The Minister for Finance, Paschal Donohoe TD, brought a Financial Resolution to the Dáil on 19 May 2021 which will impose a stamp duty charge of 10% on the multiple purchase of 10 or more residential houses. This higher charge, as well as applying to bulk purchases, will also apply to a situation where a person acquires 10 or more units on a cumulative basis over a 12 month period.

The press release accompanying the announcement explained that the background to this Financial Resolution is the purchase by institutional investors of all or a significant proportion of residential housing estates, particularly close to the time of completion. This 10% rate is intended to provide a significant disincentive to this practice of multiple purchase by institutional investors of large parts of, or indeed whole, housing estates before they reach the market, thus denying first-time buyers an opportunity to purchase a home. The press release explains that multiple purchases by Local Authorities, approved housing bodies, and the Housing Agency will be outside the scope of this higher stamp duty. The most significant exemption from this higher stamp duty charge is the multiple purchase of apartments. According to the release apartment developments face significant viability challenges and there are clear indications that any additional cost burden in apartment developments would have significant negative consequences for supply, and consequently impact on our future housing model, in particular for urban living.

The main features of the stamp duty proposal contained in the Financial Resolution were summarised in the press release and were as follows:

• The higher stamp duty rate will be 10%.
• It will apply to multiple purchases of 10 and above houses within a 12-month period.
• Apartments are fully exempt from this higher stamp duty.
• While the higher rate of stamp duty will apply automatically to all bulk purchases of 10 or more, it will also apply on a cumulative basis where for instance a person is purchasing regularly on a unit-by-unit basis.
• The higher stamp duty charge will therefore take effect once a 10th property is purchased in a 12-month period. This means that where a person or institution has purchased incrementally and reaches the 10 threshold, the higher stamp duty will apply to all of the other previous 9 purchases also. In such a situation where they have already paid the standard stamp duty rate, this payment will be offset against this new 10 % charge.
• Units purchased before 20 May 2021 can be counted towards triggering the threshold of 10, but higher stamp dates can only be applied to units bought after that date. For example if there were 6 units bought in April, and 5 units bought in June, the April purchases would enable the higher stamp duty charge to be applied to the June purchase.
• It will apply to all Irish dwellings (other than apartments) acquired, regardless of location. That is, it will apply where there are multiple dwellings in one estate or a single dwelling each in different locations across the country.
• It will also apply in circumstances where multiple purchases of residential units are made indirectly through shares, units of investment funds or certain partnership interests. There are certain anti-avoidance provisions included within the legislation and may need clarification in due course.
• The press release explains that on the advice of the Attorney General’s office, there is a requirement for a 3-month transition period for execution of contracts that have been entered into but not completed prior to the commencement of the Financial Resolution. In particular the resolution explains that the increased stamp duty should not apply to a relevant residential unit in respect of the acquisition of which a binding contract is entered into before 20 May 2021, and the instrument effecting the acquisition is executed before 20 August 2021. Further that instrument should be accompanied by a statement certifying that the instrument was executed solely in pursuance of a binding contract entered into before 20 May 2021. Further the increased stamp duty should not apply to a relevant residential unit the acquisition of which was effected before 20 May 2021.

Overall comments

It can be seen that this legislation is broad and will bring about a significant cost increase on the acquisition of certain property and certain interests held through shares, funds and partnerships. This may result in a significant disincentive for such acquisitions. The conditions attaching to the legislation are complex with significant anti-avoidance measures. The provisions will also bring about the need for more detailed review of property acquisitions into the future given that any unpaid stamp duty chargeable in respect of a relevant residential unit and any associated interest or other monetary penalty remains a charge on the relevant residential unit to which it relates without a time limit until such time as it is paid in full. A review of the transitional rules will be critical on a case by case basis.