Oireachtas Joint and Select Committees

Wednesday, 17 November 2021

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach

Finance Bill 2021: Committee Stage (Resumed)

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

Next year, the Government will invest €4 billion in the delivery of more homes in our country. We will invest €2.6 billion directly through the Exchequer and a further €1.5 billion through the Land Development Agency. The funding we have, in current terms alone, for responding to our housing needs is €1.4 billion.

What is that leading to? This year, it is leading to the building of more than 3,600 more social homes in our country. It is leading to 8,750 social homes in the pipeline that will be delivered. In the context of more homes being delivered through the private sector for private ownership and for private rental than were delivered last year, it is a figure that is growing and one that will grow again next years. The reason those figures are relevant to the debate is they show the strong role the agencies of the Government are playing in responding to the housing needs we know are there, are growing and are the cause of anxiety and frustration for so many.

If I created at any point last night the sense that I was tired by Opposition views on this, to respond to Deputy Farrell, that was far from my intention. I am absolutely up for a debate on this, for this year and the years to come, but I was making the point that the contribution of real estate investment trusts, REITs, to our housing market has to be seen in the context of all the other things the Government is doing to respond to all of the housing needs in society. Of course, I am aware of the great challenges so many face with affordability and rising prices, but I would make the point it is not only Ireland that is confronting this. It is not only this jurisdiction and this Government. In Northern Ireland, for example, the published figures show that, up to quarter 3 of this year, prices rose by 10.7%, year on year. Prices are now up 13% since the start of the pandemic. That is happening in Northern Ireland where Deputy Doherty's party is in power, where it has responsibility for housing in the Department for Communities, and it is facing into the same kind of challenges with house price inflation that are developing here and the same pressures with affordability. That is what is happening with the price of homes - houses and apartments - there.

On the performance of REITs and Irish real estate funds, IREFs, and what they bring, I have made significant changes in recent Finance Bills to deal with concerns that existed and I acknowledge the role of Deputy Doherty in dealing with issues relating to their taxation. It is worth noting that institutional investors here in Ireland own 19,500 properties, according to the Central Statistics Office, which is less than 1% of the total housing stock of our country, and information from the CSO from 2020 shows that first-time buyers purchased more than nine times the total number of properties that were purchased by property funds, real estate firms and REITs. That is as it should be. First-time buyers purchase multiples of the houses and apartments that were either forward funded or purchased by these entities.

It goes back to a point that I made last night, which is, do we want there to be any role for private savings in other countries in the delivery of more homes here in Ireland? The contention being made by the Opposition is that it does not. The argument it is developing overall here is that more supply, more apartments and more homes being built will not help with bringing down prices and will not help with affordability. The argument being made is that the role of REITs and IREFs in adding to supply in Ireland in some way is contributing to the challenges we have in getting more homes built. This debate is heading in a direction where, at a time when we need more apartments and more homes of all kinds being built, increasingly the Opposition does not see more supply playing a role in fixing the huge challenges we have with regard to the supply of housing here in Ireland.

If I look at the charges that have been made here in this debate up to this point, on the issue of tax, it is the case that the taxable incident happens when income leaves these funds. It is where tax is calculated. As that is calculated, it means that IREFs last year paid €71.9 million of tax in Ireland, which is not the same as saying they do not pay any tax at all. They do. That is the figure for how much tax they paid last year. The tax is paid when the income is distributed from these funds. For example, with regard to REITs, they are legally required to distribute 85% of the proceeds or, if they do not do that, they have to reinvest either all of the proceeds of a sale, not only a gain, or pay down their debt or pay a dividend, which at that point would be subject to dividend withholding tax.

On the role of pensions, maybe Deputy Farrell, as the debate goes on, could clarify whether Sinn Féin is saying it is now against any pension funds, including, I assume, Irish pension funds, playing a role in the delivery of either commercial property or homes here in Ireland. Maybe the Deputy could clarify that as the debate goes on.

On the role of credit unions, I continue to be open to see what role credit unions can play in the delivery of more social housing and public housing here in Ireland. We did some work on that, in response to Deputy Boyd Barrett, to try to meet some of the needs and issues they described. It has not, as of yet, led to the delivery of the kind of housing output I was hoping would happen.

Overall I continue to believe the primary responsibility for the delivery of social housing here in our country rests with the Government. We are doing that. We have 8,700 homes now in the pipeline and we are trying to enable the private sector to build more homes for either outright purchase or rental by those who rely on the private sector to see more homes being built.

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