Property Consultants Knight Frank Ireland

Budget 2012 Reaction

Independent global property consultants Knight Frank Ireland has issued the following statement in response to today’s Budget 2012 speech by the Minister for Finance Michael Noonan TD:

By and large this is a good day for the property market. Knight Frank Ireland welcomes the reduction in stamp duty from 6.00% to 2.00% on commercial property and land. We also welcome the new capital gains tax relief on investment property acquired between now and 2013 and held for 7 years.

The announcement that tenants of NAMA portfolio properties can apply for a renegotiation of the rent (where the tenant and landlord cannot agree a revised rent) with NAMA then referring the matter for independent valuation, by and large is a welcome measure.

The government has recognised the constitutional difficulties involved in trying to change laws retrospectively. However, this will not resolve the problems faced by landlords and tenants outside NAMA’s sphere of influence.

What will happen to those tenants who do not fall into this category? This is not fair. What pressure can be applied to landlords outside of NAMA? Knight Frank Ireland is concerned that this will cause continued confusion in a market already reeling from the inertia caused by the delay in announcing changes to rent review legislation. Negotiation and mediation is the answer.

However, today’s announcement does provide a much needed boost to the property investment market. Commercial investments, which are not held by NAMA, will no longer be subject to investor uncertainty regarding tenant rental income.

Knight Frank Ireland welcomes the introduction of the new Government Advisory Group to guide on NAMA strategy and capacity to deliver. It can only be for the good to have overseas external advisors, who have successfully asset managed large property portfolios, be involved.

Corporation tax of 12.5% remaining unchanged is vital to the continued attractiveness of Ireland to foreign direct investors. This has been the mainstay of the Irish market growth and is a hugely important mechanism to the continued growth of Irish exports and indigenous employment, fuelling demand for offices, industrial and manufacturing facilities.  

Mortgage interest relief increase is good news for hard-pressed home owners and an incentive for first-time buyers who as a result have a greater opportunity and choice to buy in the market from now until the end of 2012. This is also a timely boost for the suffering construction industry

However, Knight Frank Ireland does question the wisdom of the new 5.00% surcharge on certain property investment income which would seem to be counterproductive to other new measures introduced.

We are also disheartened by the 5.00% increase on Capital Gains Tax. This increase is a disincentive to a considerable amount of property transfer and sales including agricultural land.  

Further information:

Callum Bain, director, Knight Frank Ireland 

Tel: +353 (0)86 2593866

Keiron Diamond, director, Knight Frank Ireland 

Tel: +353 (0)86 2544936

Ciara Horgan, senior investment surveyor, Knight Frank Ireland 

Tel: +353 (0)86 8065749