Minister has ‘no idea’ how many funds will escape 10% stamp duty, says Doherty

TD criticises Donohoe for exempting forward purchase agreements from rule change

 Last month, the Government imposed 10% stamp duty, instead of the normal 1%, for bulk purchases of 10 or more houses in a 12-month period by an individual or corporation. File photograph: Dominic Lipinski/PA Wire

Last month, the Government imposed 10% stamp duty, instead of the normal 1%, for bulk purchases of 10 or more houses in a 12-month period by an individual or corporation. File photograph: Dominic Lipinski/PA Wire

 

Minister for Finance Paschal Donohoe has been accused of having “no idea” how many forward purchase agreements were in place to bulk buy houses before they were exempted from an increase in stamp duty on multiple purchases.

Sinn Féin finance spokesman Pearse Doherty made the accusation after Mr Donohoe said such information “is not collected by the department. However I will explore with the Minister for Housing whether it is possible to put in place a reporting regime for agreements of this nature”.

Mr Doherty criticised the Minister for not attempting to establish how many housing units and developments would be bought by vulture funds without being subject to the 10 per cent stamp duty obligation.

“This is about Maynooth all over again and you’ve no idea how many of them are there,” he said in reference to the purchase by an investment fund of an entire housing estate in Co Kildare, which sparked controversy around the squeezing out of first-time buyers.

The subsequent public anger prompted the Government to impose a 10 per cent stamp duty, instead of the normal 1 per cent, for bulk purchases of 10 or more houses in a 12-month period by an individual or corporation.

Mr Doherty told the Minister: “You have no idea how many forward purchase agreements are in place yet you exempted every single last one of them from the 10 per cent stamp duty.”

He added that the Minister had no idea either how many transactions had been completed since the financial resolution was introduced last month.

“And really doesn’t that speak volumes of the fact that you were kicked dragging to this point where you didn’t want to be in the first place which was you didn’t want to tax the vulture funds.”

Raising the issue during finance questions in the Dáil he said “you have exempted something that you don’t know how much is there. You don’t know how many bulk purchases over the next number of years because you have no knowledge of how many agreements are there.”

But defending his approach Mr Donohoe said he was motivated to have policies to deal with the bulk purchase on family houses but also to “get the balance right between also allowing more homes being built in the future”.

He said he had information about the kinds of purchases and forward purchases that took place in recent years but the information “isn’t available to me” in relation to purchases currently being completed or under way.

But he insisted “that doesn’t undermine the policy rationale for what I did”.

Mr Doherty said the Minister could have got some information from published reports online but “you didn’t even look, you didn’t even want to find out. You came before this House and you said every single forward purchase agreement for homes is exempt that is already entered into a contract.

“And actually every single one that you actually complete over the next number of months we’ll exempt all of them as well.”

The Minister insisted however that he put the policy in place to get the balance right between trying to address multiple purchases but also allow supply of more homes in the future.

He added that if they extended the increased stamp duty to forward purchases “the net effect would be less homes being built in the future.

“I want to see more homes available and that’s why I believe the policy we have in place gets the balance right.”