Green ministers question proposals to limit role of ‘cuckoo funds’

Green party ministers have questioned whether housing reforms aimed at limiting the role for “cuckoo funds” could have knock-on consequences for urban development, The Irish Times understands.

Sources said all three Green Party cabinet ministers questioned the exemption for apartment purchases to new rules proposed by Minister for Finance Paschal Donohoe and Minister for Housing Darragh O'Brien.

Under the new tax and planning rules, purchasers of 10 or more houses in a year will be hit with a ten per cent stamp duty, while all houses in newly built estates must be made available for purchase by individuals for two years.

Green Party ministers Eamon Ryan, Catherine Martin and Roderic O'Gorman are understood to have questioned whether the measures would concentrate ownership on the edge of urban centres, while apartment renting would dominate in cities.

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Mr O’Brien, is understood to have committed to examining whether separate rules which he will introduce in the coming weeks reserving a certain percentage of houses and duplexes for owner occupiers could also include apartments.

The new tax rules to be introduced by Mr Donohoe will apply to portfolios assembled through individual sales, as well as individual deals covering ten or more apartments, in an effort to combat avoidance, as well as to indirect purchases through funds and shares in companies.

A three month transition period will be allowed for contracts yet to complete. Ministers were told exempting apartments would ensure investment in the sector was continued.

The new planning rules will prohibit bulk buying - defined as more than one unit - for two years. If units remain after that time, they can be bulk purchased.

The affordable housing act will be amended in the coming weeks to designate up to 50 per cent of units for owner occupiers, not just first time buyers as had been intended. This will apply to duplexes and houses, and possibly to apartments as well. It will not apply to build to rent units.

Sinn Féin housing spokesman Eoin Ó Broin said the proposals were a “shambles”.

“It won’t stop funds purchasing houses or apartments that should have gone to owner occupiers,” he said, adding the Government is “desperately trying to give the impression of targeting the problem when in fact doing nothing of the sort”.

Social Democrats housing spokesman Cian O’Callaghan said the measures were “weak and ineffective” and the decision to exclude apartments was “completely indefensible”.

Labour's housing spokeswoman Rebecca Moynihan said the decision would push investors towards build to rent where they can apply "lower apartment standards, continuing to lock a generation into unaffordable rents".

She said the measures were “totally laughable” and a “pathetic response designed to satisfy public anger but really only satisfying investors who will continue to charge out of control rents”.

The Dáil unexpectedly passed a Sinn Féin motion calling for affordable housing to be delivered in Dublin with a maximum cost of €230,000 in Dublin and less outside the capital and with rental costs at between €700 and €900.

The motion which the Government had not supported passed after the Government appeared to forget to back its own countermotion.

A formal vote would have taken place on Wednesday night but when the Ceann Comhairle called for assent or dissent the Government side apparently did not respond.