Banning individual foreign buyers from purchasing Irish homes as a means of increasing the availability of homes, as other countries have done, has emerged as a potential way of alleviating the housing crisis.
There has been political debate over recent years and fresh commentary about whether the Government here should examine such a move in the wake of other European countries taking such measures as their governments grapple with housing shortages.
Last year, Portugal’s small Left Bloc party presented a Bill for a nationwide ban on all foreign buyers to “combat rising house prices”.
In Austria, people from outside of the EU can buy property in the country if the purchase meets criteria set out in laws that vary between different provinces. In some parts of the country, such as the capital Vienna, criteria can include the prospective buyer having a residency permit, according to an analysis by global real estate company Knight Frank LLP.
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The total number of holiday homes that can be bought by foreign nationals in Switzerland is capped at a quota of more than 1,500 a year, which is divvied out between Swiss cantons. Nonresidents in Switzerland looking to buy up property have to apply for a foreign buyer’s permit and are not allowed to own more than one residential property.
In Malta, citizens of EU countries are required to be living there for five years to buy property, unless they obtain a special permit from the government.
People who have not been a resident in Denmark for five years must apply for permission from a government department to buy property in the country. There are exceptions for EU citizens, who can buy homes in Denmark without a permit if they meet certain criteria, such as intending to use the property as their year-round home.
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Farther afield, in New Zealand, in 2018 the country’s parliament banned non-residents from buying most types of homes, except for limited investments in new apartments in large developments.
At the time, Darragh O’Brien, who was then Fianna’s Fáil’s housing spokesman, called on the then minister for housing, Eoghan Murphy, to assess the level of non-residents or foreign firms buying homes in Ireland.
Now that Mr O’Brien is himself Minister for Housing, he seems to take a different view. Banning individual foreign purchases of properties would be open to “significant legal challenge”, his spokeswoman said this week.
She also said large-scale investment funds had a “role to play” in supporting new housing supply, “particularly in high-density apartments that would otherwise not be built”, but that “traditional family homes” must be protected from “bulk purchases”.
Mr O’Brien’s spokeswoman also pointed to the Government’s stamp duty hike in May 2021 to disincentivise the practice of bulk purchases, when a stamp duty charge of 10 per cent on the multiple purchase of 10 or more residential houses was imposed.
The Minister acknowledged in the Dáil in January that the rate needed to be reviewed following calls from the Opposition.
Any move by Ireland to consider trying to limit citizens from other European Union countries buying property in the State could potentially fall foul of EU rules.
In response to a previous parliamentary question, Mairéad McGuinness, EU commissioner for financial services, said there were rules against a country putting restrictions on “non-resident EU nationals” buying homes.
Any exceptions to such restrictions would have to be justified “on grounds of public policy or public security, or by overriding reasons in the public interest”, she said. The response added that the restrictions would have to be “proportionate”.
Mr O’Brien said that €13.6 billion in investment was required annually to meet the average of 33,000 new homes per year, with more than €11 billion of this required from private sources.
“Without this private funding, activity in the housing market would be much reduced, and the pressure already facing renters and prospective homeowners would increase significantly,” he said.
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Mel Reynolds, architect and housing policy analyst, said he didn’t believe curtailing overseas buyers was a good idea and could have “all sorts of unforeseen consequences”, in particular an effect on the amount of available rental properties.
“The name of the game here for people is affordable home ownership,” he said. “What you really want to be doing is looking and saying how can we find a roadmap out of the rental sector into affordable home ownership and that’s really what you want. That’s what we need.”
Social Democrats housing spokesman Cian O’Callaghan said the Government should “absolutely” look at the issue of individual foreign purchases of properties and that “other countries have”.
“If there was a good supply of housing at affordable prices, there wouldn’t be a need to,” he said.
“But given where we are at the moment and the additional pressures, there is a relatively small number of new-build homes actually available to individuals and families to buy at the moment.”
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