Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

I move amendment No. 12:

After section 31E, to insert the following new section:

"Report on Application of a Stamp Duty Charge on the Purchase of Apartments by Investment Funds

31F. The Minister shall within 14 days from the passing of this Resolution prepare and lay before Dáil Éireann a report on the impact of deleting subsection (6)(a) of Section 31E and including residential units in an apartment block as a relevant residential unit to which the higher rate of stamp duty will apply as a consequence of this Resolution."

Amendments Nos. 12 to 14, inclusive, are in my name and that of Deputy Eoin Ó Broin and the Sinn Féin Party. The first two deal with an appropriate level of stamp duty on these funds and ensure it will apply to apartments, along with other residential developments. The third amendment is to ensure the profits of these funds are also taxed and that the sweetheart deals, which the Minister intends to leave in place for these funds, come to an end.

The Minister comes before the House today with a financial resolution to place a restriction on investment funds, and what happens? The share price of the funds goes up. That is some trick, even for the Minister. The reality is that this has basically exposed what is going on here. This is a Fine Gael, Fianna Fáil and Green Party Government that has been desperate to try to find some answer to the public anger and outrage at what has been happening for many years in terms of deliberate policy by this Government, which has locked generations out of the housing market, which has left other generations of renters paying extortionate rents and young people's dreams shattered in regard to being able to own a home, particularly in this city and other cities, and in the commuter belt.

What it has come up with here is the bare minimum to try to suggest it is now clamping down on the funds, but not really, to try to take this House and the members of the Opposition for fools. We are not falling for it and I do not think the public will fall for it either. The share price rise says exactly what we all know, namely, this is not real and it will not deter investment. Indeed, these investors now believe they will be more profitable.

The Minister has set a rate of 10% and he has suggested he wants to stop these funds buying up houses in the market. If he genuinely wanted that to happen, then he would set the rate a lot higher. When this House on previous occasions decided we wanted to stamp out a type of activity, we set punitive rates, an example being that when bankers were paying out bonuses to chief executives after the crash, the public outrage forced the Government at that time to bring in a surcharge on bankers' bonuses. The effect was that the tax on those bonuses was 89%. It was about stopping it; it was about deterring it.

The Minister has brought forward a 10% stamp duty with so many loopholes that anyone could drive a horse and cart through it. Even for those it may apply to, 10% simply will not wash. I ask the Minister to explain to the House how this rate will impact on residential property being bought up by these funds. Let us take the example of Maynooth, where property was purchased at an average of €400,000. This fund, which snapped up the 135 houses from under the noses of people who were saving for years for their deposits, would make a 5% yield if it charged the average rental charge in the State of €1,667. If it has to pay this 10% stamp duty, which is 8% more, its yield would drop from 5% to 4.5%, a drop in the ocean. At a time when international money cannot find yields like that, when Government bonds are being sold at negative interest rates, the impact of the Minister's measure, if the fund was just to accept a drop in yield, would be half a percentage point. Otherwise, what it could do is raise rents by 10%, or it could split the difference. The reality is this 10% charge is not going to make the difference, and the Minister damn well knows it.

That is what it is designed to do. It is designed not to make the difference but to give a semblance of that, in that the Minister is suggesting he is doing something about it. How do I know with conviction that is the case? It is because, six months ago, I put forward a proposal that we look at the area of a stamp duty surcharge on these funds. I have been telling the Minister for years that these funds are squeezing out people who want to own their own home, whether they be first-time buyers or other property owners. The Minister railed against it. He marched his troops into the committee and he voted against even looking at the issue. He did not want to go here, he does not want to be here and he is only reacting to the public anger which is evident over the last number of weeks. Therefore, he has designed something that is designed to fail.

He has also made so many exemptions that it is unbelievable. Forward purchases are not to be included and they all get the sweetheart deal in terms of the stamp duty that is in place. The Minister knows damn well that forward purchases amount to thousands upon thousands of homes. In the last quarter of 2020, forward purchases for private rental sales equated to €600 million. In the first quarter of 2021, the largest forward purchase was for homes in a private rental sale in excess of €500 million. They are all exempt from this stamp duty increase, as little as it is. Not only is the Minister exempting all of those forward purchases that have already been included and agreed upon, but he is giving them three months to conclude arrangements, or handshakes, or words that have been exchanged to make sure they are excluded also, not from buying apartments, but from buying homes and duplexes across this State.

The Minister made the bogus claim - let me just nail it - that apartments would not be built if it was not for forward purchase agreements. Riddle me this. How is the Marlet Property Group, one of the biggest developers, funding the development in Grand Canal Harbour? The Minister knows; he damn well knows. It is through AIG. They have no forward purchase agreement for the 596 apartments they are building in Grand Canal Harbour. It is being funded by AIG to the tune of €147 million.

How is the Marlet Property Group funding St. Clare's in Harold's Cross? A total of 220 apartments will be completed in July. There is no forward purchase agreement there. How do I know? Because it is part of something that only went on the market in March this year. Investors are now interested, after the funding has been secured. Some of these apartments will be completed in the coming months and investors are now just starting to bid on forward purchasing, offering in excess of €1 billion for the entire portfolio of 2,000 apartments, which means an average cost in excess of €500,000 per apartment. Not one of them is going on the market for anyone to buy in this city across the six regions. Not one of those units will be charged an additional cent of stamp duty as a result of the Minister's policy here tonight, and not one apartment will see its tenants have a reduced rent. What they are doing as a result of this is pushing up apartment prices right across the city and beyond. The Minister should not take my word for it. He should read Savill's report for investors in Dublin for 2020. It makes it very clear that private rental sales for apartments in Dublin are 23% above the market average for non-private rental sales. A premium price is being paid by these funds, and why would they not? The Minister has created this structure so that they can pay this amount and as we saw last week in the Sunday Business Post, it is not just apartments. These funds are also outbidding approved housing bodies up to the tune of €80,000 per unit, pushing up house prices for everybody. How did they do it? Because the Minister has let them go tax free. They will easily absorb a 10% increase, if it even applies to them, because they will look at the lifetime of their investment. What the Minister is saying to them very clearly today is that they will still have no tax to pay on their rental income.

Let us look at two of these funds, the first of which is IPUT's consolidated accounts. Were it not so serious, the Minister would have a good giggle. The fund states its profits before tax are €101 million from rent and its profits after tax are €101 million. There is no tax. Shame on the Minister. That is a commercial entity but let us look at a residential entity, I-RES, one of the biggest landlords in the State, in some cases charging rents of more than €2,000 a month in this city. It made €75 million in profit last year on its rental income and it has not paid a cent in corporation tax on that. Any other structure or company that might have bought that property and had that rental income would pay 25% corporation tax on rental income, but the Minister for Finance, Fine Gael and Fianna Fáil want these funds to go tax free and that is why they are pushing up prices on individuals. Today is the day, 19 May 2021, this is the hour, where the Minister has surrendered this city to the vulture funds and the investment funds. This is the moment when he hoisted the white flag over this city and said that it is a free-for-all for these funds. Instead of the Government coming in here and giving the red card to these funds, he has given the green light and shame on him. And shame on the Green Party, which champions a type of urban living, to actually back this because the consequence of this is not just about tax or revenue or house prices but what this city, the commuter belt and the outer regions and, indeed, other cities, will look like in the future. There can be no hiding of the consequences of the Minister's decision. Six out of seven homes that were completed in Dublin last year were apartments in Dublin city. Half of all homes completed last year in Dublin were apartments. The Minister is saying that it is a free-for-all for apartments, with no tax increase, no capital gains tax and rent free and "Let us go on the way you are boys, keep it going". By excluding apartments from this measure, he is effectively saying that this city is not a place where workers and families can ever aspire to own their own home, with rents set at rates the majority of earners will never be able to afford.

I will leave it at that. We have tabled amendments, which I hope this House will accept. I hope the Minister does not do what he did six months ago, when he turned his back on even looking at stamp duty, and then having to come in here and do a U-turn but one he knows will not have any effect on deterring these funds from gobbling up houses from under the noses of first-time buyers and others who aspire to own their own home, whether that be a house, a duplex or an apartment.

See this speech in context