The Dáil has passed an amendment to financial legislation that exempts vulture funds from a 10 per cent stamp duty surcharge on the bulk-buying of houses so long as those properties are leased to local authorities.
The Taoiseach earlier signalled that the Government will move to ensure properties leased to local authorities by investment funds will be owned by the State, ending current arrangements where corporations keep them.
Mr Martin said the State will “transition to different models” through its Housing for All strategy, but added that “you just can’t turn off the tap immediately” as for the second day in the Dáil he defended a change to financial legislation to re-instate a tax break for vulture funds.
The amendment to the Finance Bill passed on Wednesday night by 74 votes to 59 with no abstentions. The Government had the support of just one Regional Independent TD while all Opposition parties and other Independents rejected it.
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Ahead of the vote, Sinn Féin leader Mary Lou McDonald accused Mr Martin of “hijacking” the Bill, aimed primarily at supporting businesses to restart after the pandemic, with a “sneaky amendment” to incentivise cuckoo funds to “snap up” complete estates.
Currently funds that bulk buy properties engage in 25-year leases with local authorities who rent the homes at market rate with the fund owning the property at the end of the lease arrangement.
‘Benefit right now’
Mr Martin insisted that 2,400 families “can benefit right now” through the provision of social housing units through leasing by funds to local authorities.
“We can move and transition to different models, which is what I want and which will be reflected in the Housing for All strategy”.
But “if we turn off the tap immediately there are 2,400 families on the housing list, not first time buyers” who would lose out on a home this year and he asked Ms McDonald “should they be left on the street or in unacceptable conditions”.
People Before Profit TD Richard Boyd Barrett said later, however, that the answer was to "cut out the vulture middle man and get the local authorities to buy it directly, which by the way is better value, will cost less in the long run, and will mean the State will have an asset. And then allocate that housing for both social and affordable housing."
In May, after public controversy when an investment fund bought an entire housing estate in Maynooth, Co Kildare, the Government introduced a rule requiring funds to pay a 10 per cent stamp-duty surcharge, rather than the normal 1 per cent for the block purchase of 10 houses of more over 12 months with apartments excluded from the bulk buying restriction.
But the amendment to the Finance Bill will over-ride the rule if they immediately lease the properties to local authorities.
At the time the Taoiseach said no local authority should be engaging in a long lease with these institutional investors, although he acknowledged that “a limited degree of leasing has some importance, but leasing over the long term does not represent great value for money”.
U-turn
The Opposition accused him of doing a U-turn but he said that “leasing has been a feature of social housing for quite some time now. I have a view on that and we will change it”, through the Housing for All strategy, to be launched later this month.
Ms McDonald said one fund will bulk buy homes in Finglas, Tallaght and Blanchardstown and lease them back to the State for the next 25 years.
“They plan to buy up €500 million in homes to be similarly leased to councils over next the 36 months,” she said, adding that another fund, Greystar, is “set to snap up 342 homes in Griffith Avenue”.
She said it was “absolutely mindboggling” that the Government is allowing “speculators in the housing markets, who are exploiting citizens in this State to buy homes, ahead of hardworking families”.
Later, Minister for Finance Paschal Donohoe said the amendment aimed “to ensure the supply of more social housing as quickly as possible” and was introduced because of a risk that the housing need of up to 2,500 families would not be met. He said there were “qualifying conditions” that the lease has to be agreed within two years of acquisition and must run for at least 10 years.
He rejected opposition claims the Government was only interested in the market and insisted the reality it is the largest builder of State-approved and financed homes.
Sinn Féin finance spokesman Pearse Doherty said it was “nothing but a political stroke” and a “brazen step” to “give investment firms a tax break when they snap up homes from under the noses of struggling homebuyers”, outbidding them and approved housing bodies by as much as €80,000.
Mr Boyd-Barrett said the policy “is inexplicable, the only beneficiaries are these vultures and cuckoos who make an absolute fortune and they are directly contributing to the dire housing crisis”.
