New measures by the government to crackdown on cuckoo funds denying first time buyers the opportunity to own their own home have been blasted as a “cop out”.
Housing Minister Darragh O’Brien and Finance Minister Paschal Donohoe insisted they have brought in “radical and effective” measures to tackle multi-million investment funds locking out Irish people from the housing market.
The agreed measures by Cabinet include increasing the stamp duty to 10% for purchases of more than 10 houses by cuckoo funds but this will not apply to apartments.
It has now emerged that there was disagreement at a second Cabinet meeting on Tuesday evening as Green Party Ministers raised concerns over the decision to exclude the stamp duty on apartments.
Minister Donohoe said this “financial resolution,” if applied to the bulk-buying of apartments, could “lead to fewer apartments being built.”
There are no further changes to ending “cushy tax arrangements,” as requested by Sinn Fein’s Mary Lou McDonald in the Dáil on Tuesday.
She accused the Taoiseach in a fiery exchange of “spoofing” and had warned Mr Martin prior to the government proposals that the rise in stamp duty for cuckoo funds needs to be above 15%.
The Dáil is to vote later on Wednesday on the new planning and tax proposals which seeks to curb cuckoo funds snapping up new builds.
While Minister O'Brien is to join the Fine Gael parliamentary party meeting on Wednesday night to take questions from his Coalition colleagues.
Guidelines will be issued to local authorities that will urge them to consider the need for houses and duplexes to be set aside for individual non-commercial purchasers and these guidelines will take effect from Wednesday.
The Affordable Housing Bill will also be amended to allow local authorities grant planning on the basis that a percentage of units between 0-50% are reserved for owner occupiers.
Minister O’Brien said he will be issuing a circular under the Planning and Development Act that will "fundamentally ban bulk sales for houses and duplexes for all new applications received after 19 May.”
Minister Donohoe said these measures are intended to “provide a very significant disincentive” to put a stop to cuckoo funds bulk-buying homes in new housing estates that were pricing first-time buyers out of the market.
Minister Donohoe said he is “absolutely” sure the 10% stamp duty is a high enough rate for cuckoo funds despite calls from the Opposition to increase it to as high as 20%.
He said he doesn’t “envisage” that these investment funds will just take the hit on paying the extra stamp duty and said it will be “kept under review.”
He added: “What we are looking to do here is to deter a particular purchase..but not do anything that will also lead to the reduction in the supply of homes.”
When put to Minister O’Brien that these multi-billion investment funds are building and renting out apartments at unaffordable rates, he said measures will be brought forward in the Autumn to “replace” rent pressure zones to tackle the rental market.
Minister Donohoe said there is a need for investment funds in the country stating if we are to meet housing challenges and demand, investors are needed “who can play a role in providing large amounts of rental accommodation,” due to the exodus of small landlords out of the market.
Housing Minister Darragh O’Brien said he and the government “wants to ensure that homeownership is back in the reach of a whole generation of people.”
He said: “My firm priority is in the area of, you know, making homeownership really realizable for people, and delivering public homes at a scale that's not been seen before.”
However, both Minister’s have been blasted by the Opposition calling the measures a “cop out” and “weak.”
Sinn Fein’s housing spokesman Eoin Ó Broin said people will see it for what it is "very quickly” and predicted "mobilisations on the streets like we have not seen for decades" once the Covid-19 pandemic has passed.
Social Democrats housing spokesman Cian O’Callaghan said: “The measures announced by the Government this evening are weak and won’t work.
“Once again, the Government is putting the interests of investment funds ahead of those who want to own their own home.
“The Government’s proposed changes to planning laws will take a number of years to kick in.
“In the meantime, the vulture funds will feast on the homes already approved and the cuckoo funds will continue to knock first-time buyers from their nest.
“This is unacceptable. “People want immediate action. Not another can kicked down the road.”
Labour’s finance spokesperson Ged Nash said that the proposals announced by the Minister for Finance on stamp duty do not go far enough and will distort the housing market further with the attention of cuckoo funds now set to target apartments.
Labour’s housing spokeswoman Senator Rebecca Moynihan said that the fact it will be at the discretion of the planning authority to ringfence between 0-50% of homes for owner occupiers means the supply issue may go entirely unchanged.
