Monday 10 December 2018

Commercial stamp duty hike 'to hit 550,000 pension values'

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Stock image
Ronald Quinlan

Ronald Quinlan

Up to 550,000 holders of private sector pensions are set to be hit in the pocket as a result of Finance Minister Paschal Donohoe's decision to hike the rate of commercial stamp duty from 2pc to 6pc.

That's the claim being made by economist Dr John McCartney, director of research at real estate agents, Savills Ireland.

Responding to the Finance Minister's announcement of the measure, Dr McCartney said increases in stamp duty would feed through to an "immediate and commensurate reduction in property values".

With some 550,000 private sector workers currently holding money in pensions - most of which incorporate property funds, Dr McCartney concludes that yesterday's budgetary measures will "directly subtract from the value of these pensions".

CBRE executive director and head of research, Marie Hunt, described the hike in the commercial stamp duty rate as an "indirect tax on the pension industry".

Reacting to the Finance Minister's announcement, she said: "A large proportion of the institutional capital coming from Europe and indeed domestically is pension capital, so this is an indirect tax on the pension industry which makes Ireland less attractive internationally.

"It will certainly have a bearing on investors' decision-making, not least the price they will bid and pay for real estate assets from this point forward."

Commenting on the wider implications for Ireland's commercial property market and for the economy generally, Ms Hunt added: "One of the welcome developments over the last number of years is that the Irish commercial real estate market has become professionalised with more than half of all investment now emanating from overseas investors and institutional buyers as opposed to being a domestic debt-funded market as we had when the market crashed previously. This has created a much more stable market.

"Unexpectedly trebling transaction costs in this manner is clearly unwelcome."

Irish Independent

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