New amendment lets cuckoo funds avoid stamp duty

THE Housing Minister was last night accused of introducing a ‘disgusting and dishonest’ amendment that allows cuckoo funds to avoid stamp duty if they lease homes back to the State.

Minister for Housing Darragh O’Brien defended the move, claiming 2,400 social houses would be ‘at risk’ otherwise.

He cited unpublished research from officials within his department as justification for the measure.

In May, Minister for Finance Paschal Donohoe introduced a 10% stamp duty levy on the purchase of more than ten homes. Last night’s amendment exempts funds from paying the 10% stamp duty if they lease the homes back to local authorities to be used for social housing.

‘It’s a small exemption’

Speaking to reporters yesterday, Minister O’Brien said that the amendment was necessary to ensure there was adequate social housing stock for homeless families.

‘If anyone is telling me now that we shouldn’t make an exception so those families are not housed in the short term, I’d like them to put the argument to me. It is a small exemption that will be timebound,’ he said.

In May of this year, Taoiseach Micheál Martin said that such leases, which last for 25 years and result in the State not owning the home, amounted to a ‘bad deal’.

Speaking on RTÉ’s Drivetime yesterday, Mr O’Brien conceded that the Government could ‘potentially’ borrow to buy the homes, but that it would require a greater capital investment. He described the measures as ‘short term’ and transitionary, although there is no sunset clause for the exemption to lapse. The minister said he was working on ways to amend lease arrangements to allow local authorities to acquire homes when the lease lapses. Mr O’Brien said he did not see how anyone in Opposition could justify not allowing the planned leases to go ahead.

‘If... they want us to scrap those leases that are in the pipeline, that are going to house between 2,500 and 3,000 people over the next 12 months, I don’t think that is something that I could actually stand over. Maybe they can,’ he said.

‘I think there’s been a little bit of scaremongering over this, quite frankly.’

The minister said the Government has introduced ‘significant changes’ to protect home-seekers from bulkbuying of houses by large institutions, and that exemptions for cuckoo funds will be time limited.

But speaking in the Dáil last night during a short hour-long debate on the issue, Sinn Féin finance spokesman Pearse Doherty said that the plan put forward by the Government to tackle vulture funds was a ‘con job’ and that you ‘couldn’t make it up’.

Mr Doherty claimed that the Government had ignored all advice, including on excluding apartments from the 10% stamp duty rate.

He said the amendment would allow ‘investment funds to dodge the stamp duty surcharge when they snap up homes under the noses of struggling home buyers and then lease them back to local authorities’. He added that local authorities and taxpayers would be ‘picking up the bill and paying rents to these investment funds that are not then even subject to corporation tax thanks to tax arrangements gifted to them by this Government’.

Social Democrats co-leader Róisín Shorthall told the Dáil: ‘The Government has taken shamelessness to a whole new level in proceeding with this brazen amendment.

‘It is disgusting, dishonest and undignified.’

‘Taxpayers pick up the bill’