Stamp duty changes hit first-timers hardest

ESTATE agents Savills have pointed out that although the many merits of the Government’s changes to the penal stamp duty regime have been widely commended following the budget announcement, a thought must be spared for those potential first-time buyers who have now been brought into the net.

Director of Residential at Savills Ireland Ronan O’Driscoll said he welcomed the changes for the market because the new rates would undoubtedly help. “The previous rates were penal, particularly for larger properties, and we should start to see some more movement at the top end of the market as a result,” Mr O’Driscoll said.

“It is however unfortunate that first-time buyers have been hit with stamp duty,” Mr O’Driscoll added.

Over the years, previous first-time buyers had enjoyed cash benefits, such as mortgage subsidies or a grant. Until the budget, they had a stamp duty exemption. Now, they pay it like everyone else.

The property experts say they have already seen an influx of calls from would-be clients who were considering entering into the property market, but are now realising that the bill on any property purchase will have increased significantly. On a typical property worth €250,000, a first-time buyer will have to pay €2,500 more today than had they bought the same property before the budget.

Mr O’Driscoll went on to say that in all other categories, the stamp duty changes are good news and should have a positive economic impact.

Head of research at Savills, Joan Henry, said effectively stamp duty at 1% up to €1m and 2% over €1m is great news for the market and will allow potential buyers who have been on the fence to avail of the very significant reduction in prices in recent years.

“With prices in many cases back to those last seen in 2000, the relief for purchasers that now do not have to try to finance the penal stamp duty levels should mean that activity in the market increases in 2011,” she said.

Savills contend that in simple terms, the budget is bad news for first time buyers and very good news for everyone else, particularly for larger properties.

“I think a better move would have been for the Government to retain stamp duty exemption for first-time buyers, particularly for new homes. With such a glut of new homes on the market, this category would have benefited most from the first-time buyer’s market.

“However, as evidenced by our figures, this is good news for many people out there — and in these difficult times money saving opportunities are to be welcomed with open arms,” said Mr O’Driscoll.