Housing plan: Stamp duty hike to limit bulk-buying ‘not a silver bullet’, says O’Brien

A plan to limit the bulk-buying of homes but not apartments by investment funds is not a “silver bullet” and additional measures will be considered in the context of the budget if required, Fianna Fáil Minister for Housing Darragh O’Brien said this afternoon.

Speaking ahead of a vote in the Dáil this evening on new measures the Minister said the aim is to make it easier for first-time buyers to buy a house.

The Cabinet yesterday agreed to increase stamp duty to 10 per cent on purchasers of more than 10 houses within a 12-month period.

Apartment purchases will remain exempt from the higher stamp-duty rate, as would acquisitions by local authorities and approved housing bodies, in a move that has drawn sharp Opposition criticism and led to concern in the Green Party.

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Stamp duty will rise to 10% for multiple house purchases under Government plans

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The measures will also mean the issuance of new planning guidelines to local authorities. These will state that all houses and duplexes should be available for sale to individual non-commercial buyers for at least two years after they are built.

Under this provision developers of five units or more must enter into an agreement with the relevant local authority that will limit sales to individual buyers. This instruction applies to planning applications lodged from today.

If a local authority is then satisfied that a market has not emerged, the houses will be open once again to funds and other buyers.

Mr O’Brien said he believed the combination of tax-and-planning measures would act as a deterrent against investment funds buying up large volumes of newly built houses.

He said the impact of the new measures will be kept under review and, if necessary, other measures would be introduced in the next budget.

Mr O’Brien also said he would bring in further amendments to copper-fasten the percentage of developments that could be purchased by first-time buyers.He said projects such as the shared-equity scheme could help bridge the gap for first-time buyers including those purchasing apartments, but “we do have to work on the viability of apartments”, he told RTÉ’s News at One radio programme.

The shared-equity scheme, proposed under the Affordable Housing Bill 2021, would mean the State supporting first-time buyers to purchase homes in private developments. This would be in the form of an equity stake of up to 20 per cent in new builds.

Apartment builds

Earlier, Minister for Finance Paschal Donohoe also defended the decision to exempt apartments from the stamp-duty plans, saying he was convinced if apartments were included in the scheme fewer would be built.

“The first step in allowing rent to become more affordable in the future, and allow for more apartments for people who want to live in them, is for the apartments to be actually built,” said Mr Donohoe.

He said there is a “profound problem” at the moment because there are not enough properties to rent.

The Government’s plans have been criticised by the Opposition with Sinn Féin finance spokesman Pearce Doherty saying the 10 per cent stamp-duty level was too low to provide a deterrent for investment funds and it should have been closer to 17 per cent.

The Government is merely giving the pretence that it is addressing the problem, he said. “Paschal Donohoe, his Government, doesn’t want to go here. It is only because of public pressure that they now have to give a semblance that they are doing something.”

Green Party

The Green Party has also expressed concern over the exclusion of apartments from the scheme. Minister for Transport and Green Party leader Eamon Ryan said he wanted to see apartment living included as part of the measures.

Apartment living needed to be regarded as a decision for life, not just an option for the rental sector, Mr Ryan told Newstalk Breakfast, adding that mixed development was the way forward. “We can’t just give up apartments to the rental sector. We need balanced regional development.”

There is a need to bring people back to living in the centre of towns and cities, he said, to regard apartment living “for life”, not just as a stopgap before buying a house.

However, he said the approach to the issue was the same as with Covid-19, it was a “whole-of-Government” approach with every department playing their part.

When asked about the party’s record of blocking large developments, Mr Ryan replied that it is pro-developments, if they are the right development with an emphasis on quality, not quantity. Housing without services would not be acceptable, he said.

Mr Ryan said the party approach is one of getting planning right: “It’s not just a numbers game. It’s about getting good-quality housing.”

Party MEP Ciarán Cuffe said he and some of his colleagues are disappointed that the plan differentiated between houses and apartments and added that this runs the risk of creating an urban-suburban divide.