Forward funding’ model enabling funds to avoid higher taxes
Institutional funds pumping billions of euro into “forward funding” Irish residential developments can avoid paying stamp duty and ultimately circumvent the higher levy rate imposed on investors that bulk-buy houses, Dept Finance officials found last yearhttps://t.co/TSVHEIW7lF
— Killian Woods (@killianwoods) September 4, 2022
4 comments
Should I care? Does this mean more or less housing being built?
>In Ireland, investment funds have typically entered “forward purchase” agreements with developers to buy residential developments upon completion. New data from Sherry FitzGerald has shown a different “forward funding” model has become more prevalent, which involves institutional funds bankrolling the construction of housing.
Like, was this not the point of the change? We wanted funds to stop competing with purchasers and instead put their money into building new property. That is what they are doing.
Seems like a policy victory tbh.
TLDR funds paying for houses to be built.
The article and the resultant twitter outrage are bizarre. This is what we need, we need funding for developers to build. This is how we get more homes to individuals and simultaneously we get lots of rental properties by funding development of both at the same time. Prior to this change there was more incentive to fund large build to let schemes.
We added a tax change to encourage this type of funding by making it more expensive for the other scenario and the business post calls it a loophole and says funds are avoiding the tax – that’s precisely what was wanted, we didn’t want the money we wanted the change in behaviour!