The Government has won tonight's Dáil vote allowing institutional investors to be exempt from stamp duty if leasing the property to Local Authorities.

The vote was 74 in favour and 59 against.

Sinn Féin’s Eoin Ó Broin said The Coalition parties voted for a tax break for Cuckoo Funds "to reward them for snatching up family homes".

He added: "This Government has turned their back on people, again."

The Social Democrats Cian O’Callaghan said: "It’s very disappointing that, despite previous assurances, the Government is going full steam ahead with facilitating investment funds buying up homes."

He maintained the vote would push up prices and push out first-time buyers.

The People Before Profit TD Richard Boyd Barrett said it is "… an utter scandal that the government continues actively incentivise cuckoo and vulture funds who are directly contributing to the dire housing crisis we face".

He added: "It is also utterly dishonest of the government to claim we need these funds driven solely by profit to deliver social housing."

The Minister for Housing Darragh O'Brien said: "Suddenly turning off leasing units would damage the supply of badly needed homes for low income households. Any increase in Stamp Duty on social homes… would mean many of these developments would not proceed and units would be lost."

He said that this was the reason why an exemption was being put in place by the Government.

Earlier today, Sinn Féin leader Mary Lou McDonald said it is "scandalous" and "despicable" that tax breaks for investment funds leasing homes to local authorities remain in place.

She accused the Government of incentivising investment funds and said its actions are digging the hole deeper for young people and families caught in this nightmare.

The Taoiseach said the Government had taken steps to rein in so-called vulture funds.

However, Micheál Martin said the current tax breaks have to be kept in place to provide social housing for families through leasing properties from these funds.

He said that if the tap was turned off immediately then 2,400 families would lose out on getting a home this year.

Mr Martin added that the future model will focus on direct building, but he said: "The reality is we need more houses."

He said there would be a move to a new system where the State would ultimately own leased properties but this cannot happen immediately.

The Government approved measures in May to force investment funds to pay a 10% stamp duty levy if they purchase ten or more homes.

The measure does not apply to apartments.

Vacant property tax 'on the agenda'

The Taoiseach has told the Dáil that a penalty for vacant houses is "on the agenda".

"We cannot have derelict houses and empty houses", the Taoiseach said, adding that the issue of a "penalty" is on the agenda.

Labour Party leader Alan Kelly had asked whether a vacant housing tax was being considered.

The Opposition accused the Government of engaging in a "spectacular" U-turn on local authorities leasing property from investment funds.

Mick Barry, Solidarity-PBP, said the Taoiseach had opposed such a measure only nine weeks ago, and under new stamp duty measures these funds will be incentivised to engage in the practice.

This will result in local authorities paying "over the odds for the provision of social housing", Deputy Barry said, adding that if U-turns and climb downs were an Olympic sport, the Government would win gold in Tokyo.

Party colleague Paul Murphy asked "what prompted this U-turn?"

Micheál Martin said the step on stamp duty "was signalled some time ago". He emphasised that in his previous remarks, he had said that limited leasing has a role to play.

"We need to go back to the days when local authorities built houses", the Taoiseach said. The State should own public housing, but should not be competing with first-time buyers, he added.

"We're in transition here", Mr Martin said, and there is "an immediate issue" of 2,400 houses which are needed.

Mr Martin condemned the Opposition's "sloganeering" on this issue.

Building 'absolute focus' of Govt

The Taoiseach has told a meeting of the Fianna Fáil parliamentary party that the "absolute focus" of the Government is to drive on with direct building of social and affordable housing.

He said the Dáil debate that took place this evening "masks the wider progress on housing policy".

Additional reporting by Mícheál Lehane