Dáil Éireann debate -
Tuesday, 1 May 2001

Vol. 535 No. 1

Written Answers - Stamp Duty.

Pádraic McCormack

Question:

251 Mr. McCormack asked the Minister for Finance if he has any proposals to raise the exemption from stamp duty limit of £250,000 on first time buyers of a dwelling house in view of the escalating cost of housing; and if he will make a statement on the matter. [11380/01]

Minister for Finance (Mr. McCreevy)

In the Finance (No. 2) Act, 2000, I made significant changes to the stamp duty regime on transfers of residential property arising from the recommendations of the third Bacon report into the housing market. 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 of second-hand houses. Also, rates of stamp duty for first time buyers of second-hand houses at values in excess of £150,000 and up to £300,000 are now 25% less than for other owner-occupiers.

The Act also introduced a flat 9% stamp duty rate on all categories of investors buying new or second-hand residential property. In the light of developments in the housing market since last year, the Government decided to reduce the rate of stamp duty for investors in new property from this flat 9% and an amendment to this effect was introduced on Committee Stage of the Finance Bill, 2001, which applies to conveyances made on and from 27 February 2001. However, the investor rate for second hand properties will remain at 9%. This change to the stamp duty regime will leave the investor rate unchanged in the second-hand market while reducing it somewhat for new property, thus providing a supply incentive in this area. Limiting the concession to new housing maintains the relative advantage of first time purchasers in the second-hand market which accounts for two-thirds of first time purchaser transactions.

The following table outlines the stamp duty rates now applying to first time buyers of second-hand residential property.

First Time Purchaser

£	Rate
0 to 150,000	0%
150,001 to 200,000	3%
200,001 to 250,000	3.75%
250,001 to 300,000	4.5%
300,001 to 500,000	7.5%
over 500,000	9%

It should also be noted that there is no stamp duty on the sale of new residential property where the purchaser is an owner occupier and the house is not greater than 125 square metres. If a new house is more than 125 square metres, stamp duty is charged only on the site cost or a quarter of the value of the house, whichever is the greater. In such cases, the £150,000 exemption for a first time owner-occupier purchaser would also apply.

In increasing the 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 have responded fully, as recently as last June, to the needs of first time buyers. However, the position will be kept under review in the light of developments in the housing market.