Government red-faced as stamp duty scheme flops
THE Government was left red-faced last night after it emerged a Budget scheme brought in to kick-start the ailing property market has received fewer than five applications.
The stamp duty 'trade-in' plan was established by Finance Minister Brian Lenihan in a bid to address the overhang of up to 50,000 unsold properties in the sector.
It was announced in April's emergency Budget and essentially means a developer can defer the payment of stamp duty tax.
To qualify for this relief the developer must accept a second-hand property in exchange, or as part payment for, a new house or apartment that he has just built and has not yet sold.
It is only when he finally sells on this 'swapped' or 'traded-in' property that he will be liable to pay stamp duty.
The scheme only covers trade-ins completed between May 7 of this year and December 31, 2010.
And if the developer does not sell the swapped property he will still have to pay stamp duty when the end of the deferral period is up.
It was hoped the plan would get tax revenue flowing into the public purse, which is currently facing a huge black hole because of the downturn.
The person who is getting the new house also has to pay stamp duty -- meaning a double stamp duty tax bonanza for the Government.
But last night a spokesman for the Revenue Commission admitted interest in the scheme had been low. To be considered a developer must submit an application to Revenue seeking the deferral of the tax.
He must include a contract of sale, also signed by the home owner, as well as a valuation of each of the properties and the deeds of transfer for the exchange. It is also open for private house builders to apply.
"We have received less than five applications to date and a handful of telephone inquiries. The applications received did not meet the legal requirements," the spokesman said. "No deeds have been processed by our stamp duty offices."
Last night industry experts said they were not surprised this new scheme had failed to catch the public mood.
"Nobody is thinking of trading up at the moment. People are fearful of losing their jobs," said Kersten Mehl of the Irish Auctioneers and Valuers Institute (IAVI).
The Institute of Professional Accounts and Valuers (IPAV) said the scheme was nothing if credit was not flowing in the market. "The credit crunch and job insecurity are stopping people from dipping their toe in the market," said chief executive Fintan McNamara.
Paul Grimes, chairman of Real Estate Alliance (REA), which represents 38 agents around the country, said the market needed an injection of confidence rather than a complex scheme.