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UN says Ireland applies 'preferential tax laws' to vultures funds and it 'cannot continue'

The report states that “landlords have become faceless corporations wreaking havoc with tenants”.

Image: Shutterstock/abd

A UN SPECIAL Rapporteur on housing has sent a letter to the Irish government noting that they have facilitated housing financing through “preferential tax laws and weak tenant protections among other measures”.

A UN report on housing by Leilani Farha has been called a “wake-up call” for the government by Sinn Féin leader Mary Lou McDonald. 

The report is highly critical of Ireland, and other countries such as the US and Spain, for allowing vulture funds buy up properties, resulting in skyrocketing rents,

The report states that “landlords have become faceless corporations wreaking havoc with tenants”.

McDonald accused the Taoiseach of allowing corporations make profits on the back of ordinary renters.

Pricing tenants out of their homes 

The report states that “almost overnight multinational private equity and asset management firms like Blackstone have become the biggest landlords in the world, purchasing thousands and thousands of units… they have changed the global housing landscape”. 

Properties that are deemed ‘undervalued’, which generally means affordable to those living there, are being purchased en masse, renovated, and then offered at a higher rental rate, pricing tenants out of their own homes and communities.

The experts who contributed to the UN report said they had heard countless stories of tenants’ whose buildings had been bought by private equity firms and whose rents had skyrocketed almost immediately afterward, sometimes by 30% to 50%, making it impossible for them to remain in the homes.

Lack of regulations

The UN report says it wishes to remind States of their human rights obligations to regulate investment in residential real estate so that it supports the right to adequate housing and in no way undermines it.

“This cannot be left to the private sector to undertake on a voluntary basis,” the experts said.

They are also critical of the lack of regulations of these vulture funds operating in the housing sector.

“What makes this practice particularly egregious is that it is being done without any monitoring, or accountability mechanisms in place. Governments seem not to have made the connection that this new form of finance is taking place in an area that is governed by international human rights law, which imposes obligations on them. We remind all States, that while gold is a commodity, housing is not, it’s a human right,” states the report. 

Breaking international human rights 

The report also warns States, such as Ireland, that the use of private equity and asset management firms in housing “in its current form runs afoul of international human rights norms and cannot continue.”

At this time we have identified six States, but there are many more where these same issues are of serious concern, including in the global South. We are ready to engage in a dialogue with all relevant States and financial investors as to how this problem can be addressed,” the experts said.

In raising the report with the Taoiseach today, Mary Lou McDonald appealed to the Taoiseach to support some of the Sinn Féin measures to give tenants more rights. 

She called on the government to introduce a three-year rent freeze and to support legislation by Sinn Féin spokesperson Eoin Ó Broin which would prevent buy-to-let landlords from seeking vacant possessions. 

Homelessness

In his response Varadkar said didn’t have a chance to read the latest UN report in full.

He admitted that the figure of 10,000 homeless people in Ireland is too high, but said the government will not support the new legislation stating that it is unconstitutional and may breach people’s property rights. 

Over the weekend, the Taoiseach told TheJournal.ie that Section 110 incentives, which allowed large funds register as charities, and in turn avoid paying tax, were put in place “at a time when the property prices were on the floor”.

“They were designed to encourage businesses and firms to get involved in buying property at a time when we needed it,” he said, adding that the country is in a different position now, as house prices have “bounced back and building is happening again”. 

“In that context we need to review those tax incentives and see if they are still advisable and appropriate,” he said.

Tax loopholes

However, he admitted that despite stating that he would shutdown tax loopholes for such agencies, this will not be done until at least the autumn given that there is only one Finance Bill per year. 

Sinn Féin’s Pearse Doherty has called on the Taoiseach to introduce emergency legislation to deal with the issue. 

The Master of the High Court Edward Honohan recently said that the European Commission should consider taking a case against Ireland for its preferential tax treatment of vulture funds. 

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