The Bill abolishing stamp duty for first-time homebuyers has been attacked by the Opposition parties, which have described it as "a cynical exercise" and "a missed opportunity", while figures show that the move will not affect most first-time buyers. Stephen Collinsand Laura Slatteryreport
Irish Banking Federation statistics show that only about 2,000 of the 38,000 first-time buyers last year paid stamp duty, while the revenue of €70 million generated by first-time buyers was just 2 per cent of the total stamp duty tax take.
The Bill was approved by the Cabinet and published yesterday.
It will apply to all those who bought their first home since March 31st this year. Announcing the decision, Minister for Finance Brian Cowen said it was his intention to have the Bill enacted before the Dáil rises for the summer recess. The outgoing Seanad will be recalled to approve the legislation, even though the election campaign for the incoming Seanad is now in full swing.
"This Bill implements the commitment contained in the Programme for Government to abolish stamp duty for all first-time purchasers," Mr Cowen said in a statement.
"It will apply to instruments executed on or after March 31st, 2007, and where stamp duty has been paid in respect of such an instrument before the Bill becomes law, a provision has been included to allow for a repayment of that duty."
Under existing provisions, no stamp duty is paid on houses or apartments worth less than €317,501. Between that figure and €381,000, 3 per cent is paid. On houses between €381,001 and €635,000, the rate is 6 per cent; for houses or apartments over that figure, the rate is 9 per cent.
The new measure will abolish stamp duty for all first-time purchasers. According to the latest figures from the Permanent TSB/ESRI house price index, the change will not affect the average first-time buyer, who paid €278,000 to buy a house or apartment in April.
Fine Gael finance spokesman Richard Bruton described the measure as "a cynical exercise by Fianna Fáil" which fell far short of overdue reform of the housing market.
"This amendment is being introduced as a result of Fianna Fáil's last-minute U-turn during the election campaign and is an extremely partial measure that does not meet the true need for reform.
"Why should a family who are moving from a one-bed apartment have to pay a year's salary in stamp duty to get a house? Any stamp duty changes should take into consideration situations such as this, instead of the cynical reforms being proposed by Fianna Fáil," he said.
Labour Party finance spokeswoman Joan Burton said the Bill was a missed opportunity to reform stamp duty for families who needed to move home as a result of a change of circumstances.
"In addition, the decision to abolish stamp duty for all first-time buyers, regardless of the value of the house, means that the benefit will be skewed in favour of the super-rich," she said.
"Labour proposed to raise the threshold for first-time buyers from €317,500 to €450,000 with duty payable only on the excess over this threshold. We also proposed to restructure stamp duty for other buyers to make the system fairer.
"On the other hand, the Fianna Fáil decision to abolish stamp duty for all first-time buyers, regardless of the value of the property, will be an early Christmas present for the super-wealthy. A wealthy businessman who previously has been renting but decides to buy a house for €3 million will stand to save around €270,000, thanks to Fianna Fáil," she said.
The Irish Home Builders' Association and the Institute of Professional Auctioneers and Valuers welcomed the Bill.