The main points of the Government announcement are summarised below.

• The 10% rate will apply to houses and duplexes, but not apartments. Duplexes were not specifically mentioned in the Government press release but in last night’s press conference, the Minister for Housing, Darragh O’Brien TD, stated that the new rate would apply to duplexes as well as houses.
• There is a 3 month transition period for contracts already exchanged but not completed prior to the commencement of the financial resolution. In the context of forward sale agreements, which typically complete when building works are complete, this period may not be sufficient to allow all purchasers to avail of the transitional arrangements.
• To dis-incentivise any attempts to circumvent the measure by a series of smaller purchases, the new rate will apply where 10+ residential units are acquired on a cumulative basis over a 12 month period, with the purchase of the tenth unit triggering the retrospective application of the 10% rate to the previous nine purchases.
• Units purchased before the financial resolution comes into effect will count towards triggering the threshold of 10, but the new rate will only apply to units bought after the financial resolution comes into effect.
• It appears that the 10% rate will apply to the purchase of 10+ residential units anywhere in the State, and not just the purchase of 10+ residential units in any one scheme.
• Indirect multiple purchases of residential units through the acquisition of shares or units of investment funds will be subject to the new 10% rate.
• The 10% rate will not apply to multiple purchases by local authorities, Approved Housing Bodies or the Housing Agency. However social housing investment transactions, where such bodies are typically tenants rather than purchasers, may be affected by these measures.

In a separate press release, the Minister for Housing also announced new planning measures to prohibit the bulk purchase of residential units and to ring fence homes in certain developments for owner occupiers.

The Minister will issue a planning circular to local authorities and An Bord Pleanála (under Section 28 of the Planning and Development Act 2000) directing them to prohibit the bulk buying of units in new developments in planning applications lodged after 19 May 2021.

The ring fencing of up to 50% of units in new developments for owner occupiers (the so called “owner occupier guarantee”) is expected to be implemented by an amendment to the Affordable Housing Bill currently before the Dáil.  This ring fencing will be in addition to current requirements under Part V of the Planning and Development Act 2000, and it remains to be seen how this requirement will be reflected in legislation – particularly if a later change from owner occupancy to rental use will be permitted in any circumstances.

The implications of these measures for developers, investors and lenders will be significant.  Further updates to follow.

Contact your usual Arthur Cox partner for more information.