Property advisor, Savills Ireland, has raised concerns about reports that the Irish government is considering increasing stamp duty on bulk purchases of residential properties by institutional investors from 10% to 15%.
While this measure may impact investor confidence and sentiment, Savills highlights that the increase will not significantly divert supply to the private or first-time buyer (FTB) market, given that recent planning legislation already restricts block sales of residential units.
Mark Reynolds, Managing Director of Savills Ireland, explained: "The reality is that planning laws have restricted block sales of new residential developments, with no new bulk trades in recent times. The proposed stamp duty increase, therefore, will have limited impact in terms of boosting housing availability for first-time buyers, and it risks exacerbating an already challenging environment for institutional investors."
Reynolds continued: "Institutional confidence in Ireland has been on the decline, partly due to rent caps that restrict annual rental increases to 2%, which is significantly below international standards. This stamp duty hike could further destabilise investor sentiment in the Private Rented Sector (PRS) and inadvertently lead to a reduction in much-needed rental stock as investors may opt to sell units on a piecemeal basis as they become vacant, shrinking the rental housing supply even further."
Savills Ireland argues that, while these policies aim to ease the housing crisis, they could paradoxically worsen it by discouraging investment and reducing the supply of rental properties, a sector already under significant pressure to meet growing demand.