Allowing investment funds to evade 10% stamp duty 'an abuse of public monies' Dáil told

Social Democrats say Government 'tying itself up in knots' trying to explain U-turn on cuckoo funds

14/07/2020

Exempting investment funds from 10% stamp duty is “an abuse of public monies” and should be stopped, the Dáil has heard.

During Leaders’ Questions, Social Democrats co-leader Catherine Murphy attacked the Government’s decision to add an amendment to Covid-19 supports legislation to allow such ‘cuckoo-funds’ escape the tax where the properties are leased back to the State.

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.

Answering on behalf of the Government, Green Party leader and Transport Minister Eamon Ryan said this month will see the publication of its new 'Housing for All' strategy which will see a “move away” from lease arrangements.

Ms Murphy attacked the Government’s defence of the amendment on the basis it was “an emergency measure”.

“You describe this as a short-term emergency measure, for 25 years,” Ms Murphy said mockingly. “How is it short-term?”

“A builder buys an estate, then a cuckoo fund comes in and buys it in its entirety. They get exempted from stamp duty, the 10% stamp duty because they are going to lease it to the local authority.

"Then the local authority will pay the equivalent to a mortgage if not more for the 25 years. And then it will refurbish the house and hand it back to the original owner.

You could not make it up. This is not short term. This is an abuse of public money, this is what this is.

“Then we will be told that this is part of the homes delivered by the State. This is desperate value for money and why, minister, did you agree to it,” she asked.

Mr Ryan said Finance Minister Paschal Donohoe did signal a few weeks previously that those bodies engaged in the supply of public housing would not be hit with the new higher rate of stamp duty.

He agreed that things in the future needed to change. But, he said, there are legacy issues in many of these projects and contracts need to be honoured.

“We do need to change approach. The massive scaling up in investment we are about to make in social housing is not best provided on the basis of a 25-year lease where ownership is transferred back,” he said.

In the Government’s pending 'Housing for All' plan, to be announced next week, he said a change in direction will occur but in a “small number of instances” lease arrangements will continue.