Gerald Nash (Louth, Labour) | Oireachtas source

When I read last week's story by Killian Woods of the Business Post about the bulk purchase of new homes by an institutional investor at Belcamp Manor in north Dublin, it was gut-wrenching but it must have felt like a real punch in the guts for first-time buyers from the area who are anxious and are working hard to buy their forever home. The odds are stacked against them and here is what makes this situation even more obnoxious: it is their own Government that is deliberately making it so. The game is, frankly, rigged. It does not have to be this way but this is how Fianna Fáil and Fine Gael have organised it. That is what they have chosen to do. It is a deliberate policy and these are the effects.

As has been stated repeatedly this evening, in 2021, when it was revealed that an entire housing estate - a typical housing estate in a commuter belt area of the kind likely to be attractive to young couples - was bulk purchased by an investment fund, there was uproar in this House and across society. The Government responded with two initiatives in a blaze of publicity, because it was being said that something must be done and everybody was demanding change. The first change was a change to planning regulations while the second change, which is the one in question here, was the introduction of a 10% surcharge on the stamp duty charged on bulk purchases of ten or more homes excluding apartments in a 12-month period. I said at the debate that night in the convention centre that such a puny surcharge would be easily absorbed by funds with deep pockets. I said that what was needed was a punitive surcharge and not the puny one we got. I said the following:

The evidence from the markets over the past 24 hours is telling. If investors feared a 10% hike in stamp duty, they would take their money elsewhere. Instead, the valuation of I-RES REIT, for example, has gone up by in excess of 2% since last night. A rate of 10% is not punitive; it is a puny rate. It says to me that they are not deterred. They will take the move on the chin and absorb the cost.

That is exactly what they did and they are still coining it and laughing up their sleeves at us. They are still at it and the situation at Belcamp Manor is living proof of this. There will be more of this in the coming months unless the Government decides that this ends here and a penal surcharge is introduced to force a change in behaviour. New figures released today to Deputy Doherty really expose the problem. Far from stopping this objectionable behaviour, in terms of the initiative the Government took in 2021, if we can call it an initiative, the Government has succeeded in ensuring the practice has accelerated. There was a 71% increase in bulk purchases in 2023 compared with 2022.

At the time of the May 2021 debate, the Labour Party proposed a higher surcharge to discourage this behaviour. The Government came down in favour of 10%. I do not know why. It was a figure simply plucked out of the air. I asked the then Minister for Finance, Deputy Donohoe, to set out his rationale for setting the stamp duty surcharge at 10% and to publish all of the advice. That did not happen and we can draw our own conclusions from that decision. It was a shot in the dark and a poor one at that. If you are confident in your measures and the decisions you are taking, you will share the rationale without fear or favour. I was never persuaded that 10% would work and now we know beyond all doubt that it simply has not worked.

On the night in question, the then Minister for Finance said "I believe the 10% rate is at a sufficient level to discourage institutional investors from participating in the market for houses and to direct available capital to apartment developments". We know his inadequate actions and intervention have failed abjectly. Bizarrely, apartments were exempted from coverage of the 10% stamp duty surcharge. In that debate, the then Minister was at pains to describe the importance of forward purchasing for the completion of city apartment developments, how he could not intervene and how, if he did, it would put at risk the required apartment developments in this city and other urban areas. However, for me, this exemption does not wash. It did not then and it does not now. The Labour Party is of the view that such a surcharge should also apply to apartments, which the House should not need reminding are homes too and are often the first choice and possibly the only available option financially for individuals and couples.

Since then, the Government has also gone on to subsidise certain kinds of apartment developers and entertain the approaches of certain kinds of developer lobbyists providing subsidies with few conditions attached for the completion of apartment complexes. Since the May 2021 debates, there have been minimal changes to the tax treatment of investment funds that are in the business of developing properties and renting housing. This really rankles with the innate sense of equity, fairness and fair play in Irish people. Funds do not pay tax on their rental income, which is extraordinary. It is extraordinary that this has continued to be permitted. Some of the biggest landlords in the State charging the highest rents in history are not required to pay a cent in corporation tax on their profits. If a firm were incorporated and organised in a different way - the normal way - it would pay tax on its rental income and corporation tax on its profits, so these funds have it every which way. Their deep pockets mean they can see off first-time buyers with the minimum of effort. They operate in a tax environment that was designed with them in mind, and whatever about the circumstances at the time, those circumstances have changed in recent years but minimal changes have been introduced in terms of the tax treatment of these funds.

The entity that bought the properties in Belcamp Manor and those that bought the rest of the more than 600 what I might call traditional newly built homes over the past short period know fine well that paying a puny 10% stamp duty surcharge on both purchases is A-okay. Why? It is because given the environment that has been created in this country, this is the kind of investment that is virtually risk free. House prices are still rising and they know that under this Government's housing plans, prices will remain high because the Government will stick to its guns on the anaemic and insufficient target of 30,000 new homes a year rather than admit that what is required is up to 50,000 if not closer to 60,000. Similarly, these funds and their advisers know that a lack of supply and the Government's unwillingness to properly intervene to regulate the rental market in a way that would be familiar to most Europeans means that a killing is to be made in Ireland.

Frankly, this whole saga is immoral. It is unethical and wrong and needs to change. There was the chance to change it in May 2021, the chance at least to further minimise the risk of what happened in Belcamp Manor recently from occurring, but it has happened and will continue to happen. The figures do not lie. The token 10% stamp duty was designed to fail, it was doomed to fail, and fail it did. Who did it fail most? First-time buyers, and that ought to be to this Government's eternal shame.

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