Lack of urgency on Investment Fund tax measures from government revealing
- Labour calling for targeted increase in Stamp Duty.
- Changes to Revenue rules should also be possible.
After a week of speculation about measures that the government might introduce on investment funds buying up homes, Labour Finance spokesperson Ged Nash said it was revealing that we have yet to hear any proposals coming forward from government in recent days.
Deputy Nash said:
“The Minister for Housing confirmed to media today that he did not expect to have measures at Cabinet tomorrow to tackle investment funds. That betrays the lack of urgency at the heart of government on how they intend to tackle this problem.
“Over the weekend we heard no fresh ideas from government about how they intend to use tax measures to tackle the insidious practice of investment funds buying up entire estates, but also one-off properties before they even come to the open market for first time buyers.
“I think it says a lot that there were no leaks or government sources indicating what tax measures they might roll out considering they are usually falling over themselves to be first out with any good news.
“I proposed last week that a targeted stamp duty increase would block investors buying up housing. The Revenue Commissioners could also look at changing their guidance and tightening up the implementation of tax rules for these funds. I have also previously called for the Dividend Withholding Tax on REITS to be increased from 25% to 33%.
“Whatever the Minister brings forward it must hit these investment funds where it hurts and quickly. We can’t be waiting months for this to happen. These funds are very active in the market right now.
“I know in my own town of Drogheda that investment funds are trying to buy up any second-hand property through estate agents before it even comes to the market. From other colleagues I know this is happening in Dublin and Kildare too. It’s really insidious as first-time buyers don’t even know they are losing out on the chance to buy a home because it doesn’t even reach Daft.ie or MyHome.ie. These funds are paying a premium above what would be paid on the open market.
“That’s why Labour believes a targeted increase to the stamp duty rate that applies to the sale of residential property to investment funds, whether it is a new estate or an existing second-hand home, would act as a deterrent, once the rate increase was big enough.
“At the moment first time buyers simply can’t compete against the huge amount of money available to these funds. Owner occupiers would continue to pay a 1% stamp duty rate, but the rate paid by these funds could be massively increased as a deterrent to them buying up new housing developments, and existing housing for speculative purposes.”