Monday 23 September 2019

Review of cuckoo funds' tax arrangements will determine Budget move

Budget: Finance Minister Paschal Donohoe. Picture: Mark Condren
Budget: Finance Minister Paschal Donohoe. Picture: Mark Condren
Charlie Weston

Charlie Weston

Fearful of further backlashes, the Government is to review what the UN referred to as the "preferential" tax arrangements of institutional cuckoo funds investing in housing here.

Cuckoo funds are increasingly block-buying homes in Ireland, muscling families out of the market.

These big investors have been described as cuckoo funds because they buy in cash and in bulk, elbowing out traditional family buyers.

Finance Minister Paschal Donohoe told the Dáil recently he is asking his officials to examine the tax arrangements for big funds.

The Tax Strategy Group will see whether measures can be introduced to discourage so many funds block buying homes.

Returns made to Revenue from funds will be looked at, and there will be a probe to see if their activities are distorting the housing market.

A senior Government source confirmed tax matters are being looked at ahead of this autumn's Budget, as political pressure mounts over the cuckoo funds.

Fianna Fáil is making the availability of homes a central plank of its local elections manifesto. It is proposing that developers would not be given planning permission if applications did not contain a significant number of homes for sale.

The party also wants to dramatically change six-year-old legislation which introduced tax breaks for international firms investing in Ireland.

Cuckoo funds, such as real estate investment funds (Reits), do not pay corporation tax on their profits.

But Mr Donohoe said they had to distribute 85pc of their property profits each year and a dividend withholding tax is collected on the distributions.

Social

Cabinet members expect the State to ramp up the building of social housing instead of local authorities and approved housing bodies relying on the purchase of homes from developers, which is seen to be distorting the market.

It comes as one of the largest building firm in the country, Glenveagh, is seeking to alter an existing planning permission for houses in north Co Dublin to construct 174 apartments instead.

The company would not say if these units were part of a "build-to-rent" model. But the expectation is they will be sold to a cuckoo fund or to the State to house social tenants.

The building firm has already sold units in Donabate to institutional rental company, Ires Reit.

Irish Independent

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