Details on new law on stamp duty emerged in Dáil last night
THE Government’s surprise U-turn on levying higher tax on investment funds buying up new houses has been attacked as “terrible value for money”.
In a surprise move last night, the Government amended details of a new law on stamp duty.
This reversed an earlier announcement to levy so-called ‘cuckoo funds’ by 10pc to curb the purchase of vast numbers of new houses.
Social Democrats joint leader Catherine Murphy also described the law change, which was voted through by Government TDs from all three coalition parties, as “desperate value for money”.
But the Taoiseach defended the law change as necessary to prevent the risk of 2,400 social homes being lost this year if the lease arrangements were not in place with investment funds.
Officials explained that lease arrangements were made with investment funds for social and affordable houses before the tax change was announced.
But Ms Murphy said the 2,400 houses being leased by Government for 2021 was a “big surprise”.
She said last year 1,440 social homes were delivered through the same lease programme.
Ms Murphy said that the Housing Minister was saying that the number of lease deals is substantially more than the total amount leased last year.
“This is despite everyone in Government agreeing that this is terrible value for money,” the Kildare North TD said.
Green Party leader Eamon Ryan, standing in for the Tánaiste at leaders’ questions, said that these were short-term arrangements – but he conceded there was a need to change this practice of leasing.
Mr Ryan said that could be achieved through much longer leases with ownership reverting to local authorities or other such arrangements and that would all be set out within the ‘Housing For All’ strategy.
He said that nobody is saying the “current leasing arrangement is something we think is the future” – but it would take time to change the practice.
“But you describe this as a short-term emergency measure – for 25 years,” Ms Murphy countered.
She added that the local authority is going to pay the equivalent, if not more, in terms of a mortgage for 25 years and will then refurbish the house and hand it back.
“This is not short-term, this is an abuse of public money,” Deputy Murphy said.
She also questioned the timing of the move and said that when Finance Minister Paschal Donohoe announced a 10pc stamp duty of 10pc levy on block purchases of 10 or more homes, only three bodies would be exempt – local authorities, approved housing bodies and housing agencies.
“If he had signalled that he was about to exempt cuckoo funds from measures, that were designed to target cuckoo funds, it certainly would have stood out and caused a row in the Dáil,” the Social Democrats co-leader argued.
Mr Ryan said the ‘Housing for All’ strategy to be published later this month will frame a big change in direction with the role of leasing homes vastly reduced.