A radical shake-up of the current Stamp Duty regime including the capping of the top rate at 6% for non first-time buyers is proposed in the pre-Budget submission of the Institute of Professional Auctioneers and Valuers (IPAV) published today.

In its submission, prepared by economist Jim Power, IPAV has also called for a reduction in the number of Stamp Duty bands and lower rates. The Institute says Stamp Duty should only be paid on the excess amount of a house price above the threshold and not on the entire amount as at present which, it says, is grossly unfair.

To help accommodate students and the lower-paid, IPAV has called for a doubling of the income tax exemption limit in the Rent-a-Room scheme.

IPAV Chief Executive Fintan McNamara said he welcomed the abolition of Stamp Duty for all first-time buyers by the Minster for Finance this summer and the commitment to double mortgage interest relief for them in Budget 2008. However, more now needed to be done to maintain a vibrant housing market.

According to IPAV, house prices nationally decreased by 3.3% in the first eight months of this year. The average price of a second-hand house in Dublin is now €473,749 and €369,837 for the country as a whole. While a soft landing is to be welcomed, it cautions against the stark consequences on the economy of any future hard landing.

Mr McNamara said the housing market now appears to be on the way to achieving a soft landing and it was incumbent on the Government to facilitate this.

“This would be the most desirable outcome because, given the inordinate dependence of the Irish economy on residential housing activity, a hard landing, now or at any time in the future, would cause serious economic difficulties. Consequently, it is incumbent on policymakers to facilitate a soft landing for the market.”

Mr McNamara said affordability is still difficult for many families but there were a number of ways that the Government could alleviate this.

“The current Stamp Duty regime acts as a major disincentive to labour market mobility. Lower and fewer Stamp Duty rates and wider bands would increase mobility and could prove self financing.”

IPAV is proposing the following measures:

Stamp Duty rates should be tiered.

The following rates and thresholds should replace those currently in use:

- Up to €250,000
- From €250,001 - €500,000
- From €500,001 - €1,000,000
- In excess of €1,000,001

Nil *
3%
5%
6%

For non first-time buyers, the various thresholds should be indexed every year in line with projected house price inflation.

A doubling of the income tax relief for the Rent-A-Room scheme

“IPAV’s clear intention in our Budget submission is to focus on maintaining movement in the industry which contributes enormously to economic growth,” said Mr McNamara. By alleviating the severe impact that Stamp duty has on non-first buyers the Government can facilitate much greater activity in the residential housing market which could prove self-financing.”

Note for editors:

* Current Stamp Duty rates for non first-time buyers and investors:

Up to €127,000
€127,000 - €190,500
€190,501 - €254,400
€254,401 - €317,500
€317,501 - €381,000
€381,001 - €635,000
Over €635,000

Nil
3%
4%
5%
6%
7.5%
9%

Ends.