A DEPARTMENT OF Finance research paper warned the government needed to be cautious about increasing the rate of stamp duty that applied for the bulk purchase of homes.

Research by officials said a plan to hike the 10 percent rate that applied for the purchase of more than ten homes could drive out international investment that was needed to make property development viable.

It said that while the state was providing an “unprecedented level of funding” into housing, it still would not be enough by itself to meet Ireland’s ambitious housing targets.

The paper said private investment was especially important “at development stage to ensure the provision of social, affordable and private homes.”

It said if policy and rental regulation policy was constantly changing, international investment would be put off by “uncertainty and increases [in] risk profile.”

The paper added: “The mislabelling of institutional capital with the pejorative ‘vulture funds’ is also seen as a further deterrent for institutional investment.”

The research was prepared in September after Taoiseach Simon Harris wrote to the Department of Finance last May looking for a review of stamp duty on bulk purchases.

Mr Harris said figures had shown the number of houses subject to the 10 percent stamp duty rate had risen from 181 to 623 in 2023.

He wrote: “I believe we need to take further action, but we need to base that on good information.”

In the research carried out, officials estimated that the higher rate had applied to around 1 percent of residential property transactions in 2023.

They said this equated to 3 percent of sales of new homes completed that year with €44 million collected in tax by Revenue over a twelve-month period.

It said separate analysis had shown that while institutional investors were buying up property, they were actually “net sellers” in terms of putting houses and apartments back on the market.

The paper said there were arguments for and against change with bulk purchases making up a low percentage of sales.

However, there were also concerns about businesses buying up properties for “housing staff” with officials saying a higher rate might be needed to avoid that.

The paper added: “Further interventions aimed at investors, including international investors, could reinforce a perception that Ireland is not supportive of private investment in property.

“This in turn could indirectly dissuade international developers from investing in Ireland, investment which is needed if we are to achieve the current housing targets.”
In a submission for Finance Minister Jack Chambers ahead of Budget 2025, department officials put forward four options for stamp duty.

It said ‘trigger points’ could be introduced with a sliding scale of higher rates if for example an investor bought twenty or more houses.

There was a suggestion as well of reducing the threshold from ten houses to eight or extending the period for counting bulk purchases from one year to eighteen months.
Officials also explained how setting a new rate of 15 percent could be applied which would yield an extra €11.1 million if there was no “behavioural change” by institutional investors.

That was the option chosen by Minister Chambers in Budget 2025 along with an increase in stamp duty to 6 percent for properties worth over €1.5 million, or the so-called ‘mansion tax.’