GOVERNMENT WILL OPPOSE a motion by Sinn Féin today to increase stamp duty on the bulk purchase of homes by investment funds.
The motion will seek to implement a punitive tax (in this case stamp duty) of at least 17% on the purchase of homes by investment funds to stop the practice of bulk buying. Currently stamp duty is charged at 10% for such sales.
The move comes after it was reported by the Business Post last week that an investment fund had bought 46 out of 54 homes (85%) in a new housing estate in north Dublin.
Finance Minister Michael McGrath got agreement at Cabinet yesterday on a counter motion to the Sinn Féin Private motion which will be debated tonight.
The standard rates of stamp duty on residential property are 1% on values up to €1 million and 2% on values exceeding €1 million.
A higher 10% rate of duty comes in when someone acquires at least 10 properties during any 12-month period.
In May 2021 the government introduced a 10% stamp duty on the bulk purchase of family homes by investment funds.
However, in July 2021, the Government passed a controversial amendment to allow funds to side-step the 10% stamp duty if they lease back homes to the State for social housing.
While the government says the measure has proven to be a “significant disincentive”, Sinn Féin housing spokesperson Eoin Ó Broin said the funds are driving up rent and house prices.
Raising the case of Belcamp Manor, he said the homes will now be rented out for over €3,000 a month.
The issue was raised during Leaders’ Questions today, with Sinn Féín leader Mary Lou McDonald stating that “vulture funds” are continuing to snap up family homes across Ireland.
“Despite your promises to the contrary, vulture funds continue to snap up family homes.
“Of course you didn’t touch the sweetheart financial arrangements afforded to these funds by Fine Gael and Fianna Fail, which sees them pay no capital gains tax and not a single red cent on their obscene rental incomes.
“The truth is government policy enables and encourages these funds,” she said, adding that it is a “real kick in the teeth for those who have scrimped and saved and sacrificed for years to buy a home”.
Minister for Social Protection Heather Humphreys defended the government’s efforts to clamp down on investment funds buying up properties.
Speaking during leaders’ questions, the Cavan and Monaghan TD said the issue represents around 1% of new homes
“Some 30,000 new homes built in the last year, the number of planning permissions is way up, the number of commencements is way up.
“Mortgage approvals are at a record high, 500 first time buyers are drawing down their mortgages every single week,” Humphreys added.
“The policies of this government are working, compared to your own policies.
“Like what does Sinn Fein want to do, you want to abolish the Help to Buy scheme and that actually helped over 28,000 first -time buyers to get their keys last year, and you want to get rid of that.”
The government’s countermoton to be debated this evening sets out that institutional investment in commercial and residential property is “critically important” to generating the additional supply of homes.
It also sets out that institutional investors account for a relatively small share of the residential property market, accounting for 9% of total purchases in 2022, and 4% of all houses.
The government states that the majority of institutional purchases are being built to order for the rental sector and are not at the expense of first time buyers.
“Without the institutional investment it is highly likely that the scheme would never be built,” states the countermotion, which adds that the government is committed to ensuring that newly built houses are available to first-time buyers and owner-occupiers.
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