Out-Law News 1 min. read
26 May 2021, 2:04 pm
The Irish government has increased stamp duty for buyers of 10 or more residential properties to 10% to deter institutional investors from purchasing large parts of new housing estates.
The increased rate will apply both to a bulk purchase of 10 or more houses as well as to a situation where a person acquires 10 or more units on a cumulative basis over a 12 month period. The 10% rate will apply to all houses acquired in that 12-month period, including the first nine purchases.
Apartments are exempt from the increased charge, as are purchases by local authorities and approved housing bodies.
The charge is a rise from the stamp duty normally charged on residential property in Ireland, which is 1% of a property value up to €1 million, and 2% on the balance of any higher value.
Finance minister Paschal Donohoe introduced the change as a financial resolution (8 page / 153KB PDF) last week. There will be a three-month transition period for execution of contracts that had been entered into but were not complete before the resolution took effect.
Housing units acquired before the resolution comes into effect will count towards the threshold of 10 properties, but the 10% charge will only apply to those properties bought after the resolution comes into force.
Property expert Kevin Collins of Pinsent Masons, the law firm behind Out-Law, said the move was in response to an impression that institutional investment funds were buying properties and preventing owner-occupiers, particularly first-time buyers, from entering the housing market.
“The funds can afford to pay a premium for bulk buying units which prices ordinary buyers out,” Collins said.
“While it is desirable to have a supply of affordable housing, including apartments and own-door units, for purchase by owner-occupiers, the stamp duty change is a demand side measure which may not have the desired impact on investor demand but will not have a positive effect on the supply side of the market,” Collins said.
Collins said measures to address supply issues, such as providing more resources to planning body An Bord Pleanála to deal with strategic housing development applications in a timely way, might over the medium to long term be a better way of alleviating the housing shortage.
In a statement, minister Donohue said: “Ensuring that people have access to home ownership in this country is a priority for government. Building up supply, after a year when construction was forced to close for a significant period of time, is key. Making sure people can access those homes, when they come on stream, is as important.”