Marita Moloney
Marita Moloney

14.42 9 May 2021


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Sinn Féin is calling on the government to change the tax structure relating to international investment funds that purchase residential properties in Ireland.

The party will bring a motion before the Dáil this week which will demand property funds pay "appropriate" levels of tax.

It comes as some affordable housing bodies were outbid by property funds "by up to €80,000 per house" over the past four weeks.

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The Business Post reports the bodies were outbid on more than 400 homes in the last month.

The government is currently working on plans to stop international funds from buying up completed housing estates, with Housing Minister Darragh O'Brien considering a range of measures to tackle the 'cuckoo funds'.

Sinn Féin's Spokesperson on Finance, Pearse Doherty, told On The Record with Gavan Reilly that the issue needs to be addressed urgently.

Pearse Doherty calls for end to tax breaks for 'cuckoo funds' buying up housing stock

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"The largest private landlords in the State are these funds...they have thousands of properties and they intend to increase their grab in relation to rental properties, particularly in Dublin," he said.

"They pay no tax on the income they have, the tax structure is designed in a way that it is only actually paid by the investors, but the investors in the main are the likes of pension funds internationally which are exempt from any type of tax also on these funds.

"That's why it's so lucrative, it's not just about stamp duty, it's also looking at the other tax advantages that have been provided for these funds."

It comes after two UK investment funds snapped up almost all the homes in two housing estates in Dublin and Kildare with plans to rent them out to Irish families.

Funds such as those can be described as "tax-neutral" and that's why they can "outbid and outprice" ordinary families, Mr Doherty added.

"It's not just that we're looking for, we're also looking for a ban where these funds would actually go in and purchase properties that have been built.

"I've listened to the government this week scrambling like headless chickens to get media lines to suggest that this only dropped from the sky this week that it was the first time it happened, that's codswallop.

"This has been happening for years."

Mr Doherty said there are two ways in which these property finds can come in and buy housing that isn't on the market.

One is through forward funding, where they fund the developer to buy the land and work out the housing scheme, he explained.

The second is through forward purchasing where there's "an agreement with the developer that they will purchase the houses at the end".

However, forward funding "doesn't happen in Ireland", so the idea that these funds "are putting the cash on the table for the entire estate with the agreement of the developer at day dot doesn't happen", he said.

"What is happening is forward purchase where they basically go in and they see a developer has planning permission for 400 houses or 900 houses in some cases and they say, 'We'll go and buy them off you when you're finished," he added.

"We need to look at not just tax but planning in relation to this.

"These funds are looking at a return of equity in relation to about 4%, when you actually tax them and if you tax them appropriately, then you actually take that away from them so therefore it doesn't become lucrative anymore.

"We need to take away the advantage, the reason this is happening is because there is a tax structure there that makes it very lucrative for these funds to come in which have billions of euro of firepower and are able to outbid others in the market be they housing bodies or first-time buyers."

Main image: Sinn Féin Finance Spokesman Pearse Doherty speaking outside Leinster House in Dublin last year. Credit: Niall Carson/PA Wire/PA Images

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