Ireland needs more "cuckoo funds", not fewer, to solve the housing crisis, Finance Minister Paschal Donohoe has claimed.

Mr Donohoe revealed yesterday that Ireland has a massive €4billion-per-year shortfall in investment which is needed to build 33,000 houses a year – money that could come from foreign investment funds or "cuckoo funds".

Investment funds are a major player in the property market and while they give money to developers to build, there are concerns that they push others out of the home-buying market.

During a fiery Dáil debate last night, Sinn Féin finance spokesman Pearse Doherty said that if the "vulture funds" were watching the debate and "they know their lads in Fine Gael are watching their back". He said that the minister’s words were just a cover for so-called "vulture funds" that make big money for foreign investors.

"Minister Donohoe's speech went as far to convince us that the vulture funds are poor souls that are just trying to do the best for ordinary renters and home purchasers out there and we should shed a tear for them," he said.

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The Finance Minister earlier told the Dáil that an analysis prepared by his department showed that €10billion in private investment was needed annually to meet the 33,000-a-year new-home target - but we are currently €4billion-per-year short.

"So we have a gap at the moment of around €4billion per year that needs to be filled to deliver the new homes? and that is coming on to the role that institutional investment can play in our country in meeting that need," he said.

There was significant political backlash last year when it was revealed that officials in the Department of Finance were planning a "roadshow" event to attract further institutional investors.

This event has not taken place, and it has not been scheduled. This is despite it previously being planned to take place "early in the new year".

Mr Donohoe indicated at the time that he would be attending the event, if it proceeded. However, Minister for Housing Darragh O'Brien insisted that he would not attend any such events.

According to Mr Donohoe "the reality of the scale of institutional investment" was that it related to just 1% of the total housing stock and 7% of housing tenancies.

However, he said in Dublin it was much higher, at almost 15%.

Mr Donohoe said yesterday: "At the heart of these investment funds is the role that they can play to our country, in allowing us to organise savings that are held elsewhere in the world to deliver more housing supply."

Sinn Féin previously tabled a motion to end the special tax treatment of institutional investment funds. And during the Dáil debate last night, Sinn Féin's Mr Doherty said Fine Gael didn't want to talk about the tax breaks investment funds enjoyed.

"The fact that the Minister for Finance didn't even talk about the fact they pay no corporation tax or capital gains tax shows there is no defence of the sweetheart deals that he has given, and his colleagues have given, over the last number of years," he said. Mr

Doherty said it was "blatantly untrue" to say that institutional investors were funding large amounts of new build homes. He cited a report by estate agents Hooke and Macdonald which he said showed this amounted to "very few" new builds.

The report found that "institutional investors have been instrumental in enabling and funding the construction of nearly 5,500 new apartments and houses in Dublin since 2016". A research report by BNP Paribas Real Estate published earlier this month showed that 4,900 Private Rented Sector (PRS) properties were bulk-purchased by investment funds in 2021.

This was despite new measures designed to restrict bulk-buying being introduced.

On May 18 last year, the Government announced it would introduce a 10% stamp duty on the purchase of more than 10 homes in a 12-month period after an entire housing estate of 115 homes in Maynooth, Co. Kildare were all bought by one cuckoo fund.

However, while the opposition criticised the 10% levy as not going far enough the Government diluted the tax further following repeated warnings by the Department of Finance on the impact it would have on investment.

In July as the legislation was being brought before the Dáil a late amendment was added that meant funds could be exempt from the 10% stamp duty if they leased the homes to the State for social housing.

Images: Getty & Photocall Ireland