Stamp Duty Measures don’t go far enough
- Why not increase to 15% and hit them where it hurts?
- Apartments will now be targeted by investment funds.
- Explanation needed on unusual three month transition period for execution of contracts.
Labour Party Finance spokesperson Ged Nash TD has said that the proposals announced tonight by the Minister for Finance on Stamp Duty do not go far enough and will distort the housing market further with the attention of cuckoo funds now set to target apartments.
Deputy Nash said:
“Setting the Stamp Duty rate on investment funds buying up homes at 10% is not high enough. In the UK they have a top rate of 15% for investors spending more than £1.5 million pounds on residential property. The way the measure is formulated will also drive funds into the apartment market which will cause huge damage in our cities.
“Frankly the level of increase will not act as a big enough deterrent when these funds are paying significantly above the asking price as it stands. For example if a house was to sell at €300,000 then the cost of stamp duty will increase from €3,000 to €30,000. A rise to 15% would mean they have to pay €45,000. The Minister must publish his rationale for settling on a new rate of 10% before tomorrow’s Dail debate.
“It is also not clear how well this will stop the insidious practise of cuckoo funds buying up one off housing units as they come to the market through estate agents where often a significant premium above the selling price is offered. In this regard, Revenue’s rules will need to be crystal clear and with strict anti-avoidance measures. Funds may just move to concentrating on buying apartments now, which are needed for owner occupies in our cities, and for those wishing to trade down from a family home in retirement for example.
“A 15% rate would hit these investment funds where it hurts and quickly, and applying it to all residential properties would avoid distorting the market. It would also bring us into line with the UK regime. These funds are very active in the market right now buying up homes when what they were meant to do is fund the development of housing and apartments for a certain part of the market rather than act as speculators hoovering up existing supply.
“An explanation is also needed on the unusual decision to allow for a three-month transition period for execution of contracts entered into when the financial resolution passes.
“I have consistently said that a higher rate, applying to all owner-occupier homes with carve outs for local authorities and approved housing bodies would act as a deterrent, once the rate of increase was big enough.
“Ahead of Budget 2021, a full review of the tax treatment of REITs and IREFs must be undertaken along with the need to bring in a vacant homes tax.”