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The Government “needs a little bit of time and only a little bit of time” to come up with a workable solution without “unintended consequences” to deal with investment funds buying up housing estates, Tánaiste Leo Varadkar has said.
He said the Ministers for Finance and Housing are developing proposals for a solution, adding that it “needs to be a solution that doesn’t have unintended consequences”.
Mr Varadkar said: “We all know that when you pass a law or adopt a policy there’s always the law of unintended consequences. We may in good faith do something to solve a problem, but actually create another one, and that’s why we need a little bit of time and only a little bit of time to come up with a workable solution in relation to investment firms generally.”
He also said institutional investors had a role in the housing market and there were housing developments in the city, mainly apartment blocks, that would not have been built if developers had not been financed by investment funds.
Mr Varadkar was speaking in the Dáil amid intense Opposition anger and criticism of the Government’s approach to the purchases of suburban housing developments and apartment blocks.
Opposition TDs accused the Government of creating the impression that the practice of buying the funds was something new that “fell out of the sky”.
Sinn Féin finance spokesman Pearse Doherty said his party had been calling for changes in this system for the past six years as he pointed to concerns expressed by the Department of Finance in 2019 and last year about the need to change the tax structure for the funds, which he said the Minister for Finance ignored.
‘Scrambling’
He said that “now that the horse has bolted you’re scrambling” to respond. He added that one building firm said it planned to sell 43 per cent of its properties to this type of funds.
Mr Doherty said that Fine Gael and Fianna Fáil were squabbling, taking swipes at each other and finger pointing. “You’re both to blame but you need to grow up.”
Mr Doherty said that the Government was the cheerleader and creator of the scheme. He said what happened in Co Kildare and Hollystown, west Dublin, where it emerged that corporate investors had bought up almost entire estates, had happened in Dundrum, Leopardstown, Lucan and numerous other places.
The Donegal TD said investment funds paid no corporation tax, capital gains tax and only minimal stamp duty, but Mr Varadkar said he ignored the taxes they did pay including tax on the dividend they paid.
The Tánaiste said the Government firmly believed in home ownership and he said between 65 and 70 per cent of people own their own home. He said: “We want that to be a reality for people who are in their 20s and 30s, to have the same opportunity to own their own home as their parents.”
‘Gobbled up’
Social Democrats TD Róisín Shortall said that since 2019 investment funds have spent €4 billion on residential property in Ireland and the Government could not claim it did not know.
She said that two weeks ago when her party’s housing spokesman Cian O’Callaghan raised the issue of such investment funds “gobbling up” estates, Mr Varadkar’s “response was to accuse him of being ideological and you had no plans to rein in the investment funds”.
Two weeks later and another estate has been “gobbled up”, she said.
Ms Shortall said the Taoiseach on Wednesday professed surprise and said “it was a new departure and usually funds confided themselves to hoarding properties in cities not suburban estates”, but she argued young people in cities deserved housing too.
People Before Profit TD Richard Boyd Barrett said the investment funds were “ramping and plundering” estates and he claimed the Government had 65 meetings with vulture funds as it “welcomed” them in.
But he told the Tánaiste “you’re going to invite them in to rampage and plunder through the land bank with the Land Development Agency Bill. I beg you Tánaiste stop the madness” and abandon the Land Development Agency Bill.
“And if they had not been built, we’d have fewer apartments, higher rents, higher prices and perhaps even more people in homelessness, so we need to get the balance right. People do need places to rent and they need well-managed developments in particular to rent.”