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Morning Memo: Going cuckoo

Opposition TDs have accused the government of sneaking in an exemption for big investors.

This is an extract from today’s edition of Morning Memo, The Journal’s daily business newsletter, which puts the biggest business and economics stories of the day into context for readers. We also include a reading list of some of the more interesting business and economics-tinged stories from around the internet. Find out more and sign up here or at the bottom of the page. 

THERE’S A LOT going on this week but one item, in particular, deserves some attention this morning.

After the government moved to introduce a new 10% rate of stamp duty on bulk purchases of 10 homes or more last month, an important amendment, tabled by housing minister Darragh O’Brien, comes before the Dáil this evening.

That new higher rate of stamp duty is the main component of the government’s response to the ongoing controversy surrounding so-called ‘cuckoo funds’ like the one that bought up the majority of the Mullen Park housing estate in Maynooth earlier this year.

Investors of this variety are dominant in the private rented sector, writes Donal O’Donovan in the Irish Independent this morning, but overall, they’ve spent a whopping €6 billion in the Irish market since 2018. This year, internationally-backed funds have dropped €1.5 billion here so far putting 2021 on track to be another bumper year, according to estate agents JLL.

But exactly how committed the government is to tackling these funds has been the subject of some controversy on the opposition benches. Concerns have been raised by Sinn Féin, the Social Democrats and others that under the amendment before the Dáil this evening, institutional investors who bulk-buy houses in order to lease them back to the State for social housing will still be able to side-step the 10% charge.

It was the subject of heated discussion in the Dáil yesterday when Sinn Féin leader Mary Lou McDonald accused the government of sneaking another tax break into the amendment for investors, which will “actually incentivise them to buy up these family homes and to lease them back to councils”.

In response, the Taoiseach accused the opposition of “distorting government response” to the problem of first-time buyers competing with powerful investors for a very constrained stock of housing.

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Debate on the amendment has been guillotined to just an hour this evening — raising more eyebrows on the opposition benches — after which it will be voted upon.

So stay tuned. It could get interesting.

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