Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

I thank the Minister for his comments. I note the TSG will look at this stamp duty issue in the commercial property sector. We talk about the role of taxes in respect of revenue raising or behaviour changing, and this measure is very much to try to divert activity away from one sector. I am not a person who believes there should be no commercial property. Of course we need commercial property and that type of development, but at this time we need our workforce to be directed as much as possible towards housebuilding in dealing with the existing crisis. If there was ever an opportune time to try to divert people, it would be now. I strongly urge us to look at that. The success in this measure would be a reduction in taxation and a flow of investment and workers into that other channel.

On the stamp duty surcharge on the purchase of residential property, I understand there may be no data and that Revenue has identified there may be some benefits to it and so on. I think the Minister may be going to some extreme lengths to suggest why it could not happen in that there would be more properties for people to buy in this State but they could be bought as holiday homes. That was a good stretch by whoever was writing the Minister’s notes.

We focus again on this issue. We have many cash sales, non-resident sales and institutions buying up property in bulk, and all that restricts the amount of property that is available for first-time purchasers or those who are scaling up or down. That is seriously problematic so we have to look, therefore, at measures we might not look at in other times. We had a discussion earlier today on house price inflation, and this is one of the issues we are trying to deal with.

My county has seen increases in rental income of about 19%. Roscommon was 20%, and we know in terms of rents that house prices are coming very close to the peak of the pre-crisis era. That is no surprise. We were told at the time that house prices would go back to those levels and it was very clear it would happen when it was decided to turn off the tap. It was the Government before Fine Gael were in government, when Fianna Fáil adopted that policy of long-term leasing.

This is, however, about trying to ensure we support home ownership. We hear the Taoiseach always saying in the Dáil that Sinn Féin does not support home ownership. We do but we do not want the investment funds to own the homes. We do not want the non-residents to be snapping them up. We want ordinary people who want to live here and to be part of building their communities to have home ownership at an affordable price and that we are not weighing them down with very significant levels of debt which will have, in the main, to be mortgage-financed.

On the first amendment, which relates to investment funds bulk-buying properties, I know the Minister will dispute this, but it was quite embarrassing for him to have sat here for the past number of years, voting consistently against amendments we brought forward to deal with this issue, only then, thankfully, because of the role played by the media and the public anger at what was happening in Maynooth, for him to be forced into a complete tailspin where he and his officials had to cancel everything and draft emergency legislation within a fortnight that introduced a levy on these funds, but only in the case of the bulk-buying of homes. I argue the rate is too low and can be absorbed.

The biggest problem here is this, and the Minister knows or should know this better than I do. I am from Gweedore in west Donegal but a large number of completions in Dublin are apartments. That is what is happening in this city. In Donegal where I come from, I do not have the figures with me but I would say that over 99% of homes there are houses, not apartments. In Dublin a large number of completions are apartments. Some 47% of all new homes built in Dublin from January to September 2020 were apartments. In the city of Dublin, 85% of homes were apartments. The Minister has handed these over to the vulture funds, the investment funds, which are not financing the construction of them but are entering into, as the Minister acknowledged in his script, purchasing arrangements. No money passes from the funds to the developer until they are completed and these funds then purchase them from the developer, off the market, and they are not available to anybody in this city or elsewhere to be purchased.

I will make the point again where 85% of homes in the city of Dublin are apartments and are being bought by the funds, not by people from Coolock, Drumcondra or Finglas. That is not just the end of the madness. As a result of the tax structure that applies to these funds, these apartments are bought at high costs and push prices up. These funds can do that because they are bought to rent. They are rented out then at high prices and rent rolls but not paying any tax on the rental income. That is a privilege that is not available to any other company or individual in this State bar Irish real estate funds, IREFs and real estate investment trusts, REITs.

When they sell these assets in years to come they will pay no capital gains tax on the uplift. On an asset that may have increased in value by €100 million, they will not pay the 33% capital gains tax on that that any individual or any other company structure would have to pay. It is for those reasons, because there is no taxation within the fund and only dividend withholding tax at a maximum of 20% on disbursement of dividends, that they are able to outbid, push and jack up the prices for these apartments and put prices up across the board. That is what is happening.

I am sick and tired of saying this every single time at this committee. I say to the Minister, surely to God if it is simply not working year after year and he is sitting in the driving seat, maybe it is time to look in the mirror to see if there is another path we can go down. If he continues on this road, it is not good. It is not good for the footprint of Dublin or that he is surrendering Dublin to these funds. It is not good for home ownership or for prices of property across the board.

It is not just I who is saying this and I am sure the Minister will try to dismiss what I am saying. The Department of Finance the Minister leads published a paper in 2019 entitled Institutional Investment in the Housing Market.

The paper noted:

There is a risk that, should ... [buy-to-rent] investment continue at current growth rates, market forces would over the long-term create socio-economic polarisation in some urban areas. Under such a scenario average income earners would be priced-out of purchasing or renting from the private market ...

It also stated: "... there is a risk that at sufficient scale an institutional investor or group of investors could, over time, develop monopolistic ... pricing power". That is happening under the Minister's nose. Not only that, but the Minister is facilitating it. This is eyes-wide-open stuff. Crazy stuff is happening. These are things which cannot be reversed easily overnight because they are going to have a long-term impact on property prices, the shape of Dublin and how people live and are able to go about their lives. It is also wider than just apartments. This amendment is about calling that out. It is about ending that practice. It is about saying, "No, we need to stop this". That is what it is about.

As I said, I know the Minister is not going to budge on this. He has no current plans to do the investor roadshow but his Department is planning the investor roadshow and I am sure he has not told it to stop. That is the reality of it. What has happened is heartbreaking. This is not a natural disaster. It is not a pandemic. It is not what we are facing with Covid-19. It is not climate change and the challenges that will bring. This is a direct consequence of policies he and his predecessor have implemented and which people at this and previous finance committees continue to cheerlead and vote through.