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Dáil Éireann debate -
Tuesday, 30 Jan 2001

Vol. 529 No. 1

Written Answers. - Stamp Duty.

Denis Naughten

Question:

491 Mr. Naughten asked the Minister for Finance if he will reconsider the imposition of the 9% stamp duty on residential investments in the BMW region; and if he will make a statement on the matter. [1973/01]

The 9% stamp duty rate applies to all categories of investors buying new or second hand residential property. In the case of such investors, the position was changed as follows in the Finance (No. 2) Act, 2000:

House Price Thresholds

Rates prior to Finance (No 2) Act 2000 for investors purchasing new and second hand houses.

New Rates for Investors introduced in Finance (No. 2) Act 2000.

Up to £60,000

Nil

9%

£60,001 to £100,000

3%

9%

£100,001 to £170,000

4%

9%

£170,001 to £250,000

5%

9%

£250,001 to £500,000

7%

9%

Over £500,000

9%

9%

As the Deputy is aware, the context for the recent taxation measures on housing, including these stamp duty measures, is the difficult housing market situation. These market conditions, which are fully elaborated on in the most recent study into the housing market by Peter Bacon & Associates, Economic Consultants, required prompt action. In particular there was a pressing need to strengthen the position of first time owner-occupier buyers compared to investors. The third Bacon report pointed to speculative demand which was helping to drive up housing prices. The restructuring of the stamp duty regime to benefit owner-occupiers as against investors is one of the measures designed to help first time and other owner-occupier buyers.
The increase in the rate payable by investors – compared with the previous rates that applied – will of course depend on the price of the house. The Government decided to apply this flat rate of 9% to all non owner-occupier purchasers of new and second-hand residential property irrespective of the value of the property as it was considered that the previous graduated scale of rates might encourage investments in the lower end of the market. This would not be a desirable development from the point of view of the first time owner-occupier purchaser as it would bring further pressure on prices at the lower end of the market.
Stamp duty is applied on a once-off basis only. It is applied on a class basis to a range of items, for example, to transfers of Irish shares, to mortgages, to non-life insurance policies as well as to property and is therefore not a taxation that lends itself to exemptions on a regional basis. Any attempt to introduce such an exemption would raise equity considerations concerning the tax treatment of individuals in different areas. There is also a serious risk that such an exemption could lead to distortions in the housing market. These could hinder the overall national goal of increasing the supply of new homes especially to meet the needs of first time buyers who are trying to get a foothold in the housing market.
It is too early to judge the impact of this measure and to make any changes in this regard. However, the stamp duty regime will be kept under review in the light of changing circumstances in the housing market. The latest package of measures should assist in restoring balance in the housing market and curbing excessive price-increases. This price moderation is in the interests of all in the property sector whether first time buyer, owner occupier or investor.
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