Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

I move amendment No. 173:

In page 142, between lines 19 and 20, to insert the following:“Report on impact of Irish Real Estate Investment Funds on residential property prices

60.The Minister shall, within 6 months of the passing of this Act, prepare and lay before Dáil Éireann a report on the impact of Irish Real Estate Investment Funds on residential property prices, and the supply of residential properties, in the State.”.

This amendment calls for a report on Irish real estate funds, IREFs, on residential property prices and the supply of residential properties in the State. The other report that is being called for in amendment No. 174 is a report on the ability of investors in real estate investment trusts, REITs, including pension and investment funds, to neutralise their tax liability in both income and gains from Irish property held by REITs.

The Irish tax code has created a very unlevel playing field for ordinary families and individuals who are trying to get onto the property ladder. There is an incentive here where we allow for fund structures, in a very tax-efficient way, to buy up property. We can see from all of the data published by the CSO that cash buyers, of which these fund structures make up the significant part, are competing in a very aggressive way with families, newly-weds and individuals who are trying to acquire their first house, especially here in Dublin city. Figures show that close to 50% of sales are cash purchases at certain times. There is almost €17 billion of IREF assets in the State. That is the quantum that we are told in the tax strategy papers. We know that the average yield in rent in the State is 7.5%. How did they pay only €9 million in tax on more than €1 billion of income? I have discussed this with the Minister before. The accounts of these funds are available. One can see the actual tax that is being paid because of the tax efficient ways in which they do not have to pay it. It is appalling. The tax rate of some of these funds is 1.8%. This is the kind of structure that we have put in place.

I can remember when some of these structures came in. It was a time when there was a very dampened property market. That is not where we are at this time. I recall the former Minister, Deputy Noonan, saying that we needed to get a floor and to get people in etc. Things have moved on. There needs to be an assessment done on the impact that these structures are having on property prices because they are able to push up prices because they have the availability of funds to set market prices.

There is an issue as to the supply of residential properties because these funds are able to compete with individuals. It is ridiculous. Some of these funds are landlords. Some of these tax-efficient funds are charging outrageous rents which are among the highest in our capital and they then pay 1.8% in tax on their income. There has been some work done in this area but it is time to go back and look at it all again because they are clearly not paying a reasonable amount of tax. These amendments are sensible. They are asking the Minister to look at these structures and to look at how they are impacting on property prices, at the supply of residential properties in the State, at the structures themselves, and at how they are allowing for a very small effective rate of tax to be paid on income.