Reform of stamp duty will bring social benefits (Sindo)

I think we may have come full circle on this debate now …

[*Reform of stamp duty will bring social benefits rather than financial savings * (
By Dr John McCartney is an economist and is head of research at Lisney

IN financial terms, the recent debate about stamp duty is a red herring. Claims that reducing this tax will improve affordability and generally ease the burden of housing costs do not withstand close scrutiny.

This does not mean that stamp duty reform is without merit. While the financial arguments do not stack up, the proposed changes should bring a welcome improvement in the distribution of our housing stock.

Our mainstream political parties have now set out their stamp duty proposals and it seems clear that there will be no big savings for house buyers. Much of the focus has been on first-time buyers. However, the reality is that most first-time buyers already sidestep stamp duty by purchasing new homes under 125 sq m which are exempt from the tax anyway.

Therefore, proposals to scrap or limit stamp duty will be of little benefit to them - at least in financial terms.

As for reducing the general burden of housing costs, there are two reasons to be sceptical. At a conservative estimate, only 4.25 per cent of households were affected by this tax last year. Therefore, even if the reforms worked as planned, they would have minimal coverage. It is also unlikely that reducing stamp duty would result in any net saving for families that were affected by this tax.

Economic theory suggests that sellers are likely to react to any stamp duty reductions by increasing their asking prices and precedent tends to support this view. After Budget 2005 increased the stamp duty threshold on second-hand homes, many buyers responded by immediately increasing their existing offers.

If the proposed changes are unlikely to benefit house buyers financially, some of the current stamp duty proposals might improve the distributional efficiency of Ireland’s housing market and this could bring its own benefits.

While reducing stamp duty for first-time buyers may not save them money, it will widen their choices by enabling them to compete for second-hand houses in established residential areas. This may enable more young people to stay in their own neighbourhoods, thus helping to build better communities.

The ‘banding’ of stamp duty so that buyers would only pay the higher rate on sums above certain thresholds might also improve matters. It would help to eradicate ‘blockages’ on pricing because as things stand, houses that are genuinely worth €325,000 can face buyer resistance at that price because of a higher rate of stamp duty at €317,000.

Conversely, properties that are valued just below the stamp duty cut-off may get bid right up to the threshold level because buyers are keen to secure a deal below the €317,500 limit. These distortions, which can be unfair to both buyers and vendors, would be eradicated by banding.

A second effect of banding would be to help ensure that the properties occupied by different household types are more closely aligned with their accommodation needs. According to census figures, Ireland has one dwelling for every 2.4 persons in the country. Furthermore, while 69 per cent of our households are quite small (ie, they contain up to three people), 74 per cent of our dwelling units are relatively big (ie, they have five rooms or more).

We have ample housing to meet our population’s needs.

What the census does not do is cross-tabulate household size by dwelling size. Therefore we cannot tell whether the bigger dwellings are currently occupied by the bigger households. This is almost certainly not the case. At both ends of the spectrum, we have households living in properties which are inappropriate for their needs. On one hand we have ‘empty nesters’ - older couples in large family homes that are now unmanageable for them. At the other extreme, we have couples in apartments who are forming new families and who require more space.

Both groups have been discouraged from moving to more appropriate accommodation by the existing stamp duty system. Banding would not eliminate these costs but it would reduce them. And the Green Party’s proposal to eliminate stamp duty for over-60s who want to trade-down would reduce these costs even further and free up larger properties.

Stamp duty reform has become an improbable election issue. Ultimately, it is unlikely to deliver big savings for first-time buyers as some politicians would have us believe. By offering greater choice and helping to get the right families into the right type of accommodation, the proposals currently being debated do represent an improvement on the status quo.

Wow, read like a thread on this baord, except it a year to late! What stage are we at now Stage “13” perhpas.

VI - Pesudo Bomshell 1

VI - Pesudo Bomshell 2

We have ample housing to meet our population’s needs.

Seems like Lisney is the first vested interest to have broke ranks. A wise move, it is business at the end of the day and none of these operators are indebted in a charitable way to each other.

Sales must be worse than flat. They obviously need to drum up business, honesty is the last hope here. Of course popele may feel rather miffed they’ve been cotton-woolled by all involved to this point and stay away in disgust and on pricipal (wiseful thinking :wink: ).

I wonder how much more back peddling we’ll see from here on in?

Is Dr John McCartney, a member of the PIN 8)

A Very sensible article. Kudos to the good Doctor .

Firstly the admission that we have built enough property in most areas.

Secondly it posits that we need *an efficient matching mechanism *where properties may be transferred by objective matching…a couple in a 400sq ft shoebox in Dublin …and who are 7 months into a pregnancy …would have a need for 3 bedrooms. Meanwhile a divorcee with 3 bedrooms and no kids may have a need for a shoebox as they are on their own.

Stamp duty logic is that all are STBs to be tapped for cash and there is no rebate for appropriateness to the family unit.

Thats really what should change so lets allocate each family or independent unit a ‘housing need’ based on their circumstances and remove penalty tax if they trade **INTO **( not UP or down TO ) this need.

If they feel they really must have that southfork ranch outside Mullingar then tax the feckers by all means.

Overall its very suprising to see a VI write an article like this, however I’ve problems with the below :-

These people trading down, will be the ones with the most amount of cash of any of buyer and yet are being incentivised to do so…so what happens to prices of the smaller houses that they trade down to?..the ones the FTB’s want?.. FTB screwed over again.

This only furthers more effectiv eargument,s like nationalisng the Housing Stock.

Using a rather clunky tax at best to perform a process of needs based allocation is woefully inefficient in thinking never mind how bad it would be in real world applicaiton (i.e right now!).

Using Online systems like Daft to allocate SHleter resources if all parcipating are given an Needs-Based-ID-Rating, is done in a mater of weeks. Removing private ownership is the only true way to achieve this of course.

You can take this further and reaslie the downsizing of the Governments public sector/civil service can only be achieved by means of engaging the dynamic power of the internet. In the long run government as we knwo it will be an old out dated concept. This idea of leader needs to be challanged. Its works as long as there are checks & balances, I have yet to see those in this country.

If you are going to do the right thing, do the right correctly, be as true to the concept as possible in terms of success then you must do it in the most efficient & effective way that is possible.

use income tax , simply ask everyone the size of their household and allocate them a square footage range, if a dependent leaves or arrives then let the allocation change .

very simple and easy to administer .

if a ppr is sold first and a new one then acquired the stamp duty is charged but waived once the person states its a ppr and they sold the old one and the new one is in the range .

I would not allow a single person any more than 1000 sq ft and a couple any more than 1500 square feet .

Nationalising the stock would first require a constitutional change affecting the right to own property . I will give you two chances of getting that through :smiley:

And what about the young couple who manage to buy a family home before they have a family so they can reduce their mortgage before having children? Not something that’s common in Dublin but I have a few friends in Limerick doing this.

If you buy bigger than your needs at that moment then tough! Tax may not be calculated on what might be …simply on what is .

I know childless couples in 3000 square foot houses. They deserve no exemption in my opinion.

What’s with all this ‘red’ crap? Why should people with no children be discriminated against? I have no children - travelling community families (and I simply use them as an example) probably average 3/4 (don’t have the figures)… It’s f***ing easy to make kids :imp:

Head, my gaff is over 4000 square foot. I probably don’t need all of that but its too much hassle for me to trade down to a more reasonable size…say 2500 square foot or so … and I would have to pay stamp duty :smiley:

So I think I will simply have to keep it.

Yes you could do that. In this system that might actually work! land & Property Tax are probbaly a much more equitable means of taxation than being taxed directly on your income with no relaiton to your actual physical holdings and how you may be using more than you might need 8) .

We do need to curb wasteful specualtion but alas we are now so bloated its galatic in scale and we’re so fucked its not funny, its really not. This is some corner we’ve backed ourselves into (when I see we, I say a large minority of fools)

I think we should have a more gracious vision of what we think is the minimum space a human should enjoy. Personally I would try to accomodate the largest possible space remembering you can have all the space in the world if the design is wrong its negative. The amounts you propose are a good average. I wouldn’t stick stricly to multiples of the decimal. I’d be more inclided to say 1618sq feet, perhpas half this for a single person, either way using multipes of the golden ratio is most desirable.

It is also about facilites and adaptability of spaces, how useful it is. Is it designed to facilitate the correct needs & uses, does it foster sustainability is it designed with the greater social aspects of human life etc etc.

I think we need to look past a “local chipper & pub” as being classed as local amenities.

Thats 2 more chances than i would have given it meself you are too kind:wink:

The upshot is that you have a database of needs and resources from which further taxation options could be derived, yes.

Having said that a single person in a housheen in Ringsend should not be punitively taxed as against a large family in a monster ranch in Leitrim because both have the exact same open market value.

Value based taxation alone…a la council tax…is a bit too crude .

Yes, its very necessary before we build more shoebox slums in its absence . Nor should people be taxed into a shoebox by an STB tax that disincentivises every change of PPR .

I never ever ever bought anywhere not within 15mins walking distance of a good boozer, never would .

and I did punt out eg type figures to start the debate not absolutes.

A single man with shared custody of a 9 year old daughter needs more space than a single man with no kids at all for example .

See I have major problems here. For example, I personally want a house I can fit a grand piano in and storage for around 350 books and 500 CDs and a personal archive of photographs that stretches up to several thousand prints. And I’m single. What I would see in this crazy insane idea that you’ve got is that no one would take account that people have different lifestyles and needs. In my case, 1000 sq ft is probably adequate provided one of the rooms is big enough. Unfortunately in most houses around the 1000sqft the main room isn’t actually big enough to take a piano. In fact, the only one I’ve ever seen with adequate space is the house I’m in at the moment.

You - or no one else - is capable of defining for sure what one person needs or does not need. I think ideas like this are absolutely insane and have their roots in an ridiculous perception that we are short of space and housing. The problem is we are not; but we built a lot of useless housing in the past 5 or six years, investoboxes. If this had not been done, if some thought had been given to utility for people we wouldn’t even be having this ridiculous discussion based on the premise that we’re stuck for housing.

We are not and a society which dictates what people’s needs shoulds be rather than giving them some latitude on deciding them for themselves is a sick society. You think this is a good idea - I think it’s insane. Go after the speculatory element of the irish housing market and you’ll find there’s no need to go down the road of nationalising the housing stock. We have enough of it to go around, just not enough for everyone to have two.

Maybe the government should provide grants to people who want to buy two apartments and knock them into one. This way people get more living space and the number of overall properties gets reduced thus strengthening the market!

(hmm, I was only joking but there might be something to this…)

Something will have to be done! We are (realistically) looking at 20% empty nationally and a declining population ( below 4m) by around 2011 .

Do I smell a communist plot?


Sure if we didnt have things so slanted in favour of people sinking so much money into 2nd and 3rd ++ “investment” properties that were vacant then there would be no reason to even speak about nationalising the housing stock. The bubble would never have gotten so big

Truth is we encouraged the 250,000 empties

I think you can design for mostly all uses if you include this need at design level. If not which is what we have done or decades we end up in the scenario a you outline, a mess.

Yes we have acres & cres of space, 300,000 empty houses. Its obvious that building as it is currently has only been building for speualtion and when you d that we get this, Ireland today.

Building for living & life is something we;ve never eally done here. SO I coudln’t even give you an eaxmple if I tried. Thats why we must start again.

I’m only propsing that giving people the most sucessful shelter soluiton is not to be confused with telling people how they should live. The design can only be informed by How we want to live. not How Much Profit The Developer Can extract legally by a Hairs Breath

Exmaples of currtn & near solutons:

Digital Storage & E-ink Book technology has now reached a level where you won’t need all that storage space for books or music anymore. It is the future and we can’t change the direction on that one. Its now a matter for theindustry to catch up. Of course withthis technology & there is noo phsical manufactur of an objects the arguement for making things as close to free is mounting. Nature is free ia ay ojsut ned the daion to ap into it, the designs, the technology. oogle is a goo emaple of this nw trend in humanities journey.

As for the Piano as you are aware you can get some very nice digital ones these days, but there is nothing like the real thing!

Design in Ireland is still muck.

Yup! I could happily live in about 30sq m (hardly any cleaning!!!) but the piano is my problem. Electronic keyboards are crap IMHO.

Roland RD-170 with weighted keys and a decent speaker, what more could you ask for???

Then again, I’m not that discerning. :wink:

My original idea of performing a cull of the housing stock still stands,specifically to deal with the 330k empties that blight the countryside.
I’m just a wee bit concerned how the cruelty people might react to this.
Still,drastic dilemmas require drastic solutions…

Hitler would have called this the final solution :wink: