The latest housing plan due to go before the Dáil this evening will be a “strong deterrent” to cuckoo fund activities, according to the Finance Minister.
Under the new legislation, investors will face a 10% stamp duty charge when buying 10 or more residential homes – up from the current rate of 1%.
Meanwhile an 'owner occupier guarantee' aims to ringfence up to 50% of homes in new developments for owner occupiers.
Apartment developments will not fall under the new rules – with the Government insisting that international investment is needed to ensure supply in 'urban and high-density areas.'
On The Pat Kenny Show this morning, Finance Minister Paschal Donohoe said he expected the new laws to prevent further bulk buying of homes in the future.
“It is worth saying that, if you buy 10 or more houses you pay 10% on all of the houses you have purchased,” he said.
“It applies to any property in Ireland purchased by any kind of purchaser; it is ten times our normal rate of stamp duty in relation to residential properties and it is a third higher than the stamp duty in relation to commercial property.
“So yes, I do believe it will be a strong deterrent.”
He said the legislation will include measures preventing funds from creating bogus companies to get around the rules.
“It is ten houses by any purchaser, of any kind, in any 12-month period,” he said.
“So, it is very, very clear and we have made this measure as clear and as simple as that to minimise the opportunities for tax avoidance or for very aggressive tax planning to undermine this measure.
“When I introduce the financial resolution on this in the Dáil tonight, we will be bringing in further measures of definition to ensure that companies, if they are created with the sole purposes of trying to get around this measure will also be caught by it,” he said.
He said international investment funds play a key role in getting apartments built in Ireland – suggesting that they “otherwise would not be built.”
“We are in a situation here in Ireland where we have three domestic banks that are able to provide credit to our economy – three domestic banks – and we need to create and build 18,000 homes by the private sector alone, per year over the next decade on top of 15,000 homes by the State.
“The funds you are referring to are a way of directing savings from elsewhere in the world into the supply of homes in Ireland.”
Asked whether funds are keeping apartments vacant in order to drive up rental prices, he said: “I don’t have any hard data in relation to that yet.”
“It is the case that it is up, n many cases, to landlords to decide what rent they want to charge of property they own – but they have to do that within the legislative framework of our rent pressure zones.
“But if we want to look at how we can create more accommodation that is available to rent – because we do know that we have such difficulties in the supply of rental accommodation in Ireland – I would make the case that having more of that rental accommodation available, on top of what the state is doing will need to competition and more supply within our market which will help us deal with the great rental challenges we have.”
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