The implementation of restrictions on individual overseas buyers purchasing homes in Ireland has cropped up as a feasible solution to ease the country’s housing crisis, a method already employed by various nations to improve housing availability. This notion has sparked political discussions and recent dialogues, questioning if the Irish Government should also consider this approach, following the lead of other European countries that have imposed similar restrictions to mitigate their housing shortages.
Last year, a proposal was made by Portugal’s minor Left Bloc Party, advocating a nationwide prohibition on every foreign buyer, with the objective of reigning in the surge in property prices. Meanwhile, in Austria, non-EU citizens are only permitted to acquire real estate if the transaction adheres to the provisions prescribed in laws that differ across various provinces. Notably, in some areas like the capital, Vienna, prospective buyers need to have a residency permit, this is according to the assessments of international real estate corporation, Knight Frank LLP.
The total count of vacation homes that can be purchased by foreign nationals in Switzerland is limited to a yearly quota exceeding 1,500, distributed among Swiss cantons. Nonresidents in Switzerland who wish to invest in properties are required to secure a foreign buyer’s permit and are prohibited from owning more than one residential property.
In Malta, EU citizens must have resided there for five years to acquire property unless they secure a special permission from the government. Non-resident individuals in Denmark, who haven’t lived there for a period of five years need to obtain approval from a government department to buy a property. Nevertheless, there are exceptions for EU citizens who plan to use the property as their permanent home and can, therefore, buy without a permit.
In 2018, New Zealand went as far as prohibiting non-residents from buying the majority of home types, excluding certain investments in new flats in large constructions. During this period, Darragh O’Brien, then housing spokesperson for Fianna Fáil, urged the then Housing Minister, Eoghan Murphy, to evaluate the extent of non-residents or overseas companies purchasing homes in Ireland.
The Housing Minister, Mr O’Brien, has shifted his stance since assuming the role, warning that restrictive measures on individual foreign property buys would likely face substantial legal hurdles, his representative noted this week. She further underlined the importance of key investment funds contributing to the construction of new homes, particularly in densely populated apartment complexes otherwise unbuilt. She stressed, however, the necessity to safeguard traditional family houses from mass purchasing.
She also indicated towards the surge in stamp duty in May 2021, imposed by the Government to discourage the practice of mass property buying. The surge introduced a 10% stamp duty on bulk purchases involving 10 or more residential properties. After receiving calls from the Opposition for a reconsideration, Mr O’Brien acknowledged in the Dáil that the rate indeed needed a revision.
Concerns were addressed that any attempts by Ireland to restrict citizens of other European Union states from acquiring property in Ireland could be in violation of EU laws. Commenting on a prior parliamentary query, Mairéad McGuinness, the EU Commissioner for Financial Services, emphasised that imposing restrictions on foreign EU citizens aspiring to buy homes was prohibited. Any deviation from this law would only be justifiable based on public policy or public safety grounds, or in the case of compelling public interest reasons. She stressed that such a deviation would have to be reasonable.
Mr O’Brien indicated that a yearly investment of €13.6 billion is necessary to build an average of 33,000 new homes, with over €11 billion required from private investors. He warned that the housing market would slow down, and the challenges facing renters and aspiring homeowners would intensify if this private funding was not provided.
Mel Reynolds, a housing policy analyst and architect, proposed that putting a stop to foreign buyers may prompt unexpected results and reduce the quantity of available rental homes. He said that the emphasis should be on devising a strategy to transition from the rental sector to affordable home ownership, which he believes is of paramount importance.
Cian O’Callaghan, the spokesperson for housing within the Social Democrats, highly insists on the government to scrutinise the matter of individual foreign acquisitions of real estate, mirroring approaches taken by other nations. He opines that this wouldn’t have been necessary if there existed a rich supply of cost-effective housing options. However, given the present conditions and the added stressors, he points out that there is a limited quantity of newly-built residences up for purchase by single entities and families.