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Brian Mahon, Political Reporter
The Times
Brian Mahon, Political Reporter
The Times
Two property investment companies wrote to government ministers to warn them that new rules around stamp duty would inhibit housing development.
The government announced in May that it would introduce a 10 per cent stamp duty surcharge on the bulk purchases of ten or more homes. An amendment to the Finance (Covid-19 and Miscellaneous Provisions) Bill 2021 in early July granted an exemption on the increases to stamp duty to social housing units delivered through leasing.
Correspondence released under the freedom of information legislation showed that two companies wrote to Paschal Donohoe, the finance minister, and Peter Burke, the junior housing minister, to outline their concerns about the new rules prior to the amendment to the finance bill.
RediResi is a rented residential real estate platform that has been active in the build-to-rent sector, including social housing and private schemes. It wrote to Donohoe on May 28, a week after the new rules were introduced, saying it had invested €30 million in the delivery of more than 215 housing units across Ireland in the past three years.
The letter said the company purchases “distressed properties” that it fully refurbished. “Then, alongside the local authority or approved housing body we help to identify suitable candidates to realise their dream of having their own home,” it said. The company warned Donohoe that under the new stamp duty rules it would find it “increasingly difficult” to spend the additional allocation of funding from their financial model for this purpose. “This will mean that many potential homes will now not be delivered through the long-term leasing model; which you will be aware is off-balance sheet,” the letter said. While the company said that it supported the efforts of the minister in “trying to cease the practice of block purchase of new homes” it said its model, where it purchased second-hand homes and refurbished them, would be impacted by the stamp duty surcharge. Another company, New Beginning, wrote to Burke on June 25. It said that developments of social and affordable housing that had been “underwritten under one tax treatment” now “no longer make financial sense” in many cases, as a result of the change in the stamp duty rate. New Beginning also leases homes on a 25-year basis to local authorities. However the company said it has “never, nor do we ever envisage acquiring housing estates.” The letter added: “Though we will support the development of housing estates for social and affordable homes.” The company is also involved in the Mortgage to Rent scheme, where people who can no longer afford their mortgage can surrender it to the bank, with the property sold to either an approved housing body or a private company. The person can remain in the property indefinitely as a social housing tenant. The company said it was their “opinion” that the company fell into this definition of a mortgage to rent provider and asked that it be exempt from the stamp duty rules, given commitments from the housing and finance minister that such providers would be exempt.Advertisem*nt
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