Skip to main content

Property Market Stamped Out...

Fears raised over stamp duty issue...


REACTION: ESTATE AGENTS fear the struggling second-hand housing market may well grind to a halt after the disclosure that stamp duty may be abolished and replaced with an annual property tax.

The Government will be under pressure to clarify whether it plans to implement proposals by the Commission on Taxation in the December budget, having already signalled that it it may not proceed with the property tax.

Buyers who may be tempted by heavily discounted prices in second-hand houses will be reluctant to make commitments until the stamp duty issue is clarified.

The report comes at a time when house sales were beginning to pick up at the opening of the autumn selling season. However, agents last night warned that activity could cease until the Government indicated whether it would proceed with the taxation changes.

The Irish Auctioneers Valuers Institute (IAVI), which represents about 1,700 estate agents, last night urged Minister for Finance Brian Lenihan to provide clarification on stamp duty. Otherwise “the already limited number of sales would stop, further diminishing tax returns to the exchequer,” said Simon Ensor of the IAVI’s national council.

Mr Ensor welcomed the long expected abolition of stamp duty which, at 9 per cent for houses over €1 million, had been a cash cow for the Government throughout the property boom. Mr Ensor said the reintroduction of property tax was “somewhat inevitable” as it would provide the exchequer with a more stable taxation base.

Taoiseach Brian Cowen will be under pressure to decide on his policy in relation to property tax. He recently told a Sunday newspaper that he was “not wedded” to the idea of such a tax.

If the abolition of stamp duty proceeds, it could reactivate the second-hand market, where value is now emerging with house prices down by as much as 50 per cent from peak. However, sales have been relatively slow because of the lack of mortgage finance.

Marian Finnegan, chief economist with Sherry FitzGerald, said the punitive rate of duty in the second-hand market had “for too long been a barrier to entry to the property market and was in effect a tax on mobility”.

While the prospect of dropping stamp duty is good news for house-hunters, buy-to-let investors who were key players in the market over the last decade, are now being squeezed. They will still pay the full stamp duty on investment properties as well as the new property tax, all at a time when rents and values have been falling.

NCB stockbrokers warned that while the second-hand market would benefit, the changes would hit the buy-to-let market hard as a result of the property tax and the fact that stamp duty on investment properties would remain in place at a time of falling rents.

The stockbroking firm said there is a two-year supply of homes overhanging the market. The recommendations, it warns, will hit first-time buyers and investors – the two key groups which could clear the housing surplus.



Report by ORNA MULCAHY Property Editor - Irish Times

Popular posts from this blog

Ireland's Celtic Tiger Excesses...

'Bang twins' may never get to run a business again... POST-boom Ireland is awash with cautionary tales of Celtic Tiger excesses, as a rattle around the carcasses of fallen property developers and entrepreneurs will show. Few can compete with the so-called Bang twins for youth, glamour and tasteful extravagance. Simon and Christian Stokes, the 35-year-old identical twins behind Bang Cafe and exclusive private members club, Residence, saw their entire business go bust with debts of €9m, €3m of which is owed to the tax man. The debt may be in the ha'penny place compared with the eye-watering billions owed by some of their former customers. But their fall has been arguably steeper and more damning than some of the country's richest tycoons. Last week, further humiliation was heaped on them with revelations that even as their businesses were going under, the twins spent €146,000 of company money in 18 months on designer shopping sprees, five star holidays and sumptu

I fear a very different kind of property crash

While 80% of people over 40 own their own home just a third of adults under 40 do. This is disastrous for social solidarity and cohesion Changing this system of policymaking requires a government to act in a way that may be uncomfortable for some. Governments have a horizon of no more than five years, and the housing issue requires long-term planning. The Department of Public Expenditure and Reform was intended to tackle some of these problems. According to its website its remit is to “drive the delivery of better public services, living standards and infrastructure for the people of Ireland by enhancing governance, building capacity and delivering effectively”. So how is the challenge of delivering homes for people in 2024 and beyond going to be met? The extent of the problem is visible in the move by companies, including Ryanair, to buy properties to house staff. Ryanair has, justifiably, defended its right to do so. IPAV has long articulated its views on how to improve supply an

Property Tycoon's Dolce Vita Ends...

Tycoon's dolce vita ends as art seized... THE Dublin city sheriff has seized an art collection and other valuables from the Ailesbury Road home of fallen property developer Bernard McNamara. The collection will be sold to help pay his debts. The sheriff, Brendan Walsh, is believed to have moved against the property developer within the past fortnight, calling to his salubrious Dublin 4 home acting on a court order to seize anything of value from his home to reimburse his creditors. The sheriff is believed to have taken paintings from the family home along with a small number of other items. The development marks a new low for Mr McNamara, once one of Ireland's richest men but who now owes €1.5bn . The property developer and former county councillor from Clare turned the building firm founded by his father Michael into one of the biggest in Ireland. He is the highest-profile former tycoon to date to be targeted by bailiffs, signalling just how far some of Ireland's billionai