Up to half of homes in new developments to be made available to owner-occupiers

Under new rules, cuckoo funds will be liable for higher stamp duty, up from 1% to 10%, for every house above 10 in a single development.

Councils will be allowed to ringfence up to half of new-build housing estates for owner-occupiers under new rules aimed at tackling the influence of so-called cuckoo funds.

However, new rules agreed by the Government will not apply to the hundreds of millions of euro worth of homes already sold to institutional investors, nor to apartments.

However, the cuckoo funds will be liable for higher stamp duty, up from 1% to 10%, for every house above 10 in a single development.

Housing Minister Darragh O'Brien said the rules will "effectively ban the bulk sales of homes" but said the thousands of homes already sold to investors will not fall under the new rules. Cairn Homes, one of the country's largest homebuilders, said in March that its forward sales amounted to over 900 homes worth €300m.

The minister said the rules have been "focused at family homes" but the Government is not worried about driving private finance from the housing market.

New planning guidelines

The new rules, which become active from midnight tonight, will see Mr O'Brien issue new planning guidelines under section 28 of the Planning and Development Act 2000 to require local authorities and An Bord Pleanála to prohibit bulk buying of houses and duplexes. 

There will also be an “owner-occupier guarantee” which will allow local authorities to designate a specified number of houses and duplexes — up to 50% — in a development for owner-occupiers. Mr O'Brien said this will be similar to requirements under Part V obligations, which currently requires 10% of homes be made available for social housing.

He said the ringfencing has been extended beyond first-time buyers because many people will be "right-sizing" or may have been purchasing a home after a divorce.

Finance Minister Paschal Donohoe said the Government is focusing on houses because any measures for apartments "would have significant negative consequences for supply and, consequently, impact on our future housing model, in particular, for urban living".

He said it will provide a "very simple disincentive to multiple purchases of homes". Mr Donohoe said he had left the tax regimes around cuckoo funds unchanged, but felt the stamp duty measure is a strong disincentive to the mass purchase of homes. The stamp duty rise will not apply to approved housing bodies or local authorities, he added. 

Mr Donohoe said the Government has shown "urgency" by unveiling the measures within two weeks of the issue creating controversy when the purchase of 135 homes in a development of 170 in Maynooth, Co Kildare, was revealed.

The finance element of the rules will be brought through the Dáil today and will come into effect at midnight if voted through.

Reservations about the plan

However, Green Party ministers raised reservations about the plan at Cabinet yesterday. Sources said all three of the party's senior ministers, Eamon Ryan, Catherine Martin, and Roderic O'Gorman, raised issues with the exclusion of apartments. Mr O'Brien, however, said that the decision taken was a whole of Government one.

Sinn Féin's housing spokesperson Eoin Ó Broin called the move a "cop out" which did not go far enough.

The issue of housing had earlier led to angry scenes in the Dáil as Sinn Féin leader Mary Lou McDonald and Taoiseach Micheál Martin accused each other of "spoofing".

Ms McDonald said it is "Government policy to attract these investment funds which it does by giving them cushy tax arrangements".

"Last weekend, we learned that it is also Government policy to invest in these funds," said Ms McDonald. 

"Money that should have been used for affordable and social housing was being used to push ordinary buyers out of the market, to push up house prices and rents. 

"The Taoiseach, far from being shocked, knew what was happening. His claim that it is not Government policy to support these funds is bogus."

She said that the Government's plan is "too little, too late".

Mr Martin said it is Sinn Féin "that is doing the spoofing".