Written Answers. - Housing Crisis.
Noel Ahern
Question:
108
Mr. N. Ahern
asked the
Minister for Finance
the measures that have been taken to assist young couples to purchase secondhand houses; if the first time buyer's grant or some other measure can be made available to qualifying applicants who purchase secondhand homes; if this or other grants will be made available for secondhand houses as assistance towards energy saving measures as was previously mooted; the stamp duty categories for secondhand house purchases; if he can make alterations in the present bans to allow houses, selling at £180,000 approximately, to avail of the exemption up to £150,000; if these bands will be adjusted on an annual basis to allow for price changes in houses; and if he will make a statement on the matter.
[2620/01]
As the Deputy is aware, the Government announced a further package of measures on housing on 15 June 2000 which are specifically aimed at strengthening the position of first time buyers in the market. These measures arise from the most recent study into the housing market by Peter Bacon & Associates, economic consultants.
The third Bacon report reviewed and evaluated the effects of previous measures taken by Government and other recent developments in housing demand, housing supply and house prices. The study also included a general review of the evolution in the market since the publication of the previous studies by the same consultancy firm. The Government had previously taken a series of actions which was designed to increase housing supply and moderate the increase in house prices. While these measures have had an impact, the Government proposed a range of further initiatives to deal with the continued rising demand for housing.
The Finance (No. 2) Act, 2000 gave effect to the taxation aspects of these measures and involved a restructuring of stamp duty on residential property and the introduction of a new 2% anti-speculative housing tax. The Act introduced a three tiered stamp duty structure for first time buyers, owner occupiers other than first time buyers and investors. I increased the exemption from stamp duty from £60,000 to £150,000 in the case of first time buyers and for other owner occupiers to £100,000. Rates of duty for first time buyers at values up to £300,000 are now 25% less than for other owner occupiers. In particular, the revised regime is structured to facilitate those who are trying to buy their first home and who are faced with particular difficulties in the market at the present time. Many first time owner occupier buyers are now either exempt from stamp duty or pay at a reduced rate.
A flat 9% stamp duty rate is now also charged on all categories of investors buying new or secondhand residential property. The Government decided to apply this rate of 9% to all non-owner occupier purchasers of new and secondhand 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 purchaser as it would bring further pressure on prices at the lower end of the market.
The stamp duty rates now applying for secondhand residential properties are as follows:
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First Time Purchaser
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Other Owner Occupier
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Investor
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£
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Rate
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£
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Rate
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£
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Rate
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0 to 150,000
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0%
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0 to 100,000
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0%
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0 to 100,000
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9%
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150,001 to 200,000
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3%
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100,001 to 150,000
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3%
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100,001 to 150,000
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9%
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200,001 to 250,000
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3.75%
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150,001 to 200,000
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4%
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150,001 to 200,000
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9%
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250,001 to 300,000
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4.5%
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200,001 to 250,000
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5%
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200,001 to 250,000
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9%
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300,001 to 500,000
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7.5%
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250,001 to 300,000
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6%
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250,001 to 300,000
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9%
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over 500,000
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9%
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300,001 to 500,000
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7.5%
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300,001 to 500,000
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9%
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over 500,000
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9%
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over 500,000
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9%
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The new 2% anti-speculative tax applies, for a three year period, to second and additional residential properties acquired on or after 15 June 2000. The tax is a taxation measure specifically aimed at discouraging short-term speculative investment in the housing market which is causing difficulties for first time buyers. The third Bacon report pointed to speculative demand as a factor in driving up house prices.
In increasing the stamp duty first time buyer limit from £60,000 to £150,000 and in giving a 25% reduction on the "other owner occupier" category of rates applying between £150,000 and £300,000, I believe I have responded fully, as recently as last June, to the needs of first time buyers. However, I will keep the position, including the existing bands, under review.
The first time buyer's grant offers assistance to people who are first time purchasers of new houses. There are no proposals to extend the grant to first time purchasers of secondhand houses as any additional grant aid would, in present market circumstances, be likely to be absorbed in higher prices.
These taxation measures, in addition to a number of other further measures which the Minister for the Environment and Local Government, Deputy Dempsey, and the Minister of State with responsibility for housing and urban renewal, Deputy Molloy, have announced in this regard, are part of the Government's ongoing response to the problems in the housing sector and should help restore balance in the housing market.
