Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

Okay. I thank the Minister. The second question is the issue of what is happening in the housing market which directly affects the Finance Bill. This is about our experiment with REITs. When one drills into the CSO figures, they are startling. In Dublin, for example, from 2007 to the end of July 2017, 42% of new houses in Dublin were bought by non-household buyers. It is a staggering amount. It is more than those of first-time buyers. Non-household buyers are predominantly REITs, of which there are three in the market. There are non-market sales, which are predominantly the social authorities buying up houses, but these 42% are predominantly from REITs. We have looked at the published accounts of the three REITs. The rental income was €117 million last year. While the Department of Finance itself says 85% of investors are foreign, which means that rental income of approximately €100,000, the dividend withholding tax is just over €8 million. They have an effective tax rate of 8% and that is just on the rental income. If one looks at the increase in valuations and the fact that they do not pay capital gains tax, their effective tax rate is 3%.

It is bad enough that they are paying very little tax on a multi-million euro enterprise, but they are now, because of this beneficial tax rate, crowding out and outbidding our first-time buyers. We cannot allow a situation to persist whereby our tax code assists these REITs to inflate house prices beyond what is reasonable by buying up 42% of the market in Dublin. We need to take steps. We will deal with this in detail in the Finance Bill but we only have a window on that. We need to take steps to start to rein in the REITs. When they were introduced, we said we would monitor them very closely. Time has passed and one can see all the figures in terms of non-household buyers. They jumped significantly as soon as we introduced the legislation for REITs. It has failed in terms of what is happening in the housing market. I ask the Minister to consider measures to appropriately tax REITs and create a level playing field for those first-time buyers and former owner-occupiers who cannot compete with these entities.