Mick Wallace (Wexford, Independent) | Oireachtas source

I move amendment No. 30:

In page 30, after line 40, to insert the following:

"Real Estate Investment Trust (REITS) and impact on Housing/Rental Market

19.The Minister shall, within 6 months of the passing of this Act, prepare and lay before the Oireachtas a report analysing the impact Real Estate Investment Trust (REITS) have had on rental prices, and residential and commercial property prices throughout Ireland, and particularly Dublin.".

My amendment calls on the Minister within six months of the passing of the Bill to prepare and lay before the Oireachtas a report analysing the impact real estate investment trusts, REITS, have had on rental prices, and residential and commercial property prices throughout Ireland, and particularly Dublin. There are several good reasons that should happen.

I was amused listening to the latest report from Hibernia REIT boasting about the incredible money it is making. People might not have noticed but we tabled amendments to the commission of investigation into NAMA that was set up under the auspices of Mr. Justice Cooke. We added in a third module to examine the establishment of the Hibernia REIT. It was set up in 2013 following a three-year stint at NAMA by one of its founders but the company was planned long before the individual left NAMA. Some business men on the east coast of the United States were briefed on the plan for Hibernia REIT as early as 2012. The same founder is on the record as stating that they know enough people in Dublin to be able to go buy properties in Dublin without having to go to auction or having to go onto the market. If one looks at some of the assets it has purchased, the links back to NAMA begin to appear, for example, the Forum Building, the Dublin Observatory building, the Harcourt Street building, Windmill Lane, and New Century House on Central Quay. All of those assets were in NAMA and are now in the hands of Hibernia REIT either through direct purchases or secondary deals. If the State is going to continue to turn a blind eye as to how these people operate and allow them to have such an impact on the property game in Ireland, be it in terms of ownership or rental, that would be a huge mistake on the part of the Government.

REITs are subject to an entirely different tax regime from individual landlords. They are not subject to any tax on their rental incomes nor are they subject to tax on their gains. To achieve those gains, REITs must distribute 85% of all property income profits annually to shareholders.

The manner in which REITs were set up in the first place is worthy of research given that Bill Nowlan of WK Nowlan, the father of Kevin Nowlan, spent nearly two years lobbying the Department of Finance and they got the best sweetheart deal anyone in business in Ireland ever got. We are calling for research on whether this is good for the State and if we should allow it to continue in the manner in which it is working currently. The question is whether it is worthy of examination of the impact on the property game in Dublin, as it is mostly Dublin in which the REITs are operating. We want to examine the impact they have had and how big a part they have played in the escalation of rental prices in Dublin city in particular and other cities around the country.

I referred in an earlier amendment to a discussion I had nearly four years ago on the issue with the then Minister for Finance, Deputy Noonan. I refer to one of his main arguments against me at the time when I was warning him about REITs.

I reminded the Minister that one of the big problems we had with our building bubble was that a small group of people gained control of most of the land in the city and they land-banked it. They owned over 90% of the land with potential for development and thus controlled the price of it. The prices went crazy.

I have said it before, but I ended up paying €5 million for one fifth of an acre in a rough part of Dublin's north city. It was not the developers and builders who were making the mad money; it was the land-banker. This was in January 2014. The Minister for Finance, Deputy Noonan, argued:

There is a huge overhang of property, including portfolios held by NAMA and properties being held as collateral for impaired loans across the banking system. The banks have been deleveraging rapidly, especially Ulster Bank. There is potentially an enormous amount of property on the market. Part of the Government's job is to clear the overhang first because there will be no property development in this city or country until that is cleared. It is surprising that the overhang is being cleared so fast.

I am unsure why he was so surprised given that NAMA was absolutely flogging it at fire-sale prices. The take-up was powerful because it was money for jam.

It is all well and good to say that the horse has bolted and that there is no point in worrying about it from here on. Actually, that is not true. In recent years, real estate investment trusts have bought one fifth of all new residential properties in Dublin and the figure is rising. Those involved have a cartel now. That is why an investor can get €2,700 for two-bedroom properties in some parts of the city. The former Minister for Finance, Deputy Noonan, argued at the time that we needed professional landlords. By God, we have got them, but we have paid the price for it.

Is the Government happy with the fact that rents are the price they are in this city? A person can rent an apartment in the centre of Turin for €400 per month. The Government may believe that we are going in the right direction by having a rent of €2,000 per month, but I do not agree. It is nuts and it is unsustainable. The Government needs to look at how REITs operate and how the Government relates to them.

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