Stamp duty trade-in plan flops as only 15 sign up
JUST 15 property developers have availed of the stamp duty trade-in scheme introduced in an attempt to kick-start the ailing housing market, the Irish Independent has learned.
The scheme was last night branded a failure after less than one developer signed up each month since its introduction.
The trade-in plan was announced by Finance Minister Brian Lenihan in the April 2009 emergency Budget. Under the guidelines, anyone who accepted a property in exchange or as part-payment for a new home could avail of a deferred stamp duty payment.
The builder would not be liable for stamp duty until December 2010 -- but the person acquiring the house would pay stamp duty in the normal way.
However, figures obtained by the Irish Independent show just 15 cases have been processed through the scheme in the 17 months since it was introduced.
"In relation to the residential 'trade-in' scheme, we have been informed by the Revenue Commissioners that according to their records, 15 cases in total have been received to date," a spokeswoman for the Department of Finance said.
"No duty has been paid on these properties, as temporary relief under the scheme has been claimed. The total duty relieved amounts to approximately €280,000.
"However, under this scheme, the liability is delayed until either a) the person accepting the trade-in subsequently sells the traded-in secondhand house, or b) 31 December 2010, whichever is earlier."
Experts last night said the scheme was doomed to fail from the start.
"It's just not an attractive option. It's aimed at the developers, rather than the buyers," Institute of Professional Auctioneers and Valuers chief executive Fintan McNamara said.
"The difficulty is that the level of stamp duty is still too high by international standards. On top of that, we have the credit crunch, and no one is lending.
"Property prices have fallen very significantly. Reducing stamp duty will not cause house prices to rise suddenly, but it could kick-start the market."
Fine Gael housing spokes-man Terence Flanagan said the figures highlighted "another example of a government scheme falling flat on its face".
He pointed out that a separate scheme, Home Choice Loan, has also failed dismally.
Under the plan, buyers who have been refused loans can get the funding from the Government, which lends 92pc of the value, provided they are a first-time buyer and earn over €40,000 a year.
However, just four loans have been drawn down in 20 months.
"Homeowners are not convinced by these schemes," he added.
Economist Colm McCarthy, who chaired An Bord Snip, has also called for the Home Choice Loan scheme to be abandoned.
The trade-in scheme assumes the developer will be able to sell on the swapped property before December. This may not be the case for some in the current climate, but under the legislation they will have to pay the stamp duty regardless.
This effectively means they could be left with additional property on their books -- as well as a tax bill.