Alice-Mary Higgins (Independent) | Oireachtas source

I move recommendation No. 5:

In page 34, between lines 23 and 24, to insert the following:

"(4) The Minister for Finance shall, within six months of the passing of this Act , prepare and lay before both Houses of the Oireachtas a report—

(a) on the impact of Irish Real Estate Funds and the Real Estate Investment Trusts on the Irish property and housing sector, including rental prices and residential and commercial property prices throughout Ireland, and

(b) the effective tax rates paid on the profits of these entities and their shareholders.".

I will not dwell on this too long. I know the Minister of State also has a recommendation in respect of these schemes so I imagine that we might get to discuss the matter further during the debate on the Minister of State's recommendation. This is simply to request that the Minister for Finance will, within six months of the passing of the Act, prepare and lay before both Houses of the Oireachtas a report on the impact of IREFs and REITs on the Irish property and housing sector, including in the context of rental prices and residential and commercial property prices throughout Ireland and on the effective tax rates paid on the profits of these entities and their shareholders.

On Committee Stage in the Dáil, the Minister of State seemed to indicate that he expected to produce a report on this issue. I am simply raising the matter again because I am concerned that, on Report Stage in the Lower House, it seemed slightly less clear as to whether or not a report will be produced. When I looked at the debate, it indicated that the Minister of State was checking to see what he would be able to examine and provide. This recommendation has been tabled to give the Minister of State an opportunity to clarify what report he will provide. I know he is expecting figures from Revenue in March 2018 in respect of the IREF schemes but there is a real concern here.

In many cases, capital gains tax waivers effectively acted as an invitation to large vulture funds in Ireland. There were inadvertent and significant consequences. Again, the dangerous potential impact of capital gains tax measures that bring in companies was flagged at the time and consistently since then. I am very concerned. In respect of continuing that capital gains tax waiver and foreshortening the time required in terms of returning it, I know the goal has been expressed in terms of freeing up property transactions. However, I am very concerned because I do not believe there are robust measures in place. We worked with the then Minister for Housing, Planning and Local Government, Deputy Coveney, and improved them in the Seanad. Unfortunately, they were slightly diluted in the Dáil. Protections against pressure for vacant possession in the case of those sales are not adequate. If properties are going to be changing hands, and we are looking at quite a lot of properties potentially flipping and changing hands, in the context of REITs and IREFs, we need to look and drill down to see how these actors are affecting the market not simply in terms of how and by how much they are profiting but what impact they are having on issues like stability of tenure, rental prices and residential and commercial property prices, particularly given the waivers that are there in areas like major refurbishment.

This recommendation is really a request to the effect that the Minister of State be clear in the context of what information he can provide in respect of these schemes and how we can analyse them. Perhaps the Minister of State might make clear whether there has been a very strong risk assessment has been carried out not only in terms of the capital gains tax waivers, which we saw previously, but also regarding the changes in those waivers and the likely impact thereof. The fact is that 42% of sales in Dublin are going to this type of investor as opposed to only 25% of first-time buyers.They are key and very strong actors. This is a distortion in the market, and we are seeing the same mistakes made again and again. The Minister of State talked about companies and their relocation. The fact of having a property market, having every house and apartment in Dublin potentially acting as a speculative investment again rather than a home or a potential home, is a greater danger to the growth of industry and the attraction of genuine investment in the form of companies with workers who wish to locate in our towns and cities.