John Perry
Ceist:223 Mr. Perry asked the Minister for Finance if he will make a statement with regard to issues raised in correspondence (details supplied) concerning property in County Sligo. [27350/00]
Written Answers. - Stamp Duty.
As the Deputy is aware, the context for the recent taxation measures on housing, which I introduced in the Finance (No 2) Act, 2000, is the difficult housing market situation at a national level. 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 is one of the measures designed to help first time owner-occupier buyers. Given the constraints on resources in the building sector at present, there is also need to focus more on provision for people who need homes which they will live in throughout the year.
A flat 9% stamp duty rate will now be charged on all categories of investors buying new or second hand residential property. The Government decided to apply this 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 purchases of Irish shares, to mortgages, to insurance policies as well as to property and is, therefore, not a taxation that readily 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. The tax incentives applying to designated properties under the rural renewal scheme far outweigh the once-off charge to stamp duty arising on the purchase of an investment property under this scheme.
I consider that the latest package of measures, including the new stamp duty regime, should assist in restoring balance in the market and curbing price-increases. This price moderation is in the interests of all in the property sector whether first time buyer, owner occupier or investor.