Purchases of more than 10 houses at once will attract a stamp duty of 10 per cent, under plans agreed by Government tonight. However, this will not apply to blocks of apartments, while local authorities and approved housing bodies will be exempt as well.
Under the plans, all owner-occupiers will also be eligible to buy reserved sections of new housing developments, rather than just first time buyers as had been originally envisaged.
The reforms are part of a package of measures intended to deal with the housing crisis and prevent first-time buyers and others from being squeezed out by property investment funds.
Both Minister for Housing Darragh O’Brien and Minister for Finance Paschal Donohoe informed Cabinet colleauges of the changes on Tuesday evening.
The planned changes will be brought in in two phases.
Firstly, bulk purchases will be banned via a circular to be issued to local authorities in the coming days. All houses and duplexes will have to be made available for individual purchase. This will be for a period of two years, after which they can be bulk purchased if not sold by then.
The second phase will see amendements to the affordable housing bill introduced, which will allow between zero and 50 per cent of houses and duplexes to be reserved for owner occupiers - this is a broader categorisation than first time buyers, which had originally been mooted. This will happen in the coming weeks, alongside proposed changes to “Part V” obligations which could see up to 30 per cent of houses in new estates designated as social or affordable.
The taxation changes agreed by cabinet will be introduced by means of a financial resolution this week. Currently stamp duty on residential property is 1 per cent on the first €1 million.
It is understood that there will be targeted rules to prevent people circumventing the rules by splitting multiple purchases into individual units. This will work by applying the charge when a buyer purchases the tenth unit within a year - again, this will not apply to apartment developments. There will also be a transition period of three months to allow deals to be completed.
It is understood that some elements of the proposed reforms encountered significant resistance from Green members of Cabinet. Sources said that all three Green Ministers raised concerns about the exemption for bulk purchases of apartments - with the new rules only due to apply to purchases of houses and duplexes.
Speaking after a Cabinet meeting on Tuesday evening, Minister for Finance Paschal Donohoe said the measure will be voted on in the Dail on Wednesday. He said it is designed to dissuade the buying up homes that are close to completion, or fully completed, thereby denying first-time buyers the chance of acquiring and owning their own home.
“Ensuring that people have access to home ownership in this country is a priority for Government. Building up supply, after a year when construction was forced to close for a significant period of time, is key. Making sure people can access those homes, when they come on stream, is as important,” he said.