Further action is required to reduce the percentage of houses being snapped up by private companies and then typically rented out to tenants, the Taoiseach Simon Harris has indicated.
Mr Harris wrote to the then minister for finance in June seeking a possible increase in the 10 per cent rate of stamp duty on bulk purchases of residential houses by investment companies.
In a letter to the outgoing minister, Michael McGrath, the Taoiseach queried if the higher stamp duty introduced in 2021 to discourage the bulk purchase of residential houses by institutional investors had been “entirely successful”.
He wrote that “further action” was required to reduce the percentage of houses being bought by private companies.
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One of the other actions that might be pursued is lowering the number of houses that triggers the higher rate of stamp duty. At present, if an investor buys 10 houses or more during a 12-month period, they are liable to pay the 10 per cent stamp duty for each property purchased.
Citing Revenue figures, Mr Harris said that since the new tax was introduced in May 2021 the number of bulk-purchased houses had increased in each succeeding year – from 187 in 2021 to 395 in 2022 and 623 in 2023.
In the letter, which has been seen by The Irish Times, Mr Harris argued bulk purchasing of houses needed for first-time buyers cannot be tolerated.
The Taoiseach asked Mr McGrath to explore options including a possible increase to the rate of stamp duty and also a possible lowering of the minimum threshold of 10 properties (bought in a 12-month period) that makes the purchaser liable to the higher stamp duty.
The standard stamp duty rates for residential properties are 1 per cent on the first €1 million paid and 2 per cent on the excess over €1 million.
The higher levy applies only to houses and not to apartments. A new house worth €300,000 will attract stamp duty of €30,000 if bought as part of a bulk purchase, €27,000 more than if bought by a private buyer. A developer bulk purchasing houses worth €1 million will pay €100,000 on each property bought, compared with €10,000 for a private buyer.
It is understood Department of Finance officials are currently preparing a detailed analysis of institutional investor activity over the last three years in the residential house market, including to see how many purchased fewer than 10 properties.
The analysis will also include an options paper regarding possible changes to the stamp duty rate and threshold. That paper is expected to be discussed by the three coalition party leaders in Government during September, in advance of the budget on October 1st.
Sinn Féin tabled a private members’ motion in the Dáil last January calling for the rate of stamp duty to be increased from 10 per cent to 17 per cent.
It was on the back of several high-profile purchases of houses in a new estate by investors. In 2023, a single company purchased 46 of 54 houses in a development at Belcamp Manor in north Dublin. The four-bedroom homes were subsequently rented out on the private market.
In a response to parliamentary questions from Sinn Féin earlier this year, Mr McGrath said that since the new rate was introduced, less than one in 100 of all residential property transitions attracted the higher stamp duty, and less that 2 per cent of all new dwellings.
“I do not have immediate plans to increase the rate and reduce the threshold at which the higher stamp duty rate on certain purchases of residential property applies,” he told Sinn Féin’s Pearse Doherty.
The decision on whether or not to vary the stamp duty and the minimum threshold of 10 for a bulk buy will fall to Mr McGrath’s successor as Minister for Finance, Jack Chambers. Any changes are likely to be announced as part of the Budget 2025 cycle.
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