Cuckoo U-turn ‘abuse of our public money’
Stamp duty amendment anger during Dáil debate
THE Government has been accused of abusing public money following a controversial Dáil vote that allows cuckoo funds to avoid paying stamp duty.
On Wednesday night, an amendment to the Finance Bill was passed exempting investment funds from a levy aimed at stopping bulk-buying of homes.
In May, Minister for Finance Paschal Donohoe introduced a 10% stamp duty levy on the purchases of more than ten homes.
However, Wednesday’s amendment exempts funds from paying the 10% stamp duty if they lease the homes back to the local authorities for social housing.
In the Dáil yesterday, Social Democrats co-leader Catherine Murphy said the continuation of long-term leases over purchasing of social homes amounted to an ‘abuse of public money’.
Ms Murphy said the Government
is ‘tying itself up in knots’ trying to explain its U-turn on the stamp duty issue for cuckoo funds.
Deputy Murphy rubbished the Government’s claims that the amendment was a ‘short-term emergency measure’, saying that local authorities will be renting the properties for 25 years. She said: ‘You couldn’t make this up. This is not short term. This is an abuse of public money. That’s what this is.’
During this time the local authorities will have to maintain and manage the properties at an additional cost before handing the asset back at the end of the lease.
Green Party leader Eamon Ryan defended the amendment and insisted Minister Mr Donohoe made the Government’s position clear in May. Mr Ryan, the Environment Minister, said that it always indicated that investment funds would be able to sidestep the higher 10% stamp duty rate if it leased homes back to local authorities.
‘There was clear indication at that time that, for example, in regard to direct provision or social housing or such policy areas where we do want to see an immediate response in supply this year, there was a clear signal that, in that particular category, we would look to try and take a different approach,’ he said.
He added: ‘These are short-term emergency measures to address a particular problem.’
However, Ms Murphy stated that this was not the case.
‘When Deputy Donohoe announced this measure, he said three bodies would be exempt: local authorities, approved housing bodies and the Housing Agency. If he had signalled he was about to exempt cuckoo funds from a measure designed to target cuckoo funds, it certainly would have stood out and caused a row on the floor of this House,’ she said.
Back on May 19, Minister Donohoe told the Dáil: ‘It is also important to recognise that some multiple purchases of property are undertaken by bodies specifically for the purpose of providing social and affordable housing. It is not intended to apply the higher stamp duty rate in these instances.’
Sinn Féin’s Pearse Doherty accused the Government of pulling a ‘political stroke’ by ‘forcing’ the amendment through on Wednesday evening with a guillotined one-hour debate. He said it did this ‘in the middle of a housing crisis, when you know and everyone in this House knows that young people are locked out of affordable housing’.
‘When there is a scarcity of housing, you unleash these vulture funds to wreak havoc in the housing market to buy up these homes from under the noses of aspiring homeowners and give them a tax break to do that,’ he continued.
‘While the Government won this amendment, while the vulture funds and cuckoo funds won last night, it was the ordinary people of this city and this State who lost out.’
Labour Party TD Aodhán Ó Ríordáin said that 343 units in one development in Marino, north Dublin, have been bought by a vulture fund. He added: ‘You’re looking at young people facing an average rent of €1,914. What are we supposed to do with this situation and how can we prevent it from happening again?’
‘Ordinary people lost out’