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bulk-buying homes Government denies U-turn after voting through cuckoo-fund law change

The Dáil voted for an amendment to the Finance Bill, which will mean tax breaks for cuckoo funds that bulk-buy homes for leasing to local authorities

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Majority of the Mullen Park development in Maynooth, Co Kildare was bought up by a cuckoo fund

Majority of the Mullen Park development in Maynooth, Co Kildare was bought up by a cuckoo fund

Majority of the Mullen Park development in Maynooth, Co Kildare was bought up by a cuckoo fund

The coalition has denied it has performed a U-turn on clamping down on cuckoo funds after it voted through law changes last night.

The Dáil voted for an amendment to the Finance Bill, which will mean tax breaks for cuckoo funds that bulk-buy homes for leasing to local authorities.

Government officials last night maintained these law changes had already been mooted by ministers less than two months ago when the higher stamp duty rates were first introduced.

While exemptions to the higher rates were indicated in May, opposition politicians say there was no indication the higher stamp duty rate of 10pc would not apply to institutional funds that lease homes to the State.

They called the Government's amendment "sneaky", and Sinn Féin leader Mary Lou McDonald said it will "add" to the housing crisis.

The Herald asked the Departments of Housing and Finance last night where ministers had indicated publicly that such exemptions would be put in place.

"It was always the view of the Department of Housing that this issue needed to be addressed," a spokesperson for Finance Minister Paschal Donohoe said.

"Time was limited when the bill was being drafted for publication at first stage and an indication was given at that time that it would be addressed through a Committee Stage Amendment."

On May 19, Mr Donohoe told the Dáil that "multiple purchases of property are undertaken by bodies specifically for the purpose of providing social and affordable housing" and "it is not intended to apply the higher stamp duty rate in these instances".

However, Labour senator Rebecca Moynihan said he did not specifically refer to cuckoo funds buying homes for long-term leasing through local authorities.

"This is a significant difference," she said last night.

"What the Government is doing is talking through both sides of their mouth on this."

When the tax changes were announced in May, the coalition indicated there would be exemptions for approved housing bodies and local authorities buying homes.

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"This is for private investors to be able to lease. That's an entirely different thing," the senator said.

"Why can't the State buy those homes or build those homes?"

Sinn Féin housing spokesperson Eoin Ó Broin said that with the tax break, cuckoo funds will have an "incentive" to buy homes for long term leasing through local councils.

"This is basically incentivising, it's encouraging those funds," he said.

Speaking yesterday, Mr O'Brien rejected his claims.

He said the last-minute amendment to the law will ensure the delivery of more than 2,000 homes and that without this tax break, the delivery of those homes would be in jeopardy.

"There are some leases that are on the way, there are about 2,500 families that will be housed in these homes," he said.

He added that the amendment relates to homes that are "in the pipeline already" across local authorities.

"The concern is that the risk to those homes which will be delivered, over the coming months, would be jeopardised if this amendment was put in place," the minister said.

It is understood his department was also fearful that social housing targets would not be met if funds pulled out of the long-term leases and did not deliver the promised homes.

Speaking on RTÉ radio yesterday, Mr O'Brien said he was advised by his officials that funds may not build these houses if higher stamp duty rates are applied.

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