Stamp Duty: One step forward or two steps back?

Stamp Duty: One step forward or two steps back?

Stamp Duty: One step forward or two steps back?Many believe that changes introduced by this week’s budget are good news for the property market and will assist in stabilizing the market and establish true price values.

Stamp duty has dramatically reduced to a flat rate of 1% on property values up to €1 million and 2% on any amounts over €1 million. It is thought that the new rate will be very attractive for those wanting to trade up or relocate and would also entice people in rented accommodation to purchase a home in the coming months.

However the changes to stamp duty in the budget now mean that for the first time in years, First-Time Buyers will return to paying stamp duty. Rachael Doyle, director of PIBA Mortgage Services said the changes are not good news for First-First Buyers; “For First Time Buyers it will be an extra cost inhibiting those wishing to get on the property ladder, particularly at a time when acquiring lending is extremely difficult… Taken the abolition of mortgage tax relief it is yet a further impediment for First-Time Buyers. In a sense it is one step forward and two steps backward”.

Have your say

  • Stamp Duty: One step forward or two steps back?
There are 36 comments for this article
  1. Nona Mills at 5:30 pm

    It is definately fair that everyone pays the same including first time buyers. DANNYBOY your message is beyone depressing, why dont we all just sink into a mire of despair. For goodness sake we need to stay postive and up beat.

  2. Sharron Clemons at 8:27 pm

    1% is good for trading up/down. there was no point previously in going from a €350K house to a €500K house if it was going to cost €30K in stamp. The 1% makes these moves much more feasible. In fact if your house has dropped by 30% then so should the one you want to move up to – ie. it has never been such good value to move. (and no – I am not an estate agent – but I did anticipate the drop, sold my house, rented and will now buy again).

  3. optimistic at 2:19 pm

    It is definately fair that everyone pays the same including first time buyers.

    DANNYBOY your message is beyone depressing, why dont we all just sink into a mire of despair. For goodness sake we need to stay postive and up beat. With your prediction we may as well just give up

  4. optimistic at 2:17 pm

    It is definately fair that everyone pays the same including first time buyers.

    DANNYBOY your message is beyone depressing, why dont we all just sink into a mire of despair. For goodness sake we need to stay postive and up beat.

  5. LK at 3:39 pm

    1% is good for trading up/down. there was no point previously in going from a €350K house to a €500K house if it was going to cost €30K in stamp. The 1% makes these moves much more feasible. In fact if your house has dropped by 30% then so should the one you want to move up to – ie. it has never been such good value to move. (and no – I am not an estate agent – but I did anticipate the drop, sold my house, rented and will now buy again).

  6. michelle at 5:40 pm

    Same thing happened us

    deeds stamped and executed in Nov late nov , and then this announcement , we lost alot of money on selling our first home as we needed to take the hit to move and incurred alot of costs to obtain the new home . So now to see the stamp changes just days after we exchanged is so hard ,

    Good for movement of those stuck in properties at present if they can geta second mortgage but its so unfair to those within a 30 day transactions date of the budget
    please do as was done in 2007 and introduce a 30 days exception

  7. Niamh at 3:44 pm

    I don’t believe helping FTB buyers was a fair and transparent system as it only applied to houses under a certain value and new homes. We bought a 2nd hand apartment as FTB’s in Dublin 7 years ago and we had to pay stamp duty. It only further fueled new, overpriced and badly planned properties.
    It’ll certainly allow us to trade up from our apartment now that our family has doubled in size!

  8. Kevin at 11:22 am

    Hannah,

    you’re a first time buyer – if you’re about to close, explain you can’t afford the new 1% charge. There are not hundreds of buyers out there!! most people looking to sell, HAVE to sell at present. a 3k reduction is not huge on a 300k property.
    At worst they may settle for 1.5k reduction, rather than lose your sale, going back on teh market, viewings etc….etc..

    ASK!!! Tell them where you’re at!! If they refuse, then you have a decision to make!

  9. Kevin at 11:18 am

    Oh, i should add, I presume we’ll see house price reductions of between 6 and 7 per cent on asking prices with this new reduction?? Yeah right!!

    Someone mentioned prices increasing….I don’t think so. Lenders are not lending….salaries are decreasing, and rent to value ratios are still WAY out of line on many properties. Until these fall in line, the market will not improve significantly

  10. Kevin at 11:14 am

    Hi,
    Far from 2 steps back!!!! nonsense!

    this is a stimulus for the property market. Most 1st time buyers are in the 200-300 region for property. This equates to 2 to 3k additional cost.

    The property market problems exist in properties higher than this amount .REducing stamp duty from 6 or 7 % to 1% is a huge incentive for potential property purchasers, many of whom are renting at present.

    now, the next area for improvement is for EAs and Vendors to come into the real world price wise! When Irish people can co-relate annual rents to house prices, there will be movement in the market. Until then, we can see a “Japanese” style slide on property, possibly for the next 10 years.

  11. Anne at 8:24 am

    Nothing is going to heat up the market again until the prices of property reach a realistic price. €200,000 for a box in Tallaght is not realistic. There are so many apartments for sale but even those are not priced at what they are worth. All I can offer for advice to those that have just bought and paid too much stamp duty, you should have never bought! Don’t buy in this unstable market. Save your money and wait. Prices will never in our lifetime be what they were in the so called “boom” days. They will just continue to plummet. Don’t listen to estate agents, they just want you to buy, It’s their job!!! We need to get out of this Irish mind set that we have to own our homes. We don’t ! I will stay renting and let my landlord worry about upkeep, taxes and the lot. Signed Happy renting and saving my money !

  12. daire stynes at 9:07 pm

    im just about to close on my house after bearly scrappin bye my mogage approvel this 1% is goin to kill me,if i hadnt 2 kids id be gone out of this god forsacking place id say the brave men and women that gave there lives for this country in 1916 are turning in there graves,cowin and co get out know

  13. elise at 8:31 pm

    Gosh what a stupid tslking is this! do they really think that people will now start buying a house because the stampduty is only 1%? Wasn’t the problem that people couldnot pay their mortgages anymore or had troubles getting a mortgage by the banks, and now it is believed that when the stampduty is decreased to 1% al the troubles have disappeared??

    and o poor first time buyers you suddenly have to pay stampduty, have you forgotten that in many cases you pay 50% less for a house then some years ago, so I understand you want to have everthing; come on get back on earth.I suggest you start counting and you will be happy to pay this 1%

  14. EMB at 6:26 pm

    New stamp duty criteria was included in this budget so that Fianna Fail “the builder’s party” cronies could off load investment properties before property tax and water charges are introduced next year.As a result these people have 12 months to off load,down size and buy back into the property market for as little as possible. All buyers/sellers of houses for use as “principal residence” should be exempt from any tax on that family home. All investment properties should carry the burden of related taxes. It is impossible to rent a house in this State for less than 850 euro per month because “the builder’s party” government payout such monthly amounts to those on social welfare.Genuine home buyers, first time or not deserve to be allowed on the property while those who bleed it should be penalized heftily

  15. hardworker at 6:09 pm

    these new stamp duty changes are hitting us with a unforeseen tax as we just got contracts on monday have mortgage contracts from bank already, survey and valuation all done now this new tax.dont forget all that FTB are paying way higher variable rates because of all yea lucly enough to be on tracker rates,mortgage interest relief should be scrapped for any1 on a tracker and benifets passed onto FTB,also stamp duty changes dont just hit FTB in the pocket,also hits any1 in these areas as all are now gone

    # Exemption for new houses under 125 sq m in size
    # Relief on new houses over 125 sq m in size
    # Consanguinity relief for residential property transfers
    # Exemption for residential property transfers valued under €127,000
    # Site to child relief

    i guess some politicans wanted to buy there mansions and not pay large amounts of stamp duty 1 million house was 62k stamp duty now 10k

  16. Puppi von Lencoshire at 5:21 pm

    Gutted. Impeach the gangsters in charge of this petty little banana republic.

  17. hannah at 3:41 pm

    gutted. we’re just about to close. if we closed a few days ago we would be E3000 better off, after yrs of renting and working hard to save, its a kick. a couple of the rooms will remain unfurnished for a while.

  18. Sean Murphy at 3:05 pm

    I would appear that the Government has not learned the cost associated with using tax policy to heat up the property market. Don’t have much sympathy for people who have recently paid stamp duty – was it not common knowledge that stamp duty changes were on the cards in the budget?

  19. JAMES HOGAN at 3:03 pm

    MY SON CLOSED THE PURCHASE OF HIS NEW HOME ON DECEMBER 3 LAST-. HE PAID STAMP DUTY OF OVER 23000 EUROS–HAD HE CLOSED 5 DAYS LATER HE WOULD ONLY HAVE PAID 4600EUROS
    SEEMS VERY UNFAIR–COMMENTS APPRECIATED

  20. Dermot at 2:58 pm

    I think that the reduction in stamp duty is good for the market in general. With regard to First Time Buyers (FTB) whilst they will have to pay 1% to buy a new house if they are buying a house yet to be built, which is the way that a lot of new home sales are going now and in the future they should be able to benefit from just paying 1% on the purchase of the site and then contracting with the builder to build the house on the site for them,thus saving stamp duty on the building, which tends to be the major part of the house cost.

  21. Dannyboy at 2:27 pm

    I’m an FTB and I think this is great news!

    You must have this money up front with your deposit, so this will:
    A) Knock even more money off the ‘actual’ cost of the house
    http://www.independent.ie/national-news/irelands-drop-in-house-prices-is-worst-in-world-2438385.html

    B) It will eventually settle at 2.5 to 3 times the average industrial wage (€31k p.a. as of 2010)
    http://www.voxeu.org/sites/default/files/image/kelly_fig3.gif
    http://www.voxeu.org/sites/default/files/image/kelly_fig2.gif

    C) Stamp duty will continue to drive down overall property prices as 80% of applicants are being refused mortgages and this will increase to 100% [see point F]
    http://www.irishexaminer.com/ireland/kfmhojsnidau/rss2/

    D) The bank recapitalisation is doing nothing for new lending:
    http://www.independent.ie/business/irish/collapse-of-lending-for-new-mortgages-is-gathering-pace-2442935.html

    E) Drive down rental yields, along with the phasing out of Mortgage Interest Relief and Rent Relief, and the introduction of Property Tax and Water tax.
    http://www.ronanlyons.com/2010/11/23/as-rents-stabilise-the-urban-rural-gap-widens-in-the-rental-market/

    F) The major housing crash as alluded to by Morgan Kelly will hit Ireland in 12 months.
    http://www.irishtimes.com/newspaper/opinion/2010/1108/1224282865400.html

    G) Our oversupply and lack of demand is only getting started with 100,000 to emigrate over the next 4 years minimum
    http://www.irishtimes.com/newspaper/opinion/2010/1108/1224282865400.html

    Do you really want me to go on?

    If you thought you’ve seen a crash – you ain’t seen nuthin yet.
    Q. Why do you think foreign banks refuse to lend into this market?
    Q. Why do you think foreign investors refuse to buy at ‘knock down’ prices?

    A. Because we are about to deflate our economy by 25 to 50% over the next 4 years and 200k of the 800k mortgages will be abandoned over this timeframe.
    Have a look at what happened in Japan – Ireland is not unique, we’re just a banama republic.

    Eventually the music will stop – it always does.
    Then you will see the REAL property crash

  22. Chris at 2:13 pm

    The first time buyer designation was a joke anyway. If you have ever owned property anywhere on the planet before, you are not considered a FTB. What about those of us who moved to Ireland from abroad? We are in our fifties, do not own a house, so are not “trading up”. There is an infuriating assumption that everyone owns a house starting in their 20s and that everyone has always lived in Ireland…get real there are enough people in the country who have been away or come from elsewhere! GOOD RIDDANCE to the FTB designation!

  23. buyer at 2:06 pm

    I also paid over 30K in stamp duty recently and was also “sickened” by this change. However, after further consideration I feel the seller should be more annoyed.The 30K should be in their pocket, not the governments because after all the price of the house is determined by how much money the buyer can get their hands on.The percentage of this that goes to stamp duty is immaterial.

  24. Ciara at 1:44 pm

    A negative effect of the stamp duty reduction could be a sudden increase in house prices, where agencies and vendors exploit this freed up cash. However, borrowers should be prudent and stick to what they KNOW they can afford, not what lenders may offer them.

  25. Regina at 1:41 pm

    I think the 1% stamp duty is change for the better for both parties, we where all FTB at some stage and we got no help. If FTB can not afford the 1% stamp duty then they can’t afford to buy – 1% stamp duty is a lot better than property tax each year!

  26. Flexbrowne…….. at 1:32 pm

    “True price values”…..in other words, the business wants prices to rise. Not unusual to read this on a site dedicated and dependent on revenue from a busy property market, but really like…….y the obsession with and the notion that rising prices is always a good thing? Good for those who creamed it forever and a day………

  27. angery person at 1:27 pm

    Cant see it making a differnence, the banks wont give you the money for a mortgage. The governement has the us screwd & no one is wants to risk buying a house house these days because you dont know if your job is secure or you dont dont what your going to get hit with next in this country.Thank you Mr. Brain Cowen & his Party….

  28. Stephen at 1:18 pm

    All in all it seems like a welcome new rate of stamp duty. Like most change however there are winners and losers. The winners are the 2nd time buyers who will have to pay alot less stamp duty, while the losers are First Time Buyers and anyone who has paid stamp duty recently.
    Will this get the property market moving? I dont think it will change much in terms of sales numbers. Only increased confidence brought on by prices stabilising and an improved economic outlook will do that.

  29. Eamon at 1:16 pm

    Like Gerry I’m disgusted at having paid 25,000 in Stamp Duty just a couple of months ago. Another reason to get rid of this crowd of lurching,unpredictable incompetents.

  30. Peter Cresswell at 1:03 pm

    Suck it up Paddy, the stamp duty in Australia is 1.5%

  31. Grace at 1:01 pm

    Fantastic news!

  32. Pako at 1:00 pm

    Stamp Duty for FTBs this will surely help knock down the price of houses further as FTBs will continue to sit on the fence or else take even longer to budget for the additional expense. This has to be good news for someone .. free fall weeeeeeee

  33. Nicola at 12:59 pm

    Gerry I also agree with you there I am sick to the stomach, as I paid EUR 20k recently on a house too, so all that saving and time was very wasteful, and I am gutted.

  34. Gerry at 12:55 pm

    I can’t see this making a huge change in the overall number of house sales.
    I just paid over 30k in stamp duty so am pretty sickened by this change

  35. Buyer at 12:54 pm

    Who knows! The effect will only be seen after Feb when we all see how much we are left with to play with.

  36. Ken at 12:52 pm

    Good move, FTB’s should never be helped anyway they are no different than anyone else buying a house! When I bought a house my wife was a FTB and I wasn’t and we got f.all not even pro-rata..1% is good move and will hopefully get some houses sold…FTB’s suck it up and pay up..!

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