenancies is lower compared to previous years.

There were just over 246,000 tenancies registered with the RTB as of the end of 2022, which was itself down from 2021.

So the 231,000 registered as of the end of March 2024 was actually a drop.

But wait – another caveat!

This was actually expected. Part of the reason why the RTB changed how it collected data was to remove “duplicate and inactive” tenancies.

But wait again! There’s yet another factor to consider. The latest census showed that almost 331,000 private rented homes in Ireland in 2022, a figure which is obviously much higher than any of the RTB’s figures, old or new.

So what’s happening? Are landlords fleeing? Are their numbers increasing? Or was there previously a drop, and there has now been a recent rise?

The short answer is we don’t know.

Multiple economists and researchers have said it is essentially impossible to be sure whether or not landlords are leaving Ireland’s rental market.

Analysts have previously said problems with the reliability of the RTB data has fed into this issue, which is partly why the organisation has made such an effort to clean up its numbers.

However, it will likely take a year or two for the data to be normalised and for trends to start emerging.

Let’s talk more about the tax break

Amid this big mess of data, last year landlords got a tax break.

In his budget speech, Finance Minister Michael McGrath specifically referenced the “decline” in the number of small-time landlords as the driver of the decision to introduce the measure.

Housing Minister Darragh O’Brien has also said that tax breaks are needed to keep “good landlords” in the market.

The tax relief, which will be worth up to €1,000 per year, is estimated to cost the state €160 million a year and last until at least the end of 2027.

It was introduced despite multiple analysts warning against the measure, with former ESRI economist Barra Roantree memorably branding it the “stupidest tax relief of recent times, against stiff competition.”

He said this was because the vast majority of the money will go to landlords “who have never even thought about leaving the market” – which would mean that much of the €160 million will be wasted.

Senior Department of Finance officials also warned against the move, for similar reasons.

They cited a Residential Tenancies Board report from June 2021 that found only 6% of small landlords cited taxation as a motive for leaving the market”.

“A tax relief will only work if tax is a primary factor causing people to exit the rental sector,” they said, neatly stating the obvious.

Another possible obvious point is that many landlords may be leaving the market because they were never meant to be landlords in the first place.

Many so-called accidental landlords, who ended up renting out Celtic Tiger properties which fell into negative equity after the financial crash, have likely now sold up following the house prices surge of recent years.

Part of an RTB study published in December looked at why small landlords (who had one or two properties) who had left the rental sector had sold up.

It found that 54% of them had bought their homes between 2001 and 2007, further strengthening the view that many likely always intended to cash out at some point and would be unlikely to commit to the rental market for a €1,000 a year tax relief.

What does this all amount to?

Ireland may or may not have a problem with landlords leaving the market – the figures can politely be described as ‘murky’.

While the RTB’s efforts to improve its data should help give a better idea in the next year or two, until then, it’s unknown.

Even if there is an issue with landlords selling up, it’s also unclear how many are doing so due to tax reasons.

The basic logic of wanting more landlords in the market to give tenants more rent options and keep prices in check is sound.

But where the logic breaks down is how the landlord tax relief will achieve that goal.

As it stands, there is simply no good evidence that it will do what it set out to do.

Essentially, €160 million of the taxpayer’s money is going towards a policy which seems to have been introduced largely in response to lobbying group claims.

The exodus could be real. But it’s pretty concerning that the government is spending several hundred million euros without knowing for sure.