There was public outcry last week after an investment firm bought most of the homes for sale in a development outside Dublin, pushing a years-long scarcity of affordable housing and sky-high rents back to the top of the political agenda.
The new rate is a sharp hike from the current 1% rate on all residential property sales up to 1 million euros and 2% on the balance above that, regardless of the number of properties.
“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,” Finance Minister Paschal Donohoe said in a statement.
The coalition has been accused by opposition parties of relying too heavily on the private sector to boost housing supply.
The higher rate takes effect once an institution or a person purchases their 10th property in a 12-month period and applies to all of their purchases during that time.
Ireland has fallen well short of meeting housing demand each year since an enormous property crash over a decade ago brought the construction sector to its knees. The mismatch has led in particular to higher rents, locking would-be buyers out of the market for homes.
The shutdown of construction for periods this year and last year to slow the spread of COVID-19 has added to the supply shortage. House completions stalled at around 20,000 last year, well below the 30,000 to 35,000 needed annually to meet demand.
Donohoe said apartments are fully exempt from the higher stamp duty so as not to undermine the viability of large scale projects. Multiple purchases by local authorities or bodies that provide and manage social rented housing will also be exempt.