Alice-Mary Higgins (Independent) | Oireachtas source

If anything, the Minister of State has made the case for a far more ambitious investigation into REITs than mine. We all have a concern about the potential homeowners and those in rental situations. The Minister of State is correct that approximately 70% of the money has gone into commercial office blocks, many of which are empty. We can take a walk in the square mile around these buildings and see thousands of square metres of empty commercial office space. In many cases we also see, and this was highlighted during the Covid pandemic, the hollowing out of the city centre and the fact that it has been deadened by the presence of speculative, often empty, open-plan commercial office space that is already doing its work by being built and serving as a speculative investment. It is taking up spaces where we might have a vibrant city centre. REITs have a role in that.I would be very happy if the Minister of State did wish to conduct an investigation that looked not just at the interference and engagement of REITs in respect of housing but also looked at the favourable and unusual tax treatment in place for REITs. Many people have incomes and if they sell a property or another asset they are subject to capital gains tax at a certain rate. As Members know and the Minister of State is well aware, many of the investors are not based in Ireland and, as such, will not pay tax in Ireland in that regard. Those who are based in Ireland do not pay tax at anything like the rate they would pay in capital gains tax. Some people argue that it is double taxation if one is taxed again anywhere down the line. Most people and small businesses do not experience that.

There is a question around the capital gains tax waiver. We know the capital gains tax waiver from 2012 onwards is considered to have contributed significantly to the overheating of the market. The very favourable treatment of REITs in respect of capital gains tax has been and is a real concern. It is creating a dynamic of speculative investment.

The Minister of State referred to the fact that more property is sold. That is the case because much of it is flipped. A person buying a house to live in will buy it, live in it and then sell it if they decide to move on. A very large scale investor can afford to buy numerous offices and housing units and leave them empty and then, exactly as I described, pick the point of greatest pressure in the market to make them available or sell them on. Of course, there are investors buying units and then, drip by drip, selling them at a point such as the period in the market previously when there was a significant amount of selling as prices had sufficiently inflated, as the Minister of State described. I acknowledge we are in a different market now.

We cannot and should not be placing a speculative model at the centre of building. Sometimes we hear about having to coax builders to build houses. How will we coax builders to build houses when it is far more lucrative and easier for them to just build yet another empty office block? The Minister of State himself made the case in that regard in terms of the problems relating to REITs.

The problems go far beyond the housing issues at which I have looked. The Minister of State referred to reports that were done in the past. I urge him to really think about and examine potential changes we may see in respect of the operations of REITs in the forthcoming 12 months or 24 months post Brexit. I refer to the many international commercial investors that may currently be working through REITs.

The principle in respect of double taxation was based on a previous model relating to pension funds. The idea was that people were paying into a pension fund and that the fund would then invest the money and the investors would be taxed when they got their pension. That was the investment principle and it had some basis. It was based around the idea of collective investment by pension holders who paid in their pension. That is from where it originally came. The extension and widening of this kind of space that is being given to speculative investors is really problematic.

Although there may have been reports in the past, I urge the Minister of State, now that he has responsibility for this area, to consider a re-examination of the issue. I of course am very open to his examining the issues relating to commercial office letting, as well as those he has mentioned.