Housing crisis: hike in stamp duty considered to deter bulk-buying of homes

Local authorities may be blocked from agreeing long-term leases with investment funds

Speaking in the Dáil, Taoiseach Micheál Martin said, “we do not want institutional investors competing with first-time buyers. Our priority is first-time buyers.” Video: Oireachtas

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The Government is considering a stamp duty hike to deter bulk housing purchases, as well as blocking local authorities from agreeing long-term leases with institutional investors.

With the Coalition under pressure over institutional investment in housing for a second week, Ministers held talks following a Cabinet meeting where the Taoiseach said housing should be on a par with Brexit or Covid, with all departments contributing.

Government sources said no final decisions had been made. If an intervention on stamp duty applying to multiple unit sales was pursued, sources said it would have to be carefully designed as not to impact buyers such as approved housing bodies and local authorities.

There are also concerns the wrong balance could drive off institutional investors, which the Coalition believes have a role in financing home building. However, there is an acceptance across Government that meaningful interventions are needed.

On the planning side, Minister for Housing Darragh O’Brien is understood to be consulting the Attorney General on options, including restricting the bulk purchase of homes in less dense areas. He has said he wants to ringfence a percentage of homes in new developments for first-time buyers.

Despite sustained pressure, there was little sense in Government on Tuesday night that proposals would be produced in the coming days. A Government spokesman said it was “hard to put a timeframe” on action. He said the Government was addressing the issue with “absolute urgency” but admitted he “can’t say what that means” in relation to identifying and implementing new rules.

Sources indicated on Tuesday night it could be the middle of next week before proposals were brought forward. Officials said Government would consider limiting the number of units that purchasers of new homes could buy, preventing local authorities from agreeing long-term leases with funds, and tax changes which would affect how the funds operate.

‘Top priority’

After the weekly Cabinet meeting, a Government spokesman repeatedly echoed Mr Martin’s words on Tuesday that housing was now the Coalition’s “top priority”.

In the Dáil, the Taoiseach sought to hit back at Sinn Féin criticism, accusing the party of objecting to many housing developments at the planning stage.

Minister for Housing Darragh O’Brien has said he wants to ringfence a percentage of homes in new developments for first-time buyers. Photograph: Gareth Chaney/ Collins Photos
Minister for Housing Darragh O’Brien has said he wants to ringfence a percentage of homes in new developments for first-time buyers. Photograph: Gareth Chaney/ Collins Photos

The Sinn Féin leader, Mary Lou McDonald, said the housing crisis had been “created by Fianna Fáil. and deepened by Fine Gael”.

During heated exchanges on a Sinn Féin private members motion on the issue, finance spokesman Pearse Doherty said “now the Government have been caught out, they’re scrambling to give some appearance of action”. Mr O’Brien hit out at Sinn Féin as “a party of slash and burn, not build and renew”, and Minister for Finance Paschal Donohoe argued there was a role for the investors in the Irish market.

Industry sources believe Government may increase the rate of stamp duty on purchases over a certain number of units to the commercial rate of 7.5 per cent, rather than the residential rate of 1 or 2 per cent. They warned, however, such a step might be circumvented by splitting multi-unit sales into individual transactions.

A spokeswoman for Mr Donohoe said he and Mr O’Brien were working on options in the development and tax systems to address the issue. “All options will be considered by the Government to identify the optimal method to address this issue,” she said.